Today's Must Read
Berkshire (BRK.B) Gains from Solid Insurance Operations
Ibrance & Other Key Drugs to Drive Pfizer's (PFE) Sales
Monday, May 4, 2020
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Apple (AAPL), Berkshire Hathaway (BRK.B) and Pfizer (PFE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple shares have held up strongly in the pandemic-driven market weakness (down -1% vs. -12.1% YTD for the S&P 500), reflecting the must-have status of the company's products and the gowing share of higher-margin services in the company's revenue stream.
Apple’s better-than-expected March-quarter results last week reflected continued momentum in the Services segment, driven by a robust performance of App Store, Apple Music, Video, cloud services and App Store search ad business. However, iPhone sales decreased as both demand and supply were negatively impacted by the outbreak of coronavirus.
Apple didn’t provide any guidance due to the uncertainty triggered by the pandemic. Moreover, the company expects second-quarter iPhone and Wearables business revenues to be worse on a year-over-year basis than the fiscal first quarter. On the contrary, iPad and Mac revenues are expected to improve.
Berkshire Hathaway made headlines with the huge negatgive swing in its equity investments account, but that is more of an accounting issue than actual realized loss in the business operating income sense. It nevertheless gave journalists a good excuse to run catchy headlines about pandemic-related losses suffered by the 'Oracle of Omaha'.
its big quarterly loss. But don't reach too much into that, as the Zacks analyst believes that Berkshire's strong cash position supports earnings-accretive bolt-on buyouts and indicates the company’s financial flexibility. Moreover, continued insurance business growth fuels increase in float.
The company is one of the largest property and casualty insurance companies measured by premium volume. Its inorganic growth story remains impressive with strategic acquisitions. The non-insurance businesses are delivering improved results with increased revenues over the past few years.
A sturdy capital level provides further impetus. However, exposure to cat loss induces earnings volatility and also affects the property and casualty underwriting results. Also, huge capex remains a headwind.
Pfizer’s shares have lost -1.4% over the past three months against the Zacks Large-Cap Pharmaceuticals industry’s fall of -4.7%. The Zacks analyst believes that the Consumer Healthcare joint venture with Glaxo, the Array acquisition and the pending merger of Upjohn unit with Mylan, if successful, will make Pfizer a smaller company with a diversified portfolio of innovative drugs and vaccines.
The smaller Pfizer should see better revenue growth as the Lyrica LOE cliff will go away. Pfizer expects continued strong growth of key brands like Ibrance, Inlyta and Eliquis to drive sales in 2020. Pfizer also has a strong portfolio of new drugs. However, currency headwinds and pricing pressure are key top-line headwinds.
Pfizer beat estimates for earnings and sales in Q1. However, Pfizer expects a significant impact from coronavirus-related business disruption in Q2, which it expects to ease in the second half of 2020.
Other noteworthy reports we are featuring today include Novartis (NVS), Oracle (ORCL) and Lockheed Martin (LMT).
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Director of Research
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>