Today's Must Read
Operation Efficiency to Aid BHP Group (BHP) Amid Low Prices
Altria (MO) Troubled by Weak Cigarette Volumes, Pricing Aids
Monday, May 11, 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 Amgen (AMGN), BHP Group (BHP) and Altria Group (MO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Amgen shares have been standout performers lately, both relative to the broader market as well as relative the peer group. This reflects growing sales momentum, according the Zacks analyst, for Amgen’s drugs like Prolia, Evenity, Repatha, Aimovig, Otezla and biosimilars will drive sales even though competition for its legacy products is steadily increasing.
Amgen beat estimates for earnings and sales in Q1. However, it expects a significant impact from coronavirus-related business disruption in Q2, which it expects will ease in the second half of 2020. Amgen boasts a strong biosimilars portfolio, which can drive long-term growth.
Amgen is also progressing with its pipeline while regularly pursuing “external opportunities” such as the acquisition of Otezla and the stake in China's BeiGene. Amgen also expects several important clinical data readouts from its innovative pipeline in 2020. However, pricing and competitive pressure are concerns.
These are tough times for BHP and other miners, as you can see from the stock's recent underperformance. But the critical factor for operators like BHP at this stage is the abilit to survive and it remains well positioned on that front. The Zacks analyst believes that BHP Group’s strong cash flow and focus on lowering debt are likely to enhance its capability.
The company maintains capital and exploration expenditure guidance below $8 billion for fiscal 2020 and $8 billion for fiscal 2021. It currently has six major projects under development in petroleum, copper, iron ore and potash. Efforts to make operations more efficient on the back of smarter technology adoption across the entire value chain will drive growth.
However, slowdown in global growth and lower commodity prices due to the coronavirus outbreak is likely to impact results. The consensus estimate for earnings for the current fiscal has undergone negative revision lately. Nevertheless, even though metal prices remain subdued in the near term, it will eventually pick up on the back of the impending demand-supply imbalance.
Altria’s shares have lost -19.1% over the past three months against the Zacks Tobacco industry’s fall of -17.4%. The Zacks analyst believes that the company has been battling weak cigarette volumes due to stern regulations and consumers’ rising health awareness.
Though reported domestic cigarette shipment volumes rose in first-quarter 2020, it was hurt by the cigarette industry’s rate of decline and retail share losses. While management withdrew its 2020 earnings view due to COVID-19-related uncertainties, it continues to expect domestic cigarette industry volumes to drop in 2020.
Nonetheless, pricing strategies and solid oral tobacco products continued aiding Altria during the quarter, wherein top and bottom lines beat the consensus mark. Management highlighted that it hasn’t seen any material disruptions from coronavirus and is focused on strengthening its cash position amid the crisis.
Other noteworthy reports we are featuring today include Apple (AAPL), Zoetis (ZTS) and Target (TGT).
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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>>>