Today's Must Read
Solid Adoption of Cloud Solutions Aids IBM Amid High Debt
Intelligrated Unit Drives Honeywell (HON), Weak Demand Ails
Friday, May 29, 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 Novo Nordisk (NVO), International Business Machines (IBM) and Honeywell International (HON). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Novo Nordisk’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+37.7% vs. +11.4%). The Zacks analyst believes that lower realized prices in the Unites States, loss of exclusivity for products in hormone replacement therapy and intensifying competition will impact sales. Moreover, the impact of COVID-19 will affect the performance in the upcoming quarters.
Novo Nordisk beats on both first-quarter earnings and sales. Ryzodeg continues to gain traction and Ozempic, a once-weekly GLP-1, is off to a solid start. The label of Ozempic was further expanded by the FDA to include a cardiovascular indication.
Novo Nordisk has one of the broadest diabetes portfolios in the industry. Tresiba, Victoza, Ozempic, Xultophy and Saxenda maintain momentum for the company. Label expansion of existing drugs will further boost sales for the company.
Shares of IBM have lost -6.3% over the past six months against the S&P 500’s fall of -2.6%. The Zacks analyst believes that IBM is benefiting from improving position in the hosted cloud, security and analytics domains.
Moreover, Red Hat acquisition has helped IBM to enhance containerized software capabilities and strengthen competitive position in the hybrid cloud market. Further, growing clout of Watson Health and growth in Payer, Provider, Imaging and Life Sciences verticals are noteworthy. Also, gains from z15 hold promise.
However, stiff competition in the cloud computing market remains a woe. Notably, adoption of cognitive applications and transaction processing platforms in March was affected by coronavirus outbreak, which is a major concern. For 2020, IBM has withdrawn guidance, citing uncertainty pertaining to coronavirus crisis. Also, a highly leveraged balance sheet, adds to the risks.
Honeywell’s shares have lost -10.2% over the past three months against the Zacks Diversified Operations industry’s fall of -11.2%. The Zacks analyst believes that strength in defense and space businesses as well as solid demand for its warehouse automation products will likely boost Honeywell’s revenues in the quarters ahead.
Also, increased productivity and operational excellence initiatives are likely to improve the company’s near-term profitability. Its acquisitions will likely prove beneficial in the quarters ahead. It is committed to rewarding shareholders handsomely through share repurchases and dividend payouts.
The company believes that the coronavirus outbreak-led market downturn and the volatile oil market will adversely impact its near-term results. Given its extensive geographic presence, its business is subject to political, economic and geopolitical issues. Rise in debt levels can increase its financial obligations.
Other noteworthy reports we are featuring today include Amgen (AMGN), Lowe's (LOW) and S&P Global (SPGI).
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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>>>