Today's Must Read
Ecommerce Sales to Fuel Walmart (WMT), Soft Margins a Worry
Loan Growth, Branch Openings Aid BofA (BAC) amid Lower Rates
Monday, June 15, 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 Johnson & Johnson (JNJ), Walmart (WMT) and Bank of America (BAC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Johnson & Johnson’s shares have underperformed the Zacks Large Cap Pharmaceuticals over the past year (+0.5% vs. +3.3%). The Zacks analyst believes that while the coronavirus pandemic is hurting the company’s Medical Devices unit, the Pharma and Consumer segments remain resilient.
J&J’s Pharma unit is performing above-market levels, supported by contribution from new drugs and successful label expansion of blockbuster drugs, Imbruvica, Darzalex and Stelara. J&J is also making rapid progress with its pipeline and line extensions. Several pivotal data readouts and regulatory milestones are expected in 2020.
However, headwinds like generic competition and pricing pressure remain. J&J faces numerous lawsuits, which allege personal injuries to patients caused by the use of its products. These lawsuits have resulted in uncertainty.
Shares of Walmart have lost -2.3% over the past six months against the Zacks Supermarkets industry’s fall of -1.5%. The Zacks analyst believes that the stock has been benefiting from increased demand for essential items amid coronavirus.
Such trends drove the company in first-quarter fiscal 2021, wherein top and bottom lines rose year over year and beat the consensus mark, and U.S. comps grew for the 23rd straight time. Further, higher stay-at-home trends boosted e-commerce sales. Walmart has long been witnessing solid e-commerce sales, largely backed by grocery delivery.
Notably, it recently unveiled Express Delivery service to expedite deliveries amid coronavirus. The company is also undertaking other measures to support operations amid the pandemic, which however entail high costs and pose threats to the operating income. Also, the gross margin has been strained due to unfavorable mix and pricing.
Bank of America’s shares have gained +17.6% over the past three months against the Zacks Major Regional Banks industry’s rise of +18.8%. The Zacks analyst believes that opening new branches, improved digital offerings and efforts to manage costs will likely aid profitability.
Additionally, strong balance sheet and liquidity position are expected to continue supporting the company's financials amid economic slowdown. However, near-zero interest rates are expected to hurt the bank’s margins and interest income.
Also, coronavirus-induced concerns will likely continue to hamper business activities and thus, loan growth is expected to be muted. Further, dependence on capital markets performance makes us apprehensive, given its cyclical nature. This is likely to hurt fee income growth to some extent
Other noteworthy reports we are featuring today include AstraZeneca (AZN), International Business Machines (IBM) 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>>>