Today's Must Read
Adobe (ADBE) Counts on Creative Strength; Expenses A Concern
Amgen (AMGN) Boasts a Strong Branded/Biosimilars Pipeline
Monday, June 22, 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 Facebook (FB), Adobe Systems (ADBE) and Amgen (AMGN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Facebook’s shares have outperformed the S&P 500 over the past year (+24% vs. +5.1%). The Zacks analyst believes that Facebook is benefiting from growth in Instagram Stories and Feed, and expanding user base in the Asia Pacific.
The company helped people connect during the coronavirus pandemic. Notably, voice and video calling more than doubled on Messenger and WhatsApp. The launch of Messenger Rooms for video call, which can accommodate 50 people, and WhatsApp video support for up to eight users are noteworthy in this regard. Further, the GIPHY buyout will boost user engagement.
However, Facebook expects ad-sales to be hurt by weakness in travel and automotive industry. The company didn’t provide any specific revenue guidance for the second quarter of 2020 as well as the full year. Moreover, higher operating expense is expected to dent the operating margin in 2020 due to sluggish revenue growth.
Shares of Adobe have gained +30.1% over the past six months against the Zacks Software industry’s rise of +17.2%. The Zacks analyst is optimistic about Adobe’s market position, compelling product lines, solid adoption of Creative Cloud and Adobe marketing cloud.
The company is benefiting from strong demand for its creative products. Its Creative Cloud, Document Cloud and Adobe Experience Cloud products are driving the top-line growth. Further, rising subscription revenues and solid momentum across the mobile apps are major positives.
Additionally, growth in emerging markets, robust online video creation demand and improving average revenue per user are tailwinds. However, lower end-market demand and exposure to Europe remain overhangs. High acquisition expenses do not bode well for margin expansion.
Amgen’s shares have gained +28.4% over the past three months against the Zacks Biomedical and Genetics industry’s rise of +35.3%. The Zacks analyst believes that growth products like Prolia, Evenity, Repatha, Aimovig, Otezla and biosimilars will drive sales this year.
However, increasing competition for its legacy products will continue to hurt sales. 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. Amgen also 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 Lowe's (LOW), Regeneron Pharmaceuticals (REGN) and TJX Companies (TJX).
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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>>>