For Immediate Release

Chicago, IL – January 17, 2024 – Zacks Equity Research shares Regeneron Pharmaceuticals (REGN Quick QuoteREGN - Free Report) as the Bull of the Day and Petco Health and Wellness (WOOF Quick QuoteWOOF - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Lenovo Group Ltd. (LNVGY Quick QuoteLNVGY - Free Report) , Dell Technologies Inc (DELL Quick QuoteDELL - Free Report) and Apple, Inc. (AAPL Quick QuoteAAPL - Free Report) .

Here is a synopsis of all five stocks.

Bull of the Day:

Regeneron Pharmaceuticals is a biotechnology company focused on the discovery, development and commercialization of treatments targeting serious medical conditions. The company boasts a number of market-leading drugs including Eylea for several eye diseases, and Dupixent for asthma.

Eylea in particular has been an important growth driver for the company as demographic trends in the US and abroad have led to impressive adoption of the drug.

Additionally, a new drug combination that the company is introducing to improve the treatment of obesity, which compliments the exceptionally performing GLP-1 drugs could lead to another major growth catalyst. As the company attaches itself to this new mega-trend, it may ride to coattails of a secular shift in healthcare.

Furthermore, in what has been a somewhat challenging opening few weeks for the broader stock market, the healthcare sector has shown encouraging relative strength, further improving the odds of near-term strength.

These catalysts, along with a Zacks Rank #1 (Strong Buy) rating make Regeneron Pharmaceutical a compelling investment consideration.

Relative Strength in Healthcare

Although we are just two weeks into the year the healthcare sector has outperformed the broad market and all other sectors by a notable margin. The Healthcare ETF is up 2.6% YTD vs the S&P 500 ETF (-0.17%).

Additionally, something I have noted in my other publications on Zacks, is the increased uncertainty around the beginning of US presidential election years. The first quarter often shows elevated volatility; however, the healthcare industry has consistently shown defensive capacity in those situations. So, in the case of market weakness, we should see this sector holds up better than the others.

Complimenting GLP-1 Obesity Drugs

The introduction of GLP-1 therapeutics, which are semaglutides traditionally used for treatment of diabetes, have flipped the medical industry on its head. After realizing that these can be used for treatment of obesity and induce rapid weight loss, drug manufacturers like Eli Lillyand Novo Nordisk were quick to release a product.

Ozempic and WeGovy have exploded in use and popularity as their effectiveness for weight loss has become undeniable. However, recent studies have shown that while users can rapidly cut fat, they may also lose significant muscle in the process.

But Regeneron may have a solution to this growing problem. A new drug currently under review may offer the possibility of addressing the loss of muscle mass, making it a logical pair in the treatment plan.

If this is the case, the new drug may attach Regeneron to this super trend, which has already sent Eli Lilly and Novo Nordisk rocketing higher over the last year.

Earnings Estimates

These developments have not gone unnoticed, and earnings estimates have been getting upgraded over the last two months. FY23 earnings have been revised higher by 1.3% and FY24 by 5.8%. Sales for the current year are expected to grow 6.5% to $12.96 billion and 5.2% next year to $13.63 billion.

Additionally, Regeneron is trading at a one-year forward earnings multiple of 24x, which is well below the industry average 96.6x, and just above its 10-year median of 22.5x.

Bottom Line

As Regeneron pushes to new all-time highs, this momentum is likely to continue as these bullish factors carry it higher. For investors interested in adding exposure to healthcare or defensive oriented-stocks, REGN is worth looking at.

Bear of the Day:

Petco Health and Wellness, the pet retail superstore with 1,500 locations across the US, Mexico and Puerto Rico has struggled in its competition against e-commerce in recent years, ceding valuable market share.

A slowdown in growth following the Covid recovery boom and high expenditures have also played a role in pushing the stock lower and shifting analysts to the bearish side. Petco Health and Wellness currently has a Zacks Rank #5 (Strong Sell) rating and should thus be avoided until a material fundamental change.

Falling Earnings Estimates

Earnings estimates have plummeted in the last two months, giving Petco Health and Wellness Co. the lowest Zacks Rank. Current quarter earnings estimates have been lowered by (-86%) and are projected to fall (-91%) YoY to $0.02 per share. Additionally, FY24 estimates have fallen by (-71%) and are forecast to decline (89%) YoY to $0.08 per share.

Additionally, sales for this year are expected to grow 3% YoY to $6.2 billion and just 0.13% next year.

Bottom Line

WOOF stock has been selling off since its IPO and is down a cumulative (-90%) since then. Clearly something is going wrong at the company. That being said, one day there will likely be a bottom, as the Petco brand is extremely well-known. Because of that, I don’t think this is a stock that investors should sell short, but rather be avoided until things markedly improve.

Additional content:

Global PC Shipments Jump in Q4: Will Sales Grow in 2024?

The U.S. PC market is finally rebounding after witnessing a decline in sales for several quarters. Although year-over-year sales are still down, the good sign is that sales are rebounding as inflationary pressures ease and consumers’ confidence in the economy strengthens.

According to the latest report from Gartner, global PC shipments totaled 63.3 million units in the fourth quarter of 2023, increasing for the first time after eight consecutive quarters of decline.

For the year, global PC shipments totaled 241.8 million units, down 14.8% year over year from 2022. Sales were dominated by the market leaders and the top six sellers held on to their positions. However, the performances were mixed.

Lenovo Group Ltd. recorded solid year-over-year sales growth. LNVGY shipped 16,213 units and was the top seller with 25.6% of the market share.

Dell Technologies Inc held the third position. DELL shipped 9,983 units in the fourth quarter of 2023. Dell Technologies commanded 15.8% of the market share in the fourth quarter, down from 17.2% a year ago.

Apple, Inc. shipped 6,349 units and held the fourth position. AAPL had a market share of 10% in the fourth quarter, up from 9.4% a year ago. Apple has a Zacks #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Analysts believe that PC sales are finally picking up, and demand and supply are finally balanced.

“The PC market has hit the bottom of its decline after significant adjustment,” Mikako Kitagawa, Director Analyst at Gartner, said.

“Inventory was normalized in the fourth quarter of 2023, which had been an issue plaguing the industry for two years. This subtle growth suggests that demand and supply are finally balanced. However, this situation will likely change due to the anticipated component price hike [in] 2024, as well as geopolitical and economic uncertainties,” Mikako added.

The PC market took a hit in 2022 as soaring commodity prices started taking a toll on consumer spending. Consumers started spending cautiously and cut down on expensive items as the Federal Reserve launched its monetary tightening campaign to bring down 40-year high inflation.

This saw the Federal Reserve hiking interest rates by 525 basis points since March 2022, which finally started paying off late last year as inflation declined sharply.

This once again saw demand rebounding. The picture looks a lot brighter for the PC market now. According to a recent forecast by Canalys, PC shipments are projected to hit 267 million in 2024, an increase of 8% from 2023, as the global economy improves and users consider upgrading to Windows 11.

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