Monday, October 7, 2019
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 General Dynamics (GD), Merck & Co. (MRK) and Progressive (PGR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
General Dynamics’ shares have underperformed the Zacks Aerospace & Defense industry year to date (11.2% vs. 26.2%). The Zacks analyst believes that the company continues to witness strong order growth, securing some pivotal contracts from the U.S. government and its overseas clients. Deliveries of G600 can be expected from the third quarter.
Product innovations can be expected to enhance this shipbuilder’s footprint in the business jet market. However, rising interest expenses can be a potential headwind for the company’s bottom-line growth going ahead.
Moreover, delayed payments related to one of its large international vehicle programs in Canada are hurting its cash flow reserve. A comparative analysis of its historical EV/EBITDA ratio reflects a gloomy picture.
(You can read the full research report on General Dynamics here >>>)
Shares of Merck have gained 2% in the past six months, outperforming the Zacks Large Cap Pharmaceuticals industry’s fall of 5.3% over the same period. The Zacks analyst believes that Merck’s new products like Keytruda, Lynparza and Bridion are contributing meaningfully to the top line.
Keytruda sales are gaining momentum with approval for additional indications, especially in the first-line lung cancer setting. Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products are also performing strongly and remain core growth drivers for Merck.
However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) remains a concern.
(You can read the full research report on Merck here >>>).
Progressive’s shares have gained 6.7% over the past year compared with the Zacks Insurance - Property and Casualty industry’s decline of 4.7%. The Zacks analyst believes that Progressive’s focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, bodes well for growth.
Leadership in product, service and distribution innovation, especially in personal auto bodes well for long-term growth. Policies in force and retention ratio will continue to remain healthy. The company’s Snapshot, Robinson and Home Quote Explorer programs should continue to drive its business.
The company also pays back its shareholders via dividends and share repurchases. However, the company’s growth could be challenged by intense competition. Exposure to catastrophe events induces volatility to its underwriting results while escalating expenses weigh on margins are concerns.
(You can read the full research report on Progressive here >>>).
Other noteworthy reports we are featuring today include ServiceNow (NOW), Air Products (APD) and Emerson (NYSE:EMR) (EMR).
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Mark Vickery
Senior Editor
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>>>
Today's Must Read
Featured Reports
Loan Growth Aid East West Bancorp (EWBC) Amid Lower Rates
Per the Zacks analyst, steady growth in loans and deposits, and solid liquidity position support East West Bancorp.
Growing Customer Base & Partnerships Aid ServiceNow (NOW)
Per the Zacks analyst, ServiceNow benefits from rising adoption of its workflows from companies undergoing digital transformation.
Automotive Business Strength Aids Amkor Technology (AMKR)
Per the Zacks analyst, Amkor Technology is benefiting from increasing electronic content which is driving growth within its automotive business.
Emerson (EMR) Gains from Strong MRO Activities, Margins Weak
Per the analyst, strong performance of Emerson's Automation Solutions segment fueled by strong brownfield projects & MRO activities should drive its revenues.
Atlantic Aviation Drives Macquarie (MIC), High Debt Hurts
Per the Zacks analyst, solid traction of Macquarie's Atlantic Aviation segment, led by rise in hangar rental income and ancillary services will drive its revenues. High debt level remains a concern.
New Upgrades
Project Investments, Productivity to Aid Air Products (APD)
Per the Zacks analyst, Air Products should gain from its strategic investments in high-return industrial gas projects as well as productivity and cost improvement measures.
Itron (ITRI) Banks on Networked Solutions & Outcomes Segment
Per the Zacks analyst, strengthening customer deployments in North America are aiding the performance of Networked Solutions and Outcomes segments which in turn is driving Itron's top-line growth.
New Downgrades
Microchip (MCHP) Battered by Rising Lead Time & Debt Burden
Per the Zacks analyst, increasing lead time and significant exposure to Asian markets is anticipated to limit gross margin expansion. Further, highly leveraged balance sheet is a concern.
Low Interest Rates Continue to Hurt UBS Group's (UBS) NII
Per the Zacks analyst, UBS Group's net interest income continue to remain under pressure due to the prevailing low rate environment in the European economy. Also, higher legal costs remain a concern.
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The Progressive Corporation (NYSE:PGR): Free Stock Analysis Report
ServiceNow, Inc. (NOW): Free Stock Analysis Report
Merck & Co., Inc. (MRK): Free Stock Analysis Report
General Dynamics Corporation (NYSE:GD): Free Stock Analysis Report
Emerson Electric Co. (EMR): Free Stock Analysis Report
Air Products and Chemicals, Inc. (NYSE:APD): Free Stock Analysis Report
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Zacks Investment Research