Wednesday May 10, 2017
Today's Research Daily features new research reports on 16 major stocks, including Merck (MRK), Barclays (LON:BARC) (BCS) and Activision Blizzard (NASDAQ:ATVI).
Merck shares have performed largely in-line with the Zacks Large Cap Pharma industry in the year-to-date period (+8.3% for MRK vs. +7.6% for the industry), but the stock has handily outperformed the peer group over the past one year (+17.4% vs. +2.7%). This favorable momentum should continue following the company's better than expected Q1 results when it beat top- and bottom-line estimates and guided higher. The Zacks analyst likes Merck’s new products, especially Keytruda, which should continue to contribute meaningfully to the top line while management's cost-cutting initiatives should help the bottom line. The company has also made significant progress with its pipeline and is working on bringing new products to the market. However, generic competition and pricing pressure will likely remain headwinds as are rising competition in the immuno-oncology market. (You can read the full research report on Merck here >>>)
Barclays have underperformed the Zacks Foreign Banks industry this year, with BCS shares down -1.2% in the year-to-date period vs. +9.3% gain for the industry. Questions about the British bank's capital position, regulatory questions and the strong Pound have all been contributors to this underperformance. The bank's recent quarterly results were fairly strong, reflecting impressive underwriting performance and substantial drop in losses in Non-Core division. The company's efforts to restructure and simplify its operations should help outlook in the long run, but the aforementioned headwinds coupled with Brexit-related uncertainties will likely remain issues for some time. (You can read the full research report on Barclays here >>>)
Activision Blizzard shares have been strong performers this year, with the stock up +55.3% in the year-to-date period vs. the Zacks gaming industry's +29% gain in that same time period. The strong earnings reports for this quarter as well as the preceding one have added to the stock's momentum. The Zacks analyst likes Activision’s enviable product portfolio and increasing digital revenues, both of which should continue to drive growth. Moreover, the company stands to benefit further from the acquisition of King Digital. The company’s attempts to become a broad-based media company are also prudent. Apart from launching a movie studio and consumer products division, the company is strengthening its presence in the lucrative e-sports market. However, the hit driven and competitive nature of the video game industry begets caution. (You can read the full research report on Activision here >>>)
Other noteworthy reports we are featuring today include Blackstone (NYSE:BX), Sempra Energy (NYSE:SRE) and Tyson Foods (NYSE:TSN).
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks "Strong Sells" absolutely free >>.
Sheraz Mian
Director of Research
Note: SherazMian 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
Sempra Energy (SRE) Tops Q1 Earnings, Reaffirmed '17 View
The Zacks analyst thinks solid investment strategy fueled by higher cash flow from operations boosted Sempra's Q1 results.
PPL Corp (NYSE:PPL) Earnings In Line with Estimates, Revenues Lag
The covering analyst thinks the company's capital investment program will help it to attain its long term goals.
Harris (HRS) Beats on Q3 Earnings & Sales, View Adjusted
The Zacks analyst is impressed by the Q3 outperformance. However, the year-over-year decline in revenues and earnings raise concerns.
Apache (NYSE:APA) Swings to Q1 Profit on Higher Oil Prices
Higher price realizations have improved Apache's Q1 performance compared to the prior year quarter. The covering analyst is also optimistic about the company's big find - Alpine High.
Blackstone (BX) Witnessed Continued Revenue Growth in Q1
The Zacks analyst thinks Blackstone is well poised for growth from its product diversification. Yet, high dependence on management and advisory fees as a source of revenue might hurt its financials.
International Flavors (IFF) Q1 Earnings Up Y/Y, View Solid
International Flavors is poised for growth from rising product demand, productivity program and inorganic growth initiatives.
Tyson Foods (TSN) Lags Q2 Earnings, Sales on Lower Volumes
Tyson Foods posts weaker-than-expected second-quarter fiscal 2017 results due to lower volumes, per the covering analyst.
New Upgrades
Bayer (DE:BAYGN) (BAYRY) Beats Q1 Earnings, New Drugs to Drive Growth
Bayer beat both earnings and revenue estimates in Q1. The Zacks analyst believes that Pharmaceutical products launched over the last few quarters should continue to drive top line at the company.
Paylocity (PCTY) Posts Splendid Q3 Results, Raises FY17 View
Paylocity reported solid fiscal third-quarter 2017 results. The covering analyst thinks that its focus on investing in technological upgrades and product innovation will boost its performance.
Ubiquiti (UBNT) Beats on Q3 Earnings, End Markets Thrive
Ubiquiti beat Q3 earnings on robust top sales. Per the Zacks analyst, thriving Enterprise Technology business, strategic product launches and overarching business model are expected to boost growth.
New Downgrades
Inogen (INGN) Q1 Earnings Beat, Rental Revenues Plunge Y/Y
Despite a prosperous Q1 where Inogen beat the Zacks Consensus estimates, the Zacks analyst is concerned about the company's declining Rental revenues (down 35.8%) driven by lower reimbursement rates.
Tesoro (TSO) Q1 Earnings Fall on Weak Marketing Results
Weaker performance in its marketing unit and a tepid outlook for refining margins have made the covering analyst turn bearish on Tesoro.
Outfront's (OUT) Q1 FFO In Line with Estimates, Declines Y/Y
The Zacks analyst believes that softness in the national adverting market, which adversely affected Outfront Media's performance in Q1, is likely to continue in Q2.
Tyson Foods, Inc. (TSN): Free Stock Analysis Report
Sempra Energy (SRE): Free Stock Analysis Report
Merck & Company, Inc. (NYSE:MRK
The Blackstone Group L.P. (BX): Free Stock Analysis Report
Barclays PLC (BCS): Free Stock Analysis Report
Activision Blizzard, Inc (ATVI): Free Stock Analysis Report
Original post
Zacks Investment Research