Monday, July 15, 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 Cisco (CSCO), Home Depot (NYSE:HD) and Merck (MRK). 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 >>>
Cisco’s shares have gained +33.7% year to date, outperforming the Zacks Computer Networking industry's increase of +32.4%. The Zacks analyst thinks Cisco is benefiting from its expanding footprint in the rapidly growing security market. Strong contributions from security, infrastructure platforms and applications are a positive.
Order strength and improving traction of the subscription-based business model are other tailwinds. Strengthening collaboration portfolio which now includes Webex Teams and Accompany bodes well. Partnerships with Telenor, Apple (NASDAQ:AAPL), IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) Cloud are notable.
The buyout of Duo Security and Luxtera should help the company expand its IT and data center clientele. However, weakness in switching and routing is a headwind. Arista’s intention of manufacturing switches that connect campus networks is likely to hurt Cisco as it holds a dominant position in that market.
(You can read the full research report on Cisco here >>>).
Shares of Home Depot have gained +27% year to date, outperforming the Zacks Retail Building Products industry’s +22.8% increase. The Zacks analyst thinks that this is attributable to a robust surprise trend that continued in first-quarter fiscal 2019. With this, it retained its five-year long trend of earnings beats, with positive sales surprise in nine of the last 11 quarters.
Results gained from strength in Pro and DIY categories. The company’s efforts to provide an interconnected shopping experience to customers with localized and innovative products, and improved productivity also aided its quarterly performance. However, the company reported soft comps in the fiscal first quarter, which lagged analysts’ expectations.
Tough year-over-year comparisons owing to hurricane-related sales hurt comps. The company’s top-line performance in the first quarter was also hurt by adverse weather in February and deflation in lumber prices.
(You can read the full research report on Home Depot here >>>).
Merck’s shares have increased +4.3% year to date, outperforming the Zacks Large Cap Pharmaceuticals industry’s decline of -1.6% during the same period. The Zacks analyst thinks Merck’s new products like Keytruda, Lynparza and Bridion are contributing meaningfully to its 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 recent approvals for new indications. 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. Estimates have gone up ahead of Q2 results. Merck has a positive record of earnings surprises in recent quarters.
(You can read the full research report on Merck here >>>).
Other noteworthy reports we are featuring today include Humana (HUM), Public Service Enterprise Group (NYSE:PEG) and AstraZeneca (AZN).
Wall Street’s Next Amazon (NASDAQ:AMZN)
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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
AstraZeneca (AZN) Rides on Solid Pipeline, Drug Launches
The Zacks analyst likes AstraZeneca's promising late-stage pipeline that includes immuno-oncology candidates. Imfinzi is a key drug in the pipeline. New drug launches are also underway.
Acquistions, Strong Medicare Business Aid Humana (HUM)
Per the Zacks analyst, buyouts of Family Physicians Group, Your Home Advantage, Curo and others have led to inorganic growth. Strong Medicare business have driven gains in revenues and membership.
Concho (CXO) Rides on RSP Permian Buyout, High Capex a Worry
The acquisition of RSP Permian has boosted Concho's scale and production prospects. However, high 2019 capex forecast of $2.9 billion may impact overall cash flows, per the Zacks analyst.
Regular Investments Aid PSEG (PEG), Operational Risks Hurt
Per the Zacks analyst, PSEG's regular investments in infra projects bolsters its growth prospects.
Darden (DRI) Rides on Cheddar's Acquisition, High Costs Hurt
The Zacks analyst thinks that while major sales building initiatives and synergies from Cheddar's acquisition are likely to boost Darden's topline growth, high cost of operations may dent margins.
Lennar's (NYSE:LEN) SG&A Leverage Improves, Rising Costs Hurt
Per the Zacks analyst, Lennar remains strong owing to diverse revenue mix and improving SG&A leverage.
Passenger Revenues Buoy Allegiant (ALGT) Amid High Costs
The Zacks analyst likes the uptick in passenger revenues on the back of strong demand for air travel.
New Upgrades
Unit Revenues, Fleet Upgrade Buoy American Airlines (AAL)
The Zacks analyst likes the company's performance with respect to unit revenues. Efforts to modernize its fleet are also encouraging. Initiatives to reward shareholders are commendable as well.
Sunlight Buyout, Hawthorne Unit Aid Scotts Miracle-Gro (SMG)
Per the Zacks analyst, Scotts Miracle-Gro should gain from the synergies of the Sunlight Supply acquisition and strong growth prospects of its Hawthorne unit.
t:slim X2 Rollout, Favorable Market Trends Aid Tandem (TNDM)
The Zacks analyst is bullish about Tandem's strong international rollout of its t:slim X2 insulin pump. Huge global demand for diabetes care devices is another growth driver.
New Downgrades
Exposure to Cat Loss, High Expenses Hurt Alleghany (Y)
Per the Zacks analyst, Alleghany's exposure to catastrophe loss raises volatility in underwriting profitability and weighs on combined ratio while rise in expenses weigh on operating margin expansion.
Strained Margins Trend Weighs on Nordstrom(NYSE:JWN)
Per the Zacks analyst, Nordstrom suffers strained margins due to markdowns to realign inventory and higher occupancy expenses. Additionally, moderately higher SG&A expenses will hurt margins in 2019.
Altra Industrial (AIMC) Faces Forex and Costs Headwinds
Per a Zacks analyst, Altra Industrial ails from forex woes (predicted to adversely impact second-quarter 2019 results) and high costs.
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Public Service Enterprise Group Incorporated (PEG): Free Stock Analysis Report
Merck & Co., Inc. (MRK): Free Stock Analysis Report
Humana Inc. (NYSE:HUM): Free Stock Analysis Report
The Home Depot, Inc. (HD): Free Stock Analysis Report
Cisco Systems, Inc. (NASDAQ:CSCO): Free Stock Analysis Report
AstraZeneca PLC (AZN): Free Stock Analysis Report
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Zacks Investment Research