Friday, June 8, 2018
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 Pfizer (PFE), Union Pacific (UNP) and Broadcom (NASDAQ:AVGO). 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 >>>
Pfizer’s shares have outperformed the peer group in the year-to-date period (the stock is up +0.7% over this period vs. a -4.1% decline for the Zacks Large-Cap Pharmaceuticals industry). Pfizer has been working on strengthening its product portfolio through acquisitions and licensing deals.
However, Pfizer is facing headwinds in the form of genericization of key drugs, supply challenges in the legacy Hospira portfolio, pricing pressure and rising competition, which are hurting the top line. Nevertheless, the Zacks analyst thinks new products like Ibrance, contribution from acquisitions, cost-cutting efforts, a lower tax rate and share buybacks should help the company achieve its guidance.
Pfizer also boasts a strong pipeline and expects approximately 25 to 30 drug approvals through 2022, including around 15 products that have blockbuster potential. Pfizer’s growing immuno-oncology portfolio offers a strong potential. Bavencio is being considered a key long-term growth driver for Pfizer.
(You can read the full research report on Pfizer here >>>).
Shares of Union Pacific have outperformed the Zacks Rail industry (+10.2% vs. +8.3%) as well as fellow railroad operator Norfolk Southern Corp (NYSE:NSC). (+7.5%) over the last six months. In further good news, the company unveiled a bullish picture at its Investor Day on May 31. At the event, Union Pacific stated that it intends to repurchase shares worth $20 billion during 2018-20. Dividend payout ratio in the period is anticipated between 40% and 45%. Operating ratio is expected to come down to 60% by 2020.
Moreover, volume growth is expected over the next three years. The Zacks analyst thinks the company’s efforts toward promoting safety are commendable as well. However, high operating expenses and debt levels are worrisome. Declining automotive volumes, due to sluggish vehicle production in the United States, also raise concerns.
(You can read the full research report on Union Pacific here >>>).
Broadcom’s shares have underperformed the Zacks Electronics - Semiconductors industry over the past year, gaining +8.8% vs. +11.5%. Broadcom delivered an impressive second-quarter fiscal 2018 results. Both top and bottom line increased on a year over year basis, primarily driven by seasonal retrieval in demand for broadband access and robust demand for cloud data centers.
The Zacks analyst thinks Broadcom is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G. Strong ties with leading OEMs across multiple target markets will help the company to gain key insights into the requirements of customers.
The company faces intensifying competition and integration risks due to frequent acquisitions. Its leveraged balance sheet and customer concentration continue to be headwinds.
(You can read the full research report on Broadcom here >>>).
Other noteworthy reports we are featuring today include Canadian Pacific (CP), KeyCorp (NYSE:KEY) and Ulta Beauty (ULTA).
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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, Higher Rates Aid KeyCorp (KEY), High Cost A Woe
Per the Zacks analyst, KeyCorp is well poised for revenue growth driven by continued loan growth and higher interest rates. However, rise in costs due to its inorganic growth efforts remain a concern.
Ulta Beauty's (ULTA) Loyalty Program Likely to Drive Sales
Per Zacks analyst, Ulta Beauty's loyalty program will continue to boost its top line via excellent marketing and merchandising endeavors. Apparently, it boosted sales in first-quarter fiscal 2018.
Vulcan's (VMC) Inorganic Drive Solid, Inclement Weather Hurts
The Zacks analyst stresses that Vulcan Materials systematic inorganic strategy for expansion are encouraging. However, seasonal influences on construction activity pose threats.
Dividends, Buybacks Aid Canadian Pacific (CP) Amid Debt Woes
The Zacks analyst likes the company's initiatives to reward its shareholders through dividends and buybacks. However, high debt levels raise concerns.
End-Market Sales Cushion RBC Bearings (ROLL) Amid Cost Woes
Per the Zacks analyst, solid industrial and aerospace sales will boost RBC Bearings' near-term sales. However, elevated material prices and capacity-expansion expenses might dent profitability.
Five Below (FIVE) Focus on Pre-Teen Customers to Fuel Sales
Per the Zacks analyst, Five Below's impressive merchandise, focus on pre-teen customers & pricing strategy should drive sales.
Higher Spending on Starz Hurts Lions Gate's (LGF.A) Profits
Per the Zacks analyst, Lions Gate's investment on Starz is helping it to emerge as a major player in the TV space.
New Upgrades
Strong Class 8 Lineup & Cost Savings Aid Navistar (NAV)
Per the Zacks analyst, Navistar is gaining from new products & improved Class 8 lineup. Also, cost-saving initiatives like engine restructuring and reductions in discretionary spending are aiding it.
United Natural (UNFI) Likely to Gain from Strategy for 2018
Per the Zacks analyst, United Natural is set to gain from its strategy for 2018, which includes plans to improve customer base, gross margin, broadline distribution channel and e-commerce operations.
Continental (CLR) to Gain from Oil-Rich Bakken Acreage
According to the Zacks analyst, strong focus on the low-cost and lucrative Bakken shale in a favorable oil price environment will help Continental Resources generate significant free cash flow.
New Downgrades
Glaxo's (GSK) Sales Under Pressure, Advair to Face Generics
The Zacks analyst says that generic competition and price erosion are hurting Glaxo's sales. Its top-selling drug Advair is expected to face generic competition in the U.S which can hurt sales.
Wayfair (W) Hurt by Growing Expenses & Rising Competition
Per the Zacks analyst, Wayfair is suffering from increasing advertising and investment spending. Further, growing competition in e-commerce space from a dominant player like Amazon (NASDAQ:AMZN) remains a headwind.
Raw Material Price Inflation to Hurt Leggett's (LEG) Margins
Per the Zacks analyst, Leggett's margins remain under pressure mainly due to commodity inflation and steel costs inflation, which is likely to continue hurting margins, going forward.
Union Pacific Corporation (NYSE:UNP): Free Stock Analysis Report
Ulta Beauty Inc. (ULTA): Free Stock Analysis Report
Pfizer Inc. (NYSE:PFE): Free Stock Analysis Report
KeyCorp (KEY): Free Stock Analysis Report
Canadian Pacific Railway Limited (CP): Free Stock Analysis Report
Broadcom Limited (AVGO): Free Stock Analysis Report
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Zacks Investment Research