Tuesday, December 27, 2022
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 AbbVie Inc. (ABBV), PepsiCo, Inc. (PEP) and Oracle Corporation (ORCL). 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 >>>
AbbVie
shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+21.4% vs. +13.0%) reflecting the company’s robust drug pipeline. The company has succesfully expanded labels of its cancer drugs, Imbruvica and Venclexta. It has several new drugs in its portfolio, which have the potential to drive revenues once Humira loses U.S. exclusivity in 2023.
Skyrizi and Rinvoq have established outstanding launch trajectories bolstered by the approval in new indications. It has several early/mid-stage candidates that have blockbuster potential. Allergan’s acquisition has diversified AbbVie’s revenue base into new therapeutic areas, enhancing its long-term growth potential.
However, there are concerns about long-term sales growth once Humira generics enter the U.S. market. Increasing competition from newer therapies is hurting Imbruvica’s sales. Slowing consumer demand due to economic pressures is affecting aesthetics franchise sales.
(You can
read the full research report on AbbVie here >>>
)
Shares of
PepsiCo
have gained +6.9% over the past year, modestly lagging Coke’s +9.5% gain, but handily outperforming the broader market’s -21.2% decline. The company’s revenues and earnings beat the Zacks Consensus Estimate and improved year over year in the third quarter. This marked the 17th straight quarter of sales beat.
PepsiCo benefits from the resilience and strength of global beverage and convenient food businesses. It expects to benefit by delivering convenience, variety and value proposition to customers through its brands. It raised its revenue view for 2022.
However, PepsiCo witnessed margin pressures in the third quarter driven by impacts of supply-chain disruptions and inflationary labor, transportation and commodity costs. PEP anticipates incremental input cost inflation for the balance of 2022. Adverse currency rates also remain headwinds.
(You can
read the full research report on PepsiCo here >>>
)
Shares of
Oracle
have declined -8.8% over the past year against the Zacks Computer – Software industry’s decline of -31.0%. The company is spending high on product enhancements, especially toward the cloud platform, is likely to limit margin expansion. The Zacks analyst expect fiscal 2023 non-GAAP operating expenses to jump 18.3% over fiscal 2022.
Nevertheless, Oracle’s second-quarter fiscal 2023 results benefitted from strength in infrastructure and applications cloud businesses. Solid adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP), Fusion ERP and Fusion Human Capital Management (HCM), bodes well.
Solid demand for the Oracle Dedicated Region Cloud@Customer is anticipated to drive the top line. Oracle expects total cloud growth, including Cerner, to grow from 43% to 47% in USD for the next quarter. Partnerships with Accenture and Microsoft is helping Oracle win new clientele.
(You can
read the full research report on Oracle here >>>
)
Other noteworthy reports we are featuring today include Danaher Corporation (DHR), HSBC Holdings plc (HSBC) and The Progressive Corporation (PGR).
Director of Research
Sheraz Mian
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
AbbVie’s (ABBV) Skyrizi, Rinvoq Key to Long-Term Growth
PepsiCo’s (PEP) Business Investments to Bolster Performance
Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships
Featured Reports
Life Sciences Unit Aids Danaher (DHR) Amid Supply Chain Woes
The Zacks analyst is encouraged by strength in the Life Sciences unit due to robust activity in the bioprocessing business. However, supply chain woes are concerning for the company.
Expansion Efforts, Restructuring to Aid HSBC Holdings (HSBC)
Per the Zacks analyst, HSBC Holdings’ plan to expand in Asia will strengthen its performance and increase market share. Its initiatives to improve efficiency through restructuring will aid profits.
Progressive (PGR) Gains on Premiums, Cat Loss Woes Linger
Per the Zacks analyst, Progressive is set to grow on solid Agency and Direct business, which will drive improvement in net premiums. However, exposure to catastrophe loss remains a headwind.
McKesson’s (MCK) Deals Buoys Optimism Amid Sluggish Market
Per the Zacks analyst, McKesson has been pursuing deals and acquisitions to drive growth. It is a dominant player in the Distribution market which is facing weaker generic pharmaceutical pricing trend
Corning (GLW) Rides on Fiber Densification, Faster 5G Rollout
Per the Zacks analyst, Corning is poised to gain from tailwinds like 5G, broadband and cloud computing within the Optical segment, while multiple factors will likely drive growth in the fiber business
Investments Aid Entergy (ETR), Storm Restoration Costs Woe
Per the Zacks analyst, Entergy’s systematic investments are expected to boost its grid upgrades and thereby, customer reliability. Yet storm restoration costs, if not recovered, might hurt earnings.
Solid Contract Sales Aid Marriott Vacations (VAC), Costs High
Per the Zacks analyst, Marriott Vacations is likely to benefit from solid contract sales, digital initiatives and vacation ownership business. However, inflationary woes stay.
New Upgrades
Pro-Investor Steps & Addressable Market Boost Gartner (IT)
Per the Zacks analyst, Gartner’s endeavor to reward its shareholders in the form of share repurchases is appreciable. Also, large and diverse addressable market is a tailwind.
A Strong Product Suite Continues to Aid Merit Medical (MMSI)
The Zacks analyst is upbeat about Merit Medical’s robust portfolio, including radio and electrophysiology products. Potential in its Cardiovascular unit further raises optimism.
Growing International Activity to Aid Oceaneering (OII)
The Zacks analyst believes that the outlook for Oceaneering International’s ‘Subsea Robotics’ unit is particularly impressive due to growing activity outside North America.
New Downgrades
Low Liquidity & Margin Pressure Affect ManpowerGroup (MAN)
Per the Zacks analyst, decreasing current ratio is not desirable as it indicates that ManpowerGroup may have issues meeting its short-term debt. Also, staffing margin pressure is a headwind.
Rising Inflation & Sluggish Online Sales Hurt Amazon (AMZN)
Per the Zacks analyst, Amazon is suffering from rising inflationary pressure and slowdown in online shopping activities.
Exposure to Digital Assets, Costs Ail Signature Bank (SBNY)
Per the Zacks analyst, falling token prices and the FTX-led chaos in the cryptocurrency market is expected to keep hurting Signature Bank in the near-term. Higher costs are another major headwind.
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