Wednesday, September 9, 2020
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 Alphabet (GOOGL), UnitedHealth Group (UNH) and AbbVie (ABBV). 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 >>>
Alphabet shares have lagged the Zacks Internet Services industry in the year-to-date period (+13.8% vs. +19.5%), reflecting cyclical exposure to ad spending trends as a result of the pandemic-driven economic downturn. But the Zacks analyst sees the company’s strengthening cloud unit as a source of substantial long-term growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space.
Further, major updates in its search segment are enhancing the search results, which is a major positive. Moreover, Google’s robust mobile search is gaining solid momentum. Additionally, strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term.
Further, its deepening focus on wearables category remains a tailwind. However, the company’s growing litigation issues and increasing expenses might hurt profitability. Further, the company faces persistent pressure from advertisers to tighten controls on YouTube video service.
(You can read the full research report on Alphabet here >>>)
Shares of UnitedHealth have gained +9.7% over the past six months against the Zacks Medical Insurance industry’s rise of +0.7%. The Zacks analyst believes that UnitedHealth’s continued strong growth at Optum and UnitedHealthcare segments have been driving revenues. Its favorable government business and strong capital position are other positives.
It has been benefiting from higher segmental contributions, which helped it counter the coronavirus-led fund crunch. Its numerous acquisitions bolstered its inorganic growth profile. Its expansion of the health services segment and international business provides significant diversification benefits.
The company’s solid balance sheet and consistent cash flow generation not only encourage investment in business but also enables it to return shareholders’ value. Retaining 2020 earnings guidance instills investor confidence. However, it is witnessing a slowdown in its international operations. Commercial membership may also see attrition due to increased joblessness.
(You can read the full research report on UnitedHealth here >>>)
AbbVie shares have gained +32.3% over the past year against the Zacks Large-Cap Pharmaceuticals industry’s rise of +11.8%. The Zacks analyst believes that AbbVie has been successful in expanding labels of its cancer drugs, Imbruvica and Venclexta. It has an impressive late-stage pipeline.
The company gained approvals for two new drugs with significant potential, Skyrizi (risankizumab) and Rinvoq, in 2019. Both are off to a strong start. Allergan’s acquisition has diversified AbbVie’s revenue base into new therapeutic areas, enhancing its long-term growth potential.
However, sales erosion due to direct biosimilar competition to Humira in international markets is a big headwind. Also, the decline in HCV drug Mavyret’s sales is a concern.
(You can read the full research report on AbbVie here >>>)
Other noteworthy reports we are featuring today include Microsoft (MSFT), Adobe Systems (ADBE) and Anheuser-Busch InBev (BUD).
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Director of Research
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
Microsoft (MSFT) Rides on Robust Adoption of Azure & Teams
Per the Zacks analyst, Microsoft gains from expanding Azure clientele, and solid uptake of Microsoft 365 suite.
Adobe (ADBE) Rides on Creative Strength; Expenses A Concern
The Zacks analyst believes that Adobe’s creative cloud business contributes significant revenues and generates high margins.
Gradual Recovery in Volume Trends Aid AB InBev (BUD) in Q2
Per the Zacks analyst, gradual reopening of the on-premise channels across many countries led to improved volume trends on a month-to-month basis for AB InBev.
Sony (SNE) Cushioned by Business Realignment Amid Headwinds
Per the Zacks Analyst, Sony is benefiting from measures like realigning its business portfolios and selling the battery business.
Buyouts, Assets Balance Aid BlackRock (BLK) Amid High Costs
Per the Zacks analyst, opportunistic acquisitions, solid assets under management balance and focus on the active equity business will aid BlackRock.
Vertex’s (VRTX) Triple Combo CF Pill Key to Growth in 2020
Per the Zacks analyst, Vertex’s sales in 2020 are being driven by rapid uptake of Trikafta as well as higher international revenues due to reimbursement arrangements in key ex-U.S. countries.
BP plc (BP) Banks on Key Upstream Projects, Debt Level High
BP has a diversified portfolio of key upstream projects that will boost production by 900 thousand barrel of oil equivalent per day by 2021. However, huge debt exposure concerns the Zacks analyst.
New Upgrades
$9.7B Deal Drives Dominion (D) Amid Pipeline Cancellation
Per the Zacks analyst, Dominion gains from sell of its gas transmission & storage business for $9.7B, as it will help to buyback shares, but the cancellation of Atlantic Coast Pipeline is a headwind.
Sun Life Financial (SLF) Set to Grow on Solid Asia Business
Per the Zacks analyst, Sun Life is set for grow on the strength of its Asia business that are expected to provide higher return and growth as well as expanding global asset management business.
Expansion Actions, NSCC Carbon Buyout to Aid Cabot (CBT)
Per the Zacks analyst, Cabot will gain from its actions to expand its specialty compounds business. The NSCC Carbon plant acquisition will also support growth of its specialty carbons business.
New Downgrades
High Debt, Elevated Expenses Concern Voya Financial (VOYA)
Per the Zacks analyst, Voya Financial has been witnessing increase in financial leverage over the last few years inducing higher interest expenses, weighing on margin expansion.
Rising Costs & Low Fee Income Hurts Bank of Hawaii (BOH)
Per the Zacks analyst, escalating costs are likely to limit bottom-line expansion of Bank of Hawaii.
Pressure on Revenues to Hurt Waddell & Reed’s (WDR) Growth
Per the Zacks analyst, Waddell & Reed’s disappointing revenue performance mainly due to lower average assets under management balance and a tough operating backdrop remains a key near-term concern.
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