Tuesday, July 12, 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 The Coca-Cola Co. (KO), Merck & Co., Inc. (MRK), and Toyota Motor Corp. (TM). 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 >>>
Coca-Cola
shares have outperformed the Zacks Beverages – Soft drinks industry over the past year (+17.9% vs. +9.4%). The company’s top and bottom lines surpassed estimates for the fifth straight quarter. The Zacks analyst believes that the results benefited from the company’s strategic transformation and ongoing recovery around the world.
Strength across the majority of the markets, investments in the marketplace, recovery in certain markets as well as the cycling of last year’s pandemic-led impacts aided volumes. The company retained its upbeat 2022 view. It is poised to gain from innovations and accelerating digital investments.
However, pressures from higher supply chain costs, including transportation and input costs remain. Higher marketing spends are also concerning. Also, the unfavorable currency is expected to hurt the top and bottom lines in the second quarter and 2022.
(You can
read the full research report on Coca-Cola here >>>
)
Merck
shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+25.9% vs. +19.1%). The company’s drugs like Keytruda, Lynparza and Bridion have been driving sales. With continued label expansion into new indications & early-stage settings, Keytruda is expected to remain a key top-line driver.
Animal health and vaccine products are core growth drivers. Its new COVID oral antiviral pill, Lagevrio will be a key top-line driver in 2022. Merck boasts a strong cancer pipeline, including Keytruda, which should help drive long-term growth.
However, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhang on the top line. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade.
(You can
read the full research report on Merck here >>>
)
Toyota Motor
shares have declined -13.4% over the past year against the Zacks Automotive – Foreign industry’s decline of -30.8%. The Zacks analyst believes that the company is reeling under a severe chip crunch compounded by the war.
Unprecedented commodity inflation, supply-chain disruptions, tough labor market, logistical challenges and manufacturing inefficiencies will provide headwinds and clip margins. High capex and R&D expenses are also likely to dent near-term margins and cash flows.
However, Toyota’s electrification push including investment in BEVs, hybrids, batteries and fuel-cell vehicles is set to bolster prospects. It aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. The expanding portfolio of product lines, a robust lineup of trucks and SUVs, partnerships with Hino and Subaru and Mazda will steer its long-term growth.
(You can
read the full research report on Toyota Motor here >>>
)
Other noteworthy reports we are featuring today include HSBC Holdings plc (HSBC), Enbridge Inc. (ENB), and Regeneron Pharmaceuticals, Inc. (REGN).
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
Coca-Cola’s (KO) Digital Investments to Aid the Top Line
Keytruda to Remain Merck’s (MRK) Key op Line Driver in 2022
Electrification Efforts to Aid Toyota (TM) Amid Cost Woes
Featured Reports
Enbridge (ENB) Banks on C$10B of Midstream Growth Projects
Per the Zacks analyst, Enbridge is banking on C$10 billion secured midstream growth projects through 2025. However, the company has significant exposure to debt capital, which is a concern.
Eylea, Dupixent Fuel Regeneron (REGN) Amid Competition
Per the Zacks analyst, solid demand for Eylea and Dupixent maintain momentum for Regeneron amid competition. However, REGEN-COV has taken a hit due to its lack of efficacy against the Omicron variant.
Acquisitions & Cost-Cutting Initiatives Aid MetLife (MET)
Per the Zacks analyst, several acquisitions and partnerships have bolstered the capabilities and global presence of MetLife. Efforts to control costs have been driving its margins.
Increased Demand & Expansion Efforts to Aid Hilton (HLT)
Per the Zacks analyst, Hilton is likely to benefit from strong leisure demand and easing of corporate travel restrictions. This and emphasis on luxury portfolio expansion bode well.
Innovations Aid Enphase (ENPH), Capital Crunch Pose Risk
Per the Zacks analyst, Enphase frequently launches newer versions of microinverters, which expand its market share. Yet COVID-19 induced capital crunch might hamper projects offered to this stock.
Ubiquiti (UI) to Benefit from Strength in Product Portfolio
Per the Zacks analyst, Ubiquiti benefits from healthy order trends with a flexible and adaptable business model. Pandemic-induced supply chain woes and higher costs remain concerns for Ubiquiti.
DENTSPLY (XRAY) Thrives on Azento Digital-Implant in Dentistry
Per the Zacks analysts, DENTSPLY’s tooth replacement solution, Azento has a robust potential as it should gain from the growing global tooth replacement market, likely to reach $13 billion by 2022-end
New Upgrades
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.
Increasing Transaction Fees Aids Cboe Global Market (CBOE)
Per the Zacks analyst, Cboe Global is set to grow on increasing transaction fees driven by trading volume growth given strength in its proprietary products.
Wind River Deal & Strong Balance Sheet Boost Aptiv (APTV)
The Zacks analyst is optimistic about Aptiv’s increasing current ratio. Moreover, its deal to purchase Wind River from TPG Capital will aid its Advanced Safety and User Experience segment.
New Downgrades
Copa Holdings (CPA) Grapples With Escalating Fuel Prices
The Zacks Analyst is worried about the escalation in oil prices that does not bode well for Copa Holdings’ bottom line since fuel expenses represent one of the major input costs for the carrier.
Component Shortages & Supply Chain Issues Hurt Cisco (CSCO)
Per Zacks analyst, Cisco is suffering from component shortages and ongoing supply chain issues that are expected to persist in the rest of fiscal 2022 and bump up costs.
High Cost, Low Transaction Volumes Ail Northern Trust (NTRS)
Per Zacks analyst, technology and compensation expenses keep Northern Trust’s costs high. Also, low transaction volumes due to volatile equity markets are concerning.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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