Thursday, August 31, 2017
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 Merck (MRK), Caterpillar (NYSE:CAT) (CAT) and Intel (INTC). 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 >>>
Merck’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the last year, gaining +3.3% versus +7.5%. However, Merck has been pursuing acquisitions and business development deals to boost its pipeline. New products like Keytruda and Zepatier should continue to contribute meaningfully to the top line.
Keytruda is gaining strong momentum from new indication of first-line lung cancer. The Keytruda development program also significantly advanced in the first half with several key regulatory approvals.
Meanwhile, Merck will continue to focus on cost-cutting initiatives to drive the bottom line. However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competition in the immuno-oncology market is also a significant concern. The Zacks analyst discusses all of these issues in the updated research report issued today.
(You can read the full research report on Merck here >>>).
Shares of Strong Buy-rated Caterpillar have gained +29.7% year-to-date, outperforming the Zacks Construction and Mining industry which has increased +27.2% over the same period. Caterpillar has been awarded a five year $663.6 million fixed-price contract from the Pentagon to supply commercial construction equipment. Caterpillar reported 12% rise in sales in July, its best performance so far in 2017.
Backed by upbeat results and improved order activity, Caterpillar hiked revenue guidance to the range of $42–$44 billion and projects earnings per share of $5.00. The Zacks analyst thinks Asia Pacific will continue to be a catalyst for both Resource Industries as well as construction, owing to increased infrastructure and residential investment in China.
Leading indicators of U.S. construction signal robust conditions ahead that bode well for Caterpillar. Further, efforts to reduce costs will boost margins.
(You can read the full research report on Caterpillar here >>>).
Buy-rated Intel’s shares have lost -1.7% year to date, in contrast to the broader Technology sector as well as the red-hot semiconductors space (each up +19.7%). But Intel’s growing focus on the data-centric part of the business is encouraging. The launch of Xeon Scalable is anticipated to improve its footprint in the data center as well as AI space, going forward.
The company unveiled Myriad X, which will boost footprint in the IoT space. Moreover, the recent Core 8 launch will boost PC market share amid intensifying competition from AMD. Further, anticipated improvement in cost structure and lower spending, primarily due to improving operational efficiency will aid in expansion of margins going forward.
Additionally, aggressive share buyback will boost the bottom line in 2017. However, Top-PC makers like HP, Lenovo, and Asus are set to launch PCs based on Qualcomm’s ARM-based Snapdragon processor, which is a headwind for the company. Moreover, declining PC-shipments is a concern.
(You can read the full research report on Intel here >>>).
Other noteworthy reports we are featuring today include Brown-Forman (BF.B), Analog Devices (ADI) and Best Buy (BBY).
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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
Immune Design (IMDZ) Dependent on Partners, Pipeline Strong
Per the Zacks analyst, Immune Design's efforts on pipeline development are appreciable. However, dependence on other companies for revenue growth increases its vulnerability.
ONEOK (NYSE:OKE) Gains from Well Placed Assets, Debt Level Ails
The Zacks analyst believes ONEOK's recent acquisition of ONEOK Partners further expanded its asset base in prime locations but its high debt level is a concern.
Best Buy's (BBY) New Blue Strategy & Online Sales Bode Well
Per the Zacks analyst, Best Buy's New Blue strategy and sturdy online sales growth will continue to drive results higher.
dd's DISCOUNTS to Aid Ross Stores' (NASDAQ:ROST) Top-Line Growth
Per the Zacks analyst, strong sales and operating profits at dd's DISCOUNTS helped boost Ross Stores' sales in second-quarter fiscal 2017.
Analog Devices (ADI) to Grow on Linear Technology (NASDAQ:LLTC) Buyout
The Zacks analyst believes that the Linear Technology acquisition coupled with solid positioning in growth markets will drive Analog Device's top-line.
MGM Resorts (MGM) Vegas Business Solid, Regulations a Woe
Focus on non-gaming activity, and improving economy and tourism in Las Vegas should drive growth at MGM Resorts, per the Zacks analyst.
Microsoft's (NASDAQ:MSFT) Amazon (NASDAQ:AMZN) Partnership to Boost AI prospects
According to the Zacks analyst, the partnership with Amazon's Alexa will boost Microsoft's growth prospects in the rapidly growing Artificial Intelligence (AI) market.
New Upgrades
Brown-Forman's (BF.B) Whiskey & Tequila Brands Aid Top Line
Per the Zacks analyst, Brown-Forman's underlying sales is gaining from its premium American whiskey and tequila brands, as well as Jack Daniel's trademark. This trend is likely to continue in future.
Accenture (ACN) Drives on Partnerships and Strategic Buyouts
The Zacks analyst believes that Accenture's sustained focus on enhancing capabilities through acquisitions like VERAX and partnerships with the likes of Apple (NASDAQ:AAPL) are key growth drivers.
Monsanto (NYSE:MON) to Grow on Bayer (DE:BAYGN)'s Deal & New Tech Solutions
The Zacks analyst anticipates Bayer's $66-billion buyout deal and launch of state-of-the-art crop-yield enhancing solutions will boost Monsanto's near-term results.
New Downgrades
H&R Block (NYSE:HRB) Hit by High Operating and Litigation Costs
Per the Zacks analyst, H&R Block's escalating operating and litigation costs, which include employment related lawsuits in various parts of the country, will continue to put pressure on margins.
Soft Oil Prices to Limit Occidental's (OXY) Production Gains
The Zacks analyst believes the current softness in oil prices will create a bottleneck in Occidental's plans to gain by producing more oil from the Permian Resources.
Uncertainty Over Nigerian Operations Weighs on Shell (LON:RDSa) (RDS.A)
Lofty capital spending, slower production growth due to asset sales and exposure to the violence-prone regions in Nigeria has made the Zacks analyst turn bearish on Royal Dutch Shell.
Merck & Company, Inc. (NYSE:MRK): Free Stock Analysis Report
Intel Corporation (NASDAQ:INTC): Free Stock Analysis Report
Caterpillar, Inc. (CAT): Free Stock Analysis Report
Brown Forman (NYSE:BFb) Corporation (BF.B): Free Stock Analysis Report
Best Buy Co., Inc. (NYSE:BBY): Free Stock Analysis Report
Analog Devices, Inc. (ADI): Free Stock Analysis Report
Original post
Zacks Investment Research