Top Analyst Reports For Berkshire Hathaway, Merck & Charter Communications
Zacks Investment Research | May 07, 2019 03:40AM ET
Tuesday, May 7, 2019
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 Berkshire Hathaway (BRK.B), Merck (MRK) and Charter Communications (NASDAQ:CHTR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Berkshire Hathaway’s shares have underperformed the Zacks Insurance - Property and Casualty industry year to date (+4.4% vs. +6.4%). Berkshire Hathaway’s first-quarter operating earnings increased 5% year over year on solid results across all segments. The Zacks analyst thinks the company is poised for growth over the long term on its sturdy insurance business.
The company’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position allows it to make earnings-accretive bolt-on buyouts. Demand for utilities is expected to rise in the future and drive earnings growth. Continued insurance business growth also fuels increase in float. A sturdy capital level provides further impetus.
However, exposure to catastrophe loss remains a concern as its property and casualty insurance business generates maximum return on equity. Also, huge capital expenses due to railroad operations pose concerns. Capital expenditure is estimated to be $10.5 billion in 2019.
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Shares of Buy-ranked Merck have increased +4% year to date, outperforming the Zacks Large Cap Pharmaceuticals industry’s gain of +0.5% during the same period. Merck beat estimates for both earnings and sales in the first quarter. The Zacks analyst thinks Merck’s new products like Keytruda, Lynparza and Bridion are contributing meaningfully to the top line. Keytruda sales are gaining momentum with approval for additional indications, especially in the first-line lung cancer setting.
Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products are also performing strongly and remain core growth drivers for Merck.
However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) remains a concern.
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Charter Communications’ shares have outperformed the Zacks Cable TV industry year to date (+32% vs. +26.4%).Charter’s first-quarter 2019 earnings and revenues grew year over year. The company’s top line benefited from growth in Internet, video, mobile and commercial revenues. Increase in Internet subscribers coupled with more users moving to higher speed tiers aided Internet revenues.
The Zacks analyst likes the fact that Charter is looking to attract video customers by providing a new OTT video service. The company launched Spectrum TV Essentials in Charter’s footprint for Spectrum Internet users who do not avail Spectrum video services.
However, the company noted that its Internet penetration rate is about 50%, which is low when compared to its potential to deliver faster and cost-efficient services. Moreover, commercial revenue growth came below commercial customer relationship growth due to migration of customers to Spectrum pricing and packaging from Legacy TWC and Legacy Bright House.
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Other noteworthy reports we are featuring today include Anthem (NYSE:ANTM), Southern Company (NYSE:SO) and Norfolk Southern (NSC).
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Today's Must Read/h6
Featured Reports/h6
Per the Zacks analyst, acquisitions and collaborations leading to membership growth has contributed to its top line, which poise the company well for growth.
The Zacks analyst believes that the AGL Resources (NYSE:GAS) buyout has helped Southern Company to increase its customer base.
The Zacks analyst likes the company's efforts to reward shareholders. Improvement in operating ratio is an added positive. However, high debt levels are a concern.
The Zacks analyst thinks that Las Vegas' EBITDA margins have been improving consistently owing to focus on mass and non-gaming segments.
The Zacks analyst expects Illumina to maintain its growth momentum on continued uptake of sequencing consumables, instruments and microarray suites.
Per the Zacks analyst, ongoing investments in transmission projects bode well for American Elerctric's earnings in the future.
Per the Zacks analyst, Prudential is set to grow on leadership in the pension risk transfer business and growth in asset-based businesses.
Per the Zacks analyst, acquisitions and collaborations leading to membership growth has contributed to its top line, which poise the company well for growth.
The Zacks analyst believes that the AGL Resources (NYSE:GAS) buyout has helped Southern Company to increase its customer base.
The Zacks analyst likes the company's efforts to reward shareholders. Improvement in operating ratio is an added positive. However, high debt levels are a concern.
The Zacks analyst thinks that Las Vegas' EBITDA margins have been improving consistently owing to focus on mass and non-gaming segments.
The Zacks analyst expects Illumina to maintain its growth momentum on continued uptake of sequencing consumables, instruments and microarray suites.
Per the Zacks analyst, ongoing investments in transmission projects bode well for American Elerctric's earnings in the future.
Per the Zacks analyst, Prudential is set to grow on leadership in the pension risk transfer business and growth in asset-based businesses.
New Upgrades/h6
Per the Zacks analyst, Sysco's U.S. Foodservice operations are likely to remain strong and drive top line. Markedly, local case volumes in this segment have been rising for 20 straight quarters now.
Per the Zacks analyst, positive contributions from Weebly and Zesty buyouts along with well-performing Cash App, Instant Deposits, Square Invoices and Caviar are driving Square's top-line growth.
Per the Zacks analyst, increase in natural gas and NGLs production volumes in the STACK and SCOOP areas will drive demand for ONEOK's pipeline services.
Per the Zacks analyst, Sysco's U.S. Foodservice operations are likely to remain strong and drive top line. Markedly, local case volumes in this segment have been rising for 20 straight quarters now.
Per the Zacks analyst, positive contributions from Weebly and Zesty buyouts along with well-performing Cash App, Instant Deposits, Square Invoices and Caviar are driving Square's top-line growth.
Per the Zacks analyst, increase in natural gas and NGLs production volumes in the STACK and SCOOP areas will drive demand for ONEOK's pipeline services.
New Downgrades/h6
Per the Zacks analyst, lackluster spending by large banks in the financial services sector and weakness in the healthcare market are hurting Cognizant's top-line growth.
Per the Zacks analyst, Alexandria Real Estate Equities' large development pipeline escalates operational risks. Further, it is witnessing higher construction costs in its market.
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.
Per the Zacks analyst, lackluster spending by large banks in the financial services sector and weakness in the healthcare market are hurting Cognizant's top-line growth.
Per the Zacks analyst, Alexandria Real Estate Equities' large development pipeline escalates operational risks. Further, it is witnessing higher construction costs in its market.
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.
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