Top Analyst Reports For Merck, Goldman Sachs & Tesla
Zacks Investment Research | Feb 09, 2018 04:02AM ET
Friday, February 9, 2018
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), Goldman Sachs (GS) and Tesla (NASDAQ:TSLA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Merck’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the last year, losing -14.7% versus +9.8%. However, Merck beat estimates for earnings while missing the same for sales in Q4. New products like Keytruda, Lynparza, and Bridion should continue to contribute meaningfully to the top line in 2018.
Keytruda sales are gaining strong momentum with approval for additional indications especially in the first-line lung cancer setting as it is the only anti-PD-1 approved in this setting. The Animal Health unit is also strong and remains a core growth driver for Merck. 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 competitive pressure on the diabetes franchise and on products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) will remain headwinds in 2018.
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Shares of Goldman Sachs have gained +9.3% over the six months, underperforming the +15.3% gain of the Zacks Investment Banking industry. However, the company boasts an impressive earnings surprise history. It has surpassed expectations for earnings in three out of the trailing four quarters.
Despite weak fixed income trading revenues, the company’s fourth-quarter 2017 results were supported by continued momentum in investment banking business. Though several issues, including sluggish global economic growth and lower client activity levels, remain near-to-medium-term headwinds, the Zacks analyst thinks the company’s well-diversified business and focus to capitalize on growth opportunities through strategic moves will continue to strengthen the overall business.
Further, cost-control measures are commendable. Additionally, steady capital-deployment activities have boosted investors' confidence.
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Tesla’s shares have gained +4.1% over the past three months, outperforming the. -3.7% decline for the Zacks Domestic Automotive industry. Tesla reported mixed results during the fourth quarter. The company is making serious efforts to address Model 3 production bottlenecks and ramping up energy storage products.
Tesla continues to target weekly Model 3 production rates of 2,500 by the end of first-quarter 2018 and 5,000 by the end of second-quarter 2018. Tesla is also focused on geographical expansions and acquisitions for growth. The company is also rapidly developing a network of superchargers. However, high research and development costs, low number of chargers and high requirement of capital expenditure are some headwinds.
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Other noteworthy reports we are featuring today include T-Mobile (TMUS), Activision (ATVI) and Prudential (LON:PRU).
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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
Today's Must Read
Featured Reports
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Per the Zacks analyst, Interactive Brokers' efforts to wind down the Market Making segment will likely aid its financials in the long run.
Per the Zacks analyst, Activision is benefiting from well-known franchises such as Call of Duty, Destiny & Overwatch.
Per the Zacks analyst, Twitter's focus on make tweeting easier for people and more expressive is boosting user engagement.
Archer Daniels has achieved its targeted savings for 2017, and plans to accomplish $200 million savings by 2018. Per the Zacks analyst, this might help drive margins dented by dismal top-line trend.
Per the Zacks analyst, Prudential is set to grow on its high performing asset management business and deeper reach in the pension risk transfer market.
New Upgrades
Per the Zacks analyst, strong product demand in its mining, oil and gas and power generation markets, along with its cost reduction initiatives will drive Cummins' profitability.
Per Zacks analyst, Fidelity continues to strengthen its position in financial and payments solutions business through investment in mobile banking and innovative products such as PayNet and BuyWay.
Per the Zacks analyst, strong demand for HCM services along with initiatives to cross-sell newer products to existing customers is benefiting Paycom Software.
New Downgrades
Per the Zacks analyst, a significant portion of Gartner's revenues is generated from operations outside the United States, making it vulnerable to adverse foreign currency fluctuations.
Per a Zacks analyst, Weyerhaeuser will suffer from weakness in real estate sales and a decline in royalties generated from the Energy and Natural Resources businesses.
The Zacks analyst believes that Chipotle's earnings and revenues continue to suffer as a result of the negative publicity surrounding the E. coli and norovirus outbreaks that surfaced toward 2015 end.
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