Top Research Reports For Merck, McDonald's & Broadcom
Zacks Investment Research | Mar 07, 2018 04:59AM ET
Wednesday, March 7, 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), McDonald's (MCD) and Broadcom (NASDAQ:AVGO). 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 past year, losing -17.5% versus a gain of +8.4%. The Zacks analyst thinks Merck’s 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. 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 McDonald's have gained +18% over the past year, outperforming the Zacks Restaurants industry which has gained +11.6% over the same period. Notably, growing guest count remains McDonald’s top priority and it is undertaking various sales and digital initiatives to this end.
As a result, Q4 marked the fourth consecutive quarter of comparable guest count growth for the company. Increased focus on delivery, enhancement of digital capabilities, and accelerated deployment of Experience of the Future restaurants in the United States will drive growth.
In fact, global comps at McDonald’s have been positive over the past nine quarters. Meanwhile, augmented focus on refranchising will cut the company’s capital requirements and facilitate EPS growth and ROE expansion in the long run.
Yet, higher costs along with currency headwinds may hurt profits. Also, a soft industry backdrop in the United States and macroeconomic concerns in some parts of the world might limit sales growth.
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Broadcom’s shares have handily beaten the Zacks Electronics - Semiconductors industry over the past year, gaining +14.3% vs. +11.2%. Broadcom is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G.
Broadcom has recently inked financing agreements with various institutions to fund Qualcomm’s proposed takeover. If completed, then this deal will make it the third-largest chipmaker, behind Intel (NASDAQ:INTC) and Samsung (KS:005930). The company also has strong ties with leading OEMs across multiple target markets that will help it to gain key insights into the requirements of customers.
Moreover, the upcoming launch of the next generation WiFi products is expected to be a growth driver for the segment. However, customer concentration, intensifying competition, integration risks due to frequent acquisitions and leverage balance sheet are key headwinds.
(You can read the full research report on Broadcom here >>> ).
Other noteworthy reports we are featuring today include Activision (ATVI), Rockwell Collins (NYSE:COL) and Marvell Technology (MRVL).
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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/h6
Featured Reports/h6
Per the Zacks analyst Rockwell Collins will gain from its focus on research and development that helps to develop new products and enables the company to secure new orders.
While the covering analyst likes QEP Resources' large acreage position in the prolific Permian Basin, low natural gas prices limits upside.
The Zacks analyst likes the impressive performance of the company's postpaid segment evident from the subscriber additions. Loss in fixed line voice businesses and prepaid segment continue to hurt.
Per the Zacks analyst, Leucadia remains well poised to benefit from a pro-growth business environment with a lower corporate tax structure and solid traction from National Beef and Jefferies.
Per the Zacks analyst, Archer Daniels is on track with the readiness program that is building efficiency by reducing costs and transforming business with 1ADM plan.
Per the Zacks analyst, M&T Bank's increasing loans and deposits balances will get a further boost from improving economy.
The Zacks analyst is bullish on Veeva's consistent efforts in to enhance its R&D stature.
Per the Zacks analyst Rockwell Collins will gain from its focus on research and development that helps to develop new products and enables the company to secure new orders.
While the covering analyst likes QEP Resources' large acreage position in the prolific Permian Basin, low natural gas prices limits upside.
The Zacks analyst likes the impressive performance of the company's postpaid segment evident from the subscriber additions. Loss in fixed line voice businesses and prepaid segment continue to hurt.
Per the Zacks analyst, Leucadia remains well poised to benefit from a pro-growth business environment with a lower corporate tax structure and solid traction from National Beef and Jefferies.
Per the Zacks analyst, Archer Daniels is on track with the readiness program that is building efficiency by reducing costs and transforming business with 1ADM plan.
Per the Zacks analyst, M&T Bank's increasing loans and deposits balances will get a further boost from improving economy.
The Zacks analyst is bullish on Veeva's consistent efforts in to enhance its R&D stature.
New Upgrades/h6
Per the Zacks analyst, Honda is expected to gain from Vision 2030 plan, which aims to cut development costs and focus more on electric vehicles. Also, better model mix is adding to its profitability.
Per the Zacks analyst, Activision's foray into the lucrative esports market with the launch of Overwatch League is driving viewership, corporate sponsorships and media coverage for the company.
The Zacks analyst believes that Hilton's capital-light business model will continue to drive market share, units, free cash flow as well as help maintain the company's strong balance sheet.
Per the Zacks analyst, Honda is expected to gain from Vision 2030 plan, which aims to cut development costs and focus more on electric vehicles. Also, better model mix is adding to its profitability.
Per the Zacks analyst, Activision's foray into the lucrative esports market with the launch of Overwatch League is driving viewership, corporate sponsorships and media coverage for the company.
The Zacks analyst believes that Hilton's capital-light business model will continue to drive market share, units, free cash flow as well as help maintain the company's strong balance sheet.
New Downgrades/h6
Per the Zacks analyst, generic and pricing pressures in the U.S. businesses, particularly in the Rx segment, coupled with competition in the sector, may hurt the company's sales in the near term.
Per Zacks analyst, Broadcom's attempt to buy Qualcomm (NASDAQ:QCOM) is anticipated to escalate competition in the HD storage space. This doesn't bode well for Marvel in the long haul.
Per the Zacks analyst, higher costs related to marketing initiatives, unit expansion and implementation of the Affordable Care Act are keeping Jack in the Box's margins pressurized.
Per the Zacks analyst, generic and pricing pressures in the U.S. businesses, particularly in the Rx segment, coupled with competition in the sector, may hurt the company's sales in the near term.
Per Zacks analyst, Broadcom's attempt to buy Qualcomm (NASDAQ:QCOM) is anticipated to escalate competition in the HD storage space. This doesn't bode well for Marvel in the long haul.
Per the Zacks analyst, higher costs related to marketing initiatives, unit expansion and implementation of the Affordable Care Act are keeping Jack in the Box's margins pressurized.
Zacks Investment Research
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