Top Stock Reports For Eli Lilly, Union Pacific & Lockheed
Zacks Investment Research | Mar 02, 2020 02:14AM ET
Monday, March 2, 2020
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 Eli Lilly (LLY), Union Pacific (UNP) and Lockheed Martin (LMT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Eli Lilly’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past six months (+10.7% vs. +1.4%). The Zacks analyst expects that in 2020, Lilly’s revenue growth will be driven by higher demand for newer drugs like Trulicity, Jardiance, Taltz, Verzenio, Basaglar, Emgality as well as newly launched Baqsimi and Reyvow.
Lilly’s presence across a wide range of therapeutic areas and a strong diabetes portfolio provide support in the face of generic competition. Lilly is making significant pipeline progress with several positive late-stage data readouts scheduled for 2020. Lilly is also regularly adding promising new pipeline assets through business development deals.
However, generic competition for several drugs including the expected generic entry of Forteo, rising pricing pressure in the United States and price cuts in some international markets are some top-line headwinds expected in 2020.
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Shares of Union Pacific have lost -4.5% over the past year against the Zacks Rail industry’s fall of -0.3%. The Zacks analyst is impressed with Union Pacific's initiatives to reward its shareholders. Since November 2017, the company has raised its quarterly dividend payout five times.
Initiatives to control costs in order to drive the bottom line are also impressive. The company’s operating ratio, which improved 210 basis points (bps) year over year to 60.6% in 2019, is mainly attributable to its cost-cutting efforts. Operating ratio is anticipated to improve further in the days to come.
However, sluggish overall volumes (down 6% in 2019) due to freight-related weakness represent a major headwind. Its escalated debt levels are concerning too. Also, the massive capex might be a spoilsport.
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Lockheed Martin’s shares have lost -3.1% over the past three months against the Zacks Aerospace Defense industry’s fall of -13.3%. The Zacks analyst believes that expansionary budgetary provisions made by the current U.S. administration will immensely boost this defense prime's business.
Lockheed Martin, being the largest defense contractor in the world, enjoys strong demand for its high-end military equipment in domestic and international markets. It continues to be a strong cash generator, which helps it take important cash deployment decisions.
However, the company’s higher debt-to-equity ratio shows that the stock is highly leveraged when compared with its industry. Lockheed Martin also faces intense global competition for its broad portfolio of products and services. Furthermore, forced cost reduction initiatives for the F-35 program might hamper its operating results.
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Other noteworthy reports we are featuring today include Johnson & Johnson (NYSE:JNJ) (JNJ), Bayer (DE:BAYGN) (BAYRY) and Prologis (PLD).
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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
J&J is witnessing significant generic headwinds in the Pharma unit. Pipeline progress is rapid, per the Zacks analyst. Several pivotal data readouts and regulatory milestones are expected in 2020.
Per the Zacks analyst, Bayer's new products continue to drive top line at the company. Deals and acquisitions also look encouraging. However, competition remains a concern.
Per the Zacks Analyst, Prologis is well poised to grow on acquisitions and developments amid high demand for industrial real estate space.
Kimberly-Clark expects cost savings of $425-$500 million in 2020, from its FORCE Program and 2018 Global Restructuring Program.
Per the Zacks analyst, robust products such as Square Terminal, Cash Card, Square Register and Square Capital are strengthening Square's seller ecosystem, which is driving payment volume growth.
Per the Zacks analyst, BNY Mellon's efforts to manage expenses and global diversification will likely aid growth.
Per the Zacks Analyst, buyouts have helped the company to expand the business, which, in turn, has led to top-line growth. However, elevated expenses continue to weigh on margins.
J&J is witnessing significant generic headwinds in the Pharma unit. Pipeline progress is rapid, per the Zacks analyst. Several pivotal data readouts and regulatory milestones are expected in 2020.
Per the Zacks analyst, Bayer's new products continue to drive top line at the company. Deals and acquisitions also look encouraging. However, competition remains a concern.
Per the Zacks Analyst, Prologis is well poised to grow on acquisitions and developments amid high demand for industrial real estate space.
Kimberly-Clark expects cost savings of $425-$500 million in 2020, from its FORCE Program and 2018 Global Restructuring Program.
Per the Zacks analyst, robust products such as Square Terminal, Cash Card, Square Register and Square Capital are strengthening Square's seller ecosystem, which is driving payment volume growth.
Per the Zacks analyst, BNY Mellon's efforts to manage expenses and global diversification will likely aid growth.
Per the Zacks Analyst, buyouts have helped the company to expand the business, which, in turn, has led to top-line growth. However, elevated expenses continue to weigh on margins.
New Upgrades/h6
Per the Zacks analyst, Lazard's investment strategies in equity and fixed income markets might boost assets under management. Also, focus on cost savings will likely enhance its profitability.
Per the Zacks Analyst, enhanced marketing efforts, menu Innovations, seasonal promotions as well as unit growth is likely to benefit the company's top line. Moreover, cost cutting efforts bode well.
Avanos has been gaining consistently from its Chronic Care arm. The Zacks Analyst is optimistic about the recent FDA approval for the new 80-Watt COOLIEF Radiofrequency System.
Per the Zacks analyst, Lazard's investment strategies in equity and fixed income markets might boost assets under management. Also, focus on cost savings will likely enhance its profitability.
Per the Zacks Analyst, enhanced marketing efforts, menu Innovations, seasonal promotions as well as unit growth is likely to benefit the company's top line. Moreover, cost cutting efforts bode well.
Avanos has been gaining consistently from its Chronic Care arm. The Zacks Analyst is optimistic about the recent FDA approval for the new 80-Watt COOLIEF Radiofrequency System.
New Downgrades/h6
Per a Zacks analyst, A. O. Smith (AOS) is exposed to risks from unfavorable movements in foreign currencies. Also, lower consumer demand in China is likely to hurt results in first-quarter 2020.
Per the Zacks analyst, increasing SG&A expenses are clipping the margins of the firm and the trend is expected to continue. High debt-to-capital ratio of 79% is also a concern.
Per the Zacks analyst, lower industry volumes in the European & Chinese market are likely to dent prospects of the OEM auto supplier, Cooper-Standard. Further, high raw material costs is a concern.
Per a Zacks analyst, A. O. Smith (AOS) is exposed to risks from unfavorable movements in foreign currencies. Also, lower consumer demand in China is likely to hurt results in first-quarter 2020.
Per the Zacks analyst, increasing SG&A expenses are clipping the margins of the firm and the trend is expected to continue. High debt-to-capital ratio of 79% is also a concern.
Per the Zacks analyst, lower industry volumes in the European & Chinese market are likely to dent prospects of the OEM auto supplier, Cooper-Standard. Further, high raw material costs is a concern.
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