Top Stock Reports For Nike, 3M & Vertex
Zacks Investment Research | Feb 21, 2019 01:59AM ET
Thursday, February 21, 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 Nike (NYSE:NKE), 3M (MMM) and Vertex (VRTX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Buy-ranked Nike’s shares have gained +26.5% in the past year, outperforming the Zacks Shoes and Retail Apparel industry, which gained +19.9% over the same period, driven by a strong earnings trend stemming from the solid execution of Consumer Direct Offense. Nike has delivered positive earnings surprise for over three years now, with second-quarter fiscal 2019 marking 26th straight quarter of earnings beat.
Moreover, sales topped estimates for the seventh straight quarter. The Zacks analyst thinks strong progress on Consumer Direct Offense through innovation and focus on direct-to-customer are the key drivers. Growth at international and Nike Direct businesses alongside momentum in North America also aided fiscal second quarter results.
Continued strength in Nike Digital is driving the top line. However, higher SG&A expenses due to increased demand creation expense and operating overheads are likely to remain a drag. Further, the unfavorable currency environment due to the global trade and geopolitical dynamics is likely to weigh on the company’s sales.
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Shares of 3M have lost +5% in the past three months, underperforming the Zacks Diversified Operations industry, which has gained +8.7% over the same period. The Zacks analyst thinks 3M stands to gain from efforts to innovate products, solid demand and portfolio restructuring moves. Its acquisition of the technology business of M*Modal is likely to strengthen the Health Information Systems business in the months ahead.
In the fourth quarter of 2018, the company's earnings and revenues surpassed estimates. However, on a year-over-year basis, net sales declined 0.6% due to the impact of divestiture and forex woes.
For 2019, the company lowered its earnings projection and net sales growth guidance. Foreign currency translation is predicted to adversely influence sales by 1%. In addition, inflation in prices of major inputs and rising competitive pressures pose threats to near-term profitability. Shares also look comparatively overvalued.
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Vertex’s shares have outperformed the Zacks Biomedical and Genetics industry in the past year (+19.2% vs. -15.9%). Vertex beat estimates for both earnings and sales in the fourth quarter. The Zacks analyst likes Vertex’s dominance in the CF market. A significant increase in the eligible patient population for its CF drugs is driving sales growth.
Vertex’s third CF medicine, Symdeko, in a very short time, became the primary driver of the significant growth in CF revenues in 2018. Vertex’s CF pipeline is also accelerating rapidly. Studies on Vertex’s triple combination CF regimens are moving fast. The CF triple-pill regimes are crucial for long-term growth as these have the potential to treat up to 90% of CF patients.
Meanwhile, Vertex’s non-CF pipeline, though early stage, looks interesting. However, competitive pressure is rising in the CF market with many other companies developing triple combo CF drugs. Also, Vertex’s dependence on just the CF franchise for growth is a concern.
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Other noteworthy reports we are featuring today include PepsiCo (PEP), Genuine Parts (GPC) and Verisk (VRSK).
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Featured Reports/h6
Per the Zacks analyst, Verisk continues to benefit from organic growth and acquisitions. However, high debt may limit its future expansion and worsen its risk profile.
Per the Zacks analyst, CBS benefits from an increasing demand for content, rise in retransmission rates and expansion of direct-to-consumer business.
The Zacks analyst believes Diamondback's twin buys of Energen Corp and Ajax Resources should bolster its Permian hold. However, the region's lack of takeaway capacity is a concern.
Per the Zacks analyst, rise in loans and deposits are likely to aid SVB Financial's revenues further. Yet, elevated costs and high debt level remain drags.
Per the Zacks analyst, industrial & automotive acquisitions are helping Genuine Parts boost its products and expand. Also, its value-added services for existing and new customers are paying off.
Per the Zacks analyst, Torchmark is set to grow on improving premiums driven by life and health sales growth in distribution channels.
The Zacks analyst agrees that Diamond's rig award for Ocean Onyx will help the offshore contract driller fetch significant cash flow.
Per the Zacks analyst, Verisk continues to benefit from organic growth and acquisitions. However, high debt may limit its future expansion and worsen its risk profile.
Per the Zacks analyst, CBS benefits from an increasing demand for content, rise in retransmission rates and expansion of direct-to-consumer business.
The Zacks analyst believes Diamondback's twin buys of Energen Corp and Ajax Resources should bolster its Permian hold. However, the region's lack of takeaway capacity is a concern.
Per the Zacks analyst, rise in loans and deposits are likely to aid SVB Financial's revenues further. Yet, elevated costs and high debt level remain drags.
Per the Zacks analyst, industrial & automotive acquisitions are helping Genuine Parts boost its products and expand. Also, its value-added services for existing and new customers are paying off.
Per the Zacks analyst, Torchmark is set to grow on improving premiums driven by life and health sales growth in distribution channels.
The Zacks analyst agrees that Diamond's rig award for Ocean Onyx will help the offshore contract driller fetch significant cash flow.
New Upgrades/h6
Per the Zacks analyst, Moelis & Company's geographical expansion efforts, continuing solid mergers and acquisitions along with restructuring efforts across the world will likely aid revenue growth.
Yelp is gaining from its alliance with Grubhub by providing access to a significant number of restaurants on the platform. Also, growth in paid advertiser account is a tailwind, per the Zacks analyst.
Dollar General boasts impressive comparable sales run. Per the Zacks analyst, the company's better price management, merchandise, cost containment and operational initiatives should drive sales.
Per the Zacks analyst, Moelis & Company's geographical expansion efforts, continuing solid mergers and acquisitions along with restructuring efforts across the world will likely aid revenue growth.
Yelp is gaining from its alliance with Grubhub by providing access to a significant number of restaurants on the platform. Also, growth in paid advertiser account is a tailwind, per the Zacks analyst.
Dollar General boasts impressive comparable sales run. Per the Zacks analyst, the company's better price management, merchandise, cost containment and operational initiatives should drive sales.
New Downgrades/h6
Per the Zacks analyst, PepsiCo's significant international presence exposes it to currency headwinds. PepsiCo expects currency woes to hurt both revenues and EPS by 2 percentage points in 2019.
Per the Zacks analyst, higher sales & marketing plus research & development expenses are draining LogMein's margins. Intense rivalry from Adobe (NASDAQ:ADBE) Connect, Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) Skype is another concern.
Per the Zacks analyst, increased marketing investments, along with rising material and transportation costs are pressing concerns for Louisiana-Pacific.
Per the Zacks analyst, PepsiCo's significant international presence exposes it to currency headwinds. PepsiCo expects currency woes to hurt both revenues and EPS by 2 percentage points in 2019.
Per the Zacks analyst, higher sales & marketing plus research & development expenses are draining LogMein's margins. Intense rivalry from Adobe (NASDAQ:ADBE) Connect, Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) Skype is another concern.
Per the Zacks analyst, increased marketing investments, along with rising material and transportation costs are pressing concerns for Louisiana-Pacific.
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