Wednesday, February 13, 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 ExxonMobil (XOM), Merck (MRK) and Danaher (DHR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today's research reports here >>>
ExxonMobil 's shares have underperformed the Zacks Integrated International Oil industry (-2.6% vs. -0.1%) over the past three months. ExxonMobil has a leading position in the energy industry owing to its size and diverse asset base, both in terms of business mix and geographical footprint.
With a stable cash position, the company's balance sheet is one of the best in the industry. The Zacks analyst thinks this has allowed ExxonMobil to reward stockholders with a 6.3% average annual dividend hike over the past 35 years. The company owns some of the most prolific upstream assets globally along with the largest global refining operations. Notably, with two fresh offshore oil discoveries in Guyana, ExxonMobil recently completed 12 key discoveries in the Stabroek Block, driving the firm's future production.
However, persistent weakness in chemicals margins and decline in seasonal demand for gasoline are major headwinds for ExxonMobil. The company's exit from a joint venture in Russia is also concerning.
(You can read the full research report on ExxonMobil here >>> ).
Shares of Merck have gained +43% in the past year, significantly outperforming the Zacks Large Cap Pharmaceuticals industry, which has increased +6.4% over the same period. Merck beat estimates for earnings and sales in Q4. The Zacks analyst thinks 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 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.
The company 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 products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) remain a concern.
(You can read the full research report on Merck here >>> ).
Danaher 's shares have gained +10.5% over the past six months, outperforming the Zacks Diversified Operations industry, which has declined -4.2% over the same period. Danaher's fourth-quarter 2018 earnings and revenues both surpassed expectations by 0.8%. The Zacks analyst thinks strong demand for innovative products will continue to drive its revenues in the quarters ahead.
Also, robust top-line performance and effective Danaher Business System ("DBS") implementation will likely bolster profitability. Moreover, the company anticipates that the acquisition of Integrated DNA Technologies and divestiture of its dental business will boost its competency. However, the company's shares currently look overvalued compared with the industry.
Rising cost of sales remains a major cause of concern. Further, extensive governmental regulations on import laws, export control, economic sanctions laws and unfavorable movements in foreign currencies might continue to restrict Danaher's growth.
(You can read the full research report on Danaher here >>> ).
Other noteworthy reports we are featuring today include Motorola (MSI), Novartis (NVS) and Expedia (EXPE).
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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 Earnings Trendsand Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Stabroek Block Aids ExxonMobil (XOM), Chemical Margins Weak
New Drugs Drive Merck's (MRK) Sales as Competition Soars
Solid Life Sciences Business, Buyouts to Drive Danaher (DHR)
Organic Growth, Extensive Market Reach Aid Eaton (ETN)
Per the Zacks analyst Eaton's organic growth across segments is driven by improvement in end market conditions coupled with orders from 175 countries across the globe, which ensures strong performance
Downstream Unit Aids Imperial (IMO), Chemicals Business Ails
While low-cost feedstock and strong operations are buoying the downstream segment of Imperial Oil, the Zacks analyst is worried about weak margins in the firm's chemical unit.
Higher Premiums Aid Arch Capital (ACGL), High Costs Ail
Per the Zacks analyst, premium growth, owing to higher premiums written across the segments, continues to drive Arch Capital's results. However, rising expenses raise concerns.
Higher Revenues Aid Arthur J. Gallagher (AJG), High Cost Ail
Per the Zacks analyst, the company is poised for growth on improving revenues supported by strong performing Brokerage and Risk Management segments.
Lackluster iPhone Sales, China Weakness Hurts Apple (AAPL)
Per the Zacks analyst, Apple is being hurt by waning macroeconomic conditions in China that together with intensifying competition is dragging down iPhone sales.
Strong Demand, DuPont Asset Buyout to Aid FMC Corp (FMC)
While FMC faces currency and input cost headwinds, it will gain from DuPont's crop protection asset buyout and strong demand for its herbicide and insecticide products in 2019, per the Zacks analyst.
Acquisitions, Assets Balance Aid Invesco (IVZ), Costs a Woe
Per the Zacks analyst, inorganic growth strategy, solid assets under management balance and global presence will aid Invesco.
Motorola (MSI) Rides on Healthy Growth Dynamics, View Bullish
Per the Zacks analyst, Motorola expects to augment its leading position in the public safety domain by collaborating with other players in the ecosystem and has offered a bullish view on solid demand.
Expedia (EXPE) Benefits From Strengthening Gross Bookings
Per the Zacks analyst, Expedia's robust gross bookings owing to rising stayed nights and well-performing HomeAway, Brand Expedia and Expedia Partner Solutions are driving its top-line growth.
Higher Barbie Sales & Cost-Savings Effort Aid Mattel (MAT)
The Zacks analyst notes that Mattel's cost savings initiatives have been boosting earnings growth of late. Also, higher sales at the company's flagship Barbie brand is helping the topline.
Weak Generic Business and Competition Hurt Novartis (NVS)
Per the Zacks analyst, a slowdown in the generic division due to pricing pressure, pipeline setbacks and competition for key drugs weighs on Novartis. The outlook for 2019 was disappointing.
Match Group (MTCH) Hurt by Higher Investments & Debt Burden
Per the Zacks analyst, higher investments in Tinder along with higher-than-expected data costs and professional fees might limit margin expansion. Further, highly leveraged balance sheet is a concern.
Soft Volumes in U.S. & Canada Hurts Molson Coors' (TAP) Sales
Per the Zacks analyst, Molson Coors' sales in Q4 were hurt by lower volume in the U.S. and Canada, driven by challenging industry trends in these countries, which should continue in 2019.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportExxon Mobil Corporation (XOM): Free Stock Analysis ReportNovartis AG (NVS): Free Stock Analysis ReportMotorola Solutions, Inc. (MSI): Free Stock Analysis ReportMerck & Co., Inc. (MRK): Free Stock Analysis ReportExpedia Group, Inc. (EXPE): Free Stock Analysis ReportDanaher Corporation (DHR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research