Monday, July 20, 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 Netflix (NFLX), AstraZeneca (AZN) and Union Pacific (UNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Netflix shares have outperformed the Zacks Broadcast Radio and Television industry over the past year (+58.7% vs. +15.2%), though the stock has lost some ground following last week's quarterly release. The Zacks analyst believes that rising competition from Apple TV+, Amazon prime video, HBO Max, Disney+, TikTok is a major headwind. Netflix’s leveraged balance sheet and higher streaming obligation is a concern.
However, the company is dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint.
However, Netflix expects subscriber growth to decline in the second half of 2020 due to less demand. Moreover, absence of new seasons of popular shows like Money Heist and Stranger Things is expected to affect subscriber growth.
Shares of AstraZeneca have gained +20.3% over the past six months against the Zacks Large Cap Pharmaceuticals industry’s rise of +0.7%. The Zacks analyst believes that AstraZeneca’s products like Nexium, Crestor and Seroquel are facing generic competition, which is hurting sales.
The diabetes franchise also faces stiff competition while pricing pressure is hurting sales in the respiratory unit. Also, the coronavirus outbreak may hurt its profits in 2020. Nonetheless, AstraZeneca’s newer drugs, mainly cancer medicines Lynparza, Tagrisso and Imfinzi, should keep driving revenues in 2020.
Its pipeline is strong with abundance of pipeline catalysts lined up for 2020. Several launches are underway across each of the therapeutic areas. Cost-cutting efforts should drive earnings. The company has a mixed record of earnings surprises in the recent quarters. Estimates have gone up ahead of Q2 earnings release.
Union Pacific shares have gained +25.5% over the past three months against the Zacks Rail industry’s rise of +24.8%. The Zacks analyst expects Union Pacific's second-quarter 2020 results, scheduled to be released on Jul 23, to be affected severely by low volumes in these coronavirus-ravaged times.
Due to coronavirus-induced supply-chain disruptions and closure of the U.S. automotive plants, overall volumes are likely to have declined in the to-be-reported quarter. In fact, second-quarter volumes are expected to plunge nearly 20%. Weakness in the Bulk, Premium and Industrial units is likely to have weighed on the overall volume picture as well.
However, efforts to control costs, courtesy of the precision scheduled railroading operating plan, are a positive, particularly, in the light of revenue concerns. The company's ability to generate free cash flow is also a boon. Further, the uptick in e-commerce demand during the pandemic is encouraging.
Other noteworthy reports we are featuring today include NextEra Energy (NEE), Sanofi (SNY) and Estee Lauder (EL).
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Director of Research
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 Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Per the Zacks analyst, NextEra's ongoing and planned investment to produce clean electricity and strengthen its infrastructure will boost profitability.
The Zacks analyst says that Sanofi's Specialty Care unit is on a strong footing with regular label expansion of Dupixent.
Per the Zacks analyst, Estee Lauder is set to gain from cost saving plans amid COVID-19 outbreak.
Petrobras' stakes in Brazil's attractive pre-salt oil reservoirs should boost its earnings outlook. However, the Zacks analyst is concerned over the company's huge debt load of $73.1 billion.
Per the Zacks Analyst, SBA Communications will likely see portfolio growth on rising demand and adoption of data-driven mobile devices and applications, though customer concentration is a risk.
Per the Zacks analyst, Manulife Financial is set to grow on solid Asia business, expanding Wealth and Asset Management business and cost control.
Per the Zacks Analyst, strong fundamentals in the life-science industry are driving demand for Alexandria's lab office assets. However, given its global footprint, currency fluctuation remains a woe.
Per the Zacks analyst, Enphase constantly innovates versions of its microinverters, to capture larger share of the solar market. Solid shipments of products tend to bolster its revenue growth.
Per the Zacks analyst, higher demand in the Health & Home unit amid coronavirus is driving growth. Notably, sales in the segment grew 29.1% year over year in fiscal first-quarter.
Per the Zacks Analyst, Winnebago is riding on the strength of its acquisitions, including Newmar and Grand Design. Its rising free cash flow and strengthening balance sheet will boost its prospects.
The Zacks analyst believes that despite coronavirus pandemic, Lilly's sales in 2020 will be driven by higher demand for drugs like Trulicity, Taltz, and others and potential drug launches.
Per the Zacks analyst, Activision's top line is expected to benefit from a burgeoning user base on the back of a sturdy gaming portfolio and e-sports endeavors.
Per the Zacks analyst, weak demand of industrial products and high R&D costs along with supply chain disruptions plague Badger Meter's financial performance amid COVID-19 pandemonium.
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Union Pacific Corporation (UNP): Free Stock Analysis Report
Sanofi (SNY): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
NextEra Energy, Inc. (NEE): Free Stock Analysis Report
The Estee Lauder Companies Inc. (EL): Free Stock Analysis Report
AstraZeneca PLC (AZN): Free Stock Analysis Report
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.