Top Analyst Reports for Home Depot, Merck & Raytheon

Wednesday, May 16, 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 Home Depot (HD), Merck (MRK) and Raytheon (RTN). 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 >>>

Home Depot 's shares have gained +20.5% over the last year, outperforming the Zacks Retail Building Products industry's +14.1% increase. The Zacks analyst thinks that this performance is attributable to its five-year long trend of beating earnings estimates, which continued in first-quarter fiscal 2018.

Further, both the top and bottom line improved year over year in the first quarter. Results gained from strength in core business as well as relentless focus on affording innovative products, boosting interconnected customer experience and driving productivity. Steady housing market recovery and strong customer demand also remain tailwinds.

Going into the fiscal second quarter, the company continues to witness strength in all lines of business in the first few weeks of May. Consequently, it provided an optimistic view for fiscal 2018. However, the top line lagged estimates mainly due to colder-than-normal weather that led to softness in the spring season categories, particularly garden. This softness also resulted in a decline in comparable transactions.

(You can read the full research report on Home Depot here >>> ).

Shares of Merck have outperformed the Zacks Large Cap Pharmaceuticals industry year to date, gaining +5.2% versus a loss of -4.0%. Merck beat estimates for earnings while missing the same for sales in Q1.

The Zacks analyst thinks that new products like Keytruda, Lynparza, and Bridion should continue to contribute meaningfully to the top line in 2018. Keytruda sales are gaining 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. The 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.

(You can read the full research report on Merck here >>> ).

Raytheon 's shares have risen around +14.5% over the last six months, outperforming the Zacks Defense Equipment industry, which has increased +10.7% over the same period. However, Raytheon kick started 2018 on a solid note. The company's first-quarter earnings and revenues comfortably surpassed expectations.

The Zacks analyst thinks the company is one of the best-positioned large-cap defense players due to its non-platform centric focus. Due to its wide range of combat-proven defense products, the company continues to receive numerous orders from both Pentagon as well as foreign allies. Raytheon's Patriot missile-defense systems have seen a number of buyers in recent times including international customers from Europe as well as the Middle East.

However, factors like tough competition and political uncertainty continue to be major headwind for Raytheon. Moreover, the company is overvalued compared to its broader industry in terms of EV/EBITDA ratio.

(You can read the full research report on Raytheon here >>> ).

Other noteworthy reports we are featuring today include BB&T (BBT), Eaton (ETN) and Sun Life Financial (SLF).

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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 Earnings Trendsand Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Home Depot's (HD) Interconnected Strategy to Boost Sales

New Drugs to Drive Merck's (MRK) Sales as Competition Soars

Technological Investments Drive Raytheon (RTN) Amid Rivalry

Featured Reports

Loan Growth Supports BB&T (BBT), Escalating Costs a Woe

The Zacks analyst believes that improving economy and initiatives to expand market share have helped BB&T witness growth in loan and deposits. However, mounting expenses remain a headwind.

Extensive Market Reach, Product Innovation Aids Eaton (ETN)

The Zacks analyst believes Eaton's presence in 175 countries and ongoing R&D expenses resulting in new and advanced products will continue to boost its performance.

Renewable Focus, Customer Additions Aids Xcel Energy (XEL)

The Zacks analyst believes Xcel Energy's planned investment to expand its renewable generation portfolio and expansion of customer base will boost its performance.

Agilent's (A) Portfolio Drives Growth; Expenses Hurt Margins

The Zacks analyst believes that Agilent's broad-based portfolio and solid execution offers higher growth potential.

Production from U.S. Resource Plays Boost Marathon (MRO)

While Marathon is set to benefit from strong oil production growth in the U.S. resource plays, the Zacks analyst is worried over the lack of clarity on dividend increase and share repurchases.

Interpublic (IPG) Rides on Digital Strength, Business Model

The Zacks analyst believes that Interpublic's digital capabilities and diversified business model offer a distinctive competitive advantage and help the company to expand in high-growth markets.

Life-Science Assets to Stoke Growth for Alexandria (ARE)

Per the Zacks analyst, Alexandria will gain from robust fundamentals in the life-science industry, enjoy high occupancy and generate steady rental revenues.

New Upgrades

Collaborations for Technology Development to Aid Magna (MGA)

Per the Zacks analyst, its collaboration with Lyft and China's BAIC Group to co-develop futuristic mobility technologies will help Magna to strengthen and diverse its product portfolio.

Solid Volume & UNIWHEELS Buy Aid Superior Industries (SUP)

Per the Zacks analyst, UNIWHEELS buy is aiding Superior Industries to diversify its customers. Also, solid volume in North America & European business addition are leading to higher unit shipment.

Restructuring Efforts, Solid Balance Sheet Aid Ocwen (OCN)

Per the Zacks analyst, Ocwen's initiatives to restructure its servicing portfolio, efforts to focus on core operations and strengthen balance sheet are expected to support bottom-line growth.

New Downgrades

Williams-Sonoma's (WSM) Margin Hit by Higher Investments

Per the Zacks analyst, although Williams-Sonoma has been working hard on repositioning its brands, continued e-commerce and supply-chain investments weigh on operating margins.

Symantec (SYMC) to be Hurt by Booking Mix Shift, Higher OpEx

Symantec's operating margin will remain under pressure in fiscal 2019 due to continued shift of the company's booking mix to ratable revenues and increased investment in sales and marketing capacity.

Sun Life Financial's (SLF) Rising Expenses Raise Concerns

Per the Zacks analyst, Sun Life Financial's escalating expenses will continue to restrict margin expansion. Also, higher hedging cost raises concern.

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 report

Sun Life Financial Inc. (SLF): Free Stock Analysis Report

Raytheon Company (RTN): Free Stock Analysis Report

Merck & Co., Inc. (MRK): Free Stock Analysis Report

The Home Depot, Inc. (HD): Free Stock Analysis Report

Eaton Corporation, PLC (ETN): Free Stock Analysis Report

BB&T Corporation (BBT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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