Top Analyst Reports for Wells Fargo, UnitedHealth & Merck
Wednesday, April 17, 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 Wells Fargo (WFC), UnitedHealth (UNH) and Merck (MRK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Wells Fargo’s shares have underperformed the Zacks Major Regional Banks industry in the past six months, (-10.3% vs. -0.8%). Its earnings surprise history is decent, having beaten expectations in two of the trailing four quarters.
The first-quarter 2019 results reflect lower expenses and elevated net interest income, partly offset by decline in loans and deposits. However, fee income and provisions disappointed. The Zacks analyst likes Wells Fargo’s ongoing investment in its businesses to enhance compliance and risk management capability, build a better bank and strengthen core infrastructure.
However, the financial major was slapped with several sanctions, including a cap on its assets by the Federal Reserve which will continue, as recently the U.S. Consumer Financial Protection Bureau director expressed her dissatisfaction with the bank’s progress toward fixing its risk management issues, following the company’s involvement in several legal issues. Falling mortgage banking income is another concern.
Shares of Buy-ranked UnitedHealth have lost -11.3% year to date, underperforming the Zacks Medical Insurance industry, which has declined -5.6% over the same period. UnitedHealth Group’s first-quarter earnings surpassed expectations by 3.6% and were up 22.7% year over year. Higher revenues at both segments — UnitedHealthcare and Optum — plus membership growth led to this outperformance.
The Zacks analyst likes the company's solid balance sheet, strong operating performance, favorable business profile and disciplined enterprise risk management. The company also benefits from the services, technology and innovations offered by its Optum segment. However, slowdown of growth in international operations, underperformance in Medicaid business, and increase in leverage and interest burden are major headwinds.
Buy-ranked Merck’s shares have increased +1.5% year to date, outperforming the Zacks Large Cap Pharmaceuticals industry’s gain of +0.3% during the same period. The Zacks analyst thinks Merck’s 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 the 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.
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) remains a concern. Estimates have gone up slightly ahead of Q1 results. Merck has a positive record of earnings surprises in the recent quarters.
Other noteworthy reports we are featuring today include Schwab (SCHW), PNC Financial (PNC) and Raytheon (RTN).
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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 Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
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Wells Fargo & Company (WFC): Free Stock Analysis Report
UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
Raytheon Company (RTN): Free Stock Analysis Report
The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report
Merck & Co., Inc. (MRK): 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.