Top Research Reports: Amazon, Caterpillar, Vertex & More
Wednesday, August 14, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 12 major stocks, including Amazon (AMZN), Caterpillar (CAT) and Vertex (VRTX). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Amazon’s shares have outperformed the broader market year to date (the stock is up +21.5% vs. the +15.4% increase for the S&P 500 as a whole). Amazon reported mixed second quarter results. While earnings missed estimates, revenues outpaced the same. However, the company exhibited year over year growth on both counts.
The Zacks analyst thinks Amazon benefited from its solid Prime momentum owing to robust grocery services and strong content portfolio. Also, Prime Free One Day service helped Amazon in gaining traction across customers. Strengthening AWS services and its growing adoption rate made strong contributions.
Additionally, improving Alexa skills and features remained a major positive. However, rising transportation costs related to its free one-day shipping service remained an overhang. Transportation costs are expected to increase further. Also, Amazon expects foreign exchange headwinds to continue impacting its top line.
Shares of Caterpillar have outperformed the Zacks Construction and Mining industry (-9.8% vs. -11.8%) in the past year. Caterpillar reported global retail sales growth of 4% for the three-month period ended July 2019, the lowest so far this year. Further, the metric was at a level last seen in 2017.
The global machine sales growth rate has been on a downward spiral over the past few months, which is a concern, per the Zacks analyst. The company anticipates earnings per share at the lower end of its guidance of $12.06-$13.06 for 2019 and expects modest sales growth for the year.
In the Construction Industries segment, North America will aid growth while China will be a headwind. Improving commodity prices will support capital expenditure in the mining sector, which should drive performance of the Resource Industries segment. Investments in expanded offerings and services, and digital initiatives like e-commerce will also fuel growth. Its cost reduction efforts should help sustain margins despite material cost inflation.
Vertex’s shares have outperformed the Zacks Biomedical and Genetics industry year to date (+11% vs. -0.9%). Vertex beat estimates for both earnings and sales in the second quarter. The Zacks analyst thinks approval of its cystic fibrosis ('CF') drugs, Kalydeco and Orkambi, for new patient populations, is driving sales growth. Its third CF medicine, Symdeko, has become the main driver of CF revenues in a very short time.
Vertex rapidly advanced its triple combination CF regimens through late-stage development/regulatory filings. The regimens 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 with several pipeline readouts expected in 2020-21.
However, competition is rising in the CF market with many companies developing triple combo CF drugs. Also, Vertex’s overdependence on the CF franchise for growth is a concern.
Other noteworthy reports we featured today include Kraft Heinz (KHC), Diamondback Energy (FANG) and Evergy (EVRG).
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Note: Our Director of Research 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
The Zacks analyst believes Diamondback's twin buys of Energen and Ajax Resources should bolster its Permian hold. However, the region's extremely low natural gas price is a concern.
Per the Zacks analyst, Evergy's $6 billion investment in the 2019-2023 period to strengthen its operations and plans to produce more electricity from renewable sources will boost its performance.
The Zacks analyst is impressed with Old Dominion's efforts to check costs.
While premium drilling positions in Bakken play will boost Continental's oil production, the company's levered balance sheet is a concern, per the Zacks analyst.
The Zacks analyst believes that Wayfair's strong retail business along with its efforts to expand in international markets are positives.
The Zacks analyst believes Wynn Resorts is likely to gain from increasing visitation pattern in Las Vegas. Revenues from Las Vegas operations rose 5.1% in second-quarter 2019.
Per the Zacks analyst, CNH Industrial is launching several products across segments to remain at par with advancements. It is also working towards digitalization, electrification and automation.
The Zacks analyst thinks that Norwegian Cruise is bearing the brunt of high fuel and net cruise costs. Meanwhile, policy change on travel to Cuba is likely to have a negative impact on profits.
Kraft Heinz witnessed high fixed and supply chain costs, including packaging and logistics, in the first-half fiscal of 2019. Per the Zacks analyst, rising input costs are a threat to its bottom line.
Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report
The Kraft Heinz Company (KHC): Free Stock Analysis Report
Diamondback Energy, Inc. (FANG): Free Stock Analysis Report
Evergy Inc. (EVRG): Free Stock Analysis Report
Caterpillar Inc. (CAT): Free Stock Analysis Report
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
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