Top Analyst Reports: Amazon, Merck, PepsiCo & More

Monday, September 2, 2019

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Amazon (AMZN), Merck (MRK) and PepsiCo (PEP). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Amazon’s shares have outperformed the broader market year to date (the stock is up +18.3% vs. the +15.3% increase for the S&P 500 as a whole). The Zacks analyst thinks Amazon is riding on aggressive retail strategies, distribution strength and the robust Prime program. Rapid adoption of Prime driven by customer benefits and strengthening grocery services is aiding the top line. Further, expanding content portfolio is encouraging Prime membership. Further, strengthening AWS services and improving adoption rate are helping Amazon dominate the cloud space. Furthermore, improving Alexa skills and features remain major positives. Rising number of Alexa compatible devices is a tailwind. However, rising transportation cost related to its free one-day shipping service remains an overhang and is likely to increase further. Amazon also expects foreign exchange headwinds to persistently impact the top line.

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

Shares of Merck have increased +13.1% year to date, outperforming the Zacks Large Cap Pharmaceuticals industry’s decline of -1.4% during the same period. Merck beat estimates for earnings and sales in the second quarter. The Zacks analyst thinks Merck’s new products like Keytruda, Lynparza and Bridion are driving sales. 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 on products like Isentress and Zepatier remains a concern.

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

PepsiCo’s shares have outperformed the Zacks Soft Drinks Beverages industry in the last six months (+17.7% vs. +11.3%). The Zacks analyst thinks this is largely attributable to its robust surprise trend. The company reported earnings and sales beat in second-quarter 2019, driven by strength in all segments. This marked its eighth sales beat in the last 10 quarters, with positive earnings surprise in 13 of the last 14 quarters. The company’s productivity savings goal of at least $1 billion annually through 2023 bodes well. Moreover, it is gaining from strength in snacking business, which has largely offset the softness in the beverage category. However, unfavorable impacts of ongoing investments to strengthen business, higher tax rate, and the absence of asset sale and refranchising gains that occurred in 2018 are likely to weigh on PepsiCo’s earnings in 2019. Further, adverse currency rates are likely to hurt the company’s sales and earnings in 2019.

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

Other noteworthy reports we featured today include American Airlines (AAL), Dollar Tree (DLTR) and Monster Beverage (MNST).

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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

Prime Momentum & Growing AWS Adoption Benefit Amazon (AMZN)

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

Robust Snacking Category to Drive PepsiCo's (PEP) Sales

Featured Reports

Dividends & Buybacks Aid American Airlines (AAL), Debts Ail

The Zacks analyst is worried about American Airlines' high debt levels. The Boeing 737 MAX-related issues are concerning too.

Dollar Tree Plus! to Aid Dollar Tree's (DLTR) Margin & Sales

Per the Zacks analyst, Dollar Tree is in the test phase of adding merchandise with higher price points to its stores.

Acquisitions & Investments Aid AGCO Corp (AGCO), Costs Ail

Per the Zacks analyst, AGCO Corp will benefit from investment in products, acquisitions and capital-allocation plan despite higher input costs due to the implementation of tariffs.

Regency (REG) Poised for Growth with Grocery-Anchored Assets

Per the Zacks analyst, Regency's focus on premium portfolio of shopping centers in strong trade areas and high-volume grocers poise it well for growth despite bankruptcies and store-closure woes.

Campbell Soup (CPB) Top Line to Gain From Solid Snacks Unit

Per the Zacks analyst, Campbell Soup is set to gain from focus on strengthening the growing snacks category.

Global Blood (GBT) Focused on Lead Candidate Amid Competiton

Per the Zacks analyst, the company remains focused on the evelopment of its lead product candidate, voxelotor for sickle cell disease despite stiff competition.

Energy Drinks Unit Aids Monster (MNST), High Costs Hurts

Per the Zacks analyst, Monster Beverage is benefiting from strength in its energy drinks category driven by Monster Energy brand.

New Upgrades

Whiting (WLL) to Gain from Improving Well Economics

The Zacks analyst likes Whiting Petroleum's continued improvement in well economics as the company has reduced its spud-to-total-depth by 64% since 2011, while lowering well costs by 24% since 2014.

Itron (ITRI) Banks on Networked Solutions & Outcomes Segment

Per the Zacks analyst, strengthening customer deployments in North America are driving the top-line growth within Itron's Networked Solutions & Outcomes Segments.

Meritage Homes' (MTH) Focus on Entry-Level Buyers Bodes Well

The Zacks analyst stresses that Meritage Homes' strategic shift to a pure-play entry-level and first-move-up builder is expected to yield higher absorptions.

New Downgrades

Escalating Expenses Continue to Hurt Merit Medical (MMSI)

Per the Zacks analyst, escalating expenses, mainly due to higher selling, general and administrative plus research and development costs, continue to restrict Merit Medical's margin expansion.

NETGEAR (NTGR) Hurt by Arlo Spin-Off, Weak Connected Home

Per the Zacks analyst, NETGEAR's stock has plummeted largely due to the spin-off of Arlo business. Weak performance at Connected Home segment due to lower service provider revenues is also worrisome.

JetBlue (JBLU) Hurt by High Labor Costs & Capacity Woes

The Zacks analyst is concerned about capacity expansion outpacing traffic growth at JetBlue. Also, high labor expenses are limiting bottom-line growth.

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Pepsico, Inc. (PEP) : Free Stock Analysis Report
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
 
Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
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