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Top Stock Reports for Eli Lilly, CVS Health & Target

Friday, August 12, 2022

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Eli Lilly and Co. (LLY), CVS Health Corp. (CVS) and Target Corp. (TGT). 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 >>>

Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+15.5% vs. +6.5%). The company boasts a solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. Its revenue growth is being driven by higher demand for drugs like Trulicity, Taltz, and others.

Eli Lilly is regularly adding promising new pipeline assets through business development deals. Lilly expects to launch five new medicines by 2023 end including Mounjaro for type II diabetes (already launched) and donanemab for early Alzheimer's disease. Both drugs have multibillion dollar sales potential.

However, generic competition for several drugs, rising pricing pressure in the United States mainly on key drug Trulicity, and price cuts in some international markets like China, Japan and Europe are some top-line headwinds.

(You can read the full research report on Eli Lilly here >>>)

CVS Health’s shares have outperformed the Zacks Retail - Pharmacies and Drug Stores industry over the past year (+26.6% vs. +11.9%). The company’s robust sales growth across all three operating segments drove the top-line results. The extended cough, cold and flu season boosted sales in the Retail and Pharmacy businesses.

Within the Health Care Benefits arm, the continued growth across the entire range of insured and self-insured medical, pharmacy, dental and behavioral health products and services instills optimism. The raised EPS guidance for 2022 is indicative of this growth momentum continuing.

However, the contraction of margins does not bode well. The decline in COVID-19 vaccinations and testing sales is a downside. Persistent pharmacy reimbursement headwinds also continued to impact business results.

(You can read the full research report on CVS Health here >>>)

Target’s shares have declined -25.2% over the year-to-date basis against the Zacks Retail - Discount Stores industry’s decline of -10.3%. The company’s operating margin rate is in a range of around 6% and it anticipates a low-to-mid-single digit revenue growth forecast for fiscal 2022.

However, deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers a seamless shopping experience. The company has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. These have been contributing to the company’s sales performance.

Also, its recent attempt to right-size inventory is a step in the right direction, as the demand skewed toward consumer staples and away from discretionary categories. This may hurt margins for now but will help better the position for the company to gain market share.

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

Other noteworthy reports we are featuring today include Equinix, Inc. (EQIX), Chipotle Mexican Grill, Inc. (CMG), and FirstEnergy Corp. (FE).

Mark Vickery
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 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

Lilly (LLY) Potential New Products Key to Growth

Robust Pharmacy Sales Aid CVS Health (CVS) Amid Rising Costs

Target's (TGT) Omnichannel Efforts, Digitization to Aid Sales

Featured Reports

Expansion Strategy Aids Equinix (EQIX) Amid Stiff Competition
Per the Zacks Analyst, acquisitions will expand Equinix's data-center footprint and enhance inter-connection offerings. However, stiff competition might unfavorably impact its pricing power.

Chipotle (CMG) Banks on Digital Sales, Wage Inflation High
Per the Zacks analyst, digitalization will continue to play a crucial role in sustaining growth for restaurant operators. However, elevated wage inflation is a concern.

Infrastructure Investment, Clean Assets Aid FirstEnergy (FE)
Per the Zacks analyst, FirstEnergy's investment of $17 billion through 2025 to enhance clean electricity generation and strengthen its infrastructure will boost its profitability.

End-Market Demand Aids Xylem (XYL) Amid Supply-Chain Woes
Per the Zacks analyst, solid global demand across end markets, robust backlogs and orders are supporting Xylem's growth, despite supply-chain constraints, raw material and labor cost inflation.

NetApp (NTAP) Benefits from Product Portfolio & Acquisitions
Per the Zacks analyst, NetApp's performance is gaining from continued strength in Hybrid Cloud and Public Cloud segments and robust billings growth. Synergies from recent acquisitions also bode well.

New Upgrades

NOV Inc. (NOV) to Benefit from Large Installed Base of Rigs
The Zacks analyst believes that NOV's large installed base of rigs worldwide will provide a steady recurring revenue stream driven by demand for maintenance, parts and other expendable products.

Upbeat Air-Travel Demand Aids SkyWest (SKYW), High Costs Ail
Improved air-travel demand is driving SkyWest's top line. The Zacks analyst is, however, worried about escalated fuel costs that are limiting bottom-line growth.

New Downgrades

Rising Payroll Expense to Hurt Dillard's (DDS) Gross Margin
Per the Zacks analyst, Dillard's has been witnessing higher payroll and payroll-related expenses amid the current competitive wage environment. This along with inflation are likely to persist in FY22.

Escalating Expenses, High Debt Hurt Encompass Health (EHC)
Per the Zacks analyst, the company's rising labor cost continues to squeeze margins. A leveraged balance sheet constantly affects its financial flexibility.

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
Equinix, Inc. (EQIX) : Free Stock Analysis Report
FirstEnergy Corporation (FE) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
Eli Lilly and Company (LLY) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report
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