Top Stock Reports for Merck, Philip Morris & QUALCOMM
Wednesday, August 23, 2023
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 Merck & Co., Inc. (MRK), Philip Morris International Inc. (PM) and QUALCOMM Incorporated (QCOM). 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 >>>
Shares of Merck have gained +22.5% over the past year against the Zacks Large Cap Pharmaceuticals industry’s gain of +24.1%. The company beat Q2 estimates for earnings and sales. Products like Keytruda and Gardasil have been driving sales. With continued label expansion into new indications, particularly earlier-line launches, Keytruda is expected to remain a key top-line driver.
Animal health and vaccine products are core growth drivers. Merck boasts a strong cancer pipeline, including Keytruda, which should drive long-term growth. Merck is investing in M&A activity to strengthen its pipeline.
However, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade.
(You can read the full research report on Merck here >>>)
Philip Morris shares have outperformed the Zacks Tobacco industry over the past year (+1.6% vs. -1.2%). The company have been benefiting from its solid pricing power. Higher pricing variance was an upside to the company’s performance in the second quarter of 2023 and is likely to remain a driver.
A focus on reduced-risk products, especially IQOS, has been working well for the company, which is witnessing a continued product mix shift from cigarettes to smoke-free products. These upsides are likely to boost organic revenues in the full-year 2023.
However, Philip Morris has been battling cost-related headwinds. The company expects to make additional growth-oriented investments in 2023, which may impact margins. Also, soft cigarette shipment volumes and volatile currency movements have been concerns. In full-year 2023, cigarette shipment volumes are expected to decline by 1.5-2.5%.
(You can read the full research report on Philip Morris here >>>)
Shares of QUALCOMM have outperformed the Zacks Wireless Equipment industry over the year-to-date period (+0.9% vs. -5.3%). The company is focusing on a seamless transition from a wireless communications firm for the mobile industry to a connected processor firm for the intelligent edge. Strength in the snapdragon portfolio is an additional tailwind.
QUALCOMM is well-positioned to benefit from solid 5G traction, greater visibility and a diversified revenue stream. Qualcomm is also witnessing solid momentum in IoT across consumer, edge networking and industrial sectors.
However, owing to a challenging macroeconomic environment, inflationary pressures and soft recovery in China, resulting in lower-than-expected demand and elevated inventory levels. Weakness in the smartphone industry and cautious client approach are weighing on margins. Rising geopolitical volatility and high debt burden remain headwinds.
(You can read the full research report on QUALCOMM here >>>)
Other noteworthy reports we are featuring today include Gilead Sciences, Inc. (GILD), CVS Health Corporation (CVS) and Chubb Limited (CB).
Director of Research
Sheraz Mian
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
Keytruda to Remain Merck's (MRK) Key Top-Line Driver
Philip Morris (PM) Gains From Solid Pricing Amid Cost Woes
Qualcomm (QCOM) Rides on 5G Traction, Diversified Portfolio
Featured Reports
Biktarvy, Oncology Fuel Gilead (GILD) Amid Competition
Per the Zacks analyst, strong performance from flagship HIV therapy Biktarvy and contribution from the oncology franchise boost Gilead as some other drugs face generic competition and slowdown.
CVS Health (CVS) Digital Offerings Expand Amid Stiff Rivalry
The Zacks analyst is impressed with CVS Health's expanding digital base as it exceeded 53 million unique digital customers till second-quarter end. Yet stiff competition remains a concern.
Chubb (CB) Banks on Acquisitions, Cat Loss an Overhang
Per the Zacks analyst, acquisitions have helped Chubb in geographic expansion and boosted the portfolio of products and services. However, exposure to catastrophe loss induces earnings volatility.
Organic Growth to Support Citigroup (C), High Expenses Ail
Per the Zacks analyst, a diverse business model and rising NII drives Citigroup's top-line growth. However, escalating expenses and muted non-interest income are some major near-term headwinds.
Investments Aid American Electric (AEP), Weak Solvency Woes
Per the Zacks analyst, American Electric hefty investments offer a stable earnings base and tend to boost its long-term growth potential. However, its weak solvency position remains a concern
Pembina (PBA) to Benefit from Integrated Business Model
The Zacks analyst thinks Pembina Pipeline is less vulnerable to the volatile commodity market because of its integrated business model but worries about the midstream company's high debt load.
Alaska Air (ALK) Banks on Air Travel Demand Amid High Costs
Upbeat air-travel demand is driving Alaska Air's top line. The Zacks analyst, however, remains wary of the impact of increasing costs on the bottom line.
New Upgrades
Twilio (TWLO) Banks on Growing Active Customer Accounts
Per the Zacks analyst, Twilio's continued focus on introducing products as well as its go-to-market sales strategy is helping it grow its active customer accounts, which is driving top-line growth.
MDC's Build-to-Order process, Lots Acquisition Bode Well
Per the Zacks analyst, MDC benefits from the Build-to-Order process, which provides it a competitive edge over its peers. Also, land acquisition strategies and high liquidity add to the growth.
ProAssurance (PRA) Rides on Buyouts & Investment Returns
Per the Zacks analyst, strategic acquisitions are helping ProAssurance enhance its portfolio. Also, its investments are expected to garner more returns going forward.
New Downgrades
Lower Chemical Demand, Turnaround to Hurt Olin (OLN)
Per the Zacks analyst, Olin faces headwinds from soft demand in its chemical businesses, particularly in China and Europe. Maintenance turnaround at the Freeport facility may also hurt margins.
United Natural (UNFI) Hurt by High Costs, Supply-Chain Woes
Per the Zacks analyst, United Natural is battling cost inflation and supply-chain woes. Management cut fiscal 2023 earnings view as it expects similar profitability trends for the rest of the year.
High Costs, Loan Concentration Hurt Citizens Financial (CFG)
Per the Zacks analyst, elevated non-interest expenses, muted mortgage banking and a significant exposure to commercial loans are headwinds for Citizens Financial amid uncertain economic conditions. n
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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
Philip Morris International Inc. (PM) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report