The Zacks Analyst Blog Highlights: Netflix, Costco, GlaxoSmithKline, Johnson & Johnson and Cigna

For Immediate Release

Chicago, IL – April 20, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Netflix NFLX, Costco COST, GlaxoSmithKline GSK, Johnson & Johnson JNJ and Cigna(CI.

Here are highlights from Friday’s Analyst Blog:

Q1 Earnings Scorecard and Analyst Reports for Netflix, Costco and More

We bring you the the best research output of our analyst team in this space every day. Today's Research Daily features new research reports on 16 major stocks, including Netflix, Costco and GlaxoSmithKline. These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. We have also provided below a real-time scorecard of the ongoing 2020 Q1 earnings season, which ramps up in a meaningful way next week, with more than 250 companies reporting results, including 72 S&P 500 members.

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

Q1 Earnings Season Scorecard 

Including this morning's results from Proctor & Gamble (PG), Schlumberger (SLB) and others, we now have Q1 results from 47 S&P 500 members that combined account for 14.1% of the index's total market capitalization. Aggregate net income for these 47 companies are down -31.1% from the same period last year on +2.9% higher revenues, with 68.1% beating EPS estimates and an equivalent proportion beating revenue estimates.

Needless to say that this is a significantly weaker showing than we have been seeing from this group of 47 index members in other recent periods.

The earnings growth pace has been particulalry weak for the Finance sector, whose results dominate this initial sample of results. For the Finance sector, we now have Q1 results from 34.4% of the sector's market cap in the S&P 500 index. Aggregate net income for these Finance companies are down -51.3% on -1% lower revenues, with only 47.1% beating EPS estimates and 64.1% beating revenue estimates.

Estimates for the current period (2020 Q2) and full-year 2020 have been steadily coming down, with earnings for the periods now expected to be down -26.5% and -14.6%, respectively.

Netflix, which reports Q1 results next Tuesday, has been a standout beneficiary of the current shelter-in-place economy, with stock handily outperforming the Zacks Broadcast Radio and Television industry over the past six months (+55.3% vs. +9.8%). The Zacks analyst believes that Netflix is expected to benefit from an expanding content portfolio despite increasing competition from the likes of HBO, Amazon prime video, Disney+ and Apple TV+.

Expanding bundle offerings through partnerships with Telefonica, KDDI, AT&T, Comcast, DISH, Verizon, Charter, Altice, T-Mobile and Sky are a key catalyst. Moreover, the launch of low-priced mobile plans in India, Indonesia, Malaysia, Philippines and Thailand is expected to expand the subscriber base in the Asia Pacific.

Meanwhile, Netflix has a record of positive earnings surprises in recent quarters. Moreover, high streaming content obligation and increased spending are expected to hurt free cash flow generation.

Costco is another beneficiary of the current environment, with the stock standing out in its outperformance. The Zacks analyst believes that the company’s business model and commitment toward opening membership warehouses will continue to drive traffic.

The company’s growth strategies, better price management, sturdy comps performance and strong membership trends reinforce its position. Moreover, with the wave of digital transformation, Costco is rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in-stores. Such concerted efforts have been favoring comps.

Comps grew 9.6%, while sales improved 11.7% in the month of March due to coronavirus-induced panic buying as consumers stock up essential items. However, any higher investments or aggressive pricing strategy may hurt margins. Also, rising SG&A expenses and stiff competition pose concerns.

GlaxoSmithKline’s shares have lost -11.9% over the past three months against the Zacks Large Cap Pharmaceuticals industry’s fall of -5.4%. The Zacks analyst is encouraged by the company’s initiatives to focus on its oncology pipeline.  In 2020, Glaxo expects at least six potential approvals in oncology, HIV and respiratory.

Glaxo’s three newest products, Trelegy Ellipta, Shingrix and Juluca, are doing well, particularly Shingrix. These products coupled with restructuring in the Consumer Health unit have strengthened Glaxo’s competitive position.

However, pricing pressure and competitive dynamics are hampering sales of Glaxo’s respiratory products. Also, competitive pressure on HIV drugs has risen.  Its shares have unperformed the industry this year so far. Estimates have gone down ahead of the Q1 earnings release due to the uncertainty related to the coronavirus. Glaxo has a mixed record of earnings surprises in recent quarters.

Other noteworthy reports we are featuring today include Johnson & Johnson and Cigna.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com                    

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.