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Top Analyst Reports for Merck, Novartis & Mondelez

Mark Vickery

Tuesday, March 3, 2020

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 (MRK), Novartis (NVS) and Mondelez International (MDLZ). 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 >>>

Merck’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the past six months (-5.4% vs. +6%). The Zacks analyst believes that Merck’s products like Keytruda, Lynparza and Bridion are driving sales. Keytruda sales are gaining from continued uptake in lung cancer and increasing usage in other cancer indications.

Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products remain core growth drivers.

The potential separation into two companies makes strategic sense as the remaining Merck should be able to achieve higher profits than the combined company. However, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise will continue to be overhangs on the top line. 

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

Shares of Novartis have lost -2.6% over the past year against the Zacks Large Cap Pharmaceuticals industry’s rise of +1.9%. The Zacks analyst believes that solid performance of key drugs like Cosentyx and Entresto, and contribution from gene therapy, Zolgensma, have boosted performance in recent times and offset the impact of generic competition for legacy drugs.

Novartis has a strong oncology portfolio and a formidable generics business. New launches like Piqray, Mayzent and Beovu should further boost sales. The biosimilar portfolio also gains traction with new key approvals. Novartis’ decision to restructure its business is a positive and should boost the pharma segment. The deep pipeline is encouraging as well.

However, price erosion in the United States has adversely impacted the generic business. Moreover, pipeline setbacks and generic competition for additional drugs are concerning.

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

Mondelez’s shares have gained +4.3% over the past three months against the Zacks Food Preparation industry’s fall of -5.6%. The Zacks analyst believes that the company’s focus on brand building through innovation and acquisitions has been yielding results.

Evidently, the buyout of minority stakes in Perfect Snacks along with investments in Hu Master and Uplift Foods, indicates the company's efforts to boost healthy offerings. Also, Mondelez is bolstering presence in the emerging regions.

Notably, management expects organic net revenues to grow more than 3% for 2020. However, adjusted gross margin declined 10 bps due to plant transition hurdles in Brazil, inflation in Argentina and weak powdered beverages in the quarter. Also, it grapples with adverse currency movements.

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

Other noteworthy reports we are featuring today include ServiceNow (NOW), Deere (DE) and General Dynamics (GD).

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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

Keytruda & Other Key Drugs Drive Merck's (MRK) Sales

New Drugs Boost Novartis (NVS) Amid Weak Generics Business

Mondelez (MDLZ) Organic Sales Gain on Solid Pricing Actions

Featured Reports

Growing Customer Base & Partnerships Aid ServiceNow (NOW)

Per the Zacks analyst, ServiceNow benefits from rising adoption of its workflows from companies undergoing digital transformation. Also, strategic alliances with the likes of Microsoft are a tailwind.

Growing Farm Income Buoy Deere (DE), Coronavirus an Overhang

Per the Zacks analyst, rising U.S farm income will drive demand for Deere's agricultural equipment while the coronavirus outbreak will impact road building sales in China and disrupt its supply chain.

Rising Demand Aids General Dynamics (GD), Competition Hurts

Per the Zacks Analyst, a strong rise in demand for the company's varied defense products leads to organic growth.

EOG Resources (EOG) to Gain From Oil-Rich Eagle Ford Acreage

Huge inventory of premium drilling wells in the Eagle Ford shale will contribute to EOG Resources' oil production. But, escalating lease and well operating costs are a concern, per the Zacks analyst.

Acquisitions, New Business Wins Support State Street (STT)

Per the Zacks analyst, new business wins, a strong balance sheet position, synergies from strategic buyouts and global footprint are expected to continue supporting State Street's profitability.

Hormel Foods (HRL) Likely to Gain on Refrigerated Foods Unit

Hormel Foods' Refrigerated Foods unit remained strong in the first quarter despite facing input cost inflation. Per the Zacks analyst, this unit is set to keep gaining on solid pricing and innovation.

Steady Investment Aids Ameren Corp. (AEE), Regulations Hurts

Per the Zacks Analyst, it plans to invest $16 billion over 2020 - 2024 period in regulated operations to boost earnings.

New Upgrades

Macy's (M) Omnichannel Strategy, Private Brands to Lift Sales

Per the Zacks analyst, Macy's price optimization, cost containment and omnichannel strategy will help lift performance. The company's focus on private label brands will help improve profit margins.

Cogent (CCOI) Rides on Network Investments, On-Net Revenues

Per the Zacks analyst, Cogent is poised to benefit from higher On-Net revenues and network investments, backed by accretive customer connections and cost-effective operations.

Animal Health Continues to Boost Patterson Companies (PDCO)

Per the Zacks analyst, solid partnerships with product manufacturers and strong sales execution can drive robust margin improvement in Patterson Companies' core Animal Health unit.

New Downgrades

China Exposure and High Indebtedness to Hurt Flex (FLEX)

Per the Zacks analyst, Flex's substantial China exposure amid coronavirus crisis is likely to weigh on near-term financial performance. Also, the company's leveraged balance sheet is a major concern.

Higher Operating Costs Hurt Steven Madden's (SHOO) Margins

Per the Zacks analyst, Steven Madden has been witnessing higher operating expenses and cost of sales for a while now. This has been weighing on the company's gross and operating margins.

Product Cannibalization & Competitive Woes Mar GoPro (GPRO)

Per the Zacks analyst, GoPro is likely to be hit by cannibalization of action cameras, lower pricing power and production delay with cheaper alternatives from low-priced competitors entering the fray.

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Novartis AG (NVS) : Free Stock Analysis Report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
General Dynamics Corporation (GD) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
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