Top Stock Reports for Merck, CVS & Morgan Stanley

Wednesday, June 17, 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), CVS Health (CVS) and Morgan Stanley (MS). 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 shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-10% vs. +5.1%), but the Zacks analyst believes that the company's outlook remains favorable given products like Keytruda, Lynparza and Bridion. Keytruda sales are gaining from continued uptake in lung cancer and increasing usage in other cancer indications.

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, Merck expects COVID-related business disruptions to impact sales in its Pharmaceuticals as well as Animal Health units in 2020 with maximum impact in the second quarter. Meanwhile, 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 CVS have lost -11.1% over the past six months against the Zacks Retail Pharmacies and Drug Stores industry’s fall of -15.2%. The Zacks analyst believes that company’s recently-introduced Health Care Benefits segment following the Aetna acquisition also holds immense promise.

Within CVS Health’s Retail/LTC and Pharmacy Services segments, the coronavirus pandemic has resulted in greater use of 90-day prescriptions and early refills of maintenance medications. Further, there was improvement in front store volume within the Retail/LTC segment.

Moreover, the year-over-year improvement in the top line was fueled by strong growth in Pharmacy Services segment, which benefited from the upside in specialty services. CVS Health put up a robust performance with better-than-expected figures in the first quarter of 2020. However, the LTC business is facing some industry-wide challenges. Reimbursement risk continues to be a dampener.

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

Morgan Stanley’s shares have gained +55.9% over the past three months against the Zacks Investment Banking industry’s rise of +37.8%. The Zacks analyst believes that the company’s focus on corporate lending operation and strength in investment management operations will likely support top-line growth in the quarters ahead.

The deal to acquire E*Trade Financial is anticipated to further provide support to the Wealth Management segment. Although the company is aiming to change revenue mix to focus on less capital-market driven sources, the financial impact from the same will likely be seen after some time.

Therefore, a significant dependence on capital markets to generate trading and investment banking revenues makes us apprehensive. Furthermore, near-zero interest rates and elevated operating expenses are other major near-term concerns.  

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

Other noteworthy reports we are featuring today include TJX Companies (TJX), Applied Materials (AMAT) and Enterprise Products Partners (EPD).

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Sheraz Mian

Director of Research

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 is Key to Merck's (MRK) Growth Prospects

CVS Health's (CVS) PBM Arm Grows from COVID-19 Measures

Buyouts, Loan Demand Aid Morgan Stanley Amid Lower Rates

Featured Reports

Coronavirus-Led Store Closures Hurt TJX Companies (TJX)

Per the Zacks analyst, TJX Companies is bearing the brunt of coronavirus-led temporary store closures across U.S. and Europe among other regions.

Applied Materials (AMAT) Rides on Logic Spending, Risk Remain

Per the Zacks analyst, strength in semiconductor equipment and strong customer spending in foundry and logic remain growth drivers.

Enterprise Products (EPD) Banks on $7.7B Midstream Projects

Enterprise Products is well positioned to generate additional cash flow from $7.7-billion midstream projects. However, huge debt exposure concerns the Zacks analyst.

Square (SQ) Banks on Solid Momentum Across Seller Ecosystem

Per the Zacks analyst, robust products such as Square Terminal, Cash Card, Square Register and Square Capital are strengthening Square's seller ecosystem.

Verily Deal to Aid Walgreens (WBA) amid Pandemic-led Crisis

The Zacks analyst is upbeat about Walgreens' new pact with Alphabet's Verily on chronic ailment amid the pandemic.

Low Foodservice Volumes Hurt Sysco (SYY), Other Channels Aid

Coronavirus-led low food-away-from-home volumes have been hurting Sysco. However, the Zacks analyst expects Sysco's focus on tapping other revenue channels to offer cushion.

Servicing Wins Aid State Street (STT), Lower Rates A Concern

Per the Zacks analyst, synergies from strategic buyouts and global footprint will continue to aid State Street amid lower interest rates.

New Upgrades

Inorganic Growth Efforts Aid Raymond James' (RJF) Top Line

Per the Zacks analyst, Raymond James' continued efforts to expand through acquisitions along with its global diversification efforts are expected to keep driving the top line in the near term.

Growing Electronic Warfare Systems Demand Aid Mercury (MRCY)

Per the Zacks Analyst, high demand for electronic warfare, increased upgrades on electronic subsystems and continued flow of deals are aiding Mercury Systems' growth.

Store Reopening Likely to Aid DICK'S Sporting (DKS) Sales

Per the Zacks analyst, DICK'S Sporting is gaining from store reopening efforts which is likely to aid sales. In this regard, roughly 80% of its stores are now open as of the end of May.

New Downgrades

Video User Loss, Higher Debt Mars Comcast's (CMCSA) Progress

Per the Zacks analyst, Comcast persistently suffers video subscriber attrition due to cord-cutting. Moreover, coronavirus-led uncertainty and a debt-ridden balance sheet are major concerns.

High Costs, Concentration Risk Hurt E*TRADE Financial (ETFC)

Per the Zacks analyst, consistently rising expenses due to growing franchise hurt E*TRADE Financial's bottom line. Also, interest-based revenue streams, as a key source of income, pose a concern.

Exposure to Cat Loss, Rising Expenses Hurt Cincinnati (CINF)

Per the Zacks analyst, Cincinnati Financial's exposure to catastrophe weighs on its underwriting profitability. Also, increase in expenses dragging margin expansion concerns.

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The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
 
Morgan Stanley (MS) : Free Stock Analysis Report
 
Merck Co., Inc. (MRK) : Free Stock Analysis Report
 
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
 
CVS Health Corporation (CVS) : Free Stock Analysis Report
 
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
 
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