Friday, February 18, 2022
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), Shopify Inc. (SHOP), and Intercontinental Exchange, Inc. (ICE). 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 underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+2.8% vs. +16.9%), although the company beat Q4 estimates for earnings and sales. The Zacks analyst believes that drugs like Keytruda, Lynparza and Bridion have been driving sales.
Keytruda sales are gaining from continued lung cancer diagnoses, and increasing usage in other cancer indications. Animal health and vaccine products remain core growth drivers. Its new oral antiviral pill for COVID-19, molnupiravir, will be a key top-line driver in 2022.
Merck boasts a strong cancer pipeline, including Keytruda, which should help drive long-term growth. 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
Shopify
have underperformed the Zacks Internet – Services industry over the past two-year period (+21.5% vs. +42.0%), though the company is benefiting from e-commerce boom induced growth in the merchant base. Robust uptick in Shopify Shipping, Shopify Pay and Shopify Capital is driving the top line as reflected by fourth quarter results. The company has been focused on winning merchants on a regular basis, based on product offerings including Shop Pay and Shop Pay Installments, as well as features like end-to-end order tracking.
The Zacks analyst believes that solid adoption of new merchant-friendly applications holds promise, while partnerships with Facebook, Instagram and Google are expected to expand merchant base. However, higher investments on product development as well as fulfillment platform are likely to limit margin expansion in the near term. Raging inflation and cautious consumer spending is expected to hurt top-line growth in near term.
(You can
read the full research report on Shopify here >>>
)
Shares of
Intercontinental Exchange
have outperformed the Zacks Securities and Exchanges industry over the past six month period (+5.9% vs. +0.2%). The Zacks analyst believes that Intercontinental Exchange’s top line benefits from its compelling product and service portfolio, broad range of risk management services, strength in global data services. Continued strength in its energy franchise, improving recurring market data revenues are likely to keep growth on track.
Strategic buyouts help it achieve cost synergies that are in sync with its aim of generating long-term value for shareholders. It is well-poised for growth on the back of accelerated digitization taking place in the US residential mortgage industry. A solid balance sheet helps in effective capital deployment. Shares have outperformed the industry in the past six months. However, its expenses are likely to remain high in the near term.
(You can
read the full research report on Intercontinental Exchange here >>>
)
Other noteworthy reports we are featuring today include Barrick Gold Corp. (GOLD), Illumina, Inc. (ILMN) and NXP Semiconductors N.V. (NXPI).
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
Key Drugs & Animal Health Unit Drive Merck’s (MRK) Sales
Product Rollouts & Growing Merchant Base Aid Shopify (SHOP)
Intercontinental (ICE) Banks on Buyouts Amid High Costs
Featured Reports
USA Compression (USAC) to Benefit from Gas-Related Demand
The Zacks analyst likes USA Compression’s large-horsepower applications for natural gas transportation but is worried over the partnership’s high long-term debt of $2 billion.n
Recovery in Traffic, Fleet Expansion Aid Ryanair (RYAAY)
The Zacks analyst is encouraged by the improvement in Ryanair’s top line owing to recovery in traffic. The carrier’s fleet-expansion initiatives are an added positive.
Debt Reductions, Growth Projects Aid Barrick (GOLD)
Per the Zacks analyst, Barrick will benefit from actions to de-leverage its balance sheet and progress in key growth projects amid headwind from higher costs.
Asset Growth Aids Invesco’s Top Line (IVZ), High Costs a Woe
Per the Zacks analyst, Invesco’s diverse product offerings and rising assets under management will keep aiding revenues. Its inorganic growth efforts might lead to higher costs, thus hurting profits.
Illumina (ILMN) Banks on Strategic Pacts amid Stiff Rivalry
The Zacks analyst is optimistic about lllumina’s recent partnerships including Agendia pact intended to advance the use of NGS for decentralized oncology testing.
Solid Backlog, Return-Focused Growth Plan Aid KB Home (KBH)
Per the Zacks analyst, robust backlog level, a strong lineup of community openings, and solid return-focused growth model will help KB Home generate higher fiscal 2022 revenues and operating margin.
RF Power & Communication Business Strength Aids NXP (NXPI)
Per the Zacks analyst, NXP is benefiting from solid momentum in RF power for base stations. Further, rising 5G network deployments are driving growth in its communication business.
New Upgrades
Arista (ANET) Rides on Cloud Networking & Routing Platform
Per the Zacks analyst, Arista is likely to benefit from solid demand of its client-to-cloud networking portfolio with industry-leading capacity, low latency, high port density and power efficiency.
Service Corporation (SCI) Gains on Robust Cemetery Segment
Per the Zacks analyst, Service Corporation is gaining on solid Cemetery sales for a while. During fourth-quarter Consolidated Cemetery revenues increased almost 5% year over year to $443.5 million.
Investments in Specialized Distribution to Aid FEMSA (FMX)
Per the Zacks analyst, FEMSA has been on track with its strategy of creating a national distribution platform in the United States, through the expansion in the specialized distribution industry.
New Downgrades
High Input Costs, Supply Constraints to Hurt Astec (ASTE)
The Zacks analyst is concerned that elevated input costs and manufacturing challenges due to supply chain and logistic disruptions will continue to weigh on Astec’s results this year.
Poor Air Travel View, Rising Costs to Hurt Leidos (LDOS)
Per the Zacks analyst, soft near-term air travel outlook may hurt Leidos’ airport security detection and automation business. Also rising program costs due to COVID pose risk to this stock’s growth.
Supply Chain Issues Ail SolarEdge Technologies (SEDG) Growth
Per the Zacks analyst, Covid induced supply chain component shortages which leads to lower shipment volumes at a higher freight cost might have an adverse effect on SolarEdge’s results
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