For Immediate Release
Chicago, IL – September 30, 2020 – Zacks Equity Research Shares of NIKE, Inc. NKE as the Bull of the Day, OrganiGram Holdings Inc. OGI asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Thermo Fisher Scientific Inc. TMO, Danaher Corporation DHR and Agilent Technologies, Inc. A.
Here is a synopsis of all five stocks:
Bull of the Day:
Founded in 1967, Nike is one of the world’s most popular shoemakers, designing, developing, and marketing athletic footwear, apparel, and equipment for men, women, and kids. With the help of a strong brand portfolio, including Nike Pro, Nike Golf, Nike+, and Air Jordan, Nike is known for offering premium, well-designed, and high-quality products that are in-line with the latest trends.
Q1 Earnings Recap
Nike popped over 9% after the company reported blowout first quarter earnings earlier this month.
Revenue fell 1% year-over-year to $10.6 billion, but profits actually increased; net income rose 11% to $1.52 billion and earnings per share hit $0.95, easily beating the consensus estimate.
Digital sales soared 82% thanks to strong performance in all of its regions. Notably, the Europe, Middle East, and Africa (EMEA) region saw triple-digit growth over the prior-year quarter. Direct sales, which include Nike’s stores and online platforms, rose 12% to $3.7 billion.
Overall, the sportswear giant’s Q1 results showed how resilient the company is amid this year’s unprecedented headwinds, and how important its digital channel has become to its business.
"Our results this quarter continue to demonstrate Nike's full competitive advantage, as we strengthen our position in the midst of disruption. In this dynamic environment, no one can match our pace of launching innovative products and our brand's deep connection to consumers,” said CEO John Donahoe.
NKE Breaks Out
Since March 23, shares of Nike have surged over 84% compared to the S&P 500’s 44+% increase. Earnings estimates have been rising too, and NKE is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, 13 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 44 cents to $2.78 per share. Earnings are expected to grow almost 74% compared to the prior year period. 2021 looks strong too, and earnings should see double-digit year-over-year growth next year as well.
On Nike’s earnings call, management said that it anticipated revenue growth of high single digits to low double digits for fiscal 2021.
The company has also re-opened about 90% of its brick-and-mortar sales locations worldwide, and even though customer volume remained lower than average, its new product releases have been well-received.
With all of this in mind, Nike has all the pieces in place to emerge from the coronavirus pandemic an even stronger company.
If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep NKE on your shortlist.
Bear of the Day:
OrganiGram Holdings is a Canadian-based medical cannabis company that sells to both individuals and physicians. The company also operates healing centers that focus on treating post-traumatic stress disorder and chronic pain, as well as providing trauma therapy.
Q3 Earnings Recap
OrganiGram’s top and bottom lines lagged behind the consensus estimate and fell significantly year-over-year. Revenue was CA$18 million, or $13.3 million, while its net loss came to CA$0.51, or ($0.38) per share.
Shares plunged over 9% after its earnings report was released.
Management attributed these weaker-than-expected results to recent job cuts (about 25% of its workforce). This “contributed to a number of product launch delays, including our initial large format value offering, which affected opportunities to potentially capture significant market share and sales in dried flower, the largest product segment of the recreational market,” said the company.
OrganiGram also had to write off CA$19.3 million of inventory that couldn’t be sold in time during the quarter.
OGI is now a Zacks Rank #5 (Strong Sell).
One analyst has cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen nine cents to a loss of $0.40 per share; earnings are expected to see a triple-digit decline for fiscal 2020.
Shares have fallen more than 30% since the March lows, lagging the S&P 500’s 44+% rebound during the same time frame.
Going forward, OGI has a long road ahead of it. Total net loss reached almost CA$90 million last quarter, and the company only has CA$78 million cash and investments on hand. Even though the company is optimistic about new product launches and expansions, potential investors may want to stay clear until OrganiGram can reverse falling revenue and profits.
3 Picks to Ride on Coronavirus-Led Strength in Lab Plastics
Investors are currently keeping a close watch on two sets of stocks, COVID-19 vaccine developers and drug/therapy makers. There is a possibility that many of these stocks might score big over the next few months depending on their respective R&D progress. However, the rapid gene mutation of SARS-CoV-2 is thwarting all efforts toward determining a confirmed timeline of the vaccine and therapeutic advancements. Also, delivering a successful COVID-19 vaccine in a short span comes with its own share of risks.
Here we may take the example of AstraZeneca’s sudden temporary halt of phase 3 clinical trial of its vaccine candidate earlier this month on certain safety issues. Although the research work was resumed soon after that, this kind of uncertainty increases risks for investors.
Going by Jim Cramer, there will finally be only three or four actual winners. According to him, “Rather than chasing the Covid-19 vaccine developers that are panning for gold, I want to go with the equipment suppliers that sell the medical equivalent of pans and picks and shovels to the gold miners.”
This is highly prudent in a way that these laboratory equipment suppliers’ fate does not depend on the R&D outcomes of the drug and vaccine makers. Let us delve deeper.
Medical Plastic Market the Next Big Thing
Currently, thousands of biotech companies, both small and big, working toward development and manufacturing of therapies and vaccines globally, are resorting to lab plastic consumables suppliers and manufacturers to check on the contagion spread within their laboratories. This has created a rapid increase in demand for products like pipette and automation tips, storage tubes and plates, transfer pipettes, and packaging vials and bottles as well as PCR plates and RNA extraction kit. Every step of COVID-19 research has enormously increased the demand for these lab plastic equipment products.
Recent data states that since the beginning of the pandemic, this market has grown exponentially on solid demand from Original Equipment manufacturers (OEMs) and medical equipment manufacturers for the production of critical care devices including ventilators, thermal scanners, and respirators.
Going by a markets and markets report, amid the pandemic, global medical plastics market size is projected to grow from $25.1 billion in 2020 to $29.4 billion by 2021, at a CAGR of 17.2%.
Demand for medical disposables, part of medical plastic, which include masks, gloves, PPE, face shield etc are growing too with their increasing usefulness in checking the spread of infection.
3 Stocks with Strong Medical Equipment Arms
Here we have discussed three picks depending on their significant stride as medical equipment manufacturers and suppliers amid the pandemic. These stocks sport a Zacks Rank #1 (Strong Buy) or #2 (Buy) and have outperformed their respective industry.
Thermo Fisher Scientific: The company recently invested as much as $140 million to further expand its laboratory plastics consumables production to support significant global demand for COVID-19 testing, as well as development and manufacturing of therapies and vaccines. From bottles, beakers, funnels and tubes to pipettes, tips and diagnostic plates, Thermo Fisher consumables support critical COVID-19 work globally.
Its offerings include sample collection vials for diagnostic test kits, pipettes for test processing, lab essentials for research into therapies and vaccines, lab plastics to support clinical and epidemiological studies, and materials for vaccine production and biobanking.
This Zacks Rank #2 stock has outperformed the industry over the past six months, The stock has gained 50.3% in this period compared with the industry’s 32.9% growth. The stock’s long-term expected earnings growth rate is pegged at 15.5%.
Danaher Corp.: The company’s life science businesses, which work on lab equipment, are currently expanding production capacity to support the fight against COVID-19. Also, the recent surge in COVID-19 related research and development among the company’s biotech and pharmaceutical customers is generating strong demand for its bioprocessing, genomic and automation solutions.
This Zacks Rank #2 stock has outperformed the industry over the past six months. It has gained 49% in this period compared with the industry’s 18.3% growth. The stock’s long-term expected earnings growth rate is pegged at 11.6% at present.
Agilent Technologies: This Zacks Rank #2 stock too is expanding in the medical equipment space through its momentous Life Sciences & Applied Markets segment growth. The company’s research equipment Bravo has been rapidly accepted for COVID-19 research. Bravo automates the process of transferring liquids from one container to another.
While a person can only transfer one or a few liquid samples at a time, Bravo does 96 samples at once. Here comes the need for increased consumables. The Bravo instrument utilizes 96-well reservoir microplates designed and manufactured specifically by Agilent for automated liquid handlers. Many pharmaceutical companies are already using these microplates.
This stock too has outperformed the industry over the past six months. It has gained 36.9% in this period compared with the industry’s 36.7% growth. The stock’s long-term expected earnings growth rate is pegged at 10%.
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