Q2 Earnings Scorecard and Analyst Reports for Roche, AMD & Others
Tuesday, July 18, 2023
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q2 earnings season and new research reports on 16 major stocks, including Roche (RHHBY), Fomento Económico Mexicano, (FMX) and Advanced Micro Devices (AMD). 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 >>>
Q2 Earnings Season Scorecard
Including this morning's reports from Bank of America, Morgan Stanely and others, we now have Q2 results from 38 S&P 500 members. Total earnings for these 38 index members are up +5.6% from the same period last year on +8.3% highre revenues, with 86.8% beating EPS estimates and 68.4% beating revenue estimates.
This is better than expected performance for this group of 38 S&P 500 members, with the EPS beats percentage of 86.8% the highst for this group in the last 20 quarters. This is notable as unlike many other recent quarters estimates for Q2 hadn't dropped that much.
Looking at Q2 as a whole, S&P 500 earnings are expected to decline -9.4% from the same period last year on -0.5% lower revenues.
A big part of the declines are due to the Energy sector whose Q2 earnings and revenues are expected to decline -48.8% and -27.8%, respectively. Excluding the Energy sector drag, Q2 earnings for the rest of the index would be down only -3.5% on +3% higher revenues.
While index earnings are currently expected to modestly decline in 2023 Q3 as well, the growth pace would be positive had it not been for the Energy sector drag.
Today's Featured Analyst Reports
Shares of Roche Holding have modestly outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+1.6% vs. +0.2%). Company’s new drugs, namely Ocrevus, Hemlibra, Evrysdi and Tecentriq, recorded growth and should maintain momentum. The uptake of the new eye drug Vabysmo (launched at the beginning of 2022) has been outstanding and is already one of the top growth drivers for the company.
The company’s efforts to develop new drugs to combat the decline in legacy drugs are encouraging. However, performance so far in the year has been ordinary, as significantly lower COVID-19 product sales have impacted the top line.
Sales are likely to be impacted further due to the expected sharp decline in sales of COVID-19 products of roughly CHF 5 billion. Also, competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin continues to drag down sales.
(You can read the full research report on Roche Holding here >>>)
Share of Fomento Económico Mexicano have outperformed the Zacks Beverages - Soft drinks industry over the past year (+83.3% vs. +14.3%). The company’s top and bottom-line improved year over year on strength across segments and improved operating income.
Revenues improved on gains across all business units resulting from effective growth strategies and robust demand across markets. The company’s digital initiatives and business expansion endeavors have also been aiding results. Its efforts to expand in the U.S. specialized distribution segment bodes well. The company displays strong financial flexibility.
However, FEMSA continued to witness operating margin decline due to contraction at Proximity, Health and Envoy Solutions divisions. Supply-chain disruptions and higher raw material costs hurt results.
(You can read the full research report on Fomento Economico Mexicano here >>>)
Shares of AMD have outperformed the Zacks Electronics - Semiconductors industry over the year-to-date period (+82.6% vs. +57.4%). The company is witnessing strong demand for its products in industrial, vision and health care, test and emulation, communications, aerospace and defense, and automotive end-markets. Embedded segment reported strong growth.
For second quarter of 2023, AMD expects to witness growth in Embedded segment, partially offset by a decline in the Client, Gaming and Data Center segments on a year-over-year basis. AMD is benefiting from strong product portfolio and acquisitions including Xilinx and Pensando, which has diversified its business.
Robust adoption of EPYC processors by North American hyperscalers has been a tailwind. Alliances with Amazon, Microsoft, Baidu and JD.com augment business prospects. However, stiff competition from NVIDIA and Intel is a concern.
(You can read the full research report on AMD here >>>)
Other noteworthy reports we are featuring today include S&P Global Inc. (SPGI), Union Pacific Corporation (UNP) and Mondelez International, Inc. (MDLZ) .
Director of Research
Sheraz Mian
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
New Drugs Boost Roche (RHHBY), COVID-19 Treatments Decline
Investments in Specialized Distribution to Aid FEMSA (FMX)
Robust Product Portfolio & Partnerships Aid AMD's Prospects
Featured Reports
S&P Global (SPGI) to Gain From ChartIQ Buyout, Costs High
Per the Zacks analyst, S&P Global's market intelligence segment will be benefitted by the acquisition of charting provider ChartIQ. High operational cost remain a concern.
Union Pacific (UNP) Rides on Dividends & Buyback, Costs Ail
The Zacks analyst likes the shareholder-friendly measures adopted by Union Pacific. Increase in fuel costs are concerning as they are likely to keep the bottom line under pressure.
Mondelez (MDLZ) Organic Sales Gain on Solid Pricing Actions
Per the Zacks analyst, Mondelez's organic sales have been gaining from its strategic pricing initiatives. During the first quarter, balanced pricing aided organic sales growth of 19.4%.
Solid Product Suite Aids Ecolab (ECL) Amid Stiff Competition
The Zacks analyst is upbeat about Ecolab's strength in water, hygiene and infection prevention solutions and services despite its operation in a highly competitive market.
Investments Aid Sempra Energy (SRE), Project Delays Woe
Per the Zacks analyst, systematic investments in infrastructure are expected to boost Sempra's rate base growth. Yet, COVID-19 induced possible delays in LNG project development might hurt the stock.
Corning (GLW) Rides on Portfolio Strength, Cost Optimization
Per the Zacks analyst, Corning will likely gain from a diverse portfolio, improved demand and commercialization of its innovations. Focus on operational excellence and cost optimization are tailwinds.
MGM Resorts (MGM) Banks on Macao Business to Drive Growth
Per the Zacks analyst, MGM Resorts is likely to benefit from increased business volume and travel activity in Macao region. Also, its focus on asset light strategy and expansion bode well.
New Upgrades
Strong Domestic Demand, Cost Cuts Aid Sherwin-Williams (SHW)
Per the Zacks Analyst, robust demand in domestic markets will support Sherwin-Williams' sales volumes. Efforts to cut operating costs will also provide margin benefits.
Diverse Revenues, Strategic Acquisitions Aid Moody's (MCO)
Per the Zacks analyst, Moody's diverse revenue mix and low-risk product portfolio will likely aid growth. Also, supported by solid balance sheet, it is poised for top-line growth through acquisitions.
PACCAR's (PCAR) Investment in Advanced Technologies to Lift Sales
Per the Zacks analyst, PACCAR's accelerated efforts toward electrification, connected vehicle services, advanced driver-assistance system options are set to bolster its prospects.
New Downgrades
Ligand's (LGND) Dependence on Captisol Technology A Woe
The Zacks Analyst is concerned about Ligand' overdependence on its collaboration partners for revenues. The company has been experiencing a decline in its Captisol sales for COVID-19 antiviral Veklury
Matador (MTDR) Hurt by Increasing Lease Operating Expenses
The Zacks analyst is concerned since Matador has been bearing the brunt of rising lease operating costs, which is affecting the company's income.
Weak Retention & Growing Debt Affect ProAssurance (PRA)
Per the Zacks analyst, volatility in ProAssurance's premium retention in physician business can hinder top-line growth. Also, a rising debt level is concerning.
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Roche Holding AG (RHHBY) : Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
S&P Global Inc. (SPGI) : Free Stock Analysis Report
