Thursday, April 2, 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 Eli Lilly (LLY), Charter Communications (CHTR) and Eaton (ETN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. We have also linked below the lattest Zacks Earnings Trends report, which gives you a real-time take on the overall corporate earnings landscape.
You can see all of today’s research reports here >>>
With the 2020 Q1 earnigs season coming up, the market's focus is expected to shift to the earnigns impact of the ongoing pandemic. To that end, it is important to keep in mind that earnings estimates have been coming down sharply over the last few weeks and all four quarters of 2020 are now expected to show year-over-year declines.
For 2020 Q1, total earnings or aggregate net income for the S&P 500 index are now expected to be down -6.6% from the same period last year. The brunt of estimate cuts has fallen on Q2 and Q3, which are now expected to experience double-digit earnings declines. But given the still unsettled public health aspect of these cuts, it is reasonable to expect estimates to go down further. For more details about the evolving earnings picture, please check out our weekly Earnings Trends report >>>> How Low Will Earnings Estimates Go?
Eli Lilly’s shares have held their own in the ongoing market downturn, outperforming not only the broader market but also the Zacks Large Cap Pharmaceuticals industry over the past six months (+24.8% vs. -1.1). The Zacks analyst believes that in 2020, Lilly’s revenue growth is likely to be driven by higher demand for newer drugs like Trulicity, Jardiance, Taltz, Verzenio, Basaglar, Emgality as well as newly launched Baqsimi and Reyvow.
Lilly is making significant pipeline progress with several positive late-stage data readouts scheduled for 2020. Lilly is also regularly adding promising new pipeline assets through business development deals.
However, generic competition for several drugs including the expected generic entry of Forteo, rising pricing pressure in the United States and price cuts in some international markets and coronavirus pandemic impact are some top-line headwinds expected in 2020. Estimates are stable ahead of Q1 results. Lilly has a positive record of earnings surprises in the recent quarters.
(You can read the full research report on Eli Lilly here >>>)
Shares of Charter Communications have gained +22% over the past year against the Zacks Cable TV industry’s fall of -11.1%. The Zacks analyst believes that the company is benefiting from growth in Internet, mobile, commercial and video revenues. Increase in Internet speed at no extra cost is also aiding subscriber growth.
Additionally, Charter’s spectrum mobile products are gaining traction and subscriber base is increasing rapidly. Launch of spectrum mobile services to small and medium business customers is a key catalyst. Improving free cash flow is a growth driver.
However, commercial revenues continued to suffer due to migration of customers to Spectrum pricing, and packaging from Legacy TWC and Legacy Bright House. Further, Charter persistently loses video subscribers, primarily due to cord-cutting and intense competition from streaming service providers like Netflix and Amazon.
(You can read the full research report on Charter Communications here >>>)
Eaton’s shares have lost -23.4% over the past three months against the Zacks Electrical Machinery industry’s fall of -31.8%. The Zacks analyst believes that Eaton’s wide market reach, strategic acquisitions, spin-off of less profitable businesses are boosting operations.
The company’s ongoing R&D investments will help it upgrade products, and provide better electrical solutions to customers. Eaton’s divestment of the Lighting and Hydraulics business to focus on core operations is in sync with long-term growth objectives. Strong cash flow generation and product innovation are likely to drive its performance.
However, Eaton’s world-wide operations expose it to negative currency translation, cyber-attacks and security breaches, all of which might impact operations. Choppy end-market conditions have compelled the company to lower organic growth projection and trim earnings expectation.
(You can read the full research report on Eaton here >>>)
Other noteworthy reports we are featuring today include Autodesk (ADSK), The Bank of New York Mellon (BK) and Cypress Semiconductor (CY).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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
Lilly (LLY) Makes Solid Pipeline Progress
Mobile & Internet Subscriber Gain Benefits Charter (CHTR)
Global Presence Aid Eaton (ETN) Amid End Market Weakness
Autodesk's (ADSK) Subscriber Base Grows, Restructuring Hurts
Per the Zacks Analyst, Autodesk benefits from expanding subscriber base driven by strong adoption of BIM 360 and Fusion tools.
Solid Assets Growth Aids BNY Mellon (BK) Amid Lower Rates
Per the Zacks analyst, solid assets under management growth, global diversification and manageable expense levels aid BNY Mellon.
Cypress (CY) Benefits From Auto, Consumer Demand A concern
The Zacks analyst believes that Cypress new design wins and strength across industrial and auto markets are encouraging.
International & Offshore Projects to Boost Halliburton (HAL)
The Zacks analyst believes rising international activity and higher offshore spending should aid Halliburton but is concerned about weak oilfield services demand in North American land sector.
Segmental Growth Aids Hologic (HOLX), Aptima Uptake Solid
The Zacks analyst is optimistic about the strong performance by majority of Hologic's segments on constant currency basis.
Carter's (CRI) Withdraws View on COVID-19, E-Commerce Strong
Per the Zacks analyst, Carter's is reeling under the COVID-19 impact, which has compelled it to withdraw first quarter and 2020 view.
Ultragenyx's (RARE) Crysvita Aid Growth, Low Revenues a Woe
Per the Zacks analyst Ultragenyx witnessed growth in the demand for Crysvita. The drug's performance has been impressive so far.
New Product Uptake, International Growth Aid STERIS (STE)
The Zacks analyst is optimistic about STERIS' consistent top-line growth banking on product launches in Life Sciences and Applied Sterilization arms. Emerging markets expansion too holds potential.
Packaging Corp (PKG) Rides on E-commerce Boom Amid Cost Woes
Per the Zacks Analyst, Packaging Corp is poised to gain from solid demand for packaging segment and the e-commerce boom spurring demand for boxes despite higher maintenance outage costs.
Adtalem's (ATGE) Business Banks on Transformation Strategy
Adtalem is poised to benefits from its business transformation strategy that includes collaboration, acquisitions and cost-saving initiatives, per the Zacks analyst.
Crude Collapse, Downstream Woes to Weigh on Chevron (CVX)
The Zacks analyst believes the sub-$25 oil price has weakened Chevron's profile considerably, impacting its Permian production.
Sluggish Markets & Higher Costs to Hurt AGCO Corp (AGCO)
Per the Zacks analyst, AGCO's results will bear the brunt of weak agricultural markets, supply chain disruptions amid the coronavirus outbreak as well as elevated expenses.
Weak RV Market and Cost Woes to Hurt Winnebago (WGO)
Projected decline in recreational vehicle (RV) shipments in 2020 along with rising input costs are likely to hurt Winnebago's sales and profit in the near term, as per the Zacks analyst.
Eli Lilly and Company (LLY) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
Cypress Semiconductor Corporation (CY) : Free Stock Analysis Report
Charter Communications, Inc. (CHTR) : Free Stock Analysis Report
The Bank of New York Mellon Corporation (BK) : Free Stock Analysis Report
Autodesk, Inc. (ADSK) : Free Stock Analysis Report
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