U.S. Markets close in 4 hrs 14 mins

Top Analyst Reports for Procter & Gamble, AbbVie, McDonald's & PepsiCo

Mark Vickery
Top Analyst Reports for Procter & Gamble, AbbVie, McDonald's & PepsiCo

Monday, May 21, 2018

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 17 major stocks, including Procter & Gamble (PG), AbbVie (ABBV), McDonald’s (MCD) and PepsiCo (PEP). 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 >>>

Procter & Gamble's shares have underperformed the Zacks Soap and Cleaning Materials industry over the last six months (-16.9% vs. -10.2%). P&G reported third-quarter fiscal 2018 results, wherein earnings and revenues surpassed expectations, benefiting from higher demand for skincare products, along with fabric and home care products.

Adjusted earnings grew 4% from the year-ago level, aided by productivity cost savings. Top line grew 4% on organic sales growth of 1%, comprising 2% volume growth. The Zacks analyst emphasizes that Procter & Gamble remains focused on improved product, packaging and marketing initiatives, and productivity cost-savings plan.

Meanwhile, it intends to acquire the consumer-health unit of Merck KGaA, which will enhance P&G's existing consumer healthcare capabilities. However, core gross and operating margin declined 110 bps and 100 bps, respectively, in the quarter.

Lower pricing, higher commodity costs and increased competition continued to hurt results. P&G's shares have lost around 20.1% year to date. Estimates for fiscal 2018 and 2019 have moved down 0.2% and 1.3%, over the past 60 days.

(You can read the full research report on Procter & Gamble here >>>).

Shares of AbbVie have gained +9.6% year to date, outperforming the Zacks Large Cap Pharmaceuticals industry, which has declined -3.8% over the same period. AbbVie beat estimates for both earnings and sales in the first quarter. It also raised its earnings expectations for 2018 based on strong Q1 performance and an optimistic outlook for future quarters.

AbbVie’s key drug, Humira, has been performing well based on strong demand trends, despite new competition. Moreover, Imbruvica has multibillion dollar potential and AbbVie is exploring the possibility of label expansion into solid tumors and autoimmune diseases. Mavyret’s launch has also been stronger than expected. AbbVie has an impressive late-stage pipeline with label expansions for both new and existing products expected over the next few years.

The Zacks analyst thinks promising data from several pivotal studies and settlement of its second Humira patent dispute with Biogen are key positives. However, Viekira’s sales continue to be hurt by intensifying competition.

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

McDonald's shares have gained +8.6% over the past one year, outperforming the Zacks Restaurants industry which has gained +1.7% over the same period. The Zacks analyst thinks McDonald’s impressive earnings surprise history, various sales and digital initiatives as well as positive comparable sales are major positives.

Earnings surpassed the estimate for 15th straight quarter, as it reported first-quarter 2018 results. Furthermore, increased focus on delivery and accelerated deployment of Experience of the Future restaurants in the United States should boost its performance.

Efforts to attract customers in International Lead & High Growth Markets also bode well. In fact, global comps at McDonald’s have been positive over the trailing eleven quarters. Yet, high labor costs and currency headwinds are major concerns.

Moreover, revenues have been under pressure for quite some time due to strategic refranchising initiative. Even so, its augmented focus on refranchising should cut the capital requirements and facilitate EPS growth in the long run.

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

Shares of PepsiCo have decreased -18.7% year to date, underperforming the Zacks Soft Beverages industry, which has declined -12.3% over the same period. PepsiCo’s first-quarter 2018 earnings and revenues both beat expectations. Notably, this is the eighth consecutive quarter of positive earnings surprise.

The improvement was mainly due to strong performances in its international divisions, propelled by higher revenue growth in the developing and emerging markets. Core earnings and revenues grew 3% and 4.3% year over year, respectively. Organic revenues were 2.3% in the quarter, same as the prior quarter.

However, NAB division reported dismal results with revenues and operating profit decreasing 1% and 22%, respectively. Volumes declined 2.5%, led by 4% decline in CSDs and 1% decrease in Non CSDs. Shift in consumer preferences toward healthier options is a potent headwind. Earnings estimates have moved 0.2% and 0.5% south for 2018 and 2019, respectively, over the past 30 days.

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

Other noteworthy reports we are featuring today include Applied Materials (AMAT), ABB Ltd. (ABB) and Itau Unibanco (ITUB).

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

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

P&G (PG) to Gain from Merck's Consumer-Health Unit Acquisition

AbbVie's (ABBV) Mavyret Sales Strong Despite Humira Woes

McDonald's (MCD) Gains From Re-Franchising & Robust Comps

PepsiCo (PEP) Strong on Innovations, Weak NAB Results Hurt

Featured Reports

Williams' (WMB) WPZ Buyout to Ease Organizational Structure

While Williams' buyout of its midstream unit will ease organizational structure and improve credit profile, the Zacks Analyst is concerned about the regulatory roadblocks to Constitution Pipeline.

Sales-Force Integration Efforts Drive CenturyLink (CTL)

Per the Zacks analyst, sales force integration efforts with profitable revenue growth will continue to benefit CenturyLink to generate incremental cash flow.

Growth in Semiconductor Demand Aids Applied Materials (AMAT)

Per the Zacks analyst, Applied Materials continues to benefit from technological advancement in semiconductor segment along with robust 3D NAND and patterning equipment.

Diversification Aids Itau Unibanco (ITUB), High Costs a Woe

Per the Zacks analyst, strategy to internationalize the bank, diversification and focus on less risky products remained key strengths at Itau Unibanco.

Kellogg (K) Well Poised on Project K, ZBB Cost Saving Plans

Per the Zacks analyst, Kellogg's cost savings from its Project K and zero-based budgeting (ZBB) plans have been supporting renovation, innovation and margins.

Oncor Buyout to Aid Sempra Energy's (SRE) Growth, Costs Ail

Per the Zacks analyst, Oncor acquisition will expand Sempra Energy's footprint in Texas and U.S. gulf areas.

Strong Order Trends, Buyouts Catalysts for ABB Ltd. (ABB)

Per the Zacks analyst, strong order growth in Robotics & Motion and Industrial Automation segments bode well for ABB's growth momentum.

New Upgrades

Stryker (SYK) Gains Ground on Mako Total Knee Platform

Per the Zacks analyst, continued demand for the Mako Total Knee Platform and a diversified product portfolio have consistently driven Stryker's growth.

Strong Medicare Business, Balance Sheet Aid Humana (HUM)

Per the Zacks analyst, strong growth in Medicare business has led to increase in membership and revenue over past several quarters. The company's strong balance sheet enables strategic investments.

ADP Rides on Strategic Business Moves, Strong Balance Sheet

The Zacks analyst believes that ADP's buyout strategy and initiatives to streamline and expand its business are key growth catalysts. A strong cash position is also a positive.

New Downgrades

Stiff Competition, Pipeline Setbacks Weigh on Momenta (MNTA)

Per the Zacks analyst, stiff competition in the glatiramer acetate market is impacting Momenta's performance. In addition, pipeline setbacks further cloud the growth trajectory for the company.

Frequent Vehicle Recalls, Stronger Yen Weigh on Toyota (TM)

Per the Zacks analyst, frequent recalls are lowering vehicle resale value and raising costs for Toyota. Further, a stronger yen may negatively impact its profitability in fiscal 2019.

Waning Margins, Inclement Weather a Worry for Lowe's (LOW)

Per the Zacks analyst, waning gross margin and higher SG&A expenses may hurt Lowe's bottom line. Further, unfavorable weather might result in lower spring seasonal spending that can hurt sales.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
Pepsico, Inc. (PEP) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
AbbVie Inc. (ABBV) : Free Stock Analysis Report
ABB Ltd (ABB) : Free Stock Analysis Report
To read this article on Zacks.com click here.