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Top Stock Reports for AstraZeneca, Union Pacific & Altria

Sheraz Mian

Wednesday, July 29, 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 AstraZeneca (AZN), Union Pacific (UNP) and Altria Group (MO). 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 >>>

AstraZeneca shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+28.6% vs. +12.7%). The Zacks analyst believes that AstraZeneca’s products like Nexium, Crestor and Seroquel are facing generic competition, which is hurting sales.

The diabetes franchise also faces stiff competition while pricing pressure is hurting sales in the respiratory unit. Also, the coronavirus outbreak may hurt its profits in 2020. Nonetheless, AstraZeneca’s newer drugs, mainly cancer medicines Lynparza, Tagrisso and Imfinzi, should keep driving revenues in 2020.

Its pipeline is strong with abundance of pipeline catalysts lined up for 2020. Several launches are underway across each of the therapeutic areas. Cost-cutting efforts should drive earnings. The company has a mixed record of earnings surprises in the recent quarters. Estimates have gone up ahead of Q2 earnings release.

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

Shares of Union Pacific have lost -3% over the three six months against the Zacks Rail industry’s fall of -5.4%. The Zacks analyst is pleased by the company's efforts toward promoting safety and enhancing productivity.

Union Pacific is suffering a dismal freight revenue scenario (down 14% in first-half 2020). Freight revenues are being hurt, mainly by coronavirus-induced depressed volumes (down 13% in first-half 2020). Weakness in the Bulk, Premium and Industrial units weighed on the overall volume picture. Overall volumes are likely to decline around 10% in the current year. Deterioration in the debt-to-EBITDA ratio is an added woe.

However, efforts to control costs, courtesy of the precision scheduled railroading model, are a positive, particularly, in the wake of revenue concerns. Mainly owing to cost-cutting efforts, operating ratio is predicted to improve in 2020. The company's ability to generate free cash flow (up 58.9% in first-half 2020) is also a boon. Further, the uptick in e-commerce demand during the pandemic is encouraging.

(You can read the full research report on Union Pacific here >>>)

Altria shares have gained +6.2% over the past six months against the Zacks Tobacco industry’s rise of +1.6%. The Zacks analyst believes that the company has been benefiting from its pricing strategy, which boosted adjusted OCI in smokeable and oral tobacco product units in the second quarter of 2020.

This, in turn, aided the bottom line, which beat the consensus mark in the quarter. Also, the quarter depicted strength in the oral tobacco products segment, which is poised to gain on expansions in IQOS and on!

However, Altria’s revenues were hurt by the smokeable product unit’s softness due to low domestic cigarette shipment volumes. Cigarette volumes have long been affected by stern regulations and rising health awareness. Altria still expects domestic cigarette industry volumes to decline in 2020 at a lower rate, thanks to better year-to-date industry trends and anticipations of continued resilience.

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

Other noteworthy reports we are featuring today include SAP SE (SAP), Vertex Pharmaceuticals (VRTX) and Uber Technologies (UBER).

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Sheraz Mian

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

Cancer Drugs to Drive AstraZeneca's (AZN) Sales in 2020

Freight Revenue Woes Ail Union Pacific (UNP), Cost Curbs Aid

Altria (MO) to Benefit From Solid Oral Tobacco Products Unit

Featured Reports

Growth in S/4HANA Platform & Expanding Clientele Aid SAP

Per the Zacks analyst, robust adoption of S/4HANA and other cloud-based offerings have supported SAP's top line. Also, partnership with IBM is expected to aid SAP in expanding cloud-based clientele.

Vertex's (VRTX) Triple Combo CF Pill Key to Growth in 2020

Per the Zacks analyst, Vertex's sales in 2020 are being driven by rapid uptake of Trikafta as well as higher international revenues.

Eats Business Keeps Uber (UBER) Afloat Amid Rides Weakness

The Zacks analyst is optimistic about the continued surge in Uber's Eats business. However, downturn in the Rides business is a major concern.

Honda (HMC) to Gain From Focus on EVs Amid High SG&A Expenses

Per the Zacks Analyst, Honda is expected to benefit from its Vision 2030 plan, which aims to cut development costs and focus more on electric vehicles.

Eni (E) Banks on Key Upstream Projects, Refining Hurts

The Zacks analyst believes that key upstream project start-ups will aid Eni reach long-term oil and gas production growth of 3.5%.

Kellogg's (K) Organic Sales Gain From Coronavirus-Led Demand

Per the Zacks analyst, Kellogg's (K) organic sales have been benefiting from coronavirus-led stockpiling.

Diverse Assets Aid Welltower (WELL) Amid Senior Housing Woes

Per the Zacks Analyst, a diversified portfolio and strong balance sheet position bodes well for Welltower, though occupancy woes and rental rate erosions remain concerns.

New Upgrades

Watsco (WSO) Benefits From Solid E-Commerce Business, Buyouts

Per the Zacks analyst, solid e-commerce business amid coronavirus-led restrictions is helping Watsco to drive sales. Also, acquisitions added to the positives.

Prudent Asset-Selection Efforts Aid AGNC Investment (AGNC)

Per the Zacks analyst, a specified-pool MBS strategy and a greater focus on low coupon mortgage backed securities aimed at hedging high prepayment speed support AGNC Investment.

Growing Top Line, Solid Capital Position Aid RLI Corp. (RLI)

Per the Zacks analyst, its rising revenues driven by higher premiums and net investment income have led to significant growth. Moreover, robust capital position continues to be a key catalyst.

New Downgrades

Weak Demand and High Costs to Hurt Ball Corporation (BLL)

The Zacks analyst is concerned that weak demand in South America and Europe owing to the coronavirus pandemic as well as incremental costs will impact Ball Corporation's results in the near term.

Stringent Regulations, Commodity Prices hurt AES Corp. (AES)

Per the Zacks Analyst, rigid environmental rules and compliance cost may hinder company's performance. Also, volatility in market prices of fuel and electricity could create operational risks.

Decline in Client Services Revenues Hurts Allscripts (MDRX)

The Zacks analyst is worried about Allscripts' decline in its core Client Services and Software delivery unit revenues. Exposure to integration risks is another concern.

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
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
Uber Technologies, Inc. (UBER) : Free Stock Analysis Report
SAP SE (SAP) : Free Stock Analysis Report
Altria Group, Inc. (MO) : Free Stock Analysis Report
AstraZeneca PLC (AZN) : Free Stock Analysis Report
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