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Top Stock Reports: Disney, Eli Lilly, ADP & More

Kalyan Nandy

Thursday, August 8, 2019

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including The Walt Disney (DIS), Eli Lilly (LLY) and Automatic Data Processing (ADP). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Disney’s shares have gained +23% year to date, underperforming the Zacks Media Conglomerates industry’s gain of +29.8%. Disney’s third-quarter fiscal 2019 results were hurt by investments in ESPN+ and Disney+, and consolidation actions related to 21st Century Fox (21CF) and Hulu. The Zacks analyst thinks the phenomenal success of Avengers: Endgame and robust collections by Aladdin, Captain Marvel and Toy Story 4 negated lackluster performance of Dark Phoenix. Moreover, higher guest spending and growth in consumer products business drove the top line. Nevertheless, the company anticipates higher operating losses in the Direct-to-consumer & International segment due to ongoing investments. Media Networks’ operating income is also expected to decline due to weakness in 21CF’s television businesses and higher programming expenses at ESPN.

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

Shares of Eli Lilly have lost -4% year to date, underperforming the Zacks Large Cap Pharmaceuticals industry, which has declined -2.6% over the same period. Lilly beat estimates for earnings in the second quarter but missed the same for sales. Revenue growth in the second half is expected to be driven by higher demand for its newer drugs like Trulicity, Jardiance, Taltz, Verzenio and Emgality, as some older drugs like Cialis face generic competition. The Zacks analyst thinks Lilly has made significant pipeline progress in the past year with several positive late-stage data readouts, multiple approvals and regulatory submissions. Lilly also added promising new pipeline assets through business development deals. However, rising competitive pressure on Lilly’s drugs, generic competition for several drugs including Cialis, rising pricing pressure, currency headwinds and the impact of the failed Lartruvo study are expected to keep the top line under pressure.

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

ADP’s shares have gained +18.9% over the past year, outperforming the Zacks Outsourcing industry's +10.2% increase. ADP’s fourth-quarter fiscal 2019 earnings beat expectations but revenues missed the same. The Zacks analyst thinks the company continues to enjoy a dominant position in the human capital management market through strategic acquisitions. It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. A solid balance sheet enables it to continue with its shareholder-friendly activities alongside strategic buyouts and investments in product development. However, ADP faces significant competition in each of its product lines. Failure to remain technologically updated might reduce the demand for its solutions and services. The company is seeing increase in expenses as it continues to acquire companies and invest in transformation efforts.

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

Other noteworthy reports we featured today include American International Group (AIG), Equinix (EQIX) and Welltower (WELL).

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Note: Our Director of Research 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

Studio Strength Aids Disney (DIS), Streaming Investments Hurt


New Drugs to Drive Lilly's (LLY) Sales Amid Generic Pressure


ADP Rides on Strategic Buyouts Amid Technological Challenges


Featured Reports

AIG Rides on Revenue Growth From Business Streamlining

Per the Zacks analyst, business streamlining by selling low returning business and focusing on high growth businesses are driving revenues. Cost control measures are aiding underwriting margins.

Expansion Strategy Aids Equinix (EQIX) Amid Stiff Competition

Per the Zacks analyst, the IBX expansion strategy will strengthen Equinix's global footprint in the data-center space. However, stiff competition may negatively impact its pricing power.

Welltower (WELL) to Grow on Portfolio-Expansion Efforts

Per the Zacks analyst, Welltower's portfolio-expansion moves will likely drive long-term sustainability and cash-flow growth. Yet, high supply of seniors housing assets remains a headwind.

Rising Protein Demand to Continue Fueling Tyson Foods (TSN)

Per the Zacks analyst, Tyson Foods is gaining from rising demand for protein-packed food products. Moreover, the USDA expects domestic protein production to rise 2% year over year in fiscal 2020.

Solid Investments Boost ConEd (ED) Amid Litigation Risk

Per the Zacks analyst, steady investment enables Consolidated Edison to deliver reliable utility services.

Match Group (MTCH) Rides on Solid Tinder Adoption, Debt High

Per the Zacks analyst, Match Group is benefiting from increase in its average subscriber base, driven primarily by solid contribution from Tinder.

Enbridge (ENB) Banks on C$19B Growth Midstream Projects

The firm's levered balance sheet worries the Zacks analyst.

New Upgrades

Sprint (S) Gains from Network Investments, Merger Approval

Per the Zacks analyst, Sprint is poised to benefit from the launch of mobile 5G services in multiple cities. Its proposed merger with T-Mobile, now approved by the DoJ, should accelerate the momentum.

Strong Foundry & Logic To Drive KLA-Tenor's (KLAC) Growth

The Zacks analyst believes that KLA's comprehensive product line and increasing process control spending across foundry and logic players should continue to offer high growth potential.

Increasing Premiums, Pricing Aid Cincinnati Financial (CINF)

Per the Zacks analyst, Cincinnati Financial is set to grow through expansion of Cincinnati Re, new agencies, improving pricing precision, low leverage, and consistent cash flow generation.

New Downgrades

High Debt Level, Escalating Expenses Hurt WellCare (WCG)

Per the Zacks analyst, long-term debt, which induces high interest expenses, creates financial risk for the company. Moreover, escalating expenses threaten to lower its margin going forward.

Fluctuating Natural Gas Prices Hurts National Fuel Gas (NFG)

Per the Zacks analyst, Natural Fuel Gas's performance is adversely impacted by lower realized natural gas prices despite an increase in natural gas production volumes.

Werner (WERN) Hurt by Soft Freight Demand & High Capex

The Zacks analyst is worried about the lackluster freight demand and weak pricing that are impeding Werner's growth.


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Welltower Inc. (WELL) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
Equinix, Inc. (EQIX) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
American International Group, Inc. (AIG) : Free Stock Analysis Report
 
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
 
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