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Top Stock Reports for Eli Lilly, PepsiCo & IBM

·6 min read

Tuesday, September 13, 2022

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 and Company (LLY), PepsiCo, Inc. (PEP) and International Business Machines Corporation (IBM). 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 >>>

Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+37.2% vs. +12.8%), reflecting the company's solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. Its revenue growth is being driven by higher demand for drugs like Trulicity, Taltz, and others.

It is regularly adding promising new pipeline assets through business development deals. Lilly expects to launch five new medicines by 2023 end including Mounjaro for type II diabetes (already launched) and donanemab for early Alzheimer's disease. Both drugs have multibillion dollar sales potential.

However, generic competition for several drugs, rising pricing pressure in the United States mainly on key drug, Trulicity, and price cuts in some international markets like China, Japan and Europe are some top-line headwinds.

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

PepsiCo’s shares have outperformed the Zacks Beverages - Soft drinks industry over the past year (+13.7% vs. +9.7%) on the back of continued momentum in the company's business as reflected in the 16th straight quarter of sales beat in the last quarterly release. It benefits from the resilience and strength of global beverage and convenient food businesses. It expects to benefit by delivering convenience, variety and value proposition to customers through its brands. It raised its revenue view for 2022.

However, PepsiCo witnessed margin pressures in the second quarter driven by impacts of supply-chain disruptions and inflationary labor, transportation and commodity costs. PEP anticipates incremental input cost inflation for the balance of 2022. Adverse currency rates also remain headwinds.

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

IBM’s shares have outperformed the Zacks Computer - Integrated Systems industry over the past year (+4.8% vs. -6.4%). The company’s synergies from the Red Hat buyout are bolstering its competitive position in the hybrid cloud market. IBM’s growth is expected to be driven primarily by analytics, cloud computing, and security in the long haul.

A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely drive profitability. However, IBM is facing stiff competition in the cloud computing market from the likes of Amazon Web Services and Microsoft Azure.

Higher debt levels amid extensive restructuring activities pose a concern for the company. High integration risk from continuous acquisition spree is another headwind. Muted cash flow outlook for 2022 due to the impact of dollar strength and winding down of business operations in Russia remain another downside for the company.

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

Other noteworthy reports we are featuring today include Booking Holdings Inc. (BKNG), Northrop Grumman Corporation (NOC), and Illinois Tool Works Inc. (ITW).

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

Lilly (LLY) Potential New Products Key to Growth

PepsiCo's (PEP) Business Investments to Bolster Performance

IBM Rides on Hybrid Cloud & Analytics Growth Opportunities

Featured Reports

Solid Gross Bookings Momentum Aids Booking Holdings (BKNG)
Per the Zacks analyst, robust merchant business, strengthening accommodation unit and rising booked room nights number are aiding Booking Holdings' gross bookings growth.

Strong Demand Aids Northrop (NOC), Supply Chain Issue Woes
Per the Zacks Analyst, strong demand for defense products tend to boost Northrop's long-term growth. Yet, it continues to see a prolonged impact of the pandemic, with ongoing supply-chain challenges.

Dividends, Buybacks Aid Illinois Tool (ITW) Amid Cost Woes
The Zacks analyst is encouraged by the company's measures to consistently reward shareholders through dividends and share buybacks. However, high raw material costs are hurting margin performance.

Equity Residential (EQR) to Ride on Portfolio Diversification
Per the Zacks Analyst, portfolio diversification efforts to tap the suburban markets' renter demand will aid Equity Residential. However, rising supply in some markets makes us apprehensive.

STERIS' (STE) Healthcare Arm Grows Amid Supply Chain Issues
The Zacks analyst is encouraged by STERIS' robust Healthcare sales growth across consumables, capital equipments and services. Yet, supply chain disruptions continue to hamper business performance.

Solid Liquidity Aid Interpublic (IPG), Adverse Forex Ail
The Zacks analyst is positive about increasing current ratio that indicates Interpublic has no problem meeting its short-term obligations. However, unfavorable currency volatility are a headwind.

Solid In-Force Business Aids Reinsurance Group (RGA)
Per the Zacks analyst, Reinsurance Group is set to benefit from better pricing and expanding business in the pension risk transfer market. Solid in-force business ensures predictable long-term earning

New Upgrades

Strong Demand, Growth in E-Commerce Sales Aid Grainger (GWW)
Per the Zacks Analyst, Grainger is poised well to gain on strong demand in its end markets and efforts to strengthen customer relationships and investment in e-commerce and digital capabilities.

Operational Excellence Plans Bode Well for Weyerhaeuser (WY)
Per the Zacks analyst, Weyerhaeuser's focus on operational excellence plans, like merchandising for value, harvest & transportation efficiencies and more, are encouraging.

Inorganic Moves, Innovation to Benefit UFP Industries (UFPI)
Per the Zacks analyst, UFP Industries has been benefitting from its acquisition strategies for solidifying product portfolio new product innovation and an improved pricing model.

New Downgrades

Debt Loads Continue to Hurt Antero Midstream (AM)
The Zacks analyst is concerned since Antero Midstream has a significant exposure to debt capital. Increasing direct operating expenses is also hurting the company.

Zumiez (ZUMZ) Grapples With Supply-Chain Issues & Inflation
Per Zacks analyst, Zumiez is operating in a tough environment. Headwinds like supply-chain bottlenecks, higher logistics costs, a tight labor market, currency headwinds and inflation are deterrents.

Supply-Chain Issues, Modernization Delay Hurt Mercury (MRCY)
Per the Zacks analyst, modernization delays amid global economic slowdown concerns and supply-chain issues are likely to continue impacting Mercury Systems' organic revenue growth in the near-term.

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
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
Eli Lilly and Company (LLY) : Free Stock Analysis Report
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
Booking Holdings Inc. (BKNG) : Free Stock Analysis Report
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