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Top Stock Reports for J&J, Merck, Novartis & Others

Sheraz Mian

Monday, April 6, 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 Johnson & Johnson (JNJ), Merck & Co (MRK) and Novartis (NVS). 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 >>>

Johnson & Johnson’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past six months (+0.8% vs. +0.1%). The Zacks analyst believes that J&J is witnessing significant generic/biosimilar headwinds in the Pharma unit.

However, the unit is performing above-market levels driven by new drugs like Tremfya and successful label expansion of cancer drugs like Imbruvica and Darzalex and immunology drug, Stelara. Several pivotal data readouts and regulatory milestones are expected in 2020.

Headwinds like biosimilar/generic competition and pricing pressure remain. J&J faces numerous lawsuits, which allege personal injuries to patients caused by the use of its products. These lawsuits have resulted in uncertainty. Estimates have gone down ahead of Q1 results due to uncertainty about the impact of the coronavirus pandemic on results. J&J has a positive record of earnings surprises in the recent quarters.

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

Shares of Merck have lost -5.8% over the past year against the Zacks Large Cap Pharmaceuticals industry’s fall of -4.2%. The Zacks analyst believes that Merck’s products like Keytruda, Lynparza and Bridion are driving sales. Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide. Animal health and vaccine products remain core growth drivers.

The potential separation into two companies makes strategic sense as the remaining Merck should be able to achieve higher profits than the combined company. However, generic competition for several drugs, rising competitive pressure, mainly on the diabetes franchise and uncertainty surrounding coronavirus pandemic are some top-line headwinds. Estimates have declined slightly ahead of Q1 results. Merck has a positive record of earnings surprises in recent quarters.

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

Novartis’ shares have lost -11.5% over the past three months against the Zacks Large-Cap Pharmaceuticals industry’s fall of -10.1%. The Zacks analyst believes that solid performance of key drugs like Cosentyx and Entresto, and contribution from gene therapy, Zolgensma, have boosted performance in recent times and offset the impact of generic competition for legacy drugs.

New launches like Piqray, Mayzent and Beovu should further boost sales. The biosimilar portfolio also gains traction with new key approvals. Novartis’ decision to restructure its business is a positive and should boost the pharma segment. The deep pipeline is encouraging as well.

However, price erosion in the United States has adversely impacted the generic business. Moreover, pipeline setbacks and generic competition for additional drugs are concerning.

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

Other noteworthy reports we are featuring today include PayPal (PYPL), Lockheed Martin (LMT) and International Business Machines (IBM).

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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

J&J's (JNJ) Generic Woes Hurt Sales, Pipeline Progress Rapid

Keytruda & Other Key Drugs Drive Merck's (MRK) Sales

New Drugs Boost Novartis (NVS) Amid Weak Generics Business

Featured Reports

Portfolio Strength Benefits PayPal (PYPL) Amid Competition

Per the Zacks analyst, PayPal's strong performing Venmo, One Touch and Choice continue to expand its customer base, thus aiding its total payments volume.

Robust Demand Aids Lockheed (LMT), F-35 program's Cost Hurts

Per the Zacks Analyst, Lockheed Martin witnesses strong demand for its aircraft programs and missile defense systems.

Robust Adoption of Cloud Solutions Aids IBM Amid High Debt

Per the Zacks analyst, IBM's blockchain, cloud and ML capabilities, among others poises its offerings well to gain robust adoption.

Mondelez (MDLZ) Organic Sales Gain on Solid Pricing Actions

Per the Zacks analyst, Mondelez's organic sales have been gaining from its strategic pricing initiatives. During the fourth quarter, balanced pricing and volume/mix aided organic sales growth of 4.1%.

BD Life Sciences Arm Continues to Aid Becton, Dickinson (BDX)

Per the Zacks analyst, solid prospects in core BD Life Sciences unit continue to contribute to Becton, Dickinson's top line growth.

Global Industrial Segment Aids Ecolab (ECL) Amid Forex Woes

Ecolab has been gaining from solid prospects of its core Global Industrial Segment. However, the Zacks Analyst is apprehensive of the persistent foreign exchange headwinds.

Rising Demand Aids General Dynamics (GD), Competition Hurts

Per the Zacks Analyst, a strong rise in demand for the company's varied defense products leads to organic growth.

New Upgrades

Label Expansions of Eylea, Dupixent Boost Regeneron (REGN)

Per the Zacks analyst, label expansions of key drugs like Eylea and Dupixent boost Regeneron. The company's efforts to expand the evaluate Kevzara and identify antibodies for COVID-19 are impressive.

Acquisitions and Solid Capital Position Aid Nasdaq (NDAQ)

Per the Zacks Analyst, a number of buyouts have helped it expand its business, which, in turn, has led to top-line growth.

Charles River (CRAI) Benefits From Solid Global Presence

The Zacks Analyst believes that strong international presence provides Charles River the opportunity to work with world's leading professionals on multiple aspects.

New Downgrades

Weaker Server Demand Hurts Hewlett Packard's (HPE) Prospects

Weaker server demand resulting from macroeconomic uncertainties and supply constraint due to the coronavirus-led global lockdown is expected to hurt Hewlett Packard Enterprise's growth prospects.

Weaker Pricing & Automotive Demand to Hurt Cabot (CBT)

Per the Zacks analyst, lower pricing for fumed silica will hurt Cabot's Performance Chemicals segment. Softer automotive demand across China and Europe will also affect its volumes.

Coronavirus-Led Impacts Concern Nordstrom (JWN) Investors

Per the Zacks analysts, Nordstrom is likely to be pressured by the uncertainties of the coronavirus pandemic due to extended store closures. Suspended dividends and share buybacks also raise concerns.

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PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
Novartis AG (NVS) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
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