Friday, March 17, 2023
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), Toyota Motor Corporation (TM) and Infosys Limited (INFY). 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 >>>
Shares of Johnson & Johnson have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-11.9% vs. +0.8%). The company is facing macroeconomic headwinds like inflationary pressure and rising input costs are hurting margins. Headwinds like generic competition and pricing pressure continue.
Stelara’s upcoming loss of exclusivity in 2023 is a concern. Ongoing staffing shortages and COVID-related disruptions in China are hurting sales of the MedTech unit. Though J&J has taken meaningful steps to resolve its talc and opioid litigation, it continues to remain an overhang on the stock.
However, J&J’s Pharma unit is performing at above-market levels, supported by blockbuster drugs, Darzalex and Stelara, and contribution from newer drugs, Erleada and Tremfya. J&J is focusing on growing its MedTech unit through new products. It is making rapid progress with its pipeline and line extensions.
(You can read the full research report on Johnson & Johnson here >>>)
Shares of Toyota Motor have declined -20.9% over the past year against the Zacks Automotive - Foreign industry’s decline of -32.9%. The company is witnessing commodity cost inflation which is expected to weigh on gross margins. Unfavorable foreign currency translations and high R&D expenses are also likely to limit profits.
Thus, investors are advised to wait for a better entry point. However, continued demand for vehicles and robust product lineup are set to fuel sales volumes of Toyota.
To capitalize on the accelerated global shift to green cars, the auto giant is deepening focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness. Toyota is also committed to returning capital to shareholders via buybacks and dividends, which sparks confidence.
(You can read the full research report on Toyota Motor here >>>)
Shares of Infosys have underperformed the Zacks Computers - IT Services industry over the past year (-31.4% vs. -22.1%). The company is suffering from increasing anti-outsourcing sentiments in certain countries. Higher subcontractor costs and its compensation revision with a higher variable pay and incentives are weighing on margins. Further, unfavorable currency fluctuations remain a major concern.
However, Infosys is gaining from large deal wins and fast-growing digital services. Its sustained focus on Agile Digital and artificial intelligence (AI) -driven Core services is a tailwind.
Strong demand for its services in cloud, Internet of Things (IoT), cyber security, data and analytics is a key driver. Higher investments by clients in digital transformation, AI and automation are an upside. Solid traction of its CobaltTM cloud portfolio is a positive.
(You can read the full research report on Infosys here >>>)
Other noteworthy reports we are featuring today include Novartis AG (NVS), Eaton Corporation plc (ETN) and Equinix, Inc. (EQIX).
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 (JNJ) Pipeline Strong Amid Upcoming Stelara Generic Loss
Toyota (TM) Banks on Strong Sales as Cost Woes Ail Margins
Digital Transformation, AI Proliferation Aid Infosys (INFY)
Entresto, New Drugs Fuel Novartis (NVS) Amid Competition
Per the Zacks analyst, drugs like Entresto, Kesimpta, Zolgensma, Kisqali and Leqvio should fuel Novartis' performance amid generic competition for older drugs and pipeline setbacks.
New Product Development, Wide Market Reach Aid Eaton (ETN)
Per the Zacks analyst Eaton's operations in 175 countries across the world and development of new products through ongoing R&D investments will continue to drive demand and boost profitability.
High Data-Center Demand, Acquisitions to Aid Equinix (EQIX)
Per the Zacks analyst, the IBX expansion strategy will strengthen Equinix's global footprint in the data-center space amid rising demand for data centers. Yet, stiff competition is a key concern.
BCE to Gain From Increased Demand for 5G & Wireless Network
Per the Zacks analyst, BCE will benefit from the increased demand for 5G and wireless network as people are working remotely. However, supply-chain constraints remain concern.
TC Energy's (TRP) C$37B Growth Projects to Boost Earnings
The Zacks analyst believes that TC Energy's C$34 billion of growth projects should support its earnings and dividend payouts but is worried over the massive debt of C$39.6 billion.
Synchrony Financial (SYF) Gains on Buyouts, Balance Sheet
Per the Zacks Analyst, buyouts have enhanced the company's capabilities and diversified the business, which, in turn, has offered it a competitive edge. A healthy balance sheet enables investments.
Fleet Expansion Boosts Avis Budget (CAR), High Debt Hurts
The Zacks Analyst is optimistic about Avis Budget expanding its connected vehicles fleet. However, decreasing current ratio and escalated debt load are worrisome.
ABB Rides on Healthy Demand Environment & Pricing Actions
Per the Zacks analyst, steady demand environment across most customer segments within the Electrification unit bodes well for ABB. Pricing actions are supporting its margin performance.
United Rentals' (URI) Demand Solid Amid Volatile Oil Prices
Per the Zacks analyst, robust end market demand, accretive acquisitions, and fleet contributions aid United Rentals. Yet, volatile oil and natural gas price, and industry competition are headwinds.
Strong Balance Sheet Aids Deutsche Bank (DB), Expenses Down
Per the Zacks analyst Deutsche Bank's strong liquidity position will aid planned capital deployment activities. Also, decreasing expenses will reduce bottom-line pressure.
Pfizer (PFE) COVID Products to Hurt Top-Line in 2023
The Zacks analyst says Pfizer's top line is expected to decline in 2023 due to potentially steep declines in sales from its COVID-19 products, Comirnaty vaccine and Paxlovid oral pill, on lower demand
Guess? (GES) Troubled by Currency Volatility, Cost Inflation
Per the Zacks analyst, Guess? is troubled by volatile currency changes, which is likely to hurt fiscal 2024 revenues. Global cost inflation is likely to affect consumer spending and operating margin.
American Public (APEI) Ails From Low Enrollment & High Costs
Per the Zacks analyst, low enrollment and increased expenses in the RU segment as well as costs and expenses associated with the inclusion of GSUSA hurt American Public.
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