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Top Stock Reports for Merck, PepsiCo & 3M

Mark Vickery
Top Stock Reports for Merck, PepsiCo & 3M

Tuesday, September 11, 2018

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 Merck (MRK), PepsiCo (PEP) and 3M (MMM). 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 >>>

Merck’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry year to date, gaining +23.6% versus +4.7%. The Zacks analyst thinks Merck’s new products like Keytruda, Lynparza, and Bridion should continue to contribute meaningfully to the top line.

Keytruda sales are gaining strong momentum with approval for additional indications especially in the first-line lung cancer setting as it is the only anti-PD-1 approved in this setting. Animal Health unit is also strong and remains a core growth driver for Merck.

Meanwhile, Merck will continue to focus on cost-cutting initiatives to drive the bottom line. However, generic competition for several drugs and pricing pressure will continue to be overhangs on the top line. Rising competitive pressure on the diabetes franchise and on products like Isentress (HIV), Zepatier (HCV) and Zostavax (vaccine) will remain headwinds in 2018.

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

Shares of Buy-ranked PepsiCo have gained +8.7% in the past three months, outperforming the Zacks Soft Beverages industry's increase of +2.2%, driven by a solid earnings trend with beats recorded in the last 10 quarters, including second-quarter 2018. Strong performances in its international division, backed by higher revenue growth in developing and emerging markets have been aiding results.

Further, the company has reported positive sales surprise in six of the last eight quarters. The Zacks analyst thinks the company is also gaining from significant strength in the snacks business, which has mostly offset the sluggishness in beverage category.

Moreover, the company’s product innovations to include healthier food assortments and non-carbonated drinks in its portfolio should boost sales. However, consumers’ awareness on health and wellness, alongside new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales.

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

3M’s shares have gained +3.9% in the past three months, outperforming the Zacks Diversified Operations industry, which has increased +1.1% over the same period. The company perceives that stronger demand for household products like Nexcare, Post-it and Scotch and ongoing product portfolio restructuring moves will boost its revenues in the upcoming quarters.

The Zacks analyst thinks that escalating costs have become a major cause of concern for the company. Inflation in the prices of major inputs and escalating interest expenses might continue to raise the company’s aggregate costs, in turn, hurting its near-term profitability. Over the past 7 days, Zacks Consensus Estimate for the stock has remained unchanged for both 2018 and 2019.

(You can read the full research report on 3M here >>>).

Other noteworthy reports we are featuring today include Costco (COST), Broadcom (AVGO) and Phillips 66 (PSX).

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Mark Vickery
Senior Editor

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

New Drugs to Drive Merck's (MRK) Sales as Competition Soars

Robust Snacking Category to Drive PepsiCo's (PEP) Sales

3M (MMM) Gains from Portfolio Shuffling Moves Amid Cost Woes

Featured Reports

Public Storage (PSA) Gains from Buyouts, Supply Woes Remain

Per the Zacks analyst, Public Storage is poised to gain from high brand value, strategic acquisitions and robust presence in key cities. But, rising supply is likely to curb its power to raise rents.

Unit Revenues Aid American Airlines (AAL), Fuel Costs Ail

The Zacks analyst likes the company's performance with respect to unit revenues. Efforts to modernize its fleet are also encouraging.

New Stores & Supply-chain Moves Aid Advance Auto Parts (AAP)

Per the Zacks analyst, new store openings, widening online presence and tie-ups are aiding Advance Auto Parts. Also, its plan to streamline supply chain is helping it to serve customers better.

PVH Corp (PVH) Likely to Gain From Robust Brand Strength

Per the Zacks analyst, PVH Corp's sturdy brand portfolio and marketing strategies place the company well for growth.

Investment in Technology, Cost Control Aid MoneyGram (MGI)

Per the Zacks analyst, investments in technology have expanded the company's digital payment platform.

athenahealth (ATHN) Gains From Business and Services Unit

The Zacks analyst is also bullish about the company's strength in core ambulatory services.

Fastenal (FAST) Rides on Higher Market Demand, Costs High

Per the Zacks analyst, higher market demand, growth in industrial vending business and existing onsite locations bode well.

New Upgrades

Sturdy Comparable Sales Run to Fuel Costco's (COST) Top Line

Per the Zacks analyst, Costco's growth strategies, sturdy comparable sales performance and strong membership trends reinforce its position. Comparable sales increased 9.2% during the month of August.

Phillips 66 (PSX) Banks on Growing Midstream Business in US

The Zacks analyst appreciates Phillips 66's plan of capitalizing on the growing demand for fresh midstream infrastructure in prospective U.S. shale plays.

Broadcom (AVGO) Drives on Wireless Products & Acquisitions

Per the Zacks analyst, strong demand for Broadcom's wireless solutions, expanding product portfolio and acquisition synergies have led to top-line growth.

New Downgrades

Exposure to Fixed-price contracts Hurts Rockwell Collins (COL)

Per the Zacks analyst, Rockwell Collins is hurt by the heavy exposure to fixed-price contracts, exposing the bottom line to cost over-runs. It can profit only if costs stay under the contracted price.

Escalating Debts & High Fuel Costs Hurt Azul

The Zacks analyst is concerned about the rise in fuel costs, which should limit bottom-line growth. The company's high debt levels also raise concerns.

Raw Material Inflation & Forex Woes Ail Illinois Tool (ITW)

Per the Zacks analyst, Illinois Tool's margins stand to lose from inflation in raw material costs. This, along with unfavorable foreign currency movements will adversely impact bottom line in 2018.

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Phillips 66 (PSX) : Free Stock Analysis Report
Pepsico, Inc. (PEP) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
3M Company (MMM) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Broadcom Limited (AVGO) : Free Stock Analysis Report
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