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Top Research Reports for Merck, UPS & Caterpillar

Friday, November 10, 2017

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), UPS (UPS) and Caterpillar (CAT). 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 underperformed the Zacks Large Cap Pharmaceuticals industry over the last year, losing -12.1% versus +13.2%. Merck beat estimates for earnings while missing the same for sales in Q3. Merck’s new products like Keytruda and Zepatier should continue to contribute meaningfully to the top line.

Keytruda is gaining strong momentum from the new indication of first-line lung cancer. The Keytruda development program also significantly advanced this year with several key regulatory approvals. 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 competition in the immuno-oncology market is also a significant concern. The recent delay in the readout from an important lung cancer study and withdrawal of a European application for Keytruda+chemo in first-line lung cancer were disappointing.

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

Shares of UPS have underperformed the Zacks Air Freight and Cargo industry as well as rival FedEx on a year-to-date basis. While UPS has lost -1.9% of its value, the industry it belongs to and FedEx have rallied +4.6% and 16.8%, respectively, in the same period. In the third quarter of 2017, the company reported better-than-expected earnings per share and revenues despite the effect of recent hurricanes.

Moreover, both metrics improved on a year-over-year basis. The upside was driven by growth across all the key segments of the company. UPS also expects the upcoming holiday season to be a highly successful one on the back of the growing demand for e-commerce.

However, high costs are limiting bottom-line growth as the company is making significant investments to upgrade its facilities. Furthermore, foreign currency-related headwinds seem to hurting results, as UPS operates globally.

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

Strong Buy-rated Caterpillar’s have gained +46% year-to-date, outperforming the Zacks Construction and Mining industry which has increased +44.3% over the same period. Caterpillar delivered another upbeat quarter with adjusted earnings per share surging 129% year over year and revenues rising 25%.

Both beat respective expectations aided by strong demand for construction equipment in North America, robust sales in China and cost-control efforts. Caterpillar hiked 2017 guidance, to revenues of $44 billion and earnings per share of $6.25. The mid-point of the ranges reflects a year-over-year growth of 14% and 83%, respectively. Higher sales in Asia Pacific and North America, improved order rates and backlog will fuel growth in Construction Industries.

Resource Industries will gain on higher aftermarket parts sales. Energy & Transportation will be buoyed by improved sale of engines into industrial applications, strength in onshore North America oil and gas and transportation. Further, ongoing efforts to reduce costs will help boost margins.

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

Other noteworthy reports we are featuring today Blackstone (BX), Delta (DAL) and Anadarko (APC).

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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>>>

Featured Reports

Strategic Initiatives Aid Huntington (HBAN), High Costs a Woe

Per the Zacks analyst, Huntington's strategic initiatives, including expansionary moves and rise in loans should bolster revenue growth. However, escalating costs is an unfavorable factor.

Anadarko's (APC) Oil Focus Benefits, Dry Hole Expenses Ail

The Zacks analyst believes Anadarko Petroleum's focus to produce more oil will benefit the company, but the rising dry hole expenses are a concern

PRASM Growth Buoys Delta (DAL), High Costs Ail

The Zacks analyst likes Delta's performance with respect to passenger unit revenues (PRASM). Capacity discipline related efforts also encourage.

MGM Resorts' (MGM) Vegas Business Solid, Macau a Concern

Despite the Las Vegas shooting, improving economy and tourism in the region may drive growth at MGM Resorts, per the Zacks analyst. In spite of Macau revival, weak results at MGM China raise concerns.

Fund Accessibility Aids Blackstone (BX), Dividend May Falter

The Zacks analyst thinks Blackstone's fund raising capability remains strong, reflecting continued revenue growth.

Loan Growth Support M&T Bank's (MTB) Revenue, High Costs a Woe

Per the Zacks analyst, organic growth remained a key strength at M&T Bank, as reflected by rising loans and deposits aiding revenue growth.

International Paper (IP) Margins Marred by Pension Woes

Per the Zacks analyst, International Paper is taking prudent steps to drive margin expansion although high pension obligations remain a major headwind.

New Upgrades

Order Growth, Dividend Payouts Aid Huntington Ingalls (HII)

Per the Zacks analyst, solid order inflows for Huntington Ingalls' ships and submarines are boosting its revenue growth. Moreover, the company pays lucrative dividends that attract more investors.

Marathon (MPC) Buoyed by Refining Margins, Speedway Assets

Apart from strong refining margin environment, the Zacks analyst believes that the Speedway convenience store business will help Marathon Petroleum to generate healthy merchandise profits.

Amdocs (DOX) Poised to Benefit from Continuous Project Wins

Per the Zacks analyst, Amdocs is poised to record healthy revenue growth in fiscal 2018 with diligent execution of operational plans, strategic acquisitions and continuous project wins.

New Downgrades

Weakness in Generic Segment Weighs on Mallinckrodt (MNK)

Per the Zacks analyst, weakness in generic segment and lower Acthar sales due to challenging payer environment will adversely impact Mallinckrodt's growth trajectory.

Jazz Pharma's (JAZZ) Xyrem Shows Lower Growth in 2017

Jazz's key drug Xyrem is being negatively impacted by unfavorable payer mix and delayed prescription fulfillment. This might further hurt the top-line in the near term, believes the Zacks analyst.

Dwindling Customer Base, OTT Threat Weighs on DISH (DISH)

DISH Network has lost massive pay-TV and broadband subscribers due to stiff competition in the segment. The Zacks analyst does not find any near-term catalyst for the company.

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United Parcel Service, Inc. (UPS): Free Stock Analysis Report
Merck & Company, Inc. (MRK): Free Stock Analysis Report
Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
Caterpillar, Inc. (CAT): Free Stock Analysis Report
The Blackstone Group L.P. (BX): Free Stock Analysis Report
Anadarko Petroleum Corporation (APC): Free Stock Analysis Report
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