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Top Stock Reports for Alibaba, UnitedHealth & Merck

Sheraz Mian

Wednesday, June 3, 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 Alibaba Group (BABA), UnitedHealth (UNH) and Merck (MRK). 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 >>>

Alibaba shares have modestly lagged Amazon (AMZN) over the past year (+42.9% vs. +39%), but the Chinese  ecommerce giant has otherwise been stellar performer on the back of impressive growth momentum in its home market. 

Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining momentum. This is aiding growth in Tmall Import, Hema fresh food grocery business and Intime Department Stores.

However, higher costs associated with new initiatives remain a major concern. Also, COVID-19 related economic uncertainties and macro headwinds in China are major concerns. In addition, rising competition from e-commerce players poses a risk.

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

Shares of UnitedHealth have gained +9.6% over the past six months against the Zacks Medical Insurance industry’s rise of +3.2%. The Zacks analyst believes that the company has been benefiting from higher segmental contributions, which helped it counter the fallout from the coronavirus-led crunch.

It stands out from the rest in its industry by virtue of healthcare services, technology and innovations offered by its unit, Optum. Its numerous acquisitions bolstered its inorganic growth profile. Its revenues should continue to grow, driven by a strong market position and an attractive core business.

Its solid balance sheet and consistent cash flow generation encourage investment in business.  By retaining its 2020 earnings guidance, the company restores investor confidence. However, the company is witnessing a slowdown in its international operations. Commercial membership may also suffer due to increased joblessness.

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

Merck’s shares have lost -2.6% over the past three months against the Zacks Large Cap Pharmaceuticals industry’s rise of +1.2%. The Zacks analyst believes that Merck’s products like Keytruda, Lynparza and Bridion are driving sales.

Keytruda sales are gaining from continued uptake in lung cancer and increasing usage in other cancer indications. 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, Merck expects COVID-related business disruptions to impact sales in its Pharmaceuticals as well as Animal Health units in 2020 with maximum impact in the second quarter. Meanwhile, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line.  

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

Other noteworthy reports we are featuring today include PetroChina (PTR), Anheuser-Busch InBev (BUD) and 3M (MMM).

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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

Alibaba (BABA) Drives On Cloud Growth; Investments Hurt

UnitedHealth (UNH) Solid Top Line Aids, Membership Dip Hurts

Keytruda is Key to Merck's (MRK) Growth Prospects

Featured Reports

Upstream Unit Buoys PetroChina (PTR) Amid Gas Import Losses

The Zacks analyst believes oil production growth and lower lifting costs should aid PetroChina's upstream unit outlook but is worried over the losses on the domestic resale of imported natural gas.

AB InBev's (BUD) China Business Shows Recovery Post COVID

Per the Zacks analyst, AB InBev is witnessing positive trends in China and South Korea, in the post-lockdown phase.

3M (MMM) Gains From Inorganic Actions Amid Pandemic Headwinds

Per a Zacks analyst, 3M (MMM) is benefiting from inorganic activities, including divestment of drug delivery business in May.

Buyouts, Assets Balance Aid BlackRock (BLK) Amid High Costs

Per the Zacks analyst, opportunistic acquisitions, solid assets under management balance and focus on the active equity business will aid BlackRock.

Core MedSurg Unit Aids Stryker (SYK), Pricing Pressure Ails

Per the Zacks analyst, Stryker continues to gain from solid prospects of its core MedSurg arm.

Cost Savings to Aid Estee Lauder (EL), Store Closures a Woe

Per the Zacks analyst, Estee Lauder is set to gain from cost saving plans amid COVID-19 outbreak. However, store closures are likely to dent results in the fourth quarter.

ConocoPhillips (COP) Banks on Oil-Rich Eagle Ford Acreage

The Zacks analyst believes that huge acreage holdings in the prospective Eagle Ford Shale play will drive ConocoPhillips' oil production. However, rising exploration costs are a concern.

New Upgrades

Specialty Materials & Financial Strength Aid Corning (GLW)

Per the Zacks analyst, Corning continues to benefit from strong demand for premium glasses, Gorilla Glass innovations and advanced optics products. Also, it operates on a strong financial foundation.

Diamondback (FANG) to Gain from Sizeable Permian Presence

The Zacks analyst believes that the purchases of Energen and Ajax Resources have transformed Diamondback into one of the leading Permian Basin oil producers with more than 8,000 drilling locations.

Lear (LEA) Aided By Xevo Buyout and Strong Balance Sheet

Xevo buyout has broadened Lear's connectivity offerings with a leading-edge technology platform. Low leverage of 35% also increases the firm's financial flexibility, per the Zacks analyst.

New Downgrades

Soft Traffic & Low Sales Activity to Hurt PulteGroup (PHM)

Softness in consumer traffic and sales activity owing to coronavirus outbreak is a pressing concern for PulteGroup, per the Zacks analyst.

Low Volumes Amid Coronavirus Woes Weigh on Landstar (LSTR)

Declining truck revenues due to the coronavirus-induced volume softness have made the Zacks analyst turn bearish on Landstar.

Delivery Delays & High Expenses Ail DXC Technology (DXC)

Per the Zacks analyst, continued investments in business and high interest expenses are hurting DXC's margins. Also, delayed deliveries are weakening customer relationships.

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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
PetroChina Company Limited (PTR) : Free Stock Analysis Report
Merck Co., Inc. (MRK) : Free Stock Analysis Report
3M Company (MMM) : Free Stock Analysis Report
AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
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