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Tracking Q2 and Full-Year 2020 Earnings Estimates

Tuesday, April 28, 2020

Today’s Research Daily provides a real-time update on the ongoing Q1 earnings season in addition to featuring new research reports on 16 major stocks, including Visa (V), Novo Nordisk (NVO) and American Tower (AMT). 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 >>>

Q1 Earnings Season Scorecard 

Including this morning’s reports from Caterpillar (CAT), 3M (MMM), UPS (UPS) and others, we now have results from 158 S&P 500 members or 31.6% of the index’s total membership. Total earnings (aggregate net income) for these 158 companies are down -18.3% from the year-earlier period on +1.8% higher revenues, with 65.8% beating EPS estimates and 60.1% beating revenue estimates.

Excluding the Finance sector drag, Q1 earnings would be down -1.3% on +1.9% higher revenues. For the Finance sector, we now have Q1 results from 50.7% of the sector’s total market cap in the S&P 500 index. Total earnings for these Finance companies are down -48.3% on +1.7% higher revenues, with 41.9% beating EPS estimates and 65.1% beating revenue estimates.

Estimates for the current period (2020 Q2) and the following quarters have been steadily coming down, as analysts come to grips with Covid-19’s full impact. For Q2, S&P 500 earnings are now expected to be down -33.5% from the same period last year, down from positive earnings growth of +3% in early February.

Earnings for full-year 2020 are now expected to be down -19.2% from the 2019 level, which is down from +7.8% growth expected in early January. 

Visa shares have modestly done better than the broader market, but the company’s business is expected to experience a slowdown in its cross-border business due to coronavirus outbreak.

Numerous acquisitions and alliances plus technology upgrades and effective marketing have paved the way for long-term growth and consistent increase in revenues. Shift in payments such as mobile, cards and online paved way for long-term growth and led to an increase in payments volume, cross-border volume and processed transactions.

The acquisition of Visa Europe is a long-term growth strategy for the company. Its international business has been expanding and adds diversification benefits. Its strong capital position is another positive. However, high client incentives and expenses weigh on its operating margin.

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

Shares of Novo Nordisk have been standout performers during the pandemic market, reflecitng strong momentum from a number of the drug giant’s core products like Tresiba, Victoza, Ozempic, Xultophy and Saxenda maintains momentum for the company.

Ozempic, a once-weekly GLP-1, continues to gain market share. The label of Ozempic was further expanded by the FDA to include a cardiovascular indication. Rybelsus was recommended for approval for treatment of adults with type II diabetes by the European regulatory authorities and a potential approval will boost sales.

Label expansion of existing drugs will further boost sales for the company. Shares of the company have outperformed the industry in the past year. However, lower realized prices in the Unites States, loss of exclusivity for products in hormone replacement therapy and intensifying competition will adversely impact sales.

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

American Tower’s shares have gained +7.2% over the past three months against the Zacks REIT and Equity Trust industry’s fall of -15.6%. The Zacks analyst believes that rise in mobile-data usage and higher investment in 4G as well as 5G technologies is spurring demand for its telecom towers.

American Tower is enhancing its macro-tower portfolio and focusing on innovation to capture the underlying opportunities. Therefore, this will likely drive the company’s leasing activity and organic tenant billings growth in the upcoming period. Moreover, the company is expanding its international presence, which opens up new areas of growth.

However, the company has a substantially-leveraged balance sheet. Such high-debt levels might impede cash-flow growth. Moreover, consolidation trends in the telecom sector pose a cause of worry for the company. Furthermore, stiff competition in the tower industry is another concern.

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

Other noteworthy reports we are featuring today include Amgen (AMGN), Equinix (EQIX) and General Electric (GE).

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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

Visa (V) Rides On Solid Balance Sheet, Increasing Revenues

Strong Diabetes Portfolio Boost Novo (NVO) Amid Competition

Portfolio Expansion Aids American Tower (AMT), High Debt Ails

Featured Reports

Amgen (AMGN) Boasts a Strong Branded/Biosimilars Pipeline

Amgen expects several important data readouts from its innovative pipeline in 2020. It also boasts a strong biosimilars pipeline, which could boost long-term growth, per the Zacks analyst.

Equinix (EQIX) Banks on Key Partnerships to Expand Footprint

Per the Zacks Analyst, Equinix will gain from strategic partnerships to boost its data-center presence in key regions.

Solid Liquidity to Aid General Electric (GE), Market Woes Drag

Per a Zacks analyst, General Electric (GE) is poised to benefit from healthy liquidity position (with $20 billion added through BioPharma divestment).

ConocoPhillips’ (COP) Strength in Oil-Rich Eagle Ford to Aid

The Zacks analyst expects ConocoPhillips to gain from unconventional resources in the prolific Eagle Ford shale play.

Productivity Actions, New Products to Aid DuPont (DD)

While DuPont faces headwind from weak demand in certain markets, it will gain from productivity improvement actions and investment in innovation, per the Zacks analyst.

Cost Cuts Aid Canadian Pacific (CP) Amid Volume Softness

The Zacks analyst is impressed by the company’s cost-cutting measures, courtesy of the precision scheduled railroading model.

Square (SQ) Banks on Solid Momentum Across Seller Ecosystem

Per the Zacks analyst, robust products such as Square Terminal, Cash Card, Square Register and Square Capital are strengthening Square’s seller ecosystem.

New Upgrades

Improving Retention Rate, Pay-TV Resizing Aids DISH (DISH)

Per the Zacks analyst, DISH’s excellent customer service is improving retention. Also focus on acquiring and retaining subscribers that are profitable over the long term, is paying off.

Organic Growth, High Cash Flow Aid CACI International (CACI)

Per the Zacks analyst, CACI is gaining from new deal wins and on-contract growth, which is aiding organic expansion.

Adtalem’s (ATGE) Business Banks on Transformation Strategy

Adtalem is poised to benefits from its business transformation strategy that includes collaboration, acquisitions and cost-saving initiatives, per the Zacks analyst.

New Downgrades

Crude Collapse, Downstream Woes to Weigh on Chevron (CVX)

The Zacks analyst believes that oil price crash will lower Chevron’s Permian production by this year-end due to capex cut. Weak downstream segment earnings are also a concern.

Coronavirus Woes & Elevated Leverage to Ail Autoliv (ALV)

Per the Zacks analyst, weak global light vehicle production amid coronavirus is likely to dent the near-term earnings of the automotive supplier. High debt level of Autoliv is also a concern.

Urban Outfitters (URBN) Top-Line to Hit Due to Coronavirus

Per the Zacks analysts, coronavirus has disrupted Urban Outfitters business activities compelling it to close stores amid shrinking consumer demand and supply chain disruption.

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Visa Inc. (V) : Free Stock Analysis Report
 
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
 
General Electric Company (GE) : Free Stock Analysis Report
 
Equinix, Inc. (EQIX) : Free Stock Analysis Report
 
American Tower Corporation (REIT) (AMT) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
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