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The Zacks Analyst Blog Highlights Johnson & Johnson, Advanced Micro Devices, Union Pacific, Anheuser-Busch, and ServiceNow
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For Immediate Release
Chicago, IL – June 28, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Johnson & Johnson (JNJ - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , Union Pacific Corp. (UNP - Free Report) , Anheuser-Busch InBev SA/NV (BUD - Free Report) , and ServiceNow, Inc. (NOW - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Q2 Earnings Season Preview and Featured Analyst Reports for J&J, AMD and Union Pacific
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features current 2022 Q2 consensus expectations for the S&P 500 index and new research reports on 16 major stocks, including Johnson & Johnson (JNJ - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , and Union Pacific Corp. (UNP - Free Report) . These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Total Q2 earnings for the S&P 500 index are expected to be up +2.3% from the year-earlier period on +9.8% higher revenues, with strong growth in the Energy sector offsetting declines in the Finance and Tech sectors.
Excluding the strong contribution from the Energy sector whose Q2 earnings are expected to be up +187.5%, total earnings for the rest of the S&P 500 index would be down -5% from the same period last year.
The Energy sector strength has also been a factor in the aggregate revisions trend, with positive Energy sector revisions helping offset estimate cuts elsewhere.
In other words, the Energy sector strength is helping mask weakness in most of other sectors, resulting in a seemingly stable aggregate revisions picture. This trend has been in play for 2022 Q2 as well as full-year 2022.
For full-year 2022, the current expectation is for S&P 500 earnings to be up +9.1% on +9.4% higher revenues. Excluding the Energy sector, 2022 earnings for the remainder of the index would be up only +3.7%.
With respect to the revisions trend, aggregate 2022 earnings estimates are actually +3.4% since the start of the year. But it is the record upward revisions to the Energy sector that is keeping the aggregate revisions trend in positive territory. Excluding the positive revisions to the Energy, which are up +72.7% since the start of the year, aggregate 2022 earnings for the rest of the rest of the index are down -9.8% since the start of the year.
As such, it is misleading for market participants to claim that earnings estimates have yet to come down. There will most likely be more downward adjustments to estimates if the bearish macroeconomic projections come to fruition. But in a base-case outlook, earnings estimates have already adjusted lower.
For more details about Q2 estimates and evolving expectations for the coming periods, please check out our weekly Earnings Trend report here >>> Will Earnings Estimates Finally Come Down?
Featured Analyst Reports
Johnson & Johnson shares have modestly outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date basis (+7.9% vs. +7.5%), with the company's diversification making it relatively resilient amid macroeconomic turmoil. Its Pharma unit is performing at above-market levels, supported by its blockbuster drugs, Darzalex and Stelara, and contributions from newer drugs, Erleada and Tremfya. Sales in the MedTech unit recovered in Q1 and the company is focusing on growing this business through new products.
However, sales in the Consumer unit are being hurt by external supply constraints. J&J is making rapid progress with its pipeline and line extensions. Several pivotal data readouts are expected in 2022. Headwinds like generic competition and pricing pressure continue. Though J&J has taken meaningful steps to resolve its talc and opioid litigation, they continue to remain an overhang on the stock.
AMD shares have declined -1.7% over the past year against Zacks Electronics - Semiconductors industry's decline of -3.5%, with the company benefiting from strong demand of its Ryzen and EPYC server processors, owing to the increasing proliferation of Artificial Intelligence (AI) and Machine Learning (ML) in industries like cloud, gaming and data center. The growing clout of 7 nanometer (nm) products in the data center vertical, driven by work-from-home and online learning trends, is a key catalyst.
AMD provided strong 2022 guidance for revenues backed by robust growth across all businesses. Higher server and client processor revenues are likely to lead to a sequential increase. The Xilinx and Pensando acquisition will boost AMD's data center business. Alliances with Amazon, Microsoft, Baidu and JD.com augment business prospects.
Union Pacific shares have declined -0.5% over the past year against Zacks Transportation - Rail industry's decline of -3.4%. Escalation in fuel costs as oil prices move north induced a 16% rise in the operating expenses in the March quarter. Costs are likely to be high in the June quarter as well. Detailed results will be out on Jul 21. High debt/EBITDA ratio is another worry. Increased capex may also be bothersome.
However, the company's efforts to reward its shareholders even in the current uncertain scenario please us. The company hiked dividend twice in 2021. In May 2022, UNP upped its quarterly dividend by a further 10%. The railroad operator is also active on the buyback front. Management expects share repurchases in 2022 to be in line with the 2021 levels of $7.3 billion. UNP's strong free cash flow generating ability supports its shareholder-friendly activities. An uptick in freight revenues as economic activities pick up the pace is an added positive.
Other noteworthy reports we are featuring today include Anheuser-Busch InBev SA/NV (BUD - Free Report) , and ServiceNow, Inc. (NOW - Free Report) .
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4% and +95.3%. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Johnson & Johnson, Advanced Micro Devices, Union Pacific, Anheuser-Busch, and ServiceNow
For Immediate Release
Chicago, IL – June 28, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Johnson & Johnson (JNJ - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , Union Pacific Corp. (UNP - Free Report) , Anheuser-Busch InBev SA/NV (BUD - Free Report) , and ServiceNow, Inc. (NOW - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Q2 Earnings Season Preview and Featured Analyst Reports for J&J, AMD and Union Pacific
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features current 2022 Q2 consensus expectations for the S&P 500 index and new research reports on 16 major stocks, including Johnson & Johnson (JNJ - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , and Union Pacific Corp. (UNP - Free Report) . 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 >>>
Q2 Earnings Season Preview
Total Q2 earnings for the S&P 500 index are expected to be up +2.3% from the year-earlier period on +9.8% higher revenues, with strong growth in the Energy sector offsetting declines in the Finance and Tech sectors.
Excluding the strong contribution from the Energy sector whose Q2 earnings are expected to be up +187.5%, total earnings for the rest of the S&P 500 index would be down -5% from the same period last year.
The Energy sector strength has also been a factor in the aggregate revisions trend, with positive Energy sector revisions helping offset estimate cuts elsewhere.
In other words, the Energy sector strength is helping mask weakness in most of other sectors, resulting in a seemingly stable aggregate revisions picture. This trend has been in play for 2022 Q2 as well as full-year 2022.
For full-year 2022, the current expectation is for S&P 500 earnings to be up +9.1% on +9.4% higher revenues. Excluding the Energy sector, 2022 earnings for the remainder of the index would be up only +3.7%.
With respect to the revisions trend, aggregate 2022 earnings estimates are actually +3.4% since the start of the year. But it is the record upward revisions to the Energy sector that is keeping the aggregate revisions trend in positive territory. Excluding the positive revisions to the Energy, which are up +72.7% since the start of the year, aggregate 2022 earnings for the rest of the rest of the index are down -9.8% since the start of the year.
As such, it is misleading for market participants to claim that earnings estimates have yet to come down. There will most likely be more downward adjustments to estimates if the bearish macroeconomic projections come to fruition. But in a base-case outlook, earnings estimates have already adjusted lower.
For more details about Q2 estimates and evolving expectations for the coming periods, please check out our weekly Earnings Trend report here >>> Will Earnings Estimates Finally Come Down?
Featured Analyst Reports
Johnson & Johnson shares have modestly outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date basis (+7.9% vs. +7.5%), with the company's diversification making it relatively resilient amid macroeconomic turmoil. Its Pharma unit is performing at above-market levels, supported by its blockbuster drugs, Darzalex and Stelara, and contributions from newer drugs, Erleada and Tremfya. Sales in the MedTech unit recovered in Q1 and the company is focusing on growing this business through new products.
However, sales in the Consumer unit are being hurt by external supply constraints. J&J is making rapid progress with its pipeline and line extensions. Several pivotal data readouts are expected in 2022. Headwinds like generic competition and pricing pressure continue. Though J&J has taken meaningful steps to resolve its talc and opioid litigation, they continue to remain an overhang on the stock.
(You can read the full research report on Johnson & Johnson here >>>)
AMD shares have declined -1.7% over the past year against Zacks Electronics - Semiconductors industry's decline of -3.5%, with the company benefiting from strong demand of its Ryzen and EPYC server processors, owing to the increasing proliferation of Artificial Intelligence (AI) and Machine Learning (ML) in industries like cloud, gaming and data center. The growing clout of 7 nanometer (nm) products in the data center vertical, driven by work-from-home and online learning trends, is a key catalyst.
AMD provided strong 2022 guidance for revenues backed by robust growth across all businesses. Higher server and client processor revenues are likely to lead to a sequential increase. The Xilinx and Pensando acquisition will boost AMD's data center business. Alliances with Amazon, Microsoft, Baidu and JD.com augment business prospects.
(You can read the full research report on AMD here >>>)
Union Pacific shares have declined -0.5% over the past year against Zacks Transportation - Rail industry's decline of -3.4%. Escalation in fuel costs as oil prices move north induced a 16% rise in the operating expenses in the March quarter. Costs are likely to be high in the June quarter as well. Detailed results will be out on Jul 21. High debt/EBITDA ratio is another worry. Increased capex may also be bothersome.
However, the company's efforts to reward its shareholders even in the current uncertain scenario please us. The company hiked dividend twice in 2021. In May 2022, UNP upped its quarterly dividend by a further 10%. The railroad operator is also active on the buyback front. Management expects share repurchases in 2022 to be in line with the 2021 levels of $7.3 billion. UNP's strong free cash flow generating ability supports its shareholder-friendly activities. An uptick in freight revenues as economic activities pick up the pace is an added positive.
(You can read the full research report on Union Pacific here >>>)
Other noteworthy reports we are featuring today include Anheuser-Busch InBev SA/NV (BUD - Free Report) , and ServiceNow, Inc. (NOW - Free Report) .
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4% and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.