For immediate release
Chicago, IL – June 28, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day Zacks Equity Research analysts discuss the latest news and events affecting stocks and the financial markets. Stocks recently mentioned in the blog include: Johnson & Johnson JNJ, Advanced Micro Devices, Inc. AMD, Union Pacific Corp. UNP, Anheuser-Busch InBev SA/NV BUD and ServiceNow, Inc. NOW.
Here are the highlights from Monday’s analyst blog:
Season 2 Preview and Analyst Recommended Reports for J&J, AMD and Union Pacific
The Zacks Research Daily presents the best research results from our analyst team. Today’s Research Daily includes current consensus expectations for the second quarter of 2022 for the S&P 500 index and new research reports on 16 major stocks, including Johnson & Johnson (JNJ), Advanced Micro Devices, Inc. (AMD) and Union Pacific Corp. (UNP). These research reports have been carefully selected from the approximately 70 reports published today by our team of analysts.
You can view all research reports from today >>>
Example of Seasonal Earnings in the Second Quarter
Total earnings for the second quarter of the S&P 500 index are expected to rise +2.3% from the same period last year, while sales are up +9.8%, with strong growth in the energy sector offsets declines in the financial and technical sectors.
Excluding the strong contribution from the energy sector, whose second-quarter earnings are expected to rise +187.5%, total earnings for the rest of the S&P 500 index would be -5% lower than the same period last year .
Energy sector strength was also a factor in the trend of aggregate revisions, with positive energy sector revisions helping to offset projected austerity measures elsewhere.
In other words, the strength of the energy sector helps to mask the weakness in most other sectors, resulting in a seemingly stable overall picture of revisions. This trend is ongoing in the second quarter of 2022 as well as throughout the year 2022.
For the full year 2022, current expectations are that S&P 500 earnings will rise +9.1% on +9.4% higher revenues. Excluding the energy sector, earnings for the rest of the index would only rise +3.7% in 2022.
In terms of the trend of revisions, the total profit estimates for 2022 since the beginning of the year are actually +3.4%. But it’s the energy sector’s record upward revisions that keep the trend of overall revisions positive. Excluding the positive revisions to Energy, which are up +72.7% since the start of the year, total revenues for the rest of the index for 2022 are down -9.8% since the start of the year.
As such, it is misleading for market participants to claim that profit estimates have not come down yet. There will most likely be more downward adjustments to the estimates once the bearish macroeconomic projections come out. But in a base case, earnings estimates have already been revised downwards.
For more details on Q2 estimates and changing expectations for the coming periods, check out our weekly Earnings Trend report here >>> Will earnings estimates finally come down?
Recommended Analyst Reports
Johnson & Johnson stocks modestly outperformed the Zacks Large Cap Pharmaceuticals sector over the year so far (+7.9% vs. +7.5%), with the company’s diversification making it relatively resilient amid macroeconomic turmoil . The Pharma unit is outperforming the market, supported by its blockbuster drugs, Darzalex and Stelara, and contributions from newer drugs, Erleada and Tremfya. Sales in the MedTech unit recovered in the first quarter and the company focuses on growing this business through new products.
However, consumer unit sales are being hurt by external supply restrictions. J&J is making rapid progress with its pipeline and line expansions. Several critical data reads are expected in 2022. Headwinds such as generic competition and price pressure persist. While J&J has taken meaningful steps to resolve its talc and opioid disputes, they remain an overhang on the stock.
(You can read the full Johnson & Johnson research report here >>>†
AMD shares are down -1.7% from Zacks Electronics in the past year – The semiconductor industry’s decline of -3.5%, with the company benefiting from strong demand for its Ryzen and EPYC server processors, due to the increasing spread of artificial intelligence (AI) and machine learning (ML) in sectors such as cloud, gaming and data center. The growing influence of 7 nanometer (nm) products in the vertical data center sector, driven by home working and online learning trends, is a major catalyst.
AMD provided a strong 2022 revenue outlook, supported by robust growth across all businesses. Higher revenues from server and client processors are likely to lead to a sequential increase. The acquisition of Xilinx and Pensando will boost AMD’s data center operations. Alliances with Amazon, Microsoft, Baidu and JD.com boost business prospects.
(You can read the full AMD research report here >>>†
Union Pacific stocks are down -0.5% over the past year from Zacks Transportation – Rail sector’s -3.4% decline. The escalation in fuel costs as oil prices move north led to a 16% increase in operating expenses in the March quarter. Costs are also likely to be high in the June quarter. Detailed results will appear on July 21. High debt-to-EBITDA ratio is another concern. Elevated capex can also be a nuisance.
However, the company’s efforts to reward its shareholders, even in the current uncertain scenario, satisfy us. The company increased its dividend twice in 2021. In May 2022, UNP increased its quarterly dividend by an additional 10%. The railway company is also active on the purchasing front. Management expects share buybacks in 2022 to be in line with the 2021 level of $7.3 billion. UNP’s strong ability to generate free cash flows supports its shareholder-friendly operations. An increase in freight revenues as economic activity increases is an additional positive point.
(You can read the full Union Pacific research report here >>>†
Other notable reports we present today include Anheuser-Busch InBev SA/NV (BUD) and ServiceNow, Inc. (NOW).
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Past performance is no guarantee of future performance. Inherent in any investment is the potential for loss† This material is provided for informational purposes only and nothing contained herein constitutes an investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is made as to whether an investment is appropriate for any particular investor. It should not be assumed that investments in securities, companies, sectors or markets that have been identified and described have been or will be profitable. All information is current as of the date herein and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities. These returns come from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with no transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Please visit https://www.zacks.com/performance for information on the performance figures presented in this press release.
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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
Johnson & Johnson (JNJ): Free Stock Analysis Report
Union Pacific Corporation (UNP): Free Stock Analysis Report
AnheuserBusch InBev SANV (BUD): Free Stock Analysis Report
ServiceNow, Inc. (NOW): Free Stock Analysis Report