Company Reports

BeiGene is an emerging Chinese biotechnology company with a global leading position in hematologic cancers thanks to its core drug Brukinsa. Since its approval in 2019, Brukinsa’s stronger efficacy and superior safety profile have allowed BeiGene to gain market share from existing drugs. In the next five years, we expect Brukinsa to continue contributing more than 50% of BeiGene’s total revenue.

Aurizon's rail operations hold significant cost advantages over other forms of bulk commodity transportation, though the industry is highly cyclical and competitive. Downward pressure is likely to remain on haulage rates and volumes as overcapacity drives intense competition.

We expect REA Group’s near-term challenges to center around navigating significant volatility in the Australian housing market. After the onset of the covid-19 pandemic, REA Group received a substantial boost to revenue and profit margins from the booming housing market. We estimate that residential transactions were around a third above trend levels during fiscal 2021 and 2022. With the normalization of interest rates, we expect continuing swings in listings but an eventual return to trend, which started in fiscal 2023.

EchoStar has broken from its television legacy, agreeing to sell its satellite and online television operations to rival DirecTV. The move isn't surprising considering that EchoStar's predecessor, Dish Network, has made a massive bet on wireless spectrum, spending about $30 billion (more than $100 per EchoStar share) to acquire various spectrum licenses over the past 15 years. Selling the television business, which should close in late 2025, helped EchoStar raise additional capital, which it will plow into the wireless business. The firm will need to invest heavily in additional network coverage, customer acquisition, and developing new enterprise service offerings to build a niche in the wireless market. We expect EchoStar will again need to raise capital two or three years from now, even if the business performs well. Uncertainty remains very high.

In September 2024, Jacobs Solutions completed the spinoff of its critical mission solutions and cyber and intelligence businesses. On Sept. 27, these businesses were spun off and merged with Amentum to form a new publicly traded company. Jacobs shareholders received one share of Amentum Holdings (trading on the NYSE under the ticker “AMTM”) for each share of Jacobs held on Sept. 23.

Interactive Brokers is a unique brokerage in our coverage. It serves a more niche client base. In addition to retail investors, the company caters to the trading of institutional clients like hedge and mutual funds, proprietary trading groups, introducing brokers, and financial advisors. The commission mix of retail and institutional clients is about 55%/45%. Most of Interactive Brokers' clients still choose to pay commissions, even though many other retail brokerages have switched to a zero-commission model for US stock trading. The clients of Interactive Brokers are more sophisticated than those of Charles Schwab and E-Trade. They trade more frequently, maintain higher cash balances to make opportunistic moves, and use more leverage. These trading-savvy customers are attracted by Interactive Brokers’ low margin rates, comprehensive trading platform, sophisticated trading execution capabilities, and high interest paid on idle cash.

BridgeBio Pharma is a biotechnology company focused on bridging the gap between genetic research and unmet patient needs. Its pipeline targets Mendelian disorders, precision oncology, and gene therapy, with four programs in late-stage development.

LPL Financial provides an advisory and brokerage platform for advisors, broker/dealer services for financial institutions, and resources for practice management. At the end of 2023, advisors on LPL's platform served over $1.3 trillion of wealth management assets in the United States. LPL aims to offer services to all advisors regardless of business model. For example, advisors can be licensed with LPL Financial, giving LPL responsibility for managing risk and compliance, or they can operate as a hybrid Registered Investment Advisor using LPL Financial for custody, trading, and administrative support. LPL has also launched a new employee model that allows advisors to fully outsource practice management.

Stellantis’ DARE 2030 strategy (launched 2022) has four key goals—become the most profitable automotive original equipment manufacturer globally, lead the industry on carbon neutrality by achieving such by 2038, accelerate the transition to electrification with a battery electric vehicle, or BEV, sales mix target of 100% in the EU and 50% in the US by 2030, and achieve first place on customer experience.

Qube's strategy is to consolidate the fragmented logistics chain surrounding the export and import of containers, bulk products, automobiles, and general cargo, to create a more efficient and cost-effective supply chain. The business has enjoyed some successes to date, though significant scope for industry consolidation remains.

Transurban is a major toll road investor with concessions to operate motorways in Australia and North American. Concessions grant the right to operate the roads and collect tolls for predetermined amounts of time. The core Australian roads are integral parts of the motorway networks in Australia's three largest cities: Melbourne, Sydney, and Brisbane. The roads benefit from strong competitive advantages, and the assets generate attractive returns on initial investment, warranting a wide economic moat rating.

As the largest retailer in Canada, Loblaw boasts well-recognized grocery and drugstore banners and a sizable loyalty program that drives strong consumer engagement. However, we think the firm has not carved out an economic moat based on either intangible assets or cost advantage, given its sales concentration in commoditized food retail, where low prices reign as the major point of differentiation.

Founded in 1980 via the acquisition of Airstream, Thor Industries has grown to become the world’s largest recreational vehicle manufacturer. The company fabricates and sells a wide array of vehicles through three segments: North American towables, North American motorized, and Europe. Additionally, the company sells aftermarket component parts and digital solutions that are classified within its other segment. During fiscal 2024, the company generated 37% of sales from North American towables, 24% of sales from North American motorized segment, 34% of sales from Europe, and the remaining from parts.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

Eli Lilly's innovative culture and strong financial commitment to developing the next generation of drugs set the company apart from its peers and fuel its long-term growth. Lilly holds industry-leading growth potential as the company is launching several new blockbusters and patent losses are fading.

Pfizer's foundation remains solid, based on strong cash flows generated from a basket of diverse drugs. The company's large size confers significant competitive advantages in developing new drugs. This unmatched heft, combined with a broad portfolio of patent-protected drugs, has helped Pfizer build a wide economic moat around its business.

Merck's combination of a wide lineup of high-margin drugs and a pipeline of new drugs should ensure strong returns on invested capital over the long term. Further, following the divestment of the Organon business in June 2021, the remaining portfolio at Merck holds a higher percentage of drugs with strong patent protection. On the pipeline front, after several years of only moderate research and development productivity, Merck's drug development strategy is yielding important new drugs.

Adept at partnerships and acquisitions, Bristol-Myers Squibb has built a strong portfolio of drugs and a robust pipeline. This strategy is seen with its large acquisition of Celgene, which netted the firm an excellent pipeline and a strong entrenchment in blood cancer. More recent acquisitions in 2024—oncology firms Mirati and RayzeBio and neurology firm Karuna—also help support Bristol's strong overall pipeline and wide moat.

AbbVie holds a strong portfolio of marketed and pipeline drugs. While the increasing competition to the company's key drug Humira should slow the growth for the company in the near term, we believe the firm's remaining portfolio will mitigate these losses.

Johnson & Johnson stands alone as a leader across the major healthcare industries. It maintains a diverse revenue base, a developing research pipeline, and exceptional cash flow generation that together create a wide economic moat.