Pricing Power? Look At Comcast, Starbucks, Amgen, Biogen: Report
Cable TV leader Comcast ( CMCSA ), coffee king Starbucks ( SBUX ), “innovative” drug companies such as Bristol-Myers Squibb ( BMY ) and a few biotechs make Morgan Stanley’s list of companies with pricing power. Amid a low-inflation environment and worries over a global recession, stocks with pricing power should get a serious look, says the Morgan Stanley report. Its list also includes American Tower ( AMT ), Amgen ( AMGN ), Biogen ( BIIB ), Celgene ( CELG ), Constellation Brands ( STZ ), Equinix ( EQIX ), L Brands ( LB ), Mindbody ( MB ), Phillip Morris ( PM ), Reynolds American ( RAI ), Sally Beauty Holdings ( SBH ), and Sherwin-Williams ( SHW ). Here’s Morgan Stanley’s take on why some of these companies have pricing power. 1) American Tower. “Towers effectively offer local monopolies, and there is little alternative for wireless carriers wishing to add capacity to improve network quality.” 2) Amgen. “While drug pricing has been a topic of debate since U.S. presidential candidates raised focus on the topic in the late summer of 2015, we continue to see pricing power among large cap biotech.” 3) Biogen. “In 2015, management took around 11% to 12% gross price increases across its portfolio.” 4) Celgene. “Management in 2015 took 7-10% gross price increases across its portfolio and we would expect a similar net price trend in 2016.” 5) Comcast. “We are positive on CMCSA’s broadband growth story and see improved results in video given X1 (set-top box deployment).” 6) Sherwin-Williams. “(Its) pricing power relates to its control of its own distribution, as well as its outsized leverage to professional painting contractors. 7) Starbucks. “SBUX remains the category leader in the high-margin, premium coffee segment and benefits from selling an often-craved, habitual product.”