Monday, November 13, 2017
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Pfizer (PFE), Occidental Petroleum (OXY) and Charles Schwab (SCHW). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Pfizer’s shares have underperformed the peer group so far this year (the stock is up +8.3% over this period vs. a +14.5% increase for the Zacks Large-Cap Pharmaceuticals industry). Pfizer’s Q3 results were mixed as it beat earnings estimates but delivered in-line sales. However, the company raised its earnings outlook for the year.
Pfizer is facing headwinds in the form of genericization of key drugs, supply challenges in the legacy Hospira portfolio, pricing pressure and rising competition, which are hurting the top line. Neverthetheless, we believe that new products like Ibrance, contribution from acquisitions, cost-cutting efforts and share buybacks should help the company achieve its guidance.
Pfizer also boasts a strong pipeline and expects approximately 25 to 30 drug approvals over the next five years, including around 15 products that have blockbuster potential. Its growing immuno-oncology portfolio offers a strong potential. Bavencio is being considered a key long-term growth driver for Pfizer.
Shares of Occidental Petroleum have outperformed the Zacks Domestic Integrated Oil industry over the last six months, gaining +11.2% vs. +6.7%. The company’s third-quarter earnings topped expectations but total revenues fell behind.
The Zacks analyst likes the fundamental strength of the company, which will help it overcome the adverse impact from natural disasters. Occidental Petroleum will benefit from more oil production from its Permian Resources and from concentrating on high margin production region. The company generates stable cash flow and its Chemical plant will further improve its cash flow.
Occidental Petroleum, like other oil and natural gas companies, faces the risks of cost overruns and development interruptions due to delays in drilling and other approvals, property or border disputes and equipment failures. As expected, Hurricane Harvey adversely impacted income and production in the third quarter as the company had to shut down operation in Texas to ward off the impact of the storm.
Schwab’s shares have outperformed the Zacks Investment Brokers industry over the last three months, gaining +7.7% vs +6.9%. The performance was supported by impressive earnings surprise history, as the company did not lag expectations in any of the trailing four quarters.
The company’s third-quarter 2017 results reflect higher revenues and benefits from rising rates. It remains well positioned to gain from the rising rate environment. Also, initiatives to strengthen trading income are likely to support its profitability in the long run despite the near-term reduction in the same.
However, a continuous rise in expenses (due to rise in compensation costs) remains a key concern for the company. Further, significant dependence on fee-based revenue streams makes us apprehensive.
Other noteworthy reports we are featuring today Bank of New York Mellon (BK), Prudential (PRU) and S&P Global (SPGI).
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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
Per the Zacks analyst, Prudential continues to put in substantial efforts to boost and expand its international operations, thereby resulting in its overall growth.
Per the Zacks analyst, Ventas' life science real estate investments and reduction in exposure to skilled nursing facilities augur well for growth.
Per the Zacks analyst, higher unit volumes and favorable mix across all regions are boosting Johnson Controls' Power Solutions unit. But, volatile prices of steel, aluminum & copper is a concern.
Per the Zacks analyst, higher rates and rise in demand for loans will support BNY Mellon's net interest margin. Yet, concentration risk arising from dependence on fee-based income is a concern.
Per the Zacks analyst, S&P Global's strategic portfolio restructuring initiatives and core focus are likely to drive growth, while SNL Financial is expected to be accretive to GAAP earnings in 2018.
The Zacks analyst believes that increase in loan balance and higher interest rates will support SunTrust's revenues. However, slowdown in mortgage business remains a major near-term concern.
Per the analyst, buyout of nuTonomy will help Delphi to commercialize its autonomous driving solutions.
Per the Zacks analyst, realization of its new and incremental business backlogs will help American Axle to diversify its business and customer base and continue with its sales growth.
The Zacks analyst believes that U.S. Cellular's strategic initiatives of continuous rollout of 4G LTE network and enhancement of LTE handsets have paid off in terms of the huge subscriber gain.
Per the Zacks analyst, ViaSat is set to benefit from accelerating in-flight installs, strong momentum in the government business and the upcoming service launch of the ViaSat-2 satellite.
The Zacks analyst is concerned about CenturyLink's continuous loss in access lines and fall in high-speed broadband subscriber count. High debt levels and decreasing cash flows are other headwinds.
Per the Zacks analyst, TJX Companies' high employee payroll costs have been denting its results for a while now. Further the company expects higher wages to weigh on its pre-tax margin in fiscal 2018.
Per the Zacks analyst, escalating costs and expenses and unfavorable product mix are weighing on Henry Schein's bottom line. This apart, competitive pricing remains another cause of concern.
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S&P Global Inc. (SPGI): Free Stock Analysis Report
The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
Prudential Financial, Inc. (PRU): Free Stock Analysis Report
Pfizer, Inc. (PFE): Free Stock Analysis Report
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
Bank Of New York Mellon Corporation (The) (BK): Free Stock Analysis Report
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