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Pioneer Natural Resources, Viatris, NVIDIA, Deckers Outdoor and Adobe highlighted as Zacks Bull and Bear of the Day

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·11 min read
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For Immediate Release

Chicago, IL – April 22, 2021 – Zacks Equity Research Shares of Pioneer Natural Resources Company PXD as the Bull of the Day, Viatris Inc. VTRS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corporation NVDA, Deckers Outdoor Corporation DECK and Adobe Inc. ADBE.

Here is a synopsis of all five stocks:

Bull of the Day:

Pioneer Natural Resources should be one of the big beneficiaries of the upcoming recovery. This Zacks Rank #1 (Strong Buy) is expected to grow its earnings by over 500% this year.

Pioneer is a large oil and gas exploration and production company in the United States. It's one of the largest operators in the Permian Basin.

Pioneer to Buy DoublePoint Energy for $6.4 Billion

On Apr 1, Pioneer announced it agreed to buy DoublePoint Energy in a cash and stock deal worth $6.4 billion.

DoublePoint has assets in the Midland Basin, including tier one acreage adjacent to Pioneer's.

Pioneer expects the transaction to be accretive on cash flow, free cash flow per share, earnings per share and corporate returns in 2021.

Given Pioneer's dedication to returning cash to shareholders, it expects the transaction to lead to an increase in the expected per share variable dividend beginning in 2022.

The deal is expected to close in the second quarter of 2021.

Big Beat in the Fourth Quarter of 2020

On Feb 23, Pioneer reported its fourth quarter 2020 results and easily beat the Zacks Consensus by 62%.

Earnings were $1.07 versus the Zacks Consensus of $0.66.

It generated $294 million in free cash flow in the quarter.

At the end of Q4, as of Dec 31, 2020, it had unrestricted cash on hand of $1.4 billion and net debt of $1.9 billion.

It also had $2.9 billion of liquidity, including the cash and $1.5 billion unsecured credit facility which was undrawn as of Dec 31,2020.

It closed on the Parsley Energy deal in January, and then had net debt of about $5.2 billion.

Pioneer will use cash on hand and also tap its revolving credit facility for the $1 billion for the DoublePoint Energy deal.

Earnings Estimates Rise

After a solid fourth quarter, the closing of the Parsley Energy deal and now the DoublePoint Energy deal, the analysts have continued to raise earnings estimates.

2 analysts have raised estimates for 2021 in the last week, pushing the Zacks Consensus up to $10.08 from $5.86 in the last 90 days.

That is earnings growth of 514% as the company only made $1.64 last year.

The good times are expected to last into 2022 with the Zacks Consensus Estimate rising to $13.11 from $7.50 in the last 3 months. That's another 30% earnings growth.

New Variable Dividend Announced

On Feb 23, Pioneer announced that the board had increased the Company's quarterly cash dividend to $0.56, which was the fourth year in a row the dividend was raised.

It also announced a new long-term variable dividend policy beginning this year.

Pioneer expects to annually distribute up to 75% of the prior year's annual free cash flow, after the payment of the base dividend.

This is expected to begin in 2022, with the Company expecting to distribute up to 50% of 2021 free cash flow, after the payment of the base dividends, assuming the average 2021 WTI oil price is greater than $42 per barrel.

The base dividend is currently yielding 1.5%.

Another Buying Opportunity in Oil Stocks?

The oil stocks mostly hit bottom in Nov 2020.

When the Pfizer vaccine was announced as being successful, the energy stocks took off, along with the price of WTI.

Pioneer shares are up 76% in the last 6 months.

But in the last month, the shares have weakened, and corrected 10%.

The shares are on sale again.

Pioneer trades with a forward P/E of just 15. That makes it a cheap, value stock.

Bear of the Day:

Viatris is a classic example of why companies fall to a Zacks Rank #5 (Strong Sell). It disappointed the Street with its full-year guidance and analysts cut full year earnings estimates.

Viatris Inc. was formed in Nov 2020 through the combination of Mylan and Pfizer's Upjohn business. It provides access to medicines, advances sustainable operations and develops innovative solutions.

The global company has a portfolio that comprises more than 1,400 approved molecules across a wide range of therapeutic areas, spanning both non-communicable and infectious diseases, including globally recognized brands, complex generic and branded medicines, a growing portfolio of biosimilars and a variety of over-the-counter consumer products.

Disappointing Full-Year Guidance

On Feb 22, Viatris gave its outlook for the full-year 2021 and announced it would initiate a dividend.

Full-year revenue guidance is expected between $17.2 billion to $17.8 billion, which was lower than the Street expected.

"We are confident that our financial guidance for 2021 is the right starting point for Viatris and continue to expect 2021 to be our trough year in terms of revenue, adjusted EBITDA and free cash flow, reflecting a balanced view of both near-term tailwinds and headwinds, particularly given the delay in closing of the combination between Mylan and Pfizer's Upjohn business," said CEO Michael Goettler.

Analysts Cut Full-Year Earnings Estimates

The analysts were, apparently, too bullish.

7 estimates have been lowered in the last 60 days, pushing the Zacks Consensus down to $3.55 from $4.04 prior to the guidance.

That's the reason that the company has a Zacks Rank of #5 (Strong Sell).

The Zacks Rank is a short-term 1 to 3 month recommendation based on analyst earnings estimate revisions.

All the analysts were in agreement on Viatris and all cut earnings estimates at the same time.

Shares are Dirt Cheap

The shares have fallen 24% over the last 3 months, to new all-time lows, on the news.

The Street is practically giving them away right now.

Viatris trades with a forward P/E of just 3.7 as the Street has low confidence in the company right now until it reports earnings on May 10.

As for the initiation of the dividend, given the timing of the announcement in February, it doesn't expect the board to approve the $0.11 dividend until May, for payment in June 2021.

It will only make 3 quarterly payments in 2021.

Investors considering diving into Viatris may want to wait until its first quarter earnings report for more clarity on the business before doing so.

Additional content:

Sustainable Stocks to Snap Up for Earth Day

Apr 22 is celebrated as Earth Day and billions across the globe engage in activities to draw people's attention toward climate crisis and environmental degradation. Since its inception in 1970, Earth Day has witnessed major environmental events, for instance the signing of the Paris Agreement in 2016. According to the United Nations, the theme for this year is "Restore Our Earth," which will be the second Earth Day Live digital event.

Transition to Net-Zero Emissions

Over the past decade, consumers and businesses have worked hard to prioritize environmental protection over economic growth. In fact, concepts like environmental, social, and corporate governance (ESG) now play a crucial role in shaping investment decisions, especially when it comes to millennial investors.

Robeco's '2021 Global Climate Survey' shows that almost 73% investors stated that climate change is already a significant factor in their investment policy. The increasing awareness among investors has created the need for decarbonization. This in turn is supporting the transition toward a low-carbon economy, away from fossil fuels.

The United States' re-entry into the global climate fight plays a significant role in this transition, after President Joe Biden re-signed the Paris Agreement. Biden has pledged to slash America's greenhouse gas emissions at least to half by 2030.

In his efforts to achieve a 100% clean energy economy and reach net-zero emissions no later than 2050, he has planned to host a virtual summit of 40 world leaders to discuss the climate crisis. The summit will be held on Apr 22 and 23 and Biden will seek new commitments from the world's biggest carbon emitters by setting more realistic goals.

Earlier in March, Biden had announced his infrastructure initiative, in which he plans to deploy $2 trillion in infrastructure projects to curb the country's greenhouse gas emissions. The fund will be used in clean-energy measures, including electric vehicles funding, research and development, addition of charging stations, and retrofitting buildings and residences.

3 Sustainable Stock Picks

A post-pandemic green recovery could now inspire companies to produce more sustainable low-carbon products and investors should also park their funds.And new environmental regulation and changing business landscape focusing more on ESG will impact sectors like manufacturing, utilities and more. Here are five Earth-friendly stocks that will continue to grow as companies race against the climate clock.

NVIDIA operates as a visual computing company. The company plans to source 65% renewable energy globally by 2025 and its GPUs are 20 to 25 times more efficient than CPU servers for AI workloads, which help in reducing carbon footprint.

The company's expected earnings growth rate for the current year is 35.5% compared with the Zacks Semiconductor - General industry's projected earnings growth of 18.5%. The Zacks Consensus Estimate for the company's current-year earnings has been revised 16.6% upward over the past 60 days. NVIDIA flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Deckers Outdoor designs, markets, and distributes footwear, apparel and accessories for casual lifestyle use. The company has been a member of the world's largest corporate sustainability initiative, the United Nations Global Compact (UNGC), since 2016. Its sustainable development goals include materials, waste, water, gender equality and quality education, chemistry, climate and clean energy and human rights.

The company's expected earnings growth rate for the current year is 35% compared with the Zacks Shoes and Retail Apparel industry's projected earnings growth of 17.8%. The Zacks Consensus Estimate for the company's current-year earnings has been revised 0.2% upward over the past 60 days. Deckers Outdoor carries a Zacks Rank #2.

Adobe operates as a diversified software company. The company offers Adobe Creative Cloud where designers are using 3D and AR design tools to create photorealistic content and design for circularity, reducing environmental impact — that means no more costly photoshoots, wasted materials, packaging, or emissions from shipping and travel.

The company's expected earnings growth rate for the current year is 17.6% compared with the Zacks Computer - Software industry's projected earnings growth of 2%. The Zacks Consensus Estimate for this Zacks Rank #2 company's current-year earnings has been revised 5.5% upward over the past 60 days.

Zacks Top 10 Stocks for 2021

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