Tuesday, December 6, 2022
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 Bank of America Corporation (BAC), T-Mobile US, Inc. (TMUS) and ConocoPhillips (COP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Shares of Bank of America have modestly underperformed the Zacks Banks - Major Regional industry over the past year (-22.9% vs. -20.4%). The company’s over-dependence on trading revenues for fee income is a key concern. The volatile nature of the capital markets might adversely impact fee income growth.
However, Bank of America’s earnings outpaced the Zacks Consensus Estimate in three and lagged in one of the trailing four quarters. Its third-quarter 2022 results were primarily aided by higher rates and loan growth. The opening of new financial centers, enhancement in digital capabilities and cost-saving efforts are expected to keep aiding the company’s financials.
Moreover, supported by continued loan growth, Bank of America's top line is expected to improve further. Given the rise in interest rates, the company is expected to keep witnessing growth in margins in the near term.
(You can read the full research report on Bank of America here >>>)
T-Mobile's shares have outperformed the Zacks Wireless National industry over the past year (+28.5% vs. -10.4%). The company’s industry-leading growth in postpaid and broadband customers is driven by superior 5G network. It is on track to complete the Sprint customer network decommissioning by the year-end.
The company has augmented its 5G footprint by introducing 5G Home Internet services in several states. With healthy demand trends, T-Mobile has raised the guidance for 2022 across the board.
However, it operates in a fiercely competitive and almost saturated U.S. telecom market, which lowers its growth potential to some extent. Several promotional activities to lure additional customers are further eroding its profitability. Furthermore, it is engaging in leasing strategy to gain customers, thereby exposing it to credit risk. Debt obligation woes also persist.
(You can read the full research report on T-Mobile here >>>)
ConocoPhillips’s shares have gained +60.1% over the past year against the Zacks Oil and Gas - Integrated - United States industry’s gain of +65.2%. The company holds a bulk of acres in the unconventional plays of Eagle Ford shale, Permian Basin and Bakken shale. Significant opportunities are there for the firm in the Bakken Shale, where it owns about 750 undrilled locations that could provide access to huge reserves.
COP projects its 2022 production at 1.74 million barrels of oil equivalent per day (MMBoe/d), suggesting an increase from 1.6 MMBoe/d last year. COP’s balance sheet is significantly less leveraged than the industry it belongs to. Also, it approved a $20-billion increase in the existing share repurchase program to $45 billion.
However, COP is highly exposed to oil price fluctuations, which makes things challenging for the company. Also, it been generating lower dividend yield than the industry over the past few years. As such, the stock warrants a cautious stance.
(You can read the full research report on ConocoPhillips here >>>)
Other noteworthy reports we are featuring today include Starbucks Corporation (SBUX), Prologis, Inc. (PLD), and Sysco Corporation (SYY).
Director of Research
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
Higher Rates Aid Bank of America (BAC) Amid Fee Income Woes
T-Mobile (TMUS) Rides on Extensive 5G Network Coverage
ConocoPhillips (COP) Banks On Oil-Rich Bakken Shale Assets
Store Growth Aids Starbucks (SBUX), Dismal China Comps Hurts
Per the Zacks analyst, Starbucks' rapid unit growth, best-in-class loyalty program and digital offerings bode well. However, dismal performance in China hurts the company's performance.
E-commerce Adoption, High Inventory to Aid Prologis (PLD)
Per the Zacks analyst, the fast adoption of e-commerce and high inventory levels will drive demand for Prologis' facilities in key markets. Rising supply and interest rate hikes are worrisome.
Sysco's (SYY) Recipe for Growth Solid, Product Costs High
Per the Zacks analyst, Sysco has been gaining from its Recipe for Growth, which is strengthening its capacities across sales and supply chain. However, product cost inflation remains a headwind.
Business Recovery Aids Zimmer Biomet (ZBH) amid Macro Issues
The Zacks analyst is impressed with Zimmer Biomet's strong procedure recovery globally. Yet, challenges in terms of unfavorable foreign exchange, supply, inflation and staffing shortage hurt growth.
Revenue Stability Boost WEX Despite Low Current Ratio
Per the Zacks analyst, product and service quality, and deep understanding of customers' operational needs have enabled WEX to achieve revenue stability. However, low liquidity is worrisome.
Kinsale Capital (KNSL) Continues to Gain From E&S lines market
Per the Zacks , Kinsale is set to grow on solid excess and surplus lines (E&S) market due to improved margins and lower loss ratios. This has led to strong underwriting results.
Strong Investment Aid PNM Resources (PNM) Amid Merger Delay
Per the Zacks analyst PNM Resources (PNM) will gain from its planned $3.5 billion investment aimed to strengthen its infrastructure, while delay in merger approval with AVANGRID remains a headwind.
Cactus (WHD) Gains From Wellhead-Related Equipment Sales
The Zacks analyst likes Cactus as it has been witnessing higher sales of its wellhead and production-related equipment, thanks to rising customer drilling activity.
Growing Electronic Warfare Systems Demand Aid Mercury (MRCY)
Per the Zacks Analyst, high demand for electronic warfare, increased upgrades on electronic subsystems and continued flow of deals are aiding Mercury Systems' growth.
Amarin's (AMRN) Vascepa Label Expansion to Boost Sales
Per the Zacks Analyst, Amarin's focus on label expansion for Vascepa in cardiovascular risk reduction indication is encouraging. Expansion plans for Vascepa in Europe should also boost total revenues.
Higher Input Costs, Weak Demand Ail Huntsman (HUN)
Per the Zacks analyst, higher raw material costs will weigh on margins in the company's Polyurethanes unit. Weaker demand in Europe and China will also hurt sales volumes.
Wolverine (WWW) Witnesses Higher SG&A Costs & Weak Margins
Per the Zacks analyst, Wolverine has been witnessing higher SG&A costs for a while now. Also, gross margin fell 320 basis points on higher-than-expected promotions in the third quarter of 2022.
Soft Residential Market & Soaring Inflation Ail Mohawk (MHK)
Per the Zacks analyst, lower volume due to moderating housing demand, and higher unabsorbed costs and material, energy and transportation inflation are hurting Mohawk.
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