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Top Research Reports for Union Pacific, AbbVie & General Dynamics

Mark Vickery
Top Research Reports for Union Pacific, AbbVie & General Dynamics

Thursday, January 31, 2019

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 Union Pacific (UNP), AbbVie (ABBV) and General Dynamics (GD). 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 >>>

Buy-ranked Union Pacific’s shares have outperformed the Zacks Rail industry (+20.4% vs. +12%) in the past year. Union Pacific reported better-than-expected earnings per share and revenues in the fourth quarter of 2018. Both the metrics also increased year over year. Higher freight revenues on the back of volume growth aided top-line growth.

For 2019, the company anticipates volumes to increase in the low single-digit range. The Zacks analyst thinks Union Pacific’s efforts to reward its shareholders are encouraging. Notably, the company has hiked dividends thrice since November 2017.

Improvement in operating ratio and low tax rates are added positives. Its efforts to promote safety are noteworthy as well. However, high debt levels and operating expenses are concerns. Escalated capital expenditures are contributing to rise in costs.

(You can read the full research report on Union Pacific here >>>).

Shares of AbbVie have lost -29.6% in the past year, underperforming the Zacks Large-Cap Pharmaceuticals industry's decline of -1.2%. AbbVie missed estimates for earnings and sales in the fourth quarter. The Zacks analyst thinks AbbVie’s key drug, Humira has been performing well in the United States based on strong demand trends despite new competition.

Moreover, Imbruvica has multibillion dollar potential. Mavyret saw a stronger-than-expected launch and has become a significant contributor to sales. AbbVie has also been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta.

AbbVie has an impressive late-stage pipeline comprising several products with multibillion-dollar potential expected to be launched in the near term. Sales erosion due to direct biosimilar competition to Humira in international markets will be a big headwind in 2019. Also costs to support expected new product/line extension launches are likely to hurt profits in 2019.

(You can read the full research report on AbbVie here >>>).

General Dynamics’ shares have lost -23.2% in the past year, underperforming the Zacks Aerospace & Defense industry's decrease of -6.3%. General Dynamics ended fourth-quarter 2018 with both earnings and revenues surpassing expectations.

The Zacks analyst thinks the company enjoys solid demand for its varied defense products leading to organic growth, whereas a notable acquisition strategy adds to inorganic growth. The company is on track to achieve FAA type certification for its G600 aircraft later this year, which is expected to enter service in 2019.

These new jets are likely to be significantly accretive in terms of revenues as well as earnings for the company, once they become available to global customers. Moreover, a comparative analysis of the company’s historical EV/EBITDA ratio reflects a relatively gloomy picture that might be a cause for investors’ concern.

(You can read the full research report on General Dynamics here >>>).

Other noteworthy reports we are featuring today include Harris (HRS), Total System Services (TSS) and C.H. Robinson (CHRW).

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Mark Vickery
Senior Editor

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

Volume Growth, Dividends & Buybacks Buoy Union Pacific (UNP)


International Humira Sales Erosion Weighs on AbbVie (ABBV)


Rising Demand Aids General Dynamics (GD), Interest Rates Hurt


Featured Reports

Acquisitions, Strong Balance Sheet Aid Total System (TSS)

Per the Zacks analyst, buyout of NetSpend, TransFirst, Cayan, iMobile and others have aided inorganic growth. Its strong free cash flow and deleveraging progress will strengthen its balance sheet.

Strategic Buyouts Aid Raymond James (RJF), High Costs a Woe

Per the Zacks analyst, Raymond James' efforts to expand through opportunistic buyouts and loan growth will aid profitability. Yet, rise in operating expenses and weak underwriting business are woes.

Higher Commission & Fees Aid Brown & Brown (BRO), Costs Ail

Per the Zacks analyst, Brown & Brown is poised to grow on improving commission and fees driving revenues higher. However, rising expenses due to higher compensation and operating expenses hurt margin.

Loan Growth Aids Bank of Hawaii (BOH), Increasing Costs a Woe

Per Zacks analyst, Bank of Hawaii's rising loans and deposits balances is likely to get a further boost from improving economy.

Brinker's (EAT) Chili's Turnaround Strategy to Drive Growth

Per the Zacks analyst, Brinker's Chili's turnaround strategy has started to pay off. Further, the company's traffic-building strategies and efforts to capture increased market share bode well.

Europe & Asia Regions to Continue Driving Guess? (GES) Sales

Per the Zacks analyst, Guess? has been gaining from solid Europe and Asia businesses.

Precision Partners Buyout, Auto Demand Aid AK Steel (AKS)

Per the Zacks analyst, AK Steel should gain from the strength in the automotive market and the Precision Partners acquisition.

New Upgrades

Favorable Pricing, Free Cash Flow Aid C.H. Robinson (CHRW)

The Zacks analyst is impressed by the company's free cash flow generation. Favorable pricing and operating ratio improvement are added positives. Efforts to reward shareholders are also encouraging.

PACCAR (PCAR) Rides on Rising Demand for Class 8 Trucks

PACCAR's Class 8 truck retail sales are rising. Per the Zacks analyst, demand for trucks is rising due to strong North American & European economic growth and higher freight activity.

Harris (HRS) Rides on Solid Order Trend, L3 Merger Synergies

Per the Zacks analyst, Harris' revenue generating capabilities are buoyed by the possibility of greater U.S. military spending, while its merger with L3 Technologies will augment economies of scale.

New Downgrades

Rising Expenses Continue to Hurt Reinsurance Group (RGA)

Per the Zacks analyst, rising expenses, mainly due to higher claims and policy benefits as well as policy acquisition costs will restrict Reinsurance Group's operating margin expansion.

Weakness in China, Rise in Costs Hurt A. O. Smith (AOS)

Per the Zacks analyst, A. O. Smith is struggling with low sales of electric water heaters & air purifiers with high selling, general & administrative costs in China. Rise in steel prices is a concern.

Soft Demand, Rising Lumber Costs to Hurt PulteGroup (PHM)

Softness in homebuying demand in response to affordability challenges has been impacting PulteGroup's order flow. Gross margin compression due to rising lumber costs will weigh on margins


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