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Top Research Reports for Union Pacific, Lowe's & Gilead

Mark Vickery

Thursday, August 22, 2019

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Union Pacific (UNP), Lowe's (LOW) and Gilead (GILD). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Union Pacific’s shares have underperformed the Zacks Rail industry (+22.2% vs. +19%) year to date. The Zacks analyst thinks Union Pacific's initiatives to reward its shareholders are very encouraging. Since November 2017, the company hiked its quarterly dividend payout five times.

The latest dividend hike came in July, when the company increased its quarterly payout by 10.2% to 97 cents a share. It is also active on the buyback front. Union Pacific's efforts to check costs in a bid to drive the bottom line are also impressive. In fact, the company’s operating ratio has been improving mainly due to its cost-cut plans. The metric is expected to improve further going forward.

However, sluggish freight revenues represent a major headwind for the company. Moreover, its high debt levels are worrisome. The massive capex also might play a spoilsport. Hence, investors are advised to wait for a better entry point before buying Union Pacific’s shares.

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

Shares of Lowe's have outperformed the Zacks Building Products - Retail industry over the past three months, gaining +14.4% vs. +9.7%. The Zacks analyst thinks the company is gaining from key sales initiatives like focus on Pro customers, better product presentation and in-store merchandising, among others.

Such efforts drove sales in second-quarter fiscal 2019, wherein top and bottom lines were strong. While earnings gained from higher sales and lower SG&A costs, sales were backed by solid spring demand, robust execution of its holiday event, and improvement in Paint and Pro businesses. Also, Lowe’s experienced comparable sales growth in all 15 U.S regions.

However, supply-chain woes and adverse mix continued to hurt gross margin, which contracted in the quarter. Also, the company is exposed to competition. Nonetheless, solid demand in the home improvement space and Lowe’s retail fundamentals keep it well positioned.

(You can read the full research report on Lowe's here >>>).

Gilead’s shares have outperformed the Zacks Biotech industry year to date, gaining +3.1% vs. a decline of -1.2%. Gilead reported better-than-expected results for the second quarter of 2019 on strong sales of Biktarvy. It also raised its annual sales guidance.

The Zacks analyst thinks Gilead’s HIV franchise maintains momentum on continued uptake of Genvoya and Odefsey, and the rapid adoption of Biktarvy. The company has shifted focus to the HIV franchise, and newer avenues like CAR-T therapy and NASH, owing to a decline in sales of the HCV franchise.

Gilead’s collaboration with Novo Nordisk for NASH treatments is a step in the right direction, given its recent debacles. The company suffered a setback with the failure of a late-stage study on selonsertib in patients with compensated cirrhosis due to NASH. However, the HIV franchise is also expected to face stiff competition.

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

Other noteworthy reports we are featuring today include Target (TGT), EOG Resources (EOG) and Emerson Electric (EMR).

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Note: Our Director of Research 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

Dividends & Buybacks Aid Union Pacific (UNP) Amid Debt Woes

Lowe's (LOW) Top Line to Gain on Robust Comparable Sales Run

HIV Franchise Boost Growth For Gilead (GILD) As HCV Dwindles

Featured Reports

Target's (TGT) Omnichannel & Store Expansion to Boost Sales

Per the Zacks analyst, Target's focus on enhancing omni-channel capacities, coming up with new brands, remodeling stores and expanding same-day delivery options are likely to fuel top-line growth.

EOG Resources (EOG) Gains on Eagle Ford, Well Expenses High

Huge inventory of premium drilling wells in the Eagle Ford shale will contribute to EOG Resources' oil production. But, escalating lease and well operating costs are a concern, per the Zacks analyst.

Emerson (EMR) Gains from Strong MRO Activities, Margins Weak

Per the analyst, strong performance of Emerson's Automation Solutions segment fuelled by strong brownfield projects & MRO activities should drive its revenues.

LNG Contracts Aid Baker Hughes (BHGE), Oilfield Service Weak

Per the Zacks analyst, Baker Hughes is well positioned to capitalize on contracts to manufacture turbines, being used in LNG export terminals.

Expansion Efforts Aid HSBC Holdings (HSBC), High Costs a Woe

Per the Zacks analyst, while HSBC Holdings' efforts to expand in Asia and U.K. will strengthen its performance and increase market share, it might lead to higher costs, which will hurt bottom line.

Strong Insurance Business Aids Markel (MKL), Cat Loss Ails

Per the Zack analyst, Markel is poised to grow on the strength of its underwriting, investment and Markel Ventures operations and better pricing.

Production from U.S. Resource Plays to Boost Marathon (MRO)

The Zacks analyst believes that Marathon Oil's high-performing U.S. resource plays will fuel its production growth.

New Upgrades

Alibaba (BABA) Drives On New Investments & Cloud Growth

Per the Zacks analyst, Alibaba continues to benefit from its strong core e-commerce business, new investments in Asia, international growth opportunities and growing cloud computing services.

t:slim X2 Rollout, Favorable Market Trends Aid Tandem (TNDM)

The Zacks analyst is bullish about Tandem's strong international rollout of t:slim X2 insulin pump. Huge global demand for diabetes care devices on favorable market trends is another growth driver.

Acquisitions Aid Revenue Growth at Ensign Group (ENSG)

Per the Zacks analyst, a number of acquisitions of nursing operations and real estate made by the company have expanded its business portfolio, which in turn has driven revenue growth.

New Downgrades

Input Costs a Worry for Kimberly-Clark's (KMB) Bottom Line

Kimberly-Clark incurred higher input costs of $80 million from raw materials and distribution in the second quarter of 2019. Per the Zacks analyst, rising input costs remains a threat to bottom line.

Video Subscriber Loss Hurts Liberty Global (LBTYA) Prospects

Per the Zacks analyst, Liberty Global continues to suffer from continued customer losses in the video segment primarily due to stiff competition in the markets it operates.

Elevated Expenses, High Debt Levels Hurt Eaton Vance (EV)

Per the Zacks analyst, increasing expenses, mainly due to rise in compensation costs will likely hurt Eaton Vance's bottom-line growth. Also, the company's high debt levels make us apprehensive.

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Union Pacific Corporation (UNP) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
Emerson Electric Co. (EMR) : Free Stock Analysis Report
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