Thursday, September 20, 2018
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 Wells Fargo (WFC), Schlumberger (SLB) and Biogen (BIIB). 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 >>>
Wells Fargo’s shares have underperformed the Zacks Major Banks industry over the past three months (+1.5% vs. +4.2%). Further, the company possesses a disappointing earnings surprise history, having beaten expectations in only one of the trailing four quarters.
Following the sales scandal and other issues, Wells Fargo has been slapped with new sanctions, including a cap on the assets position by the Federal Reserve. Recently, the bank has been charged with a penalty of $2.09 billion by the U.S. Department of Justice. The Zacks analyst thinks the crisis related to the revelation of illegally opening millions of accounts in 2016, auto-lending issues and impact of other malpractices will take some time to alleviate.
Recently, the company’s chief financial officer, John Shrewsberry, revealed a dismal picture for the bank’s loan book as well. However, lower tax rate, easing of regulations and expansions will likely support the bank’s growth profile.
(You can read the full research report on Wells Fargo here >>>).
Shares of Schlumberger have outperformed the Zacks Oil and Gas - Field Services industry over the past year, losing -10.1% vs. -13.8%. Schlumberger is the largest oilfield services player in the world with presence in every energy market.
The Zacks analyst thinks being the leading provider of technology for complex oilfield projects, Schlumberger is better placed than most peers to take up new offshore projects in the shallow water basins. In fact, the company is expecting more drilling activities to ramp up in the offshore resources, that will meet the growing demand for crude in the world.
Moreover, the firm has been persistently rewarding shareholders with higher dividend yield than the industry over the past 15 years. However, we are concerned about Schlumberger’s rising project startup costs since the company is starting up many new developments outside North America.
(You can read the full research report on Schlumberger here >>>).
Biogen’s shares have outperformed the Zacks Biomedical and Genetics industry year to date (+6.3% vs. -4.8%). Biogen has a strong position in the MS market with a wide range of products including Avonex, Tysabri, Tecfidera and Plegridy.
The Zacks analyst likes its efforts to diversify beyond MS to other areas like Alzheimer’s, Parkinson's and stroke, among others. Meanwhile, its newest drug Spinraza has multi-billion dollar potential. Biogen’s efforts to regularly in-license assets to build its pipeline are encouraging. It has many assets in its pipeline, which have transformative potential.
Multiple data readouts are expected this year. However, the launch of Ocrevus by Roche is beginning to have a negative impact on MS franchise sales in the United States. Also, Spinraza’s moderating trends in the United States is a concern.
(You can read the full research report on Biogen here >>>).
Other noteworthy reports we are featuring today include American Express (AXP), Glaxo (GSK) and Illinois Tool Works (ITW).
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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
Loan Growth Supports Wells Fargo (WFC), Legal Issues Linger
Offshore Projects Aid Schlumberger (SLB), Start-Up Costs Ail
Biogen (BIIB) Rides on Spinraza, Diversifies Drug Portfolio
Glaxo (GSK) Boasts Solid Pipeline, Advair to Face Generics
The Zacks analyst likes Glaxo's strong pipeline with several late-stage data readouts expected in 2018-2020 period. However, its leading respiratory drug Advair may face generic competition this year.
Freight Revenues Buoy Canadian Pacific (CP) Amid Debt Woes
The Zacks analyst likes the growth in freight revenues, on the back of strong demand. Efforts to reward shareholders are also encouraging.
Restructuring Aids PPG Industries (PPG) Amid Input Cost Woes
While PPG Industries faces headwinds from raw material cost inflation, cost savings from its restructuring actions should add to its margins in FY18, per the Zacks analyst.
Constellation Brands' (STZ) Solid Beer Segment to Lift Sales
Per the Zacks analyst, Constellation Brands' strength in beer business due to higher shipment volumes and depletions is driving the company's top line.
NVR Rides on Solid Backlog & Business Model, High Costs Ail
Per the Zacks analyst. NVR is poised to benefit from the current positive housing market scenario, solid business model and strong backlog.
Transformation Efforts & SMB Products Aid Pitney Bowes (PBI)
Per the Zacks analyst, Pitney Bowes' efforts to shift its business & optimize enterprise business platform hold promise.
Whiting Petroleum (WLL) Banks on Bakken Amid Debt Concerns
While Whiting Petroleum's strategic acreage in the Bakken shale play has buoyed the firm's free cash flow and output, the Zacks analyst believes that the company's elevated leverage may limit growth.
U.S. Renewable Focus Drives NextEra Energy Partners (NEP)
Per Zacks analyst, NextEra Energy Partners decision to sell Canadian assets and buy domestic renewable assets having lower effective corporate tax rate and longer tax shield will boost performance.
Acquisitions & Value Added Services Aid Genuine Parts (GPC)
Per the Zacks analyst, industrial & automotive acquisitions are helping Genuine Parts to boost its products and expand. Also, its value-added services for existing and new customers are paying off.
Solid Product Portfolio & Demand to Aid Illinois Tool (ITW)
Per a Zacks analyst, Illinois Tool Works' solid product offerings and strengthening end-market demand will support organic growth of 3-4% and total revenue growth of 4-5% in 2018.
Rising Expenses Continue to Hurt Intercontinental (ICE)
Per the Zacks analyst escalating operating expenses, due to higher debt and integration expenses and compensation and benefits costs, will continue to hurt Intercontinental Exchange's overall growth.
Higher Rewards & Marketing Costs Hurt American Express (AXP)
Per the Zacks analyst, higher reward costs due to enhancement of U.S. platinum products and strong growth in its Delta cobrand portfolio hurts. High marketing cost is due to new global brand campaign.
ManpowerGroup (MAN) Grapples With a Competitive Industry
The Zacks analyst believes that a competitive employment services industry will put ManpowerGroup under pricing pressure and subsequently affect the company's earnings.
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Wells Fargo & Company (WFC) : Free Stock Analysis Report
Schlumberger Limited (SLB) : Free Stock Analysis Report
Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report
GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
Biogen Inc. (BIIB) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
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