Thursday, February 07, 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 Chevron (CVX), CSX Corp. (CSX) and Regeneron (REGN). 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 >>>
Chevron’s shares have gained +5.9% in the past year, outperforming the Zacks Integrated Oil industry's +1.3% increase. Chevron's Q4 earnings increased roughly 20% year over year and was ahead of analysts' expectations, while free cash flow and upstream production for 2018 hit a record.
The Zacks analyst emphasizes that Chevron’s existing oil and gas development project pipeline is among the best in the industry, targeting volume growth of around 4-7% in 2019 thanks to planned expansion in the Permian Basin. Chevron pumped 84% more out of the West Texas shale play in the quarter compared with the same period last year, with production set to soar in coming years.
Moreover, the growing free cash flow should enable Chevron to deliver safe and growing dividend for the foreseeable future. However, there are worries over drop in its downstream earnings that once again cut into overall gains from rising E&P income.
The massive capex might also create headwinds. Hence, investors are advised to wait for a better entry point before buying shares in Chevron.
(You can read the full research report on Chevron here >>>).
Shares of Buy-ranked CSX Corporation have gained +34.9% over the past year, outperforming the Zacks Rail industry, which has gained +21.8% over the same period. Ushering in further good news, the company reported better-than-expected revenues in the fourth quarter of 2018. Moreover, both earnings and revenues improved year over year.
Results were aided by volume growth and favorable pricing. Improvement in operating ratio is an added positive. Backed by operational efficiency, the company expects to achieve its operating ratio target of 60% this year itself instead of 2020 as expected earlier. In fact, CSX Corporation is looking to cut costs for driving bottom-line growth.
The Zacks analyst thinks the company’s efforts to reward its shareholders are impressive. In February 2019, CSX Corporation hiked its quarterly dividend by 9.1%. However, the company's high debt levels are worrying. As of Dec 31, 2018, long-term debt totaled $14,739 million compared with $11,790 million at 2017 end.
(You can read the full research report on CSX Corporation here >>>).
Buy-ranked Regeneron’s shares have outperformed the Zacks Biomedical and Genetics industry in the past six months, gaining +8.6% vs. a decline of -13.8%. Regeneron’s fourth-quarter results were impressive as the company comfortably beat on both the top and the bottom line. Regeneron’s growth driver, Eylea continues to drive sales, and label expansion of the drug into additional indications has further boosted growth. Dupixent too has boosted performance.
The company is working to expand Dupixent’s label further in several other indications. The Zacks analyst thinks this should diversify the company’s revenue base and reduce dependence on Eylea.
In September 2018, the FDA approved its immuno-oncology therapy, Libtayo, for the treatment of patients with metastatic or locally advanced CSCC who are not candidates for curative surgery or curative radiation. New drug approvals boost growth prospects of the company. However, the company is highly dependent on Eylea for growth.
(You can read the full research report on Regeneron here >>>).
Other noteworthy reports we are featuring today include Capital One Financial (COF), Allstate Corp. (ALL) and Canadian National Railway (CNI).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
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
Chevron (CVX) Buoyed by Permian Output Amid Downstream Woes
Cost Cuts, Dividends & Buybacks Buoy CSX Corporation (CSX)
Dupixent, Eylea's Label Expansion Boost Regeneron (REGN)
Focus on Cards Aid Capital One (COF), Asset Quality a Woe
Per the Zacks analyst, strength in credit card and online banking operations, higher interest rates and solid loan balance will aid Capital One while deteriorating asset quality is a major concern.
Acquisitions Aids TransDigm (TDG), Macro Economic Risks Hurt
Per the Zacks analyst, TransDigm strengthens its position in proprietary aerospace components' niche markets through strategic acquisitions.
Freight Revenues Aid Canadian National (CNI) Amid Debt Woes
The Zacks analyst likes the 10.2% growth in 2018 freight revenues, which boosted the company's overall volumes.
Loan Growth Aids Huntington (HBAN), Concentration Risk a Woe
The Zacks analyst believes that improving economy has helped Huntington witness growth in loan and deposits.
Paramount & MTV Turnaround, Cost Savings Aids Viacom (VIAB)
Per the Zacks analyst, the ongoing turnaround at Paramount and MTV along with cost savings is benefiting Viacom.
Strong Industrial Business to Boost RBC Bearings (ROLL)
Per the Zacks analyst, strong traction of RBC Bearings' industrial business fueled by growth in OEM demand as well as strong aftermarket and distribution demand should continue to drive its sales.
U.S. Renewable Focus Aids 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.
Premium Growth, Strong Capital Position Aids Allstate (ALL)
Per the Zacks analyst, initiatives such as pricing discipline, marketing, distribution, new products and technology has led to premium growth, strong capital position enables strategic investments.
International Expansion Boosts Ralph Lauren's (RL) Sales
Per the Zacks analyst, Ralph Lauren is firming international footing by growing in underpenetrated markets, specially China and Europe. International markets contributed 40% to sales in third quarter.
AECOM (ACM) to Gain from Solid Backlog & Federal Funding
Per the Zacks analyst, solid federal spending scenario, strong book-to-burn ratio and near record levels of backlog ($59.5 billion) bode well for AECOM.
Rising Raw Material Cost Hurts Leggett's (LEG) Margins
Per the Zacks analyst, higher steel costs and pricing lag have been hurting Leggett's performance.
Liberty Property's (LPT) Growth to Bear Brunt of Dispositions
Per the Zacks Analyst, Liberty's focus on industrial portfolio expansion is encouraging. But concerns remain regarding lease exposure to Sears and dilutive impact on earnings from asset sales.
Business Transition & High Debt Hurts Pitney Bowes (PBI)
Per the Zacks analyst, Pitney Bowes continues to transform its portfolio and make investments to boost sales, which is negatively impacting margins. Further, changing business mix is a concern.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
CSX Corporation (CSX) : Free Stock Analysis Report
Capital One Financial Corporation (COF) : Free Stock Analysis Report
Canadian National Railway Company (CNI) : Free Stock Analysis Report
The Allstate Corporation (ALL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research