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Top Stock Reports for Union Pacific, NextEra & Biogen

Mark Vickery

Monday, June 24, 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), NextEra (NEE) 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 >>>

Union Pacific’s shares have underperformed the Zacks Rail industry (+22.2% vs. +25.5%) year to date. The Zacks analyst thinks Union Pacific's second-quarter 2019 results, scheduled to be revealed on Jul 18, will be hurt by sluggish freight revenues as was the case in the first quarter.

Declining shipments apart, high operating expenses may prove detrimental to the company. High debt levels are worrisome too. Notably, Debt/EBITDA ratio (adjusted) increased to 2.6 in the first quarter of 2019 from 2.3 at 2018 end. However, the company's efforts to reward its investors through share buybacks and dividend payouts are impressive.

Since November 2017, Union Pacific hiked its quarterly dividend payout four times. The company is also active on the buyback front. Its strategic initiatives toward promoting safety and enhancing productivity represent an additional positive.

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

Shares of NextEra have outperformed the Zacks Electric Power industry in the past year, gaining +24.7% vs +13.5%. The Zacks analyst thinks NextEra’s investments under the “30 by 30” plan, targeted at strengthening renewable operations, will help the company to continue as a market leader in renewable power generation.

Focus on expanding operations in natural gas pipelines, and further expansion of business through acquisitions and organic growth has positively impacted earnings.  However, its nature of business is subject to complex and comprehensive federal, state, and other regulations. Substantial investments are undertaken to ensure the safety of nuclear operations.

That said, if planned outages last longer than expected or there is an unplanned outage, the company’s regular operations and profitability might be hindered.

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

Biogen’s shares have declined -20.6% year to date, underperforming the Zacks Outsourcing industry, which has gained +6.3% over the same period. The Zacks analyst likes Biogen’s efforts to diversify beyond MS to other areas like Alzheimer’s, Parkinson's and stroke. Spinraza is performing well and has multi-billion dollar potential.

Biogen’s efforts to regularly in-license assets in order to build its pipeline are commendable since several of them have transformative potential. Several data readouts are expected in 2019/2020 with multiple potential launches in the early 2020s.

However, its core MS business, excluding Ocrevus royalties, is suffering from a declining trend. Also, potential competition to Spinraza from competitors’ gene therapy programs for SMA is a concern. Though Biogen’s CNS pipeline is attractive, it is a high-risk area as evident from the recent failure of Alzheimer’s candidate aducanumab and uncertainty over the future of others like BAN2401.

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

Other noteworthy reports we are featuring today include Humana (HUM), V.F. Corp (VFC) and Marathon Petroleum (MPC).

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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

Dividends, Buybacks Aid Union Pacific (UNP) Amid Cost Woes

Investment in Renewables and Infrastructure Aid NextEra (NEE)

Biogen (BIIB) Rides on Alliances, Spinraza Competition Lurks

Featured Reports

Strategic Initiatives Aid Humana (HUM), High Expenses Hurt

Per the Zacks analyst, a number of buyouts such as that of Curo and Kindred at Home and certain dispositions poise the company well for growth. However, elevated costs are a concern.

Marathon (MPC) to Ride on Andeavor Buyout Amid High Capex

While Andeavor buyout has bolstered Marathon Petroleum's refining, retail and marketing portfolio, the Zacks analyst is worried about the high capital outlay that may dent profits.

CarMax (KMX) Rides on Store Expansion Amid Expense Woes

Per the Zacks analyst, aggressive store expansion and digital initiatives are helping CarMax to cater to a larger customer group. But, rising selling, general and administrative expenses are worrying.

Jabobs (JEC) Benefits From KeyW acquisition, Costs High

Per the Zacks analyst, the KeyW acquisition, focus on infrastructure, aerospace and cybersecurity bode well for Jacobs. However, higher transaction-related costs & stiff competition pose risks.

Buyouts, Higher Assets Aid Invesco (IVZ) Amid Cost Woes

Per the Zacks analyst, Invesco's inorganic growth efforts, rise in assets under management and widening global presence will aid growth.

Robust Digital Business Key to Ralph Lauren???s (RL) Growth

Per the Zacks analyst, Ralph Lauren has a winning digital ecosystem, with directly-operated platforms, wholesale digital, pure plays and social commerce.

Unit Revenue Growth Buoys Alaska Air (ALK) Amid High Costs

The Zacks analyst is impressed with Alaska Air's performance with respect to unit revenues driven by the strong demand for air travel.

New Upgrades

Emergent's (EBS) Biosciences Spin-Off Looks Encouraging

Per the Zacks analyst, Emergent's spin-off of its Biosciences business into a separate publicly traded company is encouraging as it will help the company to focus on emerging infectious diseases.

Cadence (CDNS) Rides on EDA, Hardware & IP Solutions Demand

Per the Zacks analyst, Cadence benefits from solid demand for its broad based product portfolio. Traction witnessed by Palladium Z1 and EDA-optimized Cloud-Hosted Design solution is also a positive.

Mestrelab Buy Synergy to Boost Bruker's (BRKR) CALID Arm

The Zacks analyst is bullish about solid synergy from Bruker's buyout of Mestrelab in the field of NMR within CALID. The alliance with Champalimaud Foundation within Preclinical Imaging is a plus.

New Downgrades

Jeans Segment Spin-Off Weighs on V.F. Corp's (VFC) Margins

Per the Zacks analyst, the spin-off of V.F. Corp's Jeans business as a separate entity - Kontoor Brands, hurt margins in fourth-quarter fiscal 2019. Gross and operating margin declined by 70 bps each.

Term Loan to Hurt Canadian Natural (CNQ) Balance Sheet

The Zacks analyst believes that Canadian Natural's C$3.25-billion term loan to fund the Devon Energy asset acquisition will worsen its debt-to-capital ratio and lead to higher interest outgo.

Weak Legacy Business, High Expenses Ail DXC Technology (DXC)

Per the Zacks analyst, increased cloud adoption is denting top line growth of DXC Technology's application services business. Also, high investments in Digital business keep margins under pressure.

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V.F. Corporation (VFC) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
Biogen Inc. (BIIB) : Free Stock Analysis Report
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