Thursday, January 3, 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 UnitedHealth (UNH), CVS Health (CVS) and General Electric (GE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked UnitedHealth 's shares have outperformed the Zacks Medical Insurance industry's rally in the past year (up +8.5% vs. +7.8%). The Zacks analyst thinks the company's performance is being backed by higher revenues and strength in both segments - UnitedHealthcare and Optum - plus membership growth.
The company's robust Government business is also driving long-term growth. Its international business and strong capital position are the other positives. The company's raised earnings guidance for 2018 and a strong initial 2019 guidance instills optimism among its investors. However, the company is experiencing membership decline in Commercial segment.
Shares of Buy-ranked CVS Health have underperformed the Zacks Retail Pharmacies and Drug Stores industry in the past six months, gaining +1.7% versus +4.5%. On November 29, CVS Health completed the $70-billion consolidation of insurance-giant Aetna. The culmination of this huge deal marks the creation of a new healthcare powerhouse, which combines CVS Health's broad pharmacy business with Aetna's giant insurance base.
In this regard, the Zacks analyst thinks that over the past few quarters, the company has consistently demonstrated strong Pharmacy Services performance, benefiting from the upside in specialty services. Also, Retail/LTC comparisons are encouraging of late. Strong 2019 PBM selling season is another upside.
On the flip side, the company apprehends fewer RFP (Requests for Proposals) opportunities in the market than what it has seen over the past few years. Also, according to CVS Health, Omnicare business performance should continue to remain soft through the second-half of 2018.
General Electric 's shares have underperformed the S&P 500 index in the past three months (-36.4% vs. -13.3%). The Zacks analyst thinks the company is poised to become more competent on the back of its portfolio-restructuring program. In sync with this, it intends to focus on just three core businesses - Power, Aviation and Renewable Energy - and gradually exit all others.
Moreover, the company has slashed its dividend from 12 cents per share to a penny (for improving its cash position) and plans to reorganize the Power business into two separate units. However, weakening Power business remains a key cause of concern for the company. General Electric expects that internal and external challenges will continue to hurt this business arm.
Also, the company's margins have been affected due to lower profits secured from its Renewable Energy business. Over the past seven days, the Zacks Consensus Estimate for the company's earnings has remained unchanged for both 2018 and 2019.
Other noteworthy reports we are featuring today include ExxonMobil (XOM), Chevron (CVX) and Stryker (SYK).
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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 Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Stryker's flagship Mako robotics platform has provided the company with a competitive edge in the MedTech space. However, the Zacks analyst is apprehensive of the intensely competitive industry.
Per the Zacks analyst, strong companion animal business will drive growth for Zoetis.
Baxter's Renal Care segment has significantly driven its topline. However, the Zacks analyst is pessimistic about headwinds related to generic competition for cyclophosphamide drug.
Per the Zacks analyst, plummeting gas prices should help the company to increase efficiency of its plants.
Per the Zacks analyst, Restaurant Brands' solid expansion efforts, various sales building strategies and focus on franchise business model should drive growth in the coming quarters.
Per the Zacks analyst, Monster Beverage is taking measures to minimize expenses which are denting margins.
Per the Zacks analyst, Tegna continues to benefit from higher paid-up MVPD and OTT subscribers.
Per the Zacks analyst, Entergy's investment plans will boost its grid development thereby driving earnings. It is shutting down its nuclear reactors, which will enable it to be a pure play utility.
The Zacks analyst is appreciative of the company's efforts to drive its bottom line by checking costs. Initiatives to reward shareholders through dividends and buybacks are also impressive.
Per the Zacks analyst, Schwab's focus to improve trading revenues by taking several measures and higher interest rates aid revenues. Its enhanced capital deployment plan reflects strong balance sheet.
As per Zacks analyst, stringent drilling regulations and lack of adequate infrastructure facilities near its drilling zones might affect Noble Energy's performance.
ExxonMobil's massive capital spending program for upstream operations amid weak crude pricing scenario is a serious concern, per the Zacks analyst.
The Zacks analyst believes the sub-$50 oil price will make it difficult for Chevron to fund operations, making it dependent on asset sales.