Tuesday June 6, 2017
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 Gilead (GILD), BP (BP), and Dow Chemical (DOW).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 >>>
Gilead shares have been laggards lately, on persistent fears about drug pricing and other regulatory issues that haven't eased up even after the November election. The stock has lost -25.2% of its value over the last year vs. the -9.6% decline for the Zacks Biotech industry. Gilead's HIV franchise maintains momentum driven by the rapid adoption of TAF-based regimens which now represent 42% of total Gilead HIV prescription volume. Strong uptake for Truvada for use in the pre-exposure prophylaxis setting should also boost sales as the company saw a significant uptick in PrEP usage in 2017. However, Gilead will lose exclusivity for Viread this year in some countries outside the U.S., which should impact sales. Additionally, the HCV franchise continues to be undercompetitive and pricing pressure is leading to a massive decline in Harvoni and Sovaldi sales. (You can read the full research report on Gilead here >>> ).
BP share have gained +9.1% over the past 12 months, outperforming the Zacks Oil & Gas-International Integrated industry which has lost -0.8% over the same period, as well as rival Royal Dutch Shell (up +5.1%). The Zacks analyst stresses that the petroleum giant's upstream projects are expected to generte significant cash flows starting 2020 and beyond. Moreover, the company's drilling operations are becoming efficient as reflected by the steady decline in non-productive time since 2012. However, the oil spill incident of 2010 in the BP-operated Macondo Prospect continues to affect the company. Although BP has cleared substantial litigation expenses related to the spill, it had to divest some of its best operating properties. The analyst sees the company's dividend to generally safe, but the high yield (currently yielding 6.6%) indicates some market nervousness. (You can read the full research report on BP here >>> ).
Dow Chemical shares have gained +11.1% over the past six months, outperforming the Zacks Chemicals Diversified industry (up +7.5% over the same period). The Zacks analyst likes the planned merger with DuPont, which is expected to create significant synergies. Dow should also gain from cost synergies associated with Dow Corning Silicones business and its strategic investments in the U.S. Gulf Coast and the Middle East. However, Dow's agriculture business remains affected by depressed crop commodity prices. The company also faces pricing headwinds, feedstock cost pressure as well as weak demand in the energy market. (You can read the full research report on Dow Chemical here >>> ).
Other noteworthy reports we are featuring today include Williams Partners (WPZ), America Movil (AMX) and MetLife (MET).
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Director of Research
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
Amid a steady shift toward e-commerce and supply chain strategy changes, Prologis has capacity to grow. Yet, the Zacks analyst is concerned with the anticipated rise of new facilities going forward.
The covering analyst thinks Transco Expansion project will fetch Williams Partners with stable fee-based revenue. However, the partnership's excessive reliance on debt could hurt the expansion.
The Zacks analyst believes that Chesapeake's ongoing cost savings will boost its margin, but high debt burden is a cause of concern.
Though encouraged by the company's efforts to expand its presence, the covering analyst is concerned about the recent dispute with its pilots which disrupted its operations.
Per the Zacks analyst, while progress on Gap's turnaround plans helped it post earnings and sales beat in first-quarter fiscal 2017, currency headwinds and weakness across Banana Republic are threats.
The covering analyst thinks the merger has opened expansion opportunities for DXC.
Per the Zacks analyst MetLife's inorganic growth, business portfolio repositioning, cost reduction efforts will drive long term growth.
Per the Zacks analyst, Con Edison's strong cash generation capacity enables it to follow a systematic investment program; while its regulated utilities provide it with a stable earnings base.
The covering analyst is bullish on C.R. Bard's impending $24 billion merger with Becton, Dickinson and Company. Also a strong portfolio and a series of regulatory approvals add visibility.
Per the Zacks analyst, Allegion's acquisitions, focus on innovation and solid footprint in the emerging markets are expected to boost profitability.
The Zacks analyst believes that promotional offers and discounts might drive down America Movil's margins. Intensifying competition in the Mexican wireless market is also likely to reduce margins.
AutoZone is facing several headwinds including rising costs due to the opening of new distribution centers and higher frequency of deliveries to stores along with unfavorable currency translations.
Per the covering analyst, softness in North American paper demand will continue to erode Domtar's top line. Global demand for pulp is also likely to be volatile due to U.S. dollar strength.
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