Wednesday May 17, 2017

Today's Research Daily features new research reports on 16 major stocks, including Pfizer (PFE), Home Depot (HD) and ConocoPhillips (COP). 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 >>>

A brief comment about today’s market action is in order before we discuss the featured analyst reports. Stocks appeared immune to the Washington drama for a while, but have started taking note of the issue in today’s issue. This isn’t helping stocks or the dollar, though safe-haven trades into treasuries and gold are doing better. The key question that market participants are grappling with is the future of the Trump Agenda in the current backdrop of a never-ending cycle of crises. If the administration is unable to lead Congress into enacting tax reforms and other pro-growth measures, then we probably need to get ready for the market to retrace its steps to the pre-election level.

As a reference, the S&P 500 index is up +12% in the post-election period while the Russell 2000 index is up +15.7%.

Today’s Featured Stock Research Reports

Pfizershares have underperformed the peer group as well as the broader market over the past year (the stock is down -1.7% over the last one year vs. a +4.6% increase for the Zacks Large-Cap Pharma industry) +15.8% gain for the S&P 500  index) on continued drug pricing uncertainty that have refused to go away even after the election. These headwinds notwithstanding, the Zacks analyst is pointing out that Pfizer is strengthening its product portfolio as well as pipeline through acquisitions and licensing deals. Also, cost-savings and share buybacks should help Pfizer achieve its earnings guidance. While the Hospira acquisition has significantly expanded Pfizer's sterile injectable and biosimilar capabilities, the Medivation deal has strengthened its cancer franchise by adding Xtandi to its portfolio. (You can read the full research report on Pfizer here >>>)

Home Depot sharesare up +16.3% in the year-to-date period, outperforming the Zacks Retail sector (up +13.2%) and the broader market (S&P 500 up +7.5%) in that same time period. Improving customer experience, solid execution and consistent housing market recovery helped the company post an earnings surprise in first-quarter fiscal 2017, retaining the four-year long trend of beating earnings estimates. The company’s relentless focus on offering innovative products, boosting interconnected customer experience and driving productivity seems to be paying off. Moreover, the company raised earnings guidance for fiscal 2017 while retaining its sales view. On the flip side, market participants can justifiably raise valuation concerns, particularly following the stock’s stellar recent performance. (You can read the full research report on Home Depot here>>>)

ConocoPhillips shares are down -5.9% in the year-to-date period, roughly in-line with the Zacks Energy sector’s performance in the same time period, on weakness in oil prices. During the first quarter of this year, the company’s loss per share narrowed considerably while its top line beat estimates. This was owing to improved commodity price realizations and increased production. But the quarterly loss compared unfavorably with estimates for the January–March quarter. Higher expenses, along with normal field declines and dispositions, led to the underperformance. However, the company's plan to reposition its asset base by divesting low-margin assets and using the sale proceeds to pay down debt and return cash to shareholders is proceeding nicely. The company decided to divest its interest in the San Juan Basin – rich in natural gas – for a consideration of almost $3 billion. The accord reflects ConocoPhillips’ intention to lower its exposure to the U.S. natural gas business, which has been less profitable in recent years. (You can read the full research report on ConocoPhillips here>>>)

Other noteworthy reports we are featuring today include Prudential Financial (PRU), Dominion Resources (D) and Canadian Pacific (CP).

The Best & Worst of Zacks

Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 11X worse than the market. See these critical buys and sells free >>     

Sheraz Mian

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 >>>