Tuesday, July 21, 2020

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 Bank of America (BAC), Abbott Laboratories (ABT) and Chevron (CVX). 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 >>>

Bank of America shares have lagged the broader market over the past year, reflecting cyclical weakness and an unfavorable interest rate backdrop. But the stock has nevertheless done better than the peer group (-19.4% vs. -26%) on the back of an expanding branch network, improved digital offerings and effective cost controls. 

The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters. Its second-quarter 2020 results show impressive capital markets performance, partially offset by reserve builds and lower rates. A strong balance sheet and liquidity position are expected to continue supporting the company's financials amid economic slowdown.

However, near-zero interest rates are expected to hurt the bank’s margins and interest income. Also, coronavirus-induced concerns will likely continue to hamper business activities. Thus, loan growth is expected to be muted. Further, dependence on capital markets performance makes us apprehensive, given its cyclical nature.

(You can read the full research report on Bank of America here >>>)

Shares of Abbott have gained +7.5% over the past six months against the Zacks Medical Products industry’s fall of -8.2%. The Zacks analyst believes that the branded generics and international diabetes businesses should drive growth in the coming quarters. New product launches and acquisitions should boost sales further.

Abbott posted better-than-expected numbers for the second quarter. However, the figures declined year over year. Despite $615 million of COVID-19 diagnostic testing-related sales, this year-over-year decline was primarily due to the pandemic-led fall in procedure volumes in many businesses.

However, the company’s Diabetes Care, Nutrition, and EPD arms collectively grew more than 9% in the first half of 2020 leveraging on the pandemic situation. Apart from the launch of COVID-19 tests, the company also obtained FDA for Libre 2 as an iCGM. It also received CE Mark for TriClip.

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

Chevron’s shares have gained +7.2% over the past three months against the Zacks Integrated Oil industry’s fall of -0.2%. The Zacks analyst believes that the supermajor’s reserve replacement ratio of 44% is indicative of its inability to add proved reserves to its reserve base to the amount of oil and gas produced.

The company's worldwide production averaged a record 3,058 MBOE/d in 2019, reflecting an increase of 4.4% thanks to expansion in the lucrative Permian Basin. Chevron’s proposed Noble Energy takeover deal is anticipated to expand its footprint in the DJ Basin and the Permian Basin along with cash-generating offshore assets in Israel.

However, Chevron is not immune to this historic oil price crash, forcing it to cut capex and suspend buybacks. The company’s high oil price sensitivity is a concern too.

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

Other noteworthy reports we are featuring today include Danaher (DHR), Citigroup (C) and GlaxoSmithKline (GSK).

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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>>>