Today's Must Read
Biosimilars Offset Roche's (RHHBY) Strong Oncology Portfolio
Chevron (CVX) to Boost Permian Position with Noble Buy
Wednesday, September 2, 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 Walmart (WMT), Roche Holding (RHHBY) and Chevron (CVX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Walmart shares have outperformed the Zacks Supermarkets industry in the year to date period (+24.2% vs. +23.1%). The Zacks analyst believes that the company has been benefiting from rising demand for grocery and general merchandise items amid coronavirus-led stay-at-home trends. Stay-at-home trends are also boosting e-commerce sales, which soared 97% in second-quarter fiscal 2021.
During the quarter, sales and earnings beat the consensus mark and grew year over year, with U.S. comps rising for the 24th straight time. In the U.S. segment, both store and online sales remained strong, supported by government stimulus. Clearly, Walmart’s efforts to enhance deliveries are yielding results.
However, the company is seeing high COVID-19-related costs, especially related to special bonuses. Also, price investments are hurting gross margin to an extent.
Shares of Roche have gained +7% over the past six months against the Zacks Large Cap Pharmaceuticals industry’s rise of +8.4%. The Zacks analyst believes that strong demand for its breast cancer drugs is a major upside for Roche. Also, the expansion of portfolio beyond oncology into immunology is a major positive.
Roche’s performance in the second quarter was negatively impacted by the COVID-19 outbreak, as patients defer routine visits to physicians. While the performance in the first quarter was reasonably good, weak performance in the second quarter affected the first-half results. Nevertheless, the company maintained its outlook.
Strong growth in Ocrevus, Perjeta, Tecentriq and Hemlibra countered biosimilar competition for Herceptin, MabThera and Avastin. Label expansion of Tecentriq into additional indications is a positive. Moreover, the company has a few diagnostics tests for COVID-19, which should boost demand for that segment.
Chevron shares have lost -28.5% over the past year against the Zacks Integrated Oil industry’s fall of -39.1%. 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.
While the company reported a big Q2 loss, it vowed to keep its dividend and reported impressive U.S. production growth thanks to strength in the 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 commodity price crash, forcing it to cut capex and suspend buybacks. The company’s high oil price sensitivity is a concern too.
Other noteworthy reports we are featuring today include QUALCOMM (QCOM), Advanced Micro Devices (AMD) and S&P Global (SPGI).
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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>>>