Today's Must Read
Broadcom (AVGO) Drives on FTC's Brocade Acquisition Approval
Gilead's (GILD) HIV Franchise Solid, HCV Sales Remains Weak
Monday July 10 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 Wells Fargo (WFC), Broadcom (AVGO) and Gilead (GILD).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Wells Fargo’s shares continue to struggle, reflecting lingering issues pertaining to the customer accounts issue. The stock has gained +1.1% year-to-date, underperforming the Zacks Major Banks industry, which is up +7.5% in the same time period. Wells Fargo lacks investment banking and capital markets assets that have been a source of strength for many of its peers lately.
But the bigger issue for the bank has been the customer accounts issue. Troubles have intensified following the bank’s $190-million settlement last year to resolve regulators’ claims of illegally opening millions of illegal accounts. While the current crisis at the company will take some time to alleviate, the Zacks analyst thinks continued growth in loans and deposits, coupled with cost cuts (the bank plans $4 billion in cost cuts by 2019) should help support results.
Regulatory reform remains another potential macro tailwind, though the timing of any legislative enactments on this front remains uncertain. Notably, Wells Fargo received Fed's approval for its 2017 capital plan.
Shares of Strong Buy rated Broadcom have handily beaten the technology sector as well as the red-hot semiconductor space in the year-to-date period, gaining +35.6%. The Zacks analyst likes the synergistic benefits gained from the merger with Avago, which will drive future profitability.
Seasonal strength in broadband access and sustained cloud data center spending is expected to drive top-line growth in the rest of fiscal 2017. The company recently received U.S. antitrust approval for the buyout of Brocade Communications Systems, which was announced last November and valued at $5.5 billion. However, customer concentration is a significant headwind.
Gilead’s 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 -19.8% of its value over the last year vs. the -0.8% 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.
Other noteworthy reports we are featuring today include Ford (F), NextEra Energy (NEE) and Emerson Electric (EMR).
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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 Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>