Today's Must Read
Celgene (CELG) Q2 Strong on Solid Revlimid Growth, Ups View
Membership Growth Aids UnitedHealth (UNH), Exchanges Hurt
Intel (INTC) Banks on New Xeon Scalable Chips, Guides '17 Up
Monday, July 31, 2017
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 17 major stocks, including Bank of America (BAC), UnitedHealth (UNH), Intel (INTC), and Celgene (CELG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Bank of America shares have outperformed the Zacks Major Regional Banks industry over the last six months, gaining +5.9% vs. +5.3%. The company’s second quarter 2017 earnings outpaced expectations. Improvement in net interest income, higher investment banking fees and lower provisions supported the results.
Rising interest rates, increase in loan and deposit balances, efforts to streamline and simplify operations, and potentially fewer regulations are expected to continue supporting the company's profitability going forward. However, fee income growth remains a key concern. Specifically, a fall in mortgage banking income owing to lower volumes and decline in refinancing along with uncertainty related to performance of capital markets are major concerns for the Zacks analyst.
Shares of Celgene have gained +17.5% year to date, outperforming the Zacks Biomedical and Genetics sector which has gained +10.5% over the same period. The company’s second-quarter results were strong with the company beating on both earnings and sales estimates. Revlimid continued to outperform driven by further market share increases in newly diagnosed myeloma and the continued increase in treatment duration.
The Zacks analyst likes the consecutive increase in annual earnings guidance. Celgene continues to progress with its label expansion efforts and pipeline development with sNDA submission for Revlimid in newly diagnosed multiple myeloma targeted for first-quarter 2018. However, Celgene is highly dependent on Revlimid while foreign exchange headwinds are expected to continue.
UnitedHealth’s robust Government business and continued strong growth at Optum are driving long-term growth. Its international business, growing membership and strong capital position are the other positives. In the most recently reported quarter, the company reported better-than-expected earnings, driven by an increase in revenues and membership.
Encouraged by its impressive first-half earnings, the company raised 2017 guidance. Meanwhile, the company has reduced its exposure to the troubled public exchange business. Though this move will shield it from losses in this business, premium revenues are likely to be affected. UnitedHealth shares have underperformed the Zacks Medical Insurance industry in the year-to-date period (up +19.7% vs. +22.2%).
Shares of Intel have gained only +2.5% since election results were announced on Nov 8, in contrast to the broader Technology sector (up +18.6%) as well as the red-hot semiconductors space (up +28.3%). Intel’s second-quarter 2017 results demonstrated the company’s growing focus on the data-centric part of its business.
The recent launch of Xeon Scalable is anticipated to benefit its footprint in the data center as well as AI and IoT space, going forward. Further, anticipated improvement in cost structure and lower spending, primarily due to improving operational efficiency will aid in expansion of margins over time. Additionally, aggressive share buybacks will boost the bottom line in 2017.
Intel’s weak price performance can be attributed to growing competition from AMD in the data center space. Meanwhile, top-PC makers like HP, Lenovo, and Asus are set to launch PCs based on Qualcomm’s ARM-based Snapdragon processor, which intensifies competition for Intel. This is a significant headwind amid declining PC shipments.
Other noteworthy reports we are featuring today include Starbucks (SBUX), Charter Communications (CHTR) and UPS (UPS).
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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>>>