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Research Daily

Thursday, August 3, 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 Chevron Corporation (CVX), Wells Fargo & Company (WFC) and Medtronic plc (MDT). 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 >>>

Following outperformance in 3 of the last 4 quarters, shares of Chevron have risen +10% in the past year, outperforming the broader industry's +4.7%, while larger rival ExxonMobil has seen its scrip go down -7.8% over the same time period.  The second-largest U.S. oil producer beat its Q2 earnings expectations amid recovery in commodity prices, production gains and the success of its cost savings initiatives.

However, with oil testing the psychologically-critical $50 threshold again, the near-to-medium term revenue outlook for Chevron – one of the most oil weighted majors – remains cloudy. Moreover, Chevron is still outspending its cash flow, making it dependent on asset sales. Hence, the Zacks analyst advises investors to wait for a better entry point before buying shares in the oil major.

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

Wells Fargo’s shares have underperformed the broader industry this year, losing -2.7% in the year to date period. The company’s second-quarter 2017 earnings outpaced the Zacks Consensus Estimate. The company witnessed organic growth aided by strong loans and deposit balances, along with higher net interest income. Though expenses remain elevated, the company plans $4 billion of cost cuts by 2019.

Moreover, though lesser regulations on lending and capital levels are not expected any time soon, these are likely to reduce costs of compliance significantly and allow banks to grow lending. Further, rising rates are easing margin pressure to an extent.

The current crisis related to the revelation of illegally opening millions of illegal accounts last year at the company will take some time to alleviate. Hence, the covering analyst believes that consistent growth in loans and deposits and expansions will likely support the company’s growth profile.

(You can read the full research report on Wells Fargo here >>>).

In the last three months, Medtronic has been observed to underperform the broader industry (-0.8% vs. +3.6%). Escalating costs and expenses are weighing on margins. Also, unfavorable foreign exchange continues to remain a drag.

However, Medtronic’s major business groups continue to contribute to solid top-line growth which highlighted sustainability across groups and regions. Recently, the company announced receipt of F.D.A approval and C.E. Mark for its Avalus surgical valve and CE Mark for CoreValve Evolut PRO Transcatheter valve.

The Zacks analyst is also encouraged by the solid growth trend, continuing in the U.S. as well as the healthy global acceptance of its advanced therapies. Apart from product innovation, Medtronic is focusing on geographical diversification of business.

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

Other noteworthy reports we are featuring today include Sony Corp. (SNE), American Tower Corp. (AMT) and EOG Resources, Inc. (EOG).

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Mark Vickery

Senior Editor

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>>>

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