Today's Must Read
3M (MMM) Raises Guidance Despite Significant Dollar Strength
Walgreens (WBA) Up on Amended RAD Deal, Cost Cut Plan
Wednesday, October 4, 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 Citigroup (C), 3M (MMM) and Walgreens Boots (WBA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Shares of Citigroup outperformed the Zacks Major Banks industry over the last six months, gaining +24.4% vs. +9.6%. This price performance is backed by impressive earnings surprise history. The company has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters. The Zacks analyst believes that the company’s restructuring and streamlining efforts, strategic investments in core business and expense management, will likely support profitability, going forward.
Moreover, expansion of wealth management business in Australia will act as a tailwind. However, several issues including litigation burden keep us apprehensive.In spite of rising rates, margin is under pressure, due to persistent decline in the company’s legacy holdings portfolio. Notably, expected weak trading revenues on low volatility would be a major drag for profitability.
3M shares have gained +12.8% over the last six months, outperforming the Zacks Diversified Operations industry, which has declined -1.3% over the same period. 3M's global footprint, diversified product portfolio and the ability to penetrate in different markets have been its forte. The company is continuing with its portfolio restructuring efforts by divesting assets that no longer fit in its strategy and continues to make investments in other lucrative markets.
3M is standardizing its business processes through a new global ERP system for significant operational savings and has raised its guidance for 2017 on healthy growth dynamics. However, given its international presence, adverse foreign currency translations are likely to affect 3M’s ability to realize projected growth rates in sales and earnings.
Sustained strength in the U.S. dollar will negatively impact earnings, as exports consume a significant part of the operations. Increased pension expenses, commodity price risks and intense competitive pressure remain other headwinds.
(You can read the full research report on 3M here >>>).
Shares of Walgreens Boots have done better than the embattled Zacks Retail-Drug Stores industry over the last year (WBA is down -4.6% vs. decline of -9.5% for the peer group). The company finally gaining approval from the U.S. Federal Trade Commission (FTC) for the modified deal involving purchase of a number of Rite Aid (RAD) store buoys optimism.
Although investors did not show much optimism regarding the company’s purchase of fewer-than-expected stores, the Zacks analyst believes that the deal’s financial outcome is pretty attractive. Moreover, this modified merger contract is expected to extend Walgreens’ growth strategy and offer additional operational benefits.
The analyst is also upbeat about Walgreens’ ‘Next Chapter plan’ through fiscal 2017 focusing on a multi-faceted cost-reduction initiative across the enterprise. On the flip side, slowdown in generic introduction continues to weigh upon the company’s margins. Also, tough competitive landscapes along with currency fluctuations continue to pose threats for the company.
Other noteworthy reports we are featuring today include Lockheed Martin (LMT), ConocoPhillips (COP) and BCE (BCE).
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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>>>