Today's Must Read
Schlumberger's (SLB) Higher Fracking Work Offsets Debt Load
PayPal (PYPL) Gains From Visa and MasterCard Partnerships
Tuesday, October 24, 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 Johnson & Johnson (JNJ), Schlumberger (SLB) and PayPal (PYPL). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Johnson & Johnson’s shares have gained +27.1% in the year-to-date period, compared with the +23.5% gain of the Zacks Large Cap Pharmaceuticals industry. J&J beat estimates for both earnings and sales in the third quarter and raised its 2017 sales and profit outlook.
As indicated last quarter, J&J’s sales growth accelerated in the third quarter backed by higher sales in the pharmaceutical segment and positive contribution from the Actelion deal. Though quite a few key products in J&J’s portfolio like Remicade and Concerta are facing generic competition, the Zacks analyst thinks new products in all segments, label expansion of drugs like Imbruvica and Darzalex and contribution from recent acquisitions - mainly Actelion – can support top-line growth.
Meanwhile, share buybacks and the restructuring initiative should provide bottom-line support. However, headwinds like generics, pricing pressure, sluggish growth in the Consumer segment and soft global market conditions remain.
Shares of Schlumberger have lost 24.7% year to date, following the Zacks Oil and Gas Field Services industry’s 30.3% decline. However, this compares unfavorably with rival Halliburton’s 21.0% decline. The company’s third-quarter 2017 earnings were in line with expectations. Also, the bottom line improved from the year-earlier adjusted profit.
Growing hydraulic fracturing work in the North American land market primarily supported the bottom line. Schlumberger is also expected to generate significant cashflow from the Palliser Block project where the company will assist Torxen Energy in setting up more than 1,600 oil wells.
However, since 2015, Schlumberger’s long-term debt load has increased considerably. Moreover, the company’s cash balance has been declining over the last seven quarters, reflecting significant balance sheet weakness.
Strong Buy-rated PayPal’s shares have outperformed the Zacks Internet Software industry in the year to date period (+76.9% vs. +25.4%). The company delivered strong third-quarter 2017 results, surpassing expectations on both counts. The results were driven by continued strong performance in global payments, both online and mobile. Currently, the company is riding high on partnerships and mobile centrism.
The Zacks analyst likes PayPal’s ongoing strategic partnerships with Visa and MasterCard since they offer great flexibility and choice to consumers. Partnerships with Google, Facebook, Pinterest, Alibaba, Intuit and other major retailers and financial institutions are also delivering positive results. However, continuous exposure to foreign exchange and interest rate risks are concerns.
Other noteworthy reports we are featuring today include Phillip Morris (PM), Adobe (ADBE) and Philips (PHG).
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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>>>