Today's Must Read
Gilead's (GILD) Weak HCV Franchise OffSet Strong HIV Sales
ConocoPhillips (COP) Gains from Oil-Rich Eagle Ford Acreage
Monday, October 30, 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 JPMorgan Chase (JPM), Gilead (GILD) and ConocoPhillips (COP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
JPMorgan Chase shares have outperformed the Zacks Major Regional Banks industry over the past six months, (+16.9% vs. +11.7%). This price performance is backed by impressive earnings surprise history, with the company having surpassed expectations in all the trailing four quarters. The bank’s third quarter 2017 results benefited from rise in interest rates, loan growth and lower operating expenses while trading slump, weak investment banking and fall in mortgage banking income were the headwinds.
The Zacks analyst thinks that its efforts to control expenses, the improved rate scenario and rising loan demand should continue to benefit its financials. However, the company faces a persistent fee income growth challenge, mainly due to slowdown in trading activities and dismal capital markets performance. Also, legal expenses are expected to continue lingering in the near-term.
Shares of Gilead have outperformed the Zacks Biotech industry so far in 2017, increasing +7.6% vs. a gain of +3.9%. Although Gilead topped both earnings and revenue estimates in the third quarter, it witnessed a decline in HCV sales. The HCV franchise is under tremendous pressure due to lower patient starts and increasing competition. Sales are expected to decline further.
Meanwhile, the HIV franchise maintains momentum driven by the rapid adoption of TAF-based regimens in the United States and EU. The TAF-based regimens now represent 56% of total Gilead HIV prescription volume following the launch of Genvoya and the launches of Odefsey and Descovy in 2016.
The Zacks analyst thinks strong uptake for Truvada for use in the pre-exposure prophylaxis will further boost sales as the company saw a significant uptick in PrEP usage in 2017. The acquisition of Kite and approval of Yescarta also bodes well for Gilead given the potential in the CAR T therapy. However, Gilead has lost exclusivity for Viread and Truvada.
Buy-rated ConocoPhillips’ shares are up +2.1% year to date, outperforming the Zacks U.S. Integrated Oil industry, which has lost -10.4% over the same period. ConocoPhillips is one of the largest exploration and production players in the world, based on proved reserves and production.
The Zacks analyst likes the company’s initiative to divest non-core assets as the explorer could divert the proceeds toward oil-rich Eagle Ford shale and Permian Basin. Significant undrilled locations in the Eagle Ford shale will boost the company’s production.
Recently, the upstream energy firm posted strong third-quarter 2017 results, primarily supported by higher oil and natural gas price realizations. Also, utilizing an improved completion design, ConocoPhillips has managed to significantly lower well operating costs.
Other noteworthy reports we are featuring today include General Electric (GE), PNC Financial (PNC) and Walgreens (WBA).
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