Today's Must Read
Celgene (CELG) Boasts Strong Pipeline, Competition Stiff
Goldman (GS) Exhibits Cost Control; Legal Issues Linger
Friday, December 8, 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 Bank of America (BAC), Celgene (CELG) and Goldman Sachs (GS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Bank of America’s shares have outperformed the Zacks Major Regional Banks industry over the last six months, gaining +21.6% vs. +14.3%. This price performance is backed by impressive earnings surprise history as the company surpassed expectations in each of the trailing four quarters. Rising interest rates, increase in loan and deposit balances along with initiatives to strengthen its balance sheet is expected to continue supporting profitability.
The bank’s efforts to streamline and simplify operations will support its overall growth and even improve its capital deployment activities. However, muted fee income growth remains a key concern. Fall in mortgage banking income due to lower volumes and a decline in refinancing activity along with uncertainty related to performance of capital markets make the Zacks analyst apprehensive. In fact, trading revenues are expected to decline in the fourth quarter 2017.
Shares of Celgene have underperformed the Zacks Biomedical and Genetics over the last three months, losing -27.1% vs. a decline of -12.6%. Celgene’s third-quarter results were mixed with the company beating on earnings but missing on sales estimates. While Revlimid sales were impressive yet again, Otezla sales in the United States were weak due to challenges in the dermatology market which led the management to cut guidance.
Celgene’s Revlimid continue to outperform driven by further market share increases in newly diagnosed myeloma and the continued increase in treatment duration. Pomalyst and Abraxane also performed well. The Zacks analyst likes Celgene’s label expansion efforts and pipeline development with sNDA submission for Revlimid in newly diagnosed multiple myeloma targeted for first-quarter 2018.
The approval of Idhifa for relapsed and/or refractory acute myeloid leukemia has further boosted the company’s portfolio. However, Celgene is highly dependent on Revlimid while Abraxane sales are under competitive pressure. Weakness in Otezla will persist.
Goldman Sachs’ shares have gained +11.7% over the six months, underperforming the +17.9% gain of the Zacks Investment Bank industry. Yet, the company boasts an impressive earnings surprise history. It has surpassed estimates for earnings in three of the trailing four quarters.
Though several issues, including sluggish global economic growth and lower client activity levels, remain near-to-medium-term headwinds, the Zacks analyst thinks the company’s well-diversified business and its focus to capitalize on growth opportunities through strategic moves should continue to bolster the overall business. Further, cost control measures are commendable. Additionally, steady capital deployment activities have boosted investors' confidence.
Other noteworthy reports we are featuring today include Cummins (CMI), L Brands (LB) and Quest Diagnostics (DGX).
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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>>>