Today's Must Read
EOG Resources (EOG) Gains on Eagle Ford Acreage, Debts High
Bard Buyout Aids Becton (BDX) Amid Medical Segment Slowdown
Wednesday, December 13, 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 Phillip Morris (PM), EOG Resources (EOG) and Becton, Dickinson (BDX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Phillip Morris’s shares have underperformed the Zacks Tobacco industry over the last three months (-8.1% vs. +3%). But the Zacks analyst likes Philip Morris’ consistent efforts to improve the performance of its low risk products. In this category, the company’s IQOS smokeless cigarette have been steadily expanding owing to consumer demand.
Higher cigarette pricing has also been favoring the company. Though the company has been benefiting from enhanced volumes and revenues in the reduced risk products category, it has been suffering majorly due to consistent declines in cigarette volumes stemming from the shift of customer preference away from tobacco products.
Owing to such headwinds, Phillip Morris continued with its drab performance in third-quarter 2017, wherein both earnings and revenues lagged the Zacks Consensus Estimate. These factors also compelled management to lower its 2017 view.
Shares of EOG Resources have gained around +12.7% over the last six months, outperforming the Zacks Oil & Gas E&P Industry, which has gained +4% over the same period. EOG Resources holds premium acreages in the Permian, Bakken and Eagle Ford oil shale plays in the United States.
The Zacks analyst likes the firm’s plan to complete 505 wells in the area, significantly higher than 443 recorded in 2016. The firm expects 80% and 90% of the wells to meet the standards of premium wells in 2017 and 2018, respectively. In the promising U.S. shale plays, EOG Resources has identified 7,200 premium wells that can give access to almost 6.5 billion barrels of oil equivalent estimated potential reserves over a period of 10 years.
However, the company’s lack of exposure to international resources is a drag. On top of that, increasing debt load is a cause of concern. Moreover, cash balances have been declining substantially over the first nine months, reflecting balance sheet weakness.
Becton, Dickinson’s shares have outperformed the Zacks Dental Supplies industry over the last one year, gaining +30.5% vs. +19.1%. Becton, Dickinson and Company, popularly known as BD, is steadily progressing with its planned acquisition of medical technology player, C. R. Bard. Post-completion, BD expects growth in adjusted earnings starting fiscal 2019. The Zacks analyst thinks the acquisition is a strategic one which will generate benefits from complementary businesses and geographical expansion.
Further, BD announced that it will divest its soft tissue core needle biopsy products for $100 million to Merit Medical. On the flipside, lackluster performance by the Medical segment is a concern.
Performance in the segment was affected by sluggishness in the Medication Management Solutions and Pharmaceutical Systems units in the United States. BD temporarily paused shipments of its insulin infusion sets. The voluntary recall of Barricor blood collection tubes in the recent past also adds to BD’s woes.
Other noteworthy reports we are featuring today include SAP (SAP), Sirius XM (SIRI) and ABB (ABB).
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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>>>