Today's Must Read
Currency Woes Mar United Technologies' (UTX) Inorganic Growth
Mobile Venture Aids Charter (CHTR), Pay-TV Remains a Concern
Wednesday, December 27, 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 Chevron (CVX), United Technologies (UTX) and Charter Communications (CHTR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Chevron’s shares have risen +6.9% in the past year, underperforming the Zacks Integrated Oil industry's +7.4%, while larger rival ExxonMobil has seen its scrip go down -7% over the same time period. The second-largest U.S. oil producer has been a beneficiary of the recovery in commodity prices and robust refining profits. More importantly, Chevron was able to cover its investment and payouts with cash from operations in the most recent quarter - something investors really want right now. Moreover, with increasing amounts of capital spending devoted to the lucrative Permian basin over the coming years, production from the region is expected to be strong. Consequently, the Zacks analyst thinks Chevron offers substantial upside potential from the current price levels and views it as a preferred energy play to own now.
Shares of United Technologies have outperformed the Zacks Conglomerates sector in the year-to-date period (the stock is up +16% vs. the -4.6% decline for the sector). United Technologies remains focused on four key priorities: flawless execution, innovation for growth, structural cost reduction and disciplined capital allocation. The acquisition of Rockwell Collins is further expected to offer a bigger clout in the industry and increase its bargaining power as the combined entity would emerge as one of the largest global aircraft equipment manufacturers. Management further increased its guidance for 2017 on healthy growth dynamics. However, United Technologies is exposed to market price volatility and availability risks related to raw materials, which hamper its ability to meet delivery schedules and increase operating costs. Fluctuations in foreign currency exchange rates affect its net investment in foreign subsidiaries and cause instability in cash flows. The company is also susceptible to high operating risks following the Brexit referendum.
Charter Communications’ shares have outperformed the Zacks Cable TV industry over the past three months (+1.7% vs. -2.4%). Charter plans to launch its wireless services in 2018. The company also plans to execute field trials for 5G wireless network. Charter and Altice USA have recently reached an agreement to broadcast their respective regional cable news networks. Charter and Viacom announced a multi-year renewal and expansion of their distribution relationship for the co-production of original content and collaboration around advanced advertising. Charter recently settled a pending year-long content licensing dispute with Univision Communications. However, the Zacks analyst remains concerned about the company’s operations in a saturated and competitive multi-channel U.S. video market. Charter continues to lose video customers due to cord-cutting. Further, the high debt level is a potential hazard.
Other noteworthy reports we are featuring today include Walgreens (WBA), Marsh & McLennan (MMC) and T. Rowe Price (TROW).
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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>>>