Today's Must Read
5G, FirstNet Project Aids AT&T (T) Amid Regulatory Issues
Loan Growth Supports Wells Fargo (WFC), Legal Issues Linger
Thursday, January 10, 2018
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 ExxonMobil Corp. (XOM), AT&T Inc. (T) and Wells Fargo & Co. (WFC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
ExxonMobil’s shares have underperformed the Zacks Integrated Oil industry (+5% vs. +9.1%) as well as peer Chevron (+7.1%) in the last three months. The company has a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix and geographical footprint.
With a stable cash position, the company’s balance sheet is one of the best in the industry, reflecting declining debt load over the first nine months of 2017. The Zacks analyst appreciates ExxonMobil’s plans to combine its refining & marketing businesses as this will allow the company to take better decisions and boost performance.
ExxonMobil will generate more cashflow from downstream activities, also helping it counter the volatility in its upstream business. ExxonMobil’s decision to invest in the pre-salt Carcara oil field, comprising as much as 2 billion barrels of high-quality recoverable oil reserves, will boost the company’s production. Moreover, the sixth oil discovery off the coast of Guyana further enhances the prospects of the integrated energy player.
Shares of AT&T have decreased -1.9% over the past three months, underperforming the Zacks Wireless National industry's fall of -1.3%. AT&T continues to struggle in the competitive U.S. wireless market. Loss in access lines, operating expenses, marketing costs associated with attractive discounts and union issues are other risks. AT&T-Time Warner extended their proposed deal closure deadline to Jun 21, 2018 to clear-off regulatory issues.
However, the Zacks analyst is optimistic about AT&T’s wireless growth opportunities from the launch of standards-based mobile 5G services in 2018 and the FirstNet project. AT&T’s DIRECTV NOW reported more than 1 million subscribers, despite cord-cutting. Vyatta buyout boosts AT&T’s SD-WAN suite.
AT&T-Verizon have teamed up with Tillman to build cell towers in the United States. AT&T’s NetBond is planning to offer multiple cloud connections. AT&T is exploring a strategic option to sell a major part of its Latin American pay-TV operations.
Wells Fargo’s shares have outperformed the Zacks Major Banks industry in the last three months, increasing +11.9% vs. a gain of +9.6%. Further, the company has an impressive earnings surprise history. The company surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters. Wells Fargo plans $4 billion of cost cuts by 2019.
Rising rates are easing margin pressure to an extent. Notably, following the recent Federal Reserve interest rate hike by 25 bps, Wells Fargo raised its prime lending rate from 4.25% to 4.50%. While the current crisis related to the revelation of illegally opening millions of illegal accounts last year at the company will take some time to alleviate, the Zacks analyst believes that consistent growth in loans and deposits and expansions will likely support its growth profile.
Other noteworthy reports we are featuring today include ConocoPhillips (COP), Honda Motor (HMC) 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>>>