Today's Must Read
Chevron (CVX) Buoyed by Cash Flow Amid U.S. Output Headwind
Cisco (CSCO) Rides on Security Products & Strategic Deals
Wednesday, January 17, 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 Pfizer (PFE), Chevron (CVX) and Cisco (CSCO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Pfizer’s shares have outperformed the peer group over the last six months (the stock is up +9.7% over this period vs. a +7.9% increase for the Zacks Large-Cap Pharmaceuticals industry). Pfizer is working on strengthening its product portfolio through acquisitions and licensing deals. However, Pfizer continues to face headwinds in the form of genericization of key drugs, lost alliance revenues, pricing pressure and rising competition, factors which are hurting the top-line.
Though Pfizer’s growing immuno-oncology portfolio offers strong potential, many of these assets are in early stage of development. Nonetheless, the Zacks analyst new products like Ibrance, contribution from acquisitions, cost-cutting efforts and share buybacks should help the company achieve its guidance.
Pfizer also boasts a strong pipeline and expects approximately 25 to 30 drug approvals over the next five years, including around 15 products with blockbuster potential. Bavencio is being considered a key long-term growth driver.
The company has a mixed record of earnings surprises in recent quarters. Estimates have remained stable ahead of its Q4 results.
Shares of Chevron have risen +27.3% in the past six months,, outperforming the Zacks Integrated Oil industry's +22%, while larger rival ExxonMobil has seen its scrip go up just +7.9% over the same time period. The second-largest U.S. oil producer has been a beneficiary of the recovery in commodity prices.
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. The diversified oil company also has a long, consistent dividend paying record and is one of the only two energy stocks on the list of Dividend Aristocrats.
However, the Zacks analyst remains worried over signs of headwinds in Chevron's U.S. production, while exposure to production in the vulnerable and violence-prone regions in Nigeria poses additional risk. Hence, investors should wait for a better entry point before buying shares in the oil major.
Buy-rated Cisco’s shares have outperformed the Zacks Networking industry over the past one year, gaining +35% vs. +33.4%. Recently, it unveiled the Cisco Security Connector, which is now available in the App Store on iOS devices. The Zacks analyst thinks the company’s expanding footprint in the rapidly growing security market represents a significant growth opportunity.
Additionally, partnerships with Telenor, Apple, IBM and Microsoft are positives. Also, the company’s Application Centric Infrastructure (ACI) solution is currently used by more than 4K customers. The ACI solution was recently enhanced with new features that have aided growth. Further, the planned acquisition of Broadsoft will boost company's recurring revenue base.
Moreover, the company's collaboration with Google Cloud to offer hybrid cloud solution is a key catalyst. However, intense competition from peers and challenges in the emerging markets remains a headwind.
Other noteworthy reports we are featuring today include Target (TGT), Las Vegas Sands (LVS) and Dominion Resources (D).
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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>>>