Today's Must Read
Focus on Core Operations Aid Citigroup (C), Legal Woes Linger
Humira Demand Boosts AbbVie (ABBV), Mavyret Starts Strong
Tuesday, January 30, 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 Bank of America (BAC), Citigroup (C) and AbbVie (ABBV). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Bank of America’s shares have outperformed the Zacks Major Regional Banks industry over the last six months, gaining +33.8% vs. +21.7%. This price performance is backed by impressive earnings surprise history as the company surpassed expectations in each of the trailing four quarters.
The company’s fourth-quarter 2017 earnings benefited from higher interest income and investment banking fees as well as lower operating expenses. Rising interest rates, increase in loan and deposit balances, and efforts to manage expenses are expected to continue supporting profitability.
The Zacks analyst likes the bank’s efforts to streamline and simplify operations, which will support its overall growth. While fall in mortgage banking income due to lower volumes and a decline in refinancing activity along with uncertainty related to performance of capital markets remain major concerns, gains from the new tax act will aid the bank's financial performance..
Shares of Citigroup have underperformed the Zacks Major Banks industry over the last six months, gaining +16.8% vs +21.7%. However, the company boasts an impressive earnings surprise history. It surpassed expectations for earnings in each of the trailing four quarters.
The fourth-quarter 2017 results were supported by prudent expense management and strong consumer banking. However, fixed income trading income slumped. The Zacks analyst likes the company’s restructuring and streamlining efforts, expense management and strategic investments in core business. Along with these factors, lower tax rate will likely support profitability.
Moreover, expansion of wealth management business in Australia will act as a tailwind. Yet, several issues, including litigation burden, are cause for apprehension. Also, in spite of rising rates, margin remains under pressure, due to persistent decline in the company’s legacy holdings portfolio.
Buy-rated AbbVie’s shares have gained +100.2% over the last one year, outperforming the Zacks Large Cap Pharmaceuticals industry, which has gained +26.6% over the same period. This strong performance was supported by a series of positive developments. These include promising data from several pivotal studies, regulatory nods, including approval for its competitive HCV medicine Mavyret and two approvals for Imbruvica, and settlement of its Humira patent disputes with Amgen.
AbbVie beat estimates for both earnings and sales in the fourth quarter. It also raised its earnings expectations for 2018 based on continued strong operational performance and lower tax rates. AbbVie’s key drug, Humira has been performing well based on strong demand trends, despite new competition.
Moreover, Imbruvica has multibillion dollar potential and AbbVie is exploring the possibility of label expansion into solid tumors and autoimmune diseases. Meanwhile, Mavyret’s launch has been stronger than expected. However, Viekira’s sales continue to be hurt by intensifying competition.
Other noteworthy reports we are featuring today include 3M (MMM), Starbucks (SBUX) and Halliburton (HAL).
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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>>>