Today's Must Read
BNY Mellon's (BK) Lower NIM Stress to Offset Fee Dependence
GEAM Deal Aids State Street (STT), Rising Costs a Concern
Wednesday, February 28, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Gilead (GILD), BNY Mellon (BK) and State Street (STT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Gilead’s shares have outperformed the Zacks Biotech industry in the last six months, increasing +6.1% vs. a decline of -4.6%. Gilead topped both earnings and revenue estimates in the fourth quarter.
The HIV franchise maintains momentum driven by the rapid adoption of TAF-based regimens in the United States and EU. The TAF-based regimens now represent 62% of total HIV prescription volume following the launch of Genvoya, Odefsey and Descovy in 2016.
The Zacks analyst thinks that the approval of Gilead’s latest triple HIV therapy is likely to provide an impetus to the stock as Gilead is now banking on its HIV franchise and newer avenues like the CAR-T therapy. However, the HCV franchise is under tremendous pressure due to lower patient starts and increasing competition.
Both pricing and market share are expected to stabilize by mid-2018 while patient starts are expected to decline further. The company’s guidance for 2018 also lacks luster.
Shares of BNY Mellon have underperformed the Zacks Major Regional Banks industry in the last six months (+11.3% vs. +21.6%). The company’s earnings surpassed expectations in only two of the trailing four quarters. Concentration risk arising from significant dependence on fee-based income remains a matter of concern for the company.
If there are any changes in individual investment preferences, regulatory amendments or a slowdown in capital market activities, it could hurt the company’s financials. However, The Zacks analyst thinks easing margin pressure (driven by gradual higher interest rates) and rising loan demand will drive revenue growth. Also, potential lesser regulations, lower tax rates and cost-saving initiatives are likely to drive profitability.
State Street’s shares have underperformed the Zacks Major Regional Banks industry in the last six months (+16.5% vs. +21.6%). The company has an impressive earnings surprise history, having surpassed expectations in each of the trailing four quarters.
The Zacks analyst likes its new business wins, synergies from GE Asset Management deal and rising interest rates, all of which are likely to continue supporting profitability. Further, the company’s cost saving efforts through multi-year restructuring plan is expected to a success.
However, continuous decline in trading services revenues is a concern. Also, mounting expenses remain a major near-term concern for the company.
Other noteworthy reports we are featuring today include LKQ Corporation (LKQ), Alliant Energy (LNT) and Dillard's (DDS).
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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>>>