Today's Must Read
AT&T (T) Remains Poised for 5G Launch, Margin Woes Linger
Streamlining Efforts Aid Barclays (BCS), Legal Hassles Linger
Monday, April 16, 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 (XOM), AT&T (T) and Barclays (BCS). 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 (-4.6% vs. +14.5%) as well as peer Chevron (+12.9%) over the last one year. However, Exxon Mobil 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.
The Zacks analyst likes the integrated energy firm’s decision to combine its refining & marketing businesses. 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.
However, the company’s rising exploration expenses are a concern. On top of that, Exxon Mobil’s exit from a joint venture in Russia will hurt cashflow.
Shares of AT&T have decreased -12.8% in the last year, underperforming the Zacks Wireless National industry's fall of -10.8%. However, AT&T is gearing up to launch the first standards-based mobile 5G services to consumers in multiple U.S. markets by the end of 2018.
Moreover, the Zacks analyst thinks the company is likely to immensely benefit from its long-pending merger with Time Warner Inc., with the combined entity expected to become a major player in the consolidated telecom-media space. Although the matter remains subjudice, the company is likely to go on the offensive to seek a verdict in its favor.
However, AT&T’s profitability has been hurt with spectrum crunch in a saturated wireless market. In addition, the company’s wireline division is struggling with persistent losses in access lines due to competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play offerings by cable firms. These are weighing on AT&T’s revenues and margins.
Barclays’s shares have outperformed the Zacks Foreign Banks industry over the last six months, with BCS shares up +21.2% vs. +0.1% gain for the industry. The company has surpassed the Zacks Consensus Estimate for earnings in only one of the trailing four quarters. Its restructuring and business simplifying efforts (including ring-fencing) have ended successfully and will likely continue to result in decrease in expenses.
Also, driven by these efforts, the company intends to enhance capital deployment activities as profitability improves going forward. However, the bank has been facing pressure on revenues owing to weak capital market performance, low interest rates and uncertainty related to Brexit.
Further, litigation matters remain a near-term concern. In fact, settlement of the U.S. mortgage lawsuit for $2 billion will hurt its first quarter 2018 results.
Other noteworthy reports we are featuring today include Cardinal Health (CAH), UnitedHealth (UNH) and Lennar (LEN).
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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>>>