Today's Must Read
Exxon (XOM) Gains on Hebron Project, Throughput Volumes Ail
Focus on Core Operations Aid Citigroup (C), Legal Woes Linger
New Drugs Support Amgen's (AMGN) Sales, Pipeline Strong
Thursday, May 3, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 17 major stocks, including Apple (AAPL), ExxonMobil (XOM), Citigroup (C) and Amgen (AMGN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple’s shares have gained +20.5% over the last year and have outperformed the broader market with the S&P 500 gaining +10.2% over the same period. Apple’s second-quarter fiscal 2018 results benefited from growth in iPhone and Services segment.
The Services segment on the back of growing Apple Music & Apple Pay has become the new cash cow for the company. The higher ASP of iPhone X is boosting the top-line growth. Demand in China rebounded strongly driven by iPhone, Services, Mac and Watch sales.
Going forward, the Zacks analyst thinks Apple’s foray into fast-growing technologies like autonomous vehicle, artificial intelligence (AI) & AR/VR will drive growth. However, Apple faces significant competition in most of its operating markets. The rise of feature-rich regional smartphones at a much cheaper price remains a major headwind.
Shares of ExxonMobil have underperformed the Zacks Integrated Oil industry (-5.9% vs. +18.2%) as well as peer Chevron (+19.7%) over the last year. 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.
This has allowed Exxon to reward stockholders with 6.3% average annual dividend hike over the past 35 years. The Zacks analyst is optimistic about Canada’s Hebron project as the oil field has been backing Exxon’s upstream operations.
The company’s cost-control initiatives are impressive as reflected from 60% sequential reduction in exploration costs through first-quarter 2018. However, the company’s first-quarter earnings were lower than expected, thanks to decreased refinery throughput and lower margins at the chemical business.
Citigroup’s shares have underperformed the Zacks Major Banks industry over the last six months, losing -7.8% vs +1.3%. However, the company possesses an impressive earnings surprise history, beating expectations in all the trailing four quarters. The company’s first-quarter 2018 earnings reflected high revenues, along with loan growth. However, expenses escalated on ongoing investments.
The Zacks analyst thinks the company’s restructuring and streamlining efforts, strategic investments in core business, lower tax rate and expense management will likely support profitability. Expansion of wealth-management business in Australia will act as a tailwind.
Yet several issues, including litigation burden, keep us apprehensive. Also, despite rising rates, margin remains under pressure, due to persistent decline in the company’s legacy holdings portfolio.
Shares of Amgen have lost -2.6% year to date, outperforming the Zacks Biomedical and Genetics industry, which has declined -12% over the same period. Amgen beat expectations for both earnings and sales in 2018. Amgen’s newer drugs – Prolia, Xgeva, Blincyto, Vectibix, Kyprolis – are performing well. Amgen is also progressing with its pipeline and expects approval and launch of migraine candidate, Aimovig this year.
However, Amgen has some challenges in store, given slowdown in sales of mature drugs like Enbrel, Aranesp and Neulasta, which are facing an array of branded and generic competitors. Volume growth of new drugs may not be enough to offset lost sales due to the decline in mature brands.
While Neupogen is already facing U.S. biosimilar competition, Neulasta, Epogen and Sensipar could start facing the same this year. Meanwhile, uptake of key new drug, Repatha has been slow due to payer restrictions.
Other noteworthy reports we are featuring today include Ecolab (ECL), Aetna (AET) and Emerson Electric (EMR).
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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>>>