Today's Must Read
HIV Franchise, Yescarta To Drive Growth For Gilead (GILD)
Enterprise (EPD) to Grow on Fee-Based Contracts, Debt High
Innovation Strategy to Enhance Colgate's (CL) Market Share
Friday, May 4, 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 BP (BP), Gilead (GILD), Enterprise Products (EPD) and Colgate (CL). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Strong Buy-ranked BP’s shares are up +26.7% over the last year, outperforming the Zacks International Integrated Oil industry (up +16.1%). The integrated energy company has been gaining on the back of a strong portfolio of upstream projects. Since 2016, BP has placed 13 key upstream projects online, including Atoll Phase 1 & Zohr, driving the company’s record first-quarter 2018 production. Notably, since the October-December quarter of 2010, the first-quarter output has been the highest.
The Zacks analyst appreciates the company’s commitment to return cash to shareholders through dividend payments. The company’s dividend yield of almost 4% is way higher than 1.9% of the S&P 500. In fact, the strong first-quarter 2018 results have raised expectations of a hike in quarterly dividend soon which will mark the company’s first dividend raise since 2014.
(You can read the full research report on BP here >>>).
Shares of Buy-rated Gilead have outperformed the Zacks Biotech industry in the last six months, losing -10% vs. a decline of -13%. Gilead’s first-quarter results were disappointing with both earnings and sales missing estimates as the magnitude of the decline in HCV sales was wider-than-expected due to lower patient starts and increasing competition.
Nevertheless, Gilead is now banking on its HIV franchise and newer avenues like the CAR-T therapy to drive growth. The HIV franchise maintains momentum driven by the rapid adoption of Descovy-based regimens. The FDA approval of Biktarvy has further widened the portfolio.
The CHMP has also adopted a positive opinion on the regimen and a tentative approval is expected in the third-quarter. The initial uptake of Yescarta is encouraging. Meanwhile, Gilead is intending to foray into the NASH market with selonsertib and filgotinib. Both the candidates are being evaluated in late stage studies and a tentative approval will diversify Gilead’s portfolio
Enterprise Products’ shares have gained +6.1% over the last six months, even as the Zacks Oil Production Pipeline MLP industry declined by -5.3%. Enterprise Products Partners' extensive network of pipeline that is spread across 50,000 miles is noteworthy. The pipeline network is connected to every major U.S. shale play and provides services to producers and users of commodities by transporting gas, liquids and refined products.
Enterprise Products has a strong commitment to return cash back to the unitholders. The partnership has raised its cash distribution for 55 successive quarters, reflecting stable fee-based cash flow from diversified midstream assets. Also, during first-quarter 2018, Enterprise’s earnings and revenue beat expectations. However, Enterprise Products’ excessive reliance on debt reflects its balance sheet weaknesses.
The Zacks analyst is also concerned about Enterprise Products’ rising operating costs. The partnership’s units have lost 0.9% over the last year, as compared to the industry's 19.4% decline.
Shares of Colgate have lost -9.3% over the last three months, underperforming the Zacks Consumer Staples sector, which has declined -8.6% over the same period. However, Colgate has been popular with investors for its meet or beat earnings track record. Continuing with this trend, the company delivered an earnings beat in first-quarter 2018, after three consecutive quarters of in line earnings. Results continue to be driven by sales growth and significant market share gains.
The Zacks analyst thinks the company remains on track with the brand building and productivity maximization initiatives. Consequently, it provided a robust outlook for 2018. Further, the company is encouraged by the progress on Global Growth and Efficiency Program along with additional savings anticipated from the recent expansion of the program.
However, its margins continue to be strained due to higher raw material and packaging costs. Moreover, Colgate expects the backdrop to remain challenging in 2018 due to uncertain global markets and slowing category growth worldwide.
Other noteworthy reports we are featuring today include Prologis (PLD), Public Storage (PSA) and Prudential Financial (PRU).
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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>>>