Today's Must Read
Weak Fire & Security Unit Hurts United Technologies (UTX)
Eni (E) Banks on Upstream Project in Egypt, Faces High Debts
Wednesday, May 23, 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 UnitedHealth (UNH), United Technologies (UTX) and Eni (E). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked UnitedHealth's shares have outperformed the Zacks Medical Insurance industry year to date (up +11.2% vs. +8.2%). The Zacks analyst thinks the company's robust Government business and continued strong performance at Optum are driving long-term growth. Its international business and strong capital position driving business investment are the other positives.
The company has been witnessing an increase in membership over the past many years. It again lifted its 2018 earnings guidance, buoying optimism among investors in the stock.
However, membership loss in its fee-based commercial as well as Brazilian businesses will contract the overall membership growth for UnitedHealth Group. Additionally, higher medical care ratio raises concern.
Shares of United Technologies have gained +4.7% in the last year, outperforming the Zacks Diversified Operations industry, which has lost -11.6% over the same period. United Technologies serves various end-markets.
The Zacks analyst thinks that this allows it to remain profitable even during tough economic conditions. The company has offered a bullish guidance for 2018 on healthy demand trends and is likely to deliver sustainable earnings growth in future with Rockwell merger. United Technologies remains focused on four key priorities: flawless execution, innovation, structural cost reduction and disciplined capital allocation to fuel its growth engine.
However, fluctuations in foreign currency exchange rates may affect the company’s bottom-line growth. In addition, a disruption in deliveries from suppliers, capacity constraints, production disruptions, price changes or decreased availability of raw materials or commodities is likely to have an adverse effect on the company’s ability to meet delivery schedules, thereby increasing its operating costs.
Eni's shares have gained +13.2% in the last year, underperforming the Zacks Integrated Oil industry which has gained +30% over the same period. Eni has prospective upstream projects in Angola, Egypt, Ghana, Indonesia and Kazakhstan. This is likely to aid the company achieve 4% targeted output growth through 2021. In fact, year-over-year increase in oil and natural gas production has supported the company’s strong first-quarter 2018 earnings.
Eni intends to raise the dividend for 2018 to €0.83 per share, up 3.75% from the level in 2017. This reflects the integrated energy player's strong commitment of returning cash to the shareholders. However, Eni's debt level is higher than the industry average. Also, the recovery of crude prices has been affecting the company’s refining businesses.
Other noteworthy reports we are featuring today include Sanofi (SNY), Arista (ANET) and Discovery (DISCA).
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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>>>