Today's Must Read
Glaxo's (GSK) New Drugs Start Well, Advair to Face Generics
T-Mobile (TMUS) Benefits From Service Revenues, Costs Ail
Wednesday, June 13, 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 Chevron (CVX), Glaxo (GSK) and T-Mobile (TMUS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Strong Buy-ranked Chevron’s shares have risen +19.3% in the past year, nearly in line with the Zacks Integrated Oil industry's +19.5% increase, while larger rival Exxon Mobil has seen its scrip go up a meagre +0.4% over the same time period. Shares of the company, which has survived the worst oil crash in more than 50 years, now sit near 52-week highs.
The blue-chip energy company is up more than 100% off its August 2015 lows and poised for further capital appreciation, riding on its healthy earnings growth prospects. Chevron’s existing oil and gas development project pipeline is among the best in the industry, targeting volume growth of 4-7% in 2018.
The Zacks analyst thinks production increase will be driven by Australian LNG megaprojects, as well as Chevron’s stellar Permian operations. Chevron has been able to bolster its cash from operations, allowing it to recently raise its dividend.
The company’s balance sheet seems healthy enough and the dividend yield of nearly 4% should remain safe going forward. Apart from rising commodity prices, conservative capital spending and cost control would ensure rapidly improving cash flow.
Shares of Glaxo have outperformed the Zacks Large Cap Pharmaceuticals industry year to date, gaining +16.1% versus the industry’s -4.4% decline. The Zacks analyst likes Glaxo’s efforts to develop its pipeline. Performance of new products has been encouraging.
Meanwhile, back-to-back approvals of three new products – Trelegy Ellipta, Shingrix and Juluca – and the agreement to buy out Novartis’ shareholding in the Consumer Healthcare JV – have strengthened Glaxo’s competitive position. However, persistent challenges like stiff competition, genericization, pricing pressure and slowing growth in emerging markets have been hurting sales.
Pricing pressure and competitive dynamics are hurting sales in Glaxo’s inhaled respiratory products, particularly the older products. Meanwhile, its top-selling product, Advair is also expected to face generic competition in the United States this year, which will further hurt sales. The slowdown in sales of the Consumer Healthcare segment is also a concern.
T-Mobile’s shares have underperformed the Zacks National Wireless industry over the last three months, losing -10.3% vs. -3.3%. T-Mobile has rolled out 600 MHz wireless spectrum in its footprints and has conducted Narrowband Internet of Things tests.
T-Mobile and Sprint have agreed to merge. The Zacks analyst thinks the deal will help to accelerate development of faster 5G wireless networks. The combined company would have about 127 million customers. It will have the network capacity to rapidly create a nationwide 5G network. T-Mobile’s innovative network expansion methodologies continue to be faster and technologically sounder.
A competitive and saturated wireless market and high costs of the low-priced promotional plans remain major headwinds. The company has increased its top-line by adding customers but compromised its profitability. Industry consolidation and intense competition could limit T-Mobile’s ability to attract and retain customers and may adversely affect its operating results.
Other noteworthy reports we are featuring today include Delta Air Lines (DAL), Consolidated Edison (ED) and American Water Works (AWK).
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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>>>