Today's Must Read
Drug Price Rise Hurts Walgreens (WBA), ESRX Deal a Plus
BNY Mellon's (BK) Lower Margin Stress Offsets Fee Dependence
Wednesday, June 20, 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 Schlumberger (SLB), Walgreens Boots (WBA) and BNY Mellon (BK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Schlumberger’s shares have outperformed the Zacks Oil and Gas - Field Services industry over the last year, gaining +0.4% vs. -5.8%. Schlumberger is the largest oilfield services player in the world with presence in every energy market across the world.
Also, in all the operating business segments, the company is among the top players. The firm has been banking on growing hydraulic fracturing work in the U.S. land market. The Zacks analyst thinks that being the leading provider of technology for complex oilfield projects, Schlumberger is better positioned than most peers to take up new offshore projects in the shallow water basins outside North America.
However, the company’s rising project startup costs are a concern. Schlumberger’s total debt is four times its total cash balances. Compared with its peer group, the firm has higher long-term debt to equity ratio, which reflects more levered balance sheet.
Shares of Walgreens Boots have underperformed the Zacks Drug Stores industry over the last year, losing -17.3% vs. -13.2%. Walgreens Boots' last-reported second quarter fiscal 2018 marked the company's highest sales in the last eight quarters. Also, the company's increase in sales at the Retail Pharmacy International is encouraging.
Moreover, the company has been gaining on account of strategic tie-ups. The Zacks analyst is currently looking forward to the company’s alliance with Express Scripts aiming to expand their existing group purchasing efforts.
This apart, the company’s decision to acquire a 40% stake in Sinopharm Holding Guoda Drugstores in China looks promising as it should provide a strong impetus to Walgreens Boots’ worldwide retail pharmacy business. However, declining Retail Pharmacy sales was a disappointment. Also, ongoing generic drug inflation is hurting Walgreens' pharmacy margin. The company faces tough competition along with currency fluctuations.
BNY Mellon’s shares have outperformed the Zacks Major Regional Banks industry in the last three months (+4.9% vs. -5.3%). The company has an impressive earnings surprise history, having surpassed expectations in three of the trailing four quarters. Higher interest rates, rising loan demand and steadily improving fee income are expected to aid revenue growth.
Also, potential lesser regulations, lower tax rates and cost-saving initiatives are likely to drive profitability in the quarters ahead. However, the Zacks analyst thinks concentration risk arising from significant dependence on fee-based income remains a matter of concern. If there is any change in individual investment preferences, regulatory amendments or a slowdown in capital market activities, it might hamper the company's financials.
Other noteworthy reports we are featuring today include Accenture (ACN), Stryker (SYK) and Duke Energy (DUK).
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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>>>