Today's Must Read
Tower Buyouts Drive American Tower (AMT), Debt Woes Linger
Higher Premiums Aid Chubb Limited (CB), Rising Costs Ail
Monday, August 6, 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 Gilead (GILD), American Tower (AMT) and Chubb (CB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
In addition to these stock research reports, we are also giving you a real-time scorecard of the ongoing Q2 earnings season. Including all of this morning's releases, we now have Q2 results from 410 S&P 500 members or 82% of the index's total membership.
Total earnings for these companies are up +24.9% from the same period last year on +10.1% higher revenues, with 80% beating EPS estimates and 73.9% beating revenue estimates. This is better performance than we have seen from the same group of 410 S&P 500 members in other recent periods.
For more details about the Q2 earnings season, check out our weekly Earnings Preview article - Should We Worry About the Downtrend in Earnings Estimates?
Strong Buy-ranked Gilead’s shares have outperformed the Zacks Biotech industry year to date, gaining +8.7% vs. a decline of -4.9%. Gilead’s second-quarter results beat estimates on the strength of its HIV franchise. The Zacks analyst thinks the HIV franchise maintains momentum driven by the rapid adoption of Descovy-based regimens. The FDA approval of Biktarvy has further widened the portfolio. Biktarvy has also been approved in Europe which should boost sales further. The launch of Yescarta is progressing well in the United States and the CHMP gave a positive opinion on the same (tentative approval in the third quarter). 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. However, Gilead’s HCV franchise is under pressure due to competitive and pricing pressure. The departure of the CEO at this crucial time further clouds the growth prospects of the company.
Shares of American Tower have outperformed the Zacks REIT and Equity Trust industry in the last three months (+9.3% vs. +6.1%). American Tower’s second-quarter adjusted funds from operations (AFFO) surpassed expectations. The figure also compares favorably with the year-ago tally. Further, revenues for the quarter came in higher than the previous-quarter tally. The company also increased its outlook for 2018 property revenues. The Zacks analyst thinks American Tower continues to benefit from increased investment of wireless carriers in 4G LTE and 5G networks. Its tower buyouts in emerging markets and long-term tower leases with major wireless carriers lend it a competitive edge over rivals. Nonetheless, the company has a substantially leveraged balance sheet. Further, high customer concentration remains a risk. Particularly, the accelerated Indian carrier consolidation-driven churn has emerged as a near-term headwind for the company.
Chubb’s shares have lost -5.1% year to date, underperforming the Zacks Property, Casualty and Title industry, which has gained +1.9% over the same period. However, Chubb’s second-quarter 2018 earnings beat expectations and also improved year over year on improved underwriting as well as investment results. The Zacks analyst thinks Chubb stands a good chance of leading the P&C space, benefiting from a suite of compelling products as well as services. The company’s inorganic growth story is impressive, helping it achieve a higher long-term ROE. Increased scales, efficiencies and a solid balance sheet will lend Chubb a competitive edge. A strong capital position aids Chubb to boost shareholder value and invest in strategic initiatives to drive growth. The company is on track to achieve annual run-rate integration-related savings of $875 million by the end of 2018. Exposure to cat loss induces volatility in underwriting profitability. Escalating expenses too weigh on margin expansion
Other noteworthy reports we are featuring today include Aetna (AET), Northrop Grumman (NOC) and Humana (HUM).
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Director of Research
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>>>