Today's Must Read
Oil Prices & Permian Basin Focus to Aid Occidental (OXY)
Phillips 66 (PSX) Banks on Midstream Business, Debts High
Thursday, September 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 Becton, Dickinson (BDX), Occidental Petroleum (OXY) and Phillips 66 (PSX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Becton, Dickinson’s shares have outperformed the Zacks Dental Supplies industry over the past year, gaining +30.7% vs. +14.6%. The Zacks analyst likes the strong performance of the core BD Medical and Life Sciences segment. Additionally, management is optimistic about the completion of the C.R. Bard acquisition, which has proven to be accretive.
The company’s Peripheral Intervention unit also put up a solid show recently, driving geographical sales. A strong guidance for fiscal 2018 is also indicative of brighter prospects ahead. On the flip side, contracting gross margins raise concerns.
Management still foresees a sales impact from Hurricane Maria in Puerto Rico on Bard's business in first quarter of fiscal 2019. The stock is overvalued at the moment. The recent product recalls in the Diabetes Care business and foreign exchange volatility are also likely to dent results. Pricing pressure and stiff competition are other major headwinds.
Shares of Occidental Petroleum have underperformed the Zacks Domestic Integrated Oil industry over the past year, gaining +23% vs. +34.9%. As oil prices continue to improve, Occidental Petroleum gains from more oil production in the Permian Resources and concentrating on high-margin production region.
The Zacks analyst thinks ongoing capital investment will further strengthen the existing operations of the company. The company generates a stable cash flow and its Chemical plant will further improve the same.
However, Occidental Petroleum, like other oil and natural gas companies, faces the risks of cost overruns and development interruptions due to delays in drilling and other approvals. Stringent federal and state laws are tailwinds for the company.
Phillips 66’s shares have underperformed the Zacks Oil Refining and Marketing industry over the past year, gaining +30.1% vs. +45.7%. The Zacks analyst thinks that in terms of size, efficiency and strength, Phillips 66 is a leading player in each of its operational segments – refining, chemicals and midstream.
Midstream business is in high demand in the United States as there is a huge need for fresh pipeline and infrastructure properties in the flourishing shales owing to the existing bottleneck problems. To capitalize the recent trend the company is planning to allocate most of its 2018 capital budget for midstream operations.
Moreover, the company is strongly committed in returning cash back to the shareholders through both dividend payments and repurchasing shares. However, Phillips 66 is bearing the brunt of increasing costs and expenses, affecting income. Moreover, rising debt load and declining cash balance are concerns.
Other noteworthy reports we are featuring today include SunTrust Banks (STI), Allstate (ALL) and Deutsche Bank (DB).
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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>>>