Today's Must Read
Offshore Projects Aid Schlumberger (SLB), Start-Up Costs Ail
Biogen (BIIB) Rides on Spinraza, Diversifies Drug Portfolio
Thursday, September 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 Wells Fargo (WFC), Schlumberger (SLB) and Biogen (BIIB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Wells Fargo’s shares have underperformed the Zacks Major Banks industry over the past three months (+1.5% vs. +4.2%). Further, the company possesses a disappointing earnings surprise history, having beaten expectations in only one of the trailing four quarters.
Following the sales scandal and other issues, Wells Fargo has been slapped with new sanctions, including a cap on the assets position by the Federal Reserve. Recently, the bank has been charged with a penalty of $2.09 billion by the U.S. Department of Justice. The Zacks analyst thinks the crisis related to the revelation of illegally opening millions of accounts in 2016, auto-lending issues and impact of other malpractices will take some time to alleviate.
Recently, the company’s chief financial officer, John Shrewsberry, revealed a dismal picture for the bank’s loan book as well. However, lower tax rate, easing of regulations and expansions will likely support the bank’s growth profile.
Shares of Schlumberger have outperformed the Zacks Oil and Gas - Field Services industry over the past year, losing -10.1% vs. -13.8%. Schlumberger is the largest oilfield services player in the world with presence in every energy market.
The Zacks analyst thinks being the leading provider of technology for complex oilfield projects, Schlumberger is better placed than most peers to take up new offshore projects in the shallow water basins. In fact, the company is expecting more drilling activities to ramp up in the offshore resources, that will meet the growing demand for crude in the world.
Moreover, the firm has been persistently rewarding shareholders with higher dividend yield than the industry over the past 15 years. However, we are concerned about Schlumberger’s rising project startup costs since the company is starting up many new developments outside North America.
Biogen’s shares have outperformed the Zacks Biomedical and Genetics industry year to date (+6.3% vs. -4.8%). Biogen has a strong position in the MS market with a wide range of products including Avonex, Tysabri, Tecfidera and Plegridy.
The Zacks analyst likes its efforts to diversify beyond MS to other areas like Alzheimer’s, Parkinson's and stroke, among others. Meanwhile, its newest drug Spinraza has multi-billion dollar potential. Biogen’s efforts to regularly in-license assets to build its pipeline are encouraging. It has many assets in its pipeline, which have transformative potential.
Multiple data readouts are expected this year. However, the launch of Ocrevus by Roche is beginning to have a negative impact on MS franchise sales in the United States. Also, Spinraza’s moderating trends in the United States is a concern.
Other noteworthy reports we are featuring today include American Express (AXP), Glaxo (GSK) and Illinois Tool Works (ITW).
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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>>>