Today's Must Read
ConocoPhillips (COP) Gains From Oil-Rich Eagle Ford Acreage
Passenger Revenues Buoy Delta (DAL) Amid Fuel Cost Woes
Wednesday, October 31, 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 Comcast (CMCSA), ConocoPhillips (COP) and Delta Air Lines (DAL). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Buy-ranked Comcast’s shares have outperformed the Zacks Cable Television industry year to date, losing -5.8% vs. -11.4% in the space. Comcast’s third-quarter 2018 results benefited from solid growth in the number of residential high-speed Internet customers.
Advertising revenues also increased due to higher spending on political advertising. Moreover, strong adoption of Xfinity Home drove top-line growth. The Zacks analyst thinks the nationwide rollout of the DOCSIS 3.1 technology and the completion of the nationwide rollout of Comcast’s wireless services under the Xfinity Mobile brand will continue to boost subscriber base. Partnerships with the likes of Charter, Netflix and Amazon Prime are other positives.
The Sky acquisition expands Comcast’s international reach. Sky’s content portfolio strength is a major growth driver. However, the company continues to lose voice and video subscribers due to cord-cutting and stiff competition. Additionally, high debt level is a headwind.
Shares of Buy-ranked ConocoPhillips are up +33.5% over the past year, outperforming the Zacks U.S. Integrated Oil industry, which has gained +13.7% over the same period. In terms of production and proved reserves, ConocoPhillips is the largest oil and gas exploration and production (E&P) player in the world.
The company recently reported strong third-quarter 2018 results, courtesy of higher oil realizations and strong volumes from unconventional assets. The Zacks analyst thinks there are significant opportunities for the upstream energy player in the Eagle Ford where it owns about 3,400 undrilled locations. In fact, a strong focus on two other prospective resources like Delaware basin and Bakken shale is expected to help ConocoPhillips achieve its target of 22% CAGR of production through 2017 to 2020.
Importantly, through 2017, the firm had lowered its debt load by 30%, thereby enhancing its credit rating. Consequently, ConocoPhillips offers substantial upside potential from the current price levels and is a preferred E&P company to own now.
Delta Air Lines’ shares have lost -1.5% year to date, outperforming the Zacks Airline industry's -21.8% decline. The stock has also outperformed fellow airline heavyweight, American Airlines, which has declined -33.4% in the same time frame. Delta performed impressively in the third quarter of 2018, despite high fuel costs. Both earnings and revenues surpassed the respective estimates and improved year over year.
Strong demand for air travel aided results, causing passenger revenues to increase 8.2%. Anticipating travel demand to remain strong, Delta raised its view pertaining to revenue growth for 2018. The Zacks analyst is also impressed by the company's efforts to reward its shareholders.
Despite the robust third-quarter performance, the threat posed by rising fuel costs, which increased 32.1% in the third quarter, is a major concern. Also, its fuel bill rose 35% in the quarter. Fuel costs are anticipated to be between $2.47 and $2.52 per gallon in the final quarter of 2018. Expenses on the labor front might also limit bottom-line growth.
Other noteworthy reports we are featuring today include ServiceNow (NOW), Xcel Energy (XEL) and Zimmer Biomet (ZBH).
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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>>>