Today's Must Read
Cosentyx, Entresto Fuel Novartis (NVS) Amid Weak Sandoz
QUALCOMM (QCOM) Rides on Solid Demand Trends and 5G Boom
Wednesday, November 14, 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 Chevron (CVX), Novartis (NVS) and Qualcomm (QCOM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Chevron’s shares have declined 7.9% so far this year, underperforming the Zacks Integrated Oil industry's 5.8% decrease. However, Chevron's Q3 earnings more than doubled year over year and was ahead of analysts' expectations. Cash flow was at its highest level in nearly 5 years, while upstream production hit a record.
Chevron’s existing oil and gas development project pipeline is among the best in the industry, targeting volume growth of around 7% in 2018 thanks to planned expansion in the Permian Basin. The oil supermajor pumped 80% more out of the West Texas shale play in the quarter compared with the same period last year, with production set to soar in coming years.
Moreover, the enormous increase in cash flow enabled Chevron to repurchase $750 million of its own shares. Yet there are worries over a drop in its downstream earnings due to weak international margins that once again cut into overall gains from rising E&P income. Hence, investors are advised to wait for a better entry point before buying shares of Chevron.
Shares of Novartis have outperformed the Zacks Large-Cap Pharmaceuticals industry (+14% vs. +12%), in the last six months. Novartis beat sales estimates in the third quarter on strong performance of Cosentyx and Entresto. The label expansion of oncology drugs also boost the top line.
Novartis has a strong oncology portfolio including drugs like Afinitor, Exjade, Jakavi, Zykadia, Tasigna, Jadenu and Kisqali, which continue to boost sales. Novartis restructured its business and plans to focus on becoming a core drug-focused company, powered by data and digital technologies. The company is looking to solidify its presence in the gene-therapy space. It acquired U.S.-based clinical stage gene therapy company, AveXis, Inc.
Novartis also announced that it will acquire Endocyte to further strengthen its pipeline. However, generic division Sandoz continues to face pricing pressure. The division also suffered a blow when the FDA issued a CRL to its generic Advair Diskus.
Qualcomm’s shares have lost 17.5% over the past year vs +6% for the Zacks Wireless Equipment industry. Regulatory disputes and aggressive competition in the mobile phone chipset market will likely hurt Qualcomm in future. However, Qualcomm reported healthy fourth-quarter fiscal 2018 results backed by proper execution of its strategic priorities to drive technology and product leadership.
The company has been trying to retain its leadership in 5G, chipset market and mobile connectivity with multiple technological achievements and innovative product launches. It expects growth from its China business in fiscal 2019, particularly in the second half.
While Qualcomm expanded its leadership to the high tiers with Snapdragon 700, its Snapdragon 800 solutions will continue defining the premium tier benchmarks. The product mix is improving in the China region and key Qualcomm China-based customers are gaining share globally, auguring well for its future business growth.
Other noteworthy reports we are featuring today include TJX (TJX), State Street (STT) and Deere (DE).
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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>>>