Today's Must Read
ConocoPhillips (COP) Banks On Oil-Rich Bakken Shale Assets
Inorganic Growth Aids PNC Financial (PNC) Despite High Costs
Wednesday, June 1, 2022
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 Eli Lilly and Company (LLY), ConocoPhillips (COP), and The PNC Financial Services Group, Inc. (PNC). 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 >>>
Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+59.6 % vs. +26.0%) on the back of Lilly's solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. Lilly’s revenue growth is being driven by higher demand for drugs like Trulicity, Taltz, and others. It is regularly adding promising new pipeline assets through business development deals. It has an exciting pipeline of potential new medicines including tirzepatide for type II diabetes and donanemab for early Alzheimer's disease. Both candidates have multibillion-dollar sales potential.
However, generic competition for several drugs, rising pricing pressure in the United States mainly on key drug, Trulicity, and price cuts in some international markets like China, Japan and Europe are some top-line headwinds.
ConocoPhillips shares have modestly outperformed the Zacks Oil and Gas - Integrated - United States industry over the past year (+96.1% vs. +89.5%). The company holds a bulk of acres in the unconventional plays of Eagle Ford shale, Permian Basin and Bakken shale. The Zacks analyst believes that significant opportunities are there for the firm in the Bakken Shale, where it owns about 750 undrilled locations that could provide access to huge reserves.
Notably, the company has revised its expected 2022 return of capital to shareholders upward to $10 billion, reflecting an increase from the prior-mentioned $8 billion. COP projects its 2022 production at 1.76 MMBoe/d, suggesting an improvement from 1.6 MMBoe/d reported last year. Also, the company’s balance sheet is significantly less leveraged than the industry it belongs to. Its massive liquidity position will enable it to pay off the short-term debt of $1,160 million. Given these tailwinds, ConocoPhillips is considered a preferred energy firm to own now.
PNC shares have declined -8.0% over the past year against the Zacks Banks - Major Regional industry’s decline of -12.4%. The Zacks analyst believes that mounting expenses will likely keep denting the bottom line in the near term. Though the Fed has hiked interest rates and signaled more hikes this year, the overall low interest rate environment might strain the bank’s net interest margin (NIM) in the near term. The lack of diversification in the loan portfolio is concerning.
However, Economic growth and robust pipelines are expected to support loan and deposit balances, aiding its balance sheet. Planned investments in inorganic expansion strategies will strengthen its banking franchise and diversify its business mix. Sound capital deployment activities are other positives.
(You can read the full research report on PNC here >>>)
Other noteworthy reports we are featuring today include Equinix, Inc. (EQIX), Edwards Lifesciences Corporation (EW), and Freeport-McMoRan Inc. (FCX).
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>>>