Today's Must Read
Solid Momentum in Cloud Business Driving SAP's Performance
Healthy Freight Demand Aids CSX Despite Supply-Chain Woes
Wednesday, July 6, 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 ConocoPhillips (COP), SAP SE (SAP) and CSX Corp. (CSX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
ConocoPhillips shares have gained +43.4% over the past year against the Zacks Oil and Gas - Integrated U.S. industry’s gain of +45.9%. 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. Also, the company’s balance sheet is significantly less leveraged than the industry it belongs to.
However, ConocoPhillips is highly exposed to oil price fluctuations, which is make things challenging for the company. Also, it has been generating lower dividend yield than the composite stocks belonging to the energy sector over the past few years.
SAP shares have declined -39.6% over the past year against the Zacks Computer - Software industry’s decline of -15.4%. The Zacks analyst believes that suspension of Russian operations amid the ongoing Ukraine war is expected to affect both the company’s revenues and non-IFRS operating profit in the near term.
Weak uptake of software licenses and support offerings remains a headwind. Stiff competition and increasing costs to enhance cloud-based offerings is likely to exert pressure on the company’s profitability as well.
However, SAP’s performance is gaining from strength in its cloud business, especially the new Rise with SAP solution. Momentum in SAP’s Business Process Intelligence platform, particularly the S/4HANA solutions along with steady traction witnessed in SuccessFactors Employee Central, Ariba and Fieldglass, Qualtrics and other cloud-based offerings is noteworthy.
Shares of CSX have declined -13.6% over the past year against the Zacks Transportation – Rail industry’s decline of -9.4%. The Zacks analyst believes that supply-chain disturbances are hurting the company’s operations. Weakness in the merchandise segment due to lower automotive volumes is concerning. High costs, primarily due to escalating fuel expenses, pose a threat to CSX’s bottom line. CSX’s high capital expenditures are also worrisome.
However, CSX is benefiting from higher export coal volumes, domestic intermodal shipments and favorable pricing. With the demand scenario expected to remain strong, despite the current market bloodbath, management anticipates double-digit growth in operating income and revenues for 2022 from the respective year-ago reported figures.
Other noteworthy reports we are featuring today include Alnylam Pharmaceuticals, Inc. (ALNY), DTE Energy Co. (DTE), and NVR, Inc. (NVR).
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>>>