Today's Must Read
Continental (CLR) to Benefit From Delaware Asset Acquisition
Global Expansion Aids SVB Financial (SIVB), Higher Costs Ail
Wednesday, October 5, 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 MSCI Inc. (MSCI), Continental Resources, Inc. (CLR) and SVB Financial Group (SIVB). 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 >>>
MSCI shares have declined -24.5% over the past year against the Zacks Business - Software Services industry’s decline of -28.5%. The company has a leveraged balance sheet, which is a concern. Nevertheless, its top line benefited from solid growth in recurring subscriptions.
MSCI is gaining strong demand for custom and factor index modules, recurring revenue business model and the growing adoption of its ESG solution in the investment process. MSCI’s expanding portfolio of climate tools is noteworthy. Acquisitions have enhanced MSCI’s ability to provide climate-risk assessment and assist investors with climate-risk disclosure requirements.
MSCI’s new portfolio foot-printing tool has extended climate analysis to municipal bonds and securitized products. Moreover, a strong traction from client segments like wealth management, banks and hedge funds is a positive.
(You can read the full research report on MSCI here >>>)
Continental Resources shares have outperformed the Zacks Oil and Gas - Exploration and Production - United States industry over the past year (+42.2% vs. +40.4%). The company has a premier position in the Bakken region, which is one of the largest onshore oilfields in the United States. Its operations in the SCOOP and STACK plays of Oklahoma generate huge profits.
Continental Resources has acquired Delaware Basin assets from Pioneer Natural Resources, marking its entry into the prolific Permian Basin. The acquisition has brightened its long-term production outlook. Also, the company has maintained its average oil production upward to 200,000-210,000 Bbls/d for the year. With high oil prices, higher production is expected to boost the company’s profitability.
However, Continental’s significant exposure to debt is concerning. Higher production costs will affect its bottom-line. Also, the aggressive capital budget remains a headwind for the company. As such, the stock warrants a cautious stance.
(You can read the full research report on Continental Resources here >>>)
SVB Financial shares have underperformed the Zacks Banks - West industry over the past year (-44.5% vs. -23.2%). Several macroeconomic and geopolitical concerns will likely continue to weigh on its financials in the next few quarters. Additionally, elevated expenses are expected to hurt the bottom line to an extent.
However, the company has an impressive earnings surprise history. The company's earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Higher rates, growth in loans and deposit balances, efforts to improve non-interest income, and the company’s global expansion strategy will likely keep aiding financials.
The acquisitions of Boston Private, MoffettNathanson and the debt investment business of WestRiver Group are expected to be earnings accretive and will help SVB Financial further cement its foothold in the innovation economy.
(You can read the full research report on SVB Financial here >>>)
Other noteworthy reports we are featuring today include Church & Dwight Co., Inc. (CHD), Hewlett Packard Enterprise Company (HPE), and International Paper Company (IP).
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>>>