Today's Must Read
Phillips 66 (PSX) Grows on Chemicals, Turnaround Costs Hurt
AstraZeneca (AZN) Looks Well Poised for Sales Growth in 2019
Wednesday, March 20, 2019
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 Las Vegas Sands (LVS), Phillips 66 (PSX) and AstraZeneca (AZN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Las Vegas Sands’ shares have lost -2.7% over the past six months, outperforming the Zacks Gaming industry’s decline of -8%. Increased revenues at casino, rooms and malls drove the company’s top line in the fourth-quarter 2018. It generated solid revenues from Macao operations as well. In the next couple of years, the company is likely to spend $2 billion in Macao.
To strengthen its resort portfolio, Las Vegas Sands is focusing on expanding the Four Seasons Tower Suites Macao, St. Regis Tower Suites Macao and the Londoner Macao. The Zacks analyst thinks planned investment in new capital projects in Macao and higher revenues from The Parisian Macao are also likely to drive growth.
Las Vegas Sands’ consistent focus on a convention-based Integrated Resort business model is an added positive. Nevertheless, high debt and competition are worrisome. Estimates for the current year have witnessed upward revisions in the past 30 days.
Shares of Phillips 66 have outperformed the Zacks Oil Refining and Marketing industry over the past year, gaining +2.8% vs. -6.1%. In terms of size, efficiency and strength, Phillips 66 is a leading player in two of its operational segments – chemicals and midstream.
To capitalize on the recent trend of high demand for midstream assets, the company is planning to allocate most of its 2019 capital budget for midstream operations. The Zacks analyst thinks growing petrochemical demand should support the company’s Chemicals businesses.
Phillips 66 is strongly committed to returning cash to shareholders through both dividend payments and share repurchases. However, Phillips 66 is bearing the brunt of increasing turnaround costs, which is hurting its refining business. Moreover, lower crack spread — the income from converting crude into gasoline and diesel — is denting cash flow at its refining unit.
AstraZeneca’s shares have gained +12.8% year to date, outperforming the Zacks Large Cap Pharmaceuticals industry which has gained +4.3% over the same period. AstraZeneca’s core products like Nexium, Crestor and Seroquel are facing generic competition, which is hurting sales.
The diabetes franchise also faces stiff competition while pricing pressure is hurting sales in the Respiratory franchise. Nonetheless, AstraZeneca returned to product sales growth in the second half of 2018 on the back of its newer drugs and looks confident of seeing sustained growth for several years.
The Zacks analyst thinks AstraZeneca’s newer drugs like Lynparza, Tagrisso and Imfinzi should keep contributing to revenues. Meanwhile, several launches are underway across each of the therapeutic areas - Oncology, CV metabolism and Respiratory. Cost-cutting efforts should drive earnings. AstraZeneca also has a promising late-stage pipeline that includes immuno-oncology candidates. Imfinzi is a key drug in the pipeline.
Other noteworthy reports we are featuring today include Intuitive American Electric Power (AEP), Hilton (HLT) and AutoZone (AZO).
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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>>>