Today's Must Read
Acquisitions Aid Morgan Stanley (MS), Underwriting a Concern
Opdivo, Eliquis Fuel Bristol-Myers (BMY) Amid Competition
Wednesday, May 1, 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 ExxonMobil (XOM), Morgan Stanley (MS) and Bristol-Myers (BMY). 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 >>>
ExxonMobil’s shares have outperformed the Zacks Integrated International Oil industry (+7.2% vs. +1.5%) over the past three months. The Zacks analyst thinks ExxonMobil has a leading position in the energy industry owing to its size and diverse asset base, both in terms of business mix and geographical footprint.
With a stable cash position, the company’s balance sheet is one of the best in the industry. This has allowed ExxonMobil to reward stockholders with a 6.2% average annual dividend hike over the past 37 years. The company owns some of the most prolific upstream assets globally. Notably, with three fresh offshore oil discoveries in Guyana, ExxonMobil recently completed 13 key discoveries in the Stabroek Block.
However, the integrated energy firm recently reported weak first-quarter 2019 results due to significant lower contributions from downstream and chemical businesses. Significant scheduled maintenance activities and the contraction in fuel margin hurt ExxonMobil’s downstream business, whereas the chemical business was hurt by soft margin.
Shares of Morgan Stanley have gained +5.5% over the past six months, outperforming the Zacks Investment Banking industry, which has declined -3.6% over the same period. The company possesses an impressive earnings surprise history, having beaten expectations in three of the trailing four quarters. Its first-quarter 2019 results were driven by higher net interest income and decline in costs.
The Zacks analyst thinks the deal to acquire Solium Capital is in sync with the company’s efforts to strengthen its wealth management business. Focus on corporate lending unit, steady loan growth, higher interest rates and normalized levels of trading activities will likely aid revenues. Also, its steady capital deployments indicate a strong liquidity position.
However, slowdown in debt originations will hinder underwriting fee income growth and hurt the company’s investment banking performance. Further, elevated operating expenses remain a major near-term concern.
Bristol-Myers’ shares have underperformed the Zacks Large Cap Pharmaceuticals industry in the past six months, losing -8.9% vs. +0.6%. Bristol-Myers beat on both earnings and sales in the first quarter, primarily on robust sales of Opdivo and Eliquis. The Zacks analyst thinks the company’s efforts to develop pipeline products like Opdivo are encouraging.
In January, Bristol-Myers announced that it will acquire Celgene for an equity value of approximately $74 billion to bolster its portfolio. While the deal was previously being opposed by a few shareholders, the merger has now been given a green signal.
However, the company’s voluntary withdrawal of the sBLA seeking approval of Opdivo+Yervoy for the treatment of first-line NSCLC with tumor mutational burden greater or equal to 10 mutations/megabase following discussions with the FDA was disappointing, given the market potential. Competition has stiffened for Opdivo from Merck’s Keytruda and Roche’s Tecentriq.
Other noteworthy reports we are featuring today include FirstEnergy (FE), Continental Resources (CLR) and Synchrony Financial (SYF).
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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>>>