Today's Must Read
Prudent Underwriting, Pricing Aid Chubb (CB), Cat Loss Ails
Improving Volumes Aid CME Group (CME), High Expenses Ail
Friday, August 9, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Bristol-Myers (BMY), CME Group (CME) and Chubb (CB). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Bristol-Myers’ shares have underperformed the Zacks Large Cap Pharmaceuticals industry in the year-to-date period, losing -9% vs. -1.2%. Bristol-Myers reported impressive second-quarter results. It beat on both earnings and sales largely due to robust sales of immuno-oncology drug Opdivo and blood thinner drug Eliquis. Label expansion of Opdivo into additional indications continues to drive sales. The Zacks analyst thinks impending acquisition of Celgene Corporation will broaden Bristol-Myers’ portfolio but associated delays are disappointing. Moreover, the company’s decision to divest Celgene’s blockbuster drug Otezla raises questions about targeted synergies. Also, pipeline setbacks are a concern. The failure of part 2 of the Checkmate-227 study was a disappointment, given the potential of the NSCLC market. Additionally, the approval of Merck’s Keytruda for first-line NSCLC adds to Bristol-Myers’ woes.
Shares of CME Group have outperformed the Zacks Securities and Exchanges industry over the past three months, gaining +15.4% versus +14.5%. CME Group’s second-quarter EPS beat estimates. The Zacks analyst thinks the company remains well-poised for growth given its strong market position, which is attributable to varied derivative product lines. Efforts to expand and cross sell through strategic alliances, acquisitions, new product initiatives and a stable global presence bode well. Product innovation and a growing proportion of volume from customers outside the United States have been aiding results. The company intends to focus more on over-the-counter clearing services. However, its diversified product portfolio has significant exposure to interest rate volatility and currency fluctuations. Firm government regulations and limited credit availability in the current unstable capital and credit markets are the other negatives. Moreover, the company has been witnessing escalating expenses.
Chubb’s shares have gained +22.2% year to date, outperforming the Zacks Property, Casualty and Title industry, which has increased +3.2% over the same period. Chubb’s second-quarter EPS beat estimates on prudent underwriting, premium growth and better pricing. The Zacks analyst thinks the insurer will benefit from a suite of compelling products and services. Its inorganic growth story is also impressive, helping it to achieve a higher long-term return on equity. Increased scale, efficiency and a solid balance sheet will continue to lend a competitive edge. Chubb estimates solid growth in Overseas General operations (both commercial and consumer lines) going forward. A strong capital position will allow it to boost shareholder return and invest in strategic growth initiatives. However, exposure to cat loss remains a concern. Also, mounting expenses will curb margin expansion.
Other noteworthy reports we featured today include Exelon (EXC), Hershey (HSY) and Newmont Goldcorp (NEM).
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