Today's Must Read
Sinopec (SNP) to Gain From Hangjinqi Natural Gas Project
Revlimid, Otezla Power Celgene (CELG) Amid Pipeline Setbacks
Tuesday, August 13, 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 Micron Technology (MU), Sinopec (SNP) and Celgene (CELG). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Micron’s shares have outperformed the Zacks Semiconductors industry (+32.8% vs. +14%) in the year-to-date period. The Zacks analyst thinks Micron is well poised to benefit from resurgence in memory demand, backed by a progress in customer inventory adjustments in the cloud, graphics and PC markets.
Moreover, its focus on increasing the mix of high-value solutions in its portfolio is a boon. Strong growth in managed NAND products is also a tailwind. Further, introduction of server processors that support higher memory densities is likely to fuel demand for its solutions. Additionally, the company’s decision to cut down on capital expenditure will enable it to reach a balanced inventory level.
However, it is hit by declining memory prices (both DRAM and NAND) and lower demand from smartphone OEMs. Moreover, the U.S.-China trade spat has made the demand environment highly volatile for Micron.
Shares of Sinopec have underperformed the Zacks Integrated Oil industry over the past six months, losing -29.6% vs -17.4%. The Zacks analyst believes Sinopec’s latest major discoveries will boost its production in the days to come.
Sinopec’s natural gas business has immense potential for growth over the coming years, as China intends to move from coal to natural gas. Its natural gas capacity building in Hangjinqi can enable the company to significantly gain from rising demand for cleaner energy source. Notably, it is committed to increase shareholders’ wealth. However, China’s slowest economic growth in decades is expected to affect its refining businesses.
Moreover, the company's Chemical unit is currently under pressure from declining demand. Also, global economic slowdown and the trade conflict between the United States and China will affect commodity prices. This can hurt Sinopec’s Exploration and Production profits.
Celgene’s shares have gained +3.8% in the past three months versus the Zacks Biomedical and Genetics industry's loss of -11.1% over the same period. The Zacks analyst believes that the company’s lead drug, Revlimid, continues to drive revenues on label expansions and market share gains.
Celgene’s second-quarter results were strong as it comfortably beat on both sales and earnings. Investors’ focus is on the merger announcement with large-cap pharma Bristol-Myers Squibb Co. for a whopping $74 billion.
Per the terms, Celgene shareholders will receive $50 plus one share of Bristol-Myers and one tradeable Contingent Value Right, which will entitle the holder to receive a cash payment of $9.00 upon the achievement of FDA approval for three candidates (ozanimod, liso-cel and bb2121). Shares have outperformed the industry in the year so far. However, pipeline setbacks are a concern.
Other noteworthy reports we featured today include Paychex (PAYX), LyondellBasell Industries (LYB) and McCormick & Company (MKC).
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Note: Our Director of Research 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>>>