Today's Must Read
Lowe's (LOW) Top Line to Gain on Robust Comparable Sales Run
HIV Franchise Boost Growth For Gilead (GILD) As HCV Dwindles
Thursday, August 22, 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 Union Pacific (UNP), Lowe's (LOW) and Gilead (GILD). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Union Pacific’s shares have underperformed the Zacks Rail industry (+22.2% vs. +19%) year to date. The Zacks analyst thinks Union Pacific's initiatives to reward its shareholders are very encouraging. Since November 2017, the company hiked its quarterly dividend payout five times.
The latest dividend hike came in July, when the company increased its quarterly payout by 10.2% to 97 cents a share. It is also active on the buyback front. Union Pacific's efforts to check costs in a bid to drive the bottom line are also impressive. In fact, the company’s operating ratio has been improving mainly due to its cost-cut plans. The metric is expected to improve further going forward.
However, sluggish freight revenues represent a major headwind for the company. Moreover, its high debt levels are worrisome. The massive capex also might play a spoilsport. Hence, investors are advised to wait for a better entry point before buying Union Pacific’s shares.
Shares of Lowe's have outperformed the Zacks Building Products - Retail industry over the past three months, gaining +14.4% vs. +9.7%. The Zacks analyst thinks the company is gaining from key sales initiatives like focus on Pro customers, better product presentation and in-store merchandising, among others.
Such efforts drove sales in second-quarter fiscal 2019, wherein top and bottom lines were strong. While earnings gained from higher sales and lower SG&A costs, sales were backed by solid spring demand, robust execution of its holiday event, and improvement in Paint and Pro businesses. Also, Lowe’s experienced comparable sales growth in all 15 U.S regions.
However, supply-chain woes and adverse mix continued to hurt gross margin, which contracted in the quarter. Also, the company is exposed to competition. Nonetheless, solid demand in the home improvement space and Lowe’s retail fundamentals keep it well positioned.
Gilead’s shares have outperformed the Zacks Biotech industry year to date, gaining +3.1% vs. a decline of -1.2%. Gilead reported better-than-expected results for the second quarter of 2019 on strong sales of Biktarvy. It also raised its annual sales guidance.
The Zacks analyst thinks Gilead’s HIV franchise maintains momentum on continued uptake of Genvoya and Odefsey, and the rapid adoption of Biktarvy. The company has shifted focus to the HIV franchise, and newer avenues like CAR-T therapy and NASH, owing to a decline in sales of the HCV franchise.
Gilead’s collaboration with Novo Nordisk for NASH treatments is a step in the right direction, given its recent debacles. The company suffered a setback with the failure of a late-stage study on selonsertib in patients with compensated cirrhosis due to NASH. However, the HIV franchise is also expected to face stiff competition.
Other noteworthy reports we are featuring today include Target (TGT), EOG Resources (EOG) and Emerson Electric (EMR).
It’s Illegal in 42 States, But Investors Will Make Billions Legally
In addition to the companies you read about above, today you get details on the newly-legalized
industry that’s tapping into a “habit” that Americans spend an estimated $150 billion on every year.
That’s twice as much as they spend on marijuana, legally or otherwise.
Zacks special report reveals how investors can profit from this new opportunity. As more states legalize this activity, the industry could expand by as much as 15X. Zacks’ has just released a Special Report revealing 5 top stocks to watch in this space.
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>>>