Today's Must Read
Sinopec (SNP) Banks on Sichuan Gas Discovery, Refining Weak
Digital Capabilities to Aid HSBC (HSBC) Amid Revenue Concern
Monday, September 16, 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 Celgene (CELG), Sinopec (SNP) and HSBC Holdings (HSBC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Celgene’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past three months (1.2% vs. -4.3%). The Zacks analyst thinks that Celgene’s lead drug, Revlimid, continues to drive revenues on label expansions and market share gains.
Robust performance of psoriasis drug, Otezla, is also boosting Celgene’s performance. Investors are focusing on the company’s merger with large-cap pharma Bristol-Myers 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 receipt of FDA approval for three candidates — ozanimod, liso-cel and bb2121. The merger was initially opposed but was eventually given a green signal.
Shares of Sinopec have lost 26.4% in the past six months, underperforming the Zacks Integrated Oil industry’s fall of 18.3%. The Zacks analyst believes that the company has made major progress in identifying attractive and economically viable oil and natural gas reserves.
A huge scale of prospective reserves was discovered in a number of prolific natural gas basins like Sichuan and Ordos. The discoveries will help Sinopec capitalize on mounting clean energy demand as China is transitioning from coal to natural gas for electricity generations. However, China’s bleak economic outlook will continue to hurt the firm’s refining business.
In fact, soft refining margin primarily led the company to report dismal second-quarter 2019 earnings. Moreover, the firm’s cash flow declined 54% year over year in the first half of 2019, reflecting weak operations.
HSBC’s shares have lost 4.8% year to date, underperforming the Zacks Foreign Banks industry’s rise of 2.9% over the same period.
The Zacks analyst believes that the company’s initiatives to improve market share in the U.K. and China are likely to lead to an increase in expenses and hurt bottom-line growth. These efforts will support financials over the long term. Also, initiatives to strengthen digital capabilities globally, improve operating efficiency and open 50 new retail banking branches in the United States will go a long way in supporting profits.
Its steady capital deployments are impressive, reflecting a strong balance sheet position, and will enhance shareholder value. Nevertheless, disappointing economic growth in Europe and weak loan demand are likely to hurt revenue growth to some extent. Additionally, uncertainty related to the implication of Brexit on its financials remains a major near-term concern.
Other noteworthy reports we are featuring today include BHP Group (BHP), Vertex Pharmaceuticals (VRTX) and Prudential Financial (PRU).
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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>>>