Today's Must Read
Restructuring Efforts to Aid HSBC (HSBC), Revenues a Concern
Sanofi (SNY) Diabetes Sales Weak, Specialty Care Unit Strong
Friday, November 15, 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 Chevron (CVX), HSBC Holdings (HSBC) and Sanofi (SNY). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Chevron’s shares have outperformed the Zacks Integrated Oil industry year to date (+12.1% vs. -0.2%). The Zacks analyst believes that Chevron’s well economics in the Permian also continues to show improvement as the company has been able to achieve a 40% reduction in its development and production costs since 2015.
The company’s existing project pipeline is among the best in the industry, targeting volume growth of around 4-7% in 2019 thanks to planned expansion in the Permian Basin.
However, the continued drop in Chevron's downstream segment earnings (partly attributable to a fall in domestic refined products sales margins) is a concern. In particular, Chevron's high-profile Gorgon LNG development in Australia is suffering from mechanical issues that may restrict its ramp-up.
Shares of HSBC have lost 12.9% in the past six months against Zacks Foreign Banks industry’s rise of 0.3%. The Zacks analyst believes that while 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.
Its third-quarter 2019 results reflect lower revenues and rise in credit costs. Additionally, its initiatives to strengthen digital capabilities globally and improve operating efficiency through further restructuring actions will go a long way in supporting profitability.
However, slow economic growth in Europe, uncertainty over Brexit implications and weak loan demand are likely to continue hurting revenue growth. Given the dismal revenue growth assumptions, the company no longer expects to achieve its targeted return on tangible equity ratio next year.
Sanofi’s shares have gained 7.1% over the past three months against the Zacks Large Cap Pharmaceuticals industry's rise of 6.3%. The Zacks analyst believes that Sanofi’s Specialty Care segment is on a strong footing, particularly with the regular label expansion of Dupixent.
Dupixent is now annualizing at around €2 billion in sales after just around two years in the market and could prove to be key long-term driver. The performance of the Vaccines and Consumer Healthcare franchises also improved of late. Sanofi’s R&D pipeline is strong and it delivered impressive results with several positive data read-outs and the achievement of regulatory milestones this year.
However, headwinds include weak performance of the Diabetes unit, generic competition for many drugs and slower-than-expected uptake of core products like Praluent.
Other noteworthy reports we are featuring today include Sony (SNE), Aon (AON) and Moody's (MCO).
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