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Research Daily

Tuesday, January 21, 2020

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 Roche Holding (RHHBY), Royal Dutch Shell (RDS.A) and Citigroup (C). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Roche’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+31.7% vs. +15.1%), primarily reflecting solid sales of new drugs. Strong growth of Ocrevus, Perjeta, Tecentriq and Hemlibra countered biosimilar competition in Europe for Herceptin and MabThera. Particularly, MS drug Ocrevus witnessed strong growth on increased demand.

Roche’s dominant position in the breast cancer space continues to boost performance further. Also, label expansion of Tecentriq into additional indications is a positive. The recent Spark acquisition will boost Roche’s presence in the gene therapy space.

However, most of the legacy drugs are facing competition. Pipeline setbacks and biosimilar competition are concerns as well. Additionally, the persistent delay in the Spark acquisition is disappointing. 

(You can read the full research report on Roche here >>>)

Shares of Royal Dutch Shell have lost -9.6% in the past six months against the Zacks Integrated Oil industry's decline of -7.1%, primarily reflecting the tough commodity-price backdrop. These are undoubtedly difficult times for the oil industry, but Shell is doing as good a job as any. It reported better-than-expected September-quarter results and we will likely see similar outperformance as the company reports Q4 results towards the end of this month. 

The Anglo-Dutch company's position as a key supplier of liquefied natural gas should further benefit its long-term cash flow growth on the back of attractive growth opportunities. Moreover, its dividend is safe and secure. However, there are worries over drop in its cash flow excluding working capital while the company’s poor reserve replacement ratio raises concerns about future production.

Moreover, Shell’s $1.7-$2.3 billion impairment charge is expected to increase gearing. Hence, investors are advised to wait for a better entry point.

(You can read the full research report on Royal Dutch Shell here >>>)

Citigroup’sshares have gained +11.8% over the past three months against the Zacks Major Regional Banks industry's rise of +7.4%. The Zacks analyst believes that net interest revenues will likely be supported by loan growth and mix, despite low rates in the days ahead. Also, the company’s steady capital-deployment activities are also commendable.

The company has an impressive earnings surprise history, beating the Zacks Consensus Estimate in all the trailing four quarters. The company’s fourth-quarter 2019 results reflected higher revenues and loans, partly offset by rise in expenses and cost of credit.

Citigroup’s streamlining efforts, along with strategic investments in core business, bode well for the long term. However, pending litigation issues might keep legal expenses elevated. Additionally, decline in equity-market revenues and volatile underwriting business are concerns for the company.

(You can read the full research report on Citigroup here >>>)

Other noteworthy reports we are featuring today include UnitedHealth (UNH), AstraZeneca (AZN) and Costco Wholesale (COST).

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Sheraz Mian

Director of Research

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>>>

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