Today's Must Read
Focus on Core Operations Aid Citigroup (C), Legal Woes Linger
Asset Growth Aids Blackstone (BX) Top Line, High Costs a Woe
Thursday, May 28, 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 T-Mobile US (TMUS), Citigroup (C) and Blackstone Group (BX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
T-Mobile’s shares have outperformed the Zacks National Wireless industry over the past year (+27.7% vs. +0.6%). The Zacks analyst believes that intense competition is likely to limit the company’s ability to attract and retain customers, which might affect results.
T-Mobile reported mixed first-quarter 2020 results, with the bottom line beating the Zacks Consensus Estimate and the top line missing the same. On April 1, the company closed its long-pending merger with Sprint to create a new wireless giant.
The transaction enabled T-Mobile and Sprint to join their high- and low-band spectrum for a faster nationwide 5G rollout. T-Mobile has deployed 5G sites in Philadelphia and New York City using Sprint’s 2.5 GHz mid-band spectrum on its 5G network.
However, it operates in a fiercely competitive and almost saturated U.S. telecom market. To lure customers from rivals, T-Mobile launched several low-priced service plans, which enhanced revenues, but did not improve operating margin.
Shares of Citigroup have lost 30.4% over the past six months against the Zacks Major Regional Banks industry’s fall of 29.3%. The Zacks analyst believes that Citigroup’s streamlining efforts, along with strategic investments in core business, bode well for the long term. Also, net interest revenues will likely be supported by loan growth and mix, despite low rates.
However, the company has an impressive earnings surprise history, beating the Zacks Consensus Estimate in all the trailing four quarters. Further, the company's declining costs base due to wind-down of legacy assets, supports bottom line expansion.
However, pending litigation issues might keep legal expenses elevated. Additionally, volatile equity-market revenues and underwriting business are concerns. Notably, the company has temporarily suspended share buybacks through the second quarter of 2020, following the challenges from the coronavirus pandemic.
Blackstone’s shares have gained 0.7% over the past three months against the Zacks Investment Management industry’s fall of 3.8%. The Zacks analyst believes that the company remains well-poised to gain from its fund-raising ability, revenue mix, persistent asset inflows and inorganic growth initiatives.
The company’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Its first-quarter 2020 results were hurt by an increase in expenses, partly offset by higher revenues. Moreover, its transition from a publicly traded partnership to a corporation is expected to help in attracting more investors.
However, continuously increasing expenses (mainly owing to higher general and administrative costs) are expected to hamper the bottom line to an extent in the near term. Additionally, lower chances of sustainability of the company’s capital deployment activities remain a major concern.
Other noteworthy reports we are featuring today include General Electric (GE), Regeneron Pharmaceuticals (REGN) and Canadian National Railway (CNI).
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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>>>