Top Analyst Reports For ExxonMobil, Bank Of America & Mastercard
Zacks Investment Research | Nov 08, 2017 02:16AM ET
Wednesday, November 8, 2017
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 ExxonMobil (XOM), Bank of America (BAC) and Mastercard (MA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Strong Buy-rated ExxonMobil’s shares have underperformed the Zacks Oil International Integrated industry (-7.4% vs. +5.7%) in the year to date period as well as peer Chevron (NYSE:CVX was down -0.4%). However, ExxonMobil has a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix and geographical footprint.
The Zacks analyst likes its stable cash position and the company’s balance sheet is one of the best in the industry, reflecting declining debt load over the first nine months of 2017. The company has been investing heavily in its extensive refining businesses, which will likely help it counter volatile upstream businesses.
In fact, higher margins from the lucrative refinery operations primarily supported ExxonMobil’s strong third-quarter 2017 results. Increased price realizations from liquids and natural gas also drove the Q3 numbers. Moreover, ExxonMobil’s decision to invest in the pre-salt Carcara oil field is commendable as the company expects it to contain as much as 2 billion barrels of high-quality recoverable oil reserves.
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Shares of Bank of America have outperformed the Zacks Major Regional Banks industry over the last six months, gaining +13.3% vs. +9%. This price performance is backed by impressive earnings surprise history as the company has surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
The company’s third-quarter 2017 results were driven by higher net interest income, a fall in operating expenses and decline in credit costs. Rising interest rates, increase in loan and deposit balances along with initiatives to strengthen its balance sheet is expected to continue supporting profitability.
The bank’s efforts to streamline and simplify operations will support its overall growth. However, muted fee income growth remains a key concern. Fall in mortgage banking income due to lower volumes and a decline in refinancing activity along with uncertainty related to performance of capital markets is worrying.
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Mastercard’s shares have gained +45.2% year to date, outperforming the Zacks Financial Transaction Services industry which has gained +34.5% over the same period. Its third-quarter 2017 earnings surpassed expectations, mainly driven by strong transaction, higher cross border volumes and gains from acquisitions.
The Zacks analyst likes Mastercard’s solid market position, ongoing expansion and digital initiatives, and significant opportunities from the secular shift toward electronic payments. The acquisitions of VocaLink and NuData Security complement the company’s efforts to participate in new payment flows and enhance its safety and security offerings.
However, it continues to face increasing costs, a volatile forex environment and legal issues. Also, higher incentives and rewards will put pressure on the bottom line.
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Other noteworthy reports we are featuring today Royal Dutch Shell (LON:RDSa) (RDS.A), Pioneer Natural Resources (PXD) and Interactive Brokers (IBKR).
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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
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The Zacks analyst believes that Interactive Brokers' increased focus on strengthening the Electronic Brokerage segment and restructuring efforts will go a long way in supporting its profitability.
The Zacks analyst is bullish on strategic buyouts and expansionary moves of Cardinal Health (NYSE:CAH).
Per the Zacks analyst, Take Two will continue to benefit from increasing digital revenues, Social Point buyout and strength in its franchises like Grand Theft Auto and 2K titles, NBA and WWE.
While appreciating Shell's successful integration of the BG Group acquisition and surge in its cash flows, the covering analyst remains concerned over slower oil production growth due to asset sales.
Per the Zacks analyst, strong focus on the low-cost and lucrative Permian Basin will help Pioneer Natural combat the rise in exploration expenses.
Per the Zacks analyst, Arrow's alliance with companies like Cypress and buyouts including that of UBM enable it to enter new markets, diversify and broaden its portfolio, thus boosting its top-line.
Per the Zacks Analyst, Dun & Bradstreet will benefit from its high-margin business model and strong product portfolio.
The Zacks analyst believes that Interactive Brokers' increased focus on strengthening the Electronic Brokerage segment and restructuring efforts will go a long way in supporting its profitability.
The Zacks analyst is bullish on strategic buyouts and expansionary moves of Cardinal Health (NYSE:CAH).
Per the Zacks analyst, Take Two will continue to benefit from increasing digital revenues, Social Point buyout and strength in its franchises like Grand Theft Auto and 2K titles, NBA and WWE.
While appreciating Shell's successful integration of the BG Group acquisition and surge in its cash flows, the covering analyst remains concerned over slower oil production growth due to asset sales.
Per the Zacks analyst, strong focus on the low-cost and lucrative Permian Basin will help Pioneer Natural combat the rise in exploration expenses.
Per the Zacks analyst, Arrow's alliance with companies like Cypress and buyouts including that of UBM enable it to enter new markets, diversify and broaden its portfolio, thus boosting its top-line.
Per the Zacks Analyst, Dun & Bradstreet will benefit from its high-margin business model and strong product portfolio.
New Upgrades/h6
Per the Zacks analyst, CyberArk's strategic acquisitions like Conjur, investments in product suite and go-to-market sales strategies are driving both its top and bottom lines.
Per the Zacks analyst, the partnership between AutoNation & Waymo, will benefit the former as well as its stores will be utilized for repairing and maintaining Waymo's self-driving hybrid vehicle flee
Per the Zacks analyst, Michael Kors' buyout of Jimmy Choo will help diversify portfolio and tap global markets. Further, in order to drive top-line it has been focusing on global store expansion.
Per the Zacks analyst, CyberArk's strategic acquisitions like Conjur, investments in product suite and go-to-market sales strategies are driving both its top and bottom lines.
Per the Zacks analyst, the partnership between AutoNation & Waymo, will benefit the former as well as its stores will be utilized for repairing and maintaining Waymo's self-driving hybrid vehicle flee
Per the Zacks analyst, Michael Kors' buyout of Jimmy Choo will help diversify portfolio and tap global markets. Further, in order to drive top-line it has been focusing on global store expansion.
New Downgrades/h6
The Zacks analyst is bearish on persistently falling Mineral Nutrition arm sales, which may mar Phibro Animal's top line in the coming quarters. Unfavorable currency movements is an added headwind.
Per the Zacks analyst, Donaldson's sales will continue to be hurt by prolonged weakness in the gas turbine market. Further, its Industrial Filtration Solutions business is also witnessing soft demand.
Per the Zacks analyst, declining comps and soft store traffic are primary concerns for Macy's. As a result, the company has been grappling with dwindling top and bottom lines for quite some time now.
The Zacks analyst is bearish on persistently falling Mineral Nutrition arm sales, which may mar Phibro Animal's top line in the coming quarters. Unfavorable currency movements is an added headwind.
Per the Zacks analyst, Donaldson's sales will continue to be hurt by prolonged weakness in the gas turbine market. Further, its Industrial Filtration Solutions business is also witnessing soft demand.
Per the Zacks analyst, declining comps and soft store traffic are primary concerns for Macy's. As a result, the company has been grappling with dwindling top and bottom lines for quite some time now.
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