Top Research Reports For Union Pacific, Lowe's & Gilead
Zacks Investment Research | Aug 22, 2019 02:33AM ET
Thursday, August 22, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Union Pacific (UNP), Lowe's (LOW) and Gilead (GILD). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
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Union Pacific’s shares have underperformed the Zacks Rail industry (+22.2% vs. +19%) year to date. The Zacks analyst thinks Union Pacific's initiatives to reward its shareholders are very encouraging. Since November 2017, the company hiked its quarterly dividend payout five times.
The latest dividend hike came in July, when the company increased its quarterly payout by 10.2% to 97 cents a share. It is also active on the buyback front. Union Pacific's efforts to check costs in a bid to drive the bottom line are also impressive. In fact, the company’s operating ratio has been improving mainly due to its cost-cut plans. The metric is expected to improve further going forward.
However, sluggish freight revenues represent a major headwind for the company. Moreover, its high debt levels are worrisome. The massive capex also might play a spoilsport. Hence, investors are advised to wait for a better entry point before buying Union Pacific’s shares.
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Shares of Lowe's have outperformed the Zacks Building Products - Retail industry over the past three months, gaining +14.4% vs. +9.7%. The Zacks analyst thinks the company is gaining from key sales initiatives like focus on Pro customers, better product presentation and in-store merchandising, among others.
Such efforts drove sales in second-quarter fiscal 2019, wherein top and bottom lines were strong. While earnings gained from higher sales and lower SG&A costs, sales were backed by solid spring demand, robust execution of its holiday event, and improvement in Paint and Pro businesses. Also, Lowe’s experienced comparable sales growth in all 15 U.S regions.
However, supply-chain woes and adverse mix continued to hurt gross margin, which contracted in the quarter. Also, the company is exposed to competition. Nonetheless, solid demand in the home improvement space and Lowe’s retail fundamentals keep it well positioned.
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Gilead’s shares have outperformed the Zacks Biotech industry year to date, gaining +3.1% vs. a decline of -1.2%. Gilead reported better-than-expected results for the second quarter of 2019 on strong sales of Biktarvy. It also raised its annual sales guidance.
The Zacks analyst thinks Gilead’s HIV franchise maintains momentum on continued uptake of Genvoya and Odefsey, and the rapid adoption of Biktarvy. The company has shifted focus to the HIV franchise, and newer avenues like CAR-T therapy and NASH, owing to a decline in sales of the HCV franchise.
Gilead’s collaboration with Novo Nordisk (CSE:NOVOb) for NASH treatments is a step in the right direction, given its recent debacles. The company suffered a setback with the failure of a late-stage study on selonsertib in patients with compensated cirrhosis due to NASH. However, the HIV franchise is also expected to face stiff competition.
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Other noteworthy reports we are featuring today include Target (TGT), EOG Resources (NYSE:EOG) and Emerson Electric (NYSE:EMR).
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Note: Our Director of Research 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
Today's Must Read/h6
Featured Reports/h6
Per the Zacks analyst, Target's focus on enhancing omni-channel capacities, coming up with new brands, remodeling stores and expanding same-day delivery options are likely to fuel top-line growth.
Huge inventory of premium drilling wells in the Eagle Ford shale will contribute to EOG Resources' oil production. But, escalating lease and well operating costs are a concern, per the Zacks analyst.
Per the analyst, strong performance of Emerson's Automation Solutions segment fuelled by strong brownfield projects & MRO activities should drive its revenues.
Per the Zacks analyst, Baker Hughes is well positioned to capitalize on contracts to manufacture turbines, being used in LNG export terminals.
Per the Zacks analyst, while HSBC Holdings' efforts to expand in Asia and U.K. will strengthen its performance and increase market share, it might lead to higher costs, which will hurt bottom line.
Per the Zack analyst, Markel is poised to grow on the strength of its underwriting, investment and Markel Ventures operations and better pricing.
The Zacks analyst believes that Marathon Oil (NYSE:MRO)'s high-performing U.S. resource plays will fuel its production growth.
Per the Zacks analyst, Target's focus on enhancing omni-channel capacities, coming up with new brands, remodeling stores and expanding same-day delivery options are likely to fuel top-line growth.
Huge inventory of premium drilling wells in the Eagle Ford shale will contribute to EOG Resources' oil production. But, escalating lease and well operating costs are a concern, per the Zacks analyst.
Per the analyst, strong performance of Emerson's Automation Solutions segment fuelled by strong brownfield projects & MRO activities should drive its revenues.
Per the Zacks analyst, Baker Hughes is well positioned to capitalize on contracts to manufacture turbines, being used in LNG export terminals.
Per the Zacks analyst, while HSBC Holdings' efforts to expand in Asia and U.K. will strengthen its performance and increase market share, it might lead to higher costs, which will hurt bottom line.
Per the Zack analyst, Markel is poised to grow on the strength of its underwriting, investment and Markel Ventures operations and better pricing.
The Zacks analyst believes that Marathon Oil (NYSE:MRO)'s high-performing U.S. resource plays will fuel its production growth.
New Upgrades/h6
Per the Zacks analyst, Alibaba continues to benefit from its strong core e-commerce business, new investments in Asia, international growth opportunities and growing cloud computing services.
The Zacks analyst is bullish about Tandem's strong international rollout of t:slim X2 insulin pump. Huge global demand for diabetes care devices on favorable market trends is another growth driver.
Per the Zacks analyst, a number of acquisitions of nursing operations and real estate made by the company have expanded its business portfolio, which in turn has driven revenue growth.
Per the Zacks analyst, Alibaba continues to benefit from its strong core e-commerce business, new investments in Asia, international growth opportunities and growing cloud computing services.
The Zacks analyst is bullish about Tandem's strong international rollout of t:slim X2 insulin pump. Huge global demand for diabetes care devices on favorable market trends is another growth driver.
Per the Zacks analyst, a number of acquisitions of nursing operations and real estate made by the company have expanded its business portfolio, which in turn has driven revenue growth.
New Downgrades/h6
Kimberly-Clark incurred higher input costs of $80 million from raw materials and distribution in the second quarter of 2019. Per the Zacks analyst, rising input costs remains a threat to bottom line.
Per the Zacks analyst, Liberty Global continues to suffer from continued customer losses in the video segment primarily due to stiff competition in the markets it operates.
Per the Zacks analyst, increasing expenses, mainly due to rise in compensation costs will likely hurt Eaton Vance's bottom-line growth. Also, the company's high debt levels make us apprehensive.
Kimberly-Clark incurred higher input costs of $80 million from raw materials and distribution in the second quarter of 2019. Per the Zacks analyst, rising input costs remains a threat to bottom line.
Per the Zacks analyst, Liberty Global continues to suffer from continued customer losses in the video segment primarily due to stiff competition in the markets it operates.
Per the Zacks analyst, increasing expenses, mainly due to rise in compensation costs will likely hurt Eaton Vance's bottom-line growth. Also, the company's high debt levels make us apprehensive.
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