Friday, August 23, 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 U.S. Bancorp (USB), Duke Energy (DUK) and Glaxo (GSK). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
U.S. Bancorp’s shares have outperformed the Zacks Major Banks industry over the past three months, gaining +1.9% vs. a decline of -1.4%. Further, the company possesses an impressive earnings surprise history, having beaten expectations in three of the trailing four quarters.
The company’s second-quarter 2019 results reflect elevated interest and fee income, partly mitigated by higher costs and provisions. The Zacks analyst thinks U.S. Bancorp will likely get support from its solid business model, core franchise, relatively higher interest rates and diverse revenue streams.
Further, strategic acquisitions and rising loans and deposit balances have strengthened the company's balance sheet. However, escalating costs due to its ongoing investments in technology and likely increase in legal expenses remain concerns. Also, significant exposure to commercial loans remains a headwind for the company.
(You can read the full research report on U.S. Bancorp here >>>).
Shares of Duke Energy have outperformed the Zacks Electric Power industry in the past year, gaining +12.2% vs +12.1%. Duke Energy ended second-quarter 2019 on a solid note, with both earnings and revenues exceeding expectations. It invests heavily in infrastructure and expansion projects. It expects to invest about $37 billion in its overall growth projects in the 2019-2023-time frame.
The Zacks analyst thinks this investment plan will drive earnings base growth in its combined electric and gas businesses by approximately 6%, over the next five years. However, the company already has a notable long-term debt of $54.3 billion as of Jun 30, 2019, compared with $51.1 billion at 2018 end.
Such massive debt levels can turn out to be a major headwind for the company, going forward. Moreover, cleaner energy generation may lead Duke Energy to incur high environmental compliance costs, which may weigh on its bottom line.
(You can read the full research report on Duke Energy here >>>).
Glaxo’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry year to date, gaining +8.6% versus the industry’s decline of -1.2%. Glaxo’s earnings and sales beat estimates in Q2. The Zacks analyst thinks the company’s three newest products — Trelegy Ellipta, Shingrix and Juluca — are doing well, particularly Shingrix.
These products coupled with restructuring in the Consumer Health unit have strengthened Glaxo’s competitive position. We are encouraged by the company’s initiatives to focus on its oncology pipeline.
However, stiff competition, genericization and pricing pressure on key drugs in the Pharma segment are hurting sales. Particularly, pricing pressure and competitive dynamics are hampering sales of Glaxo’s respiratory products.
Importantly, a generic version of its top-selling drug Advair has been launched, which is significantly eroding the drug’s sales. Also, competitive pressure on HIV drugs is rising in 2019.
(You can read the full research report on Glaxo here >>>).
Other noteworthy reports we are featuring today include Ross Stores (ROST), Keysight (KEYS) and Xylem (XYL).
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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 Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Loan Growth Supports U.S. Bancorp (USB), Cost Woes Linger
Glaxo's (GSK) Pipeline Growing Amid Generic Woes for Advair
Investment Plan Aids Duke Energy (DUK), Commodity Prices hurt
Strength in Categories Aid Ross Stores' (ROST) Sturdy Comps
Per the Zacks analyst, Ross Stores witnessed robust comps in the past few quarters driven by strength across categories, except ladies.
High Demand of 5G Design & Test Solutions Aid Keysight (KEYS)
Per the Zacks analyst, robust adoption driven by high demand for 5G design and test solutions primarily from telecom vendors, and a strong pipeline for new business bookings are key catalysts.
Xylem's (XYL) Solid Orders A Boon, European Weakness Hurts
Per a Zacks analyst, Xylem's solid orders as well as healthy backlog are boon. However, weakness in European markets is predicted to adversely impacts sales.
Duke Realty (DRE) to Ride on High Industrial Property Demand
Per the Zacks analyst, Duke Realty is well poised to benefit from high demand for industrial real estate space amid stable economy and e-commerce boom.
Solid Demand to Aid International Flavors (IFF), Costs Ail
Per the Zacks analyst, growing global demand for flavors and fragrances, productivity initiatives and acquisitions will drive growth despite raw material cost inflation.
Clinical Research Arm Aids PRA Health (PRAH), Direct Costs Up
PRA Health has been gaining consistently from strength in its Clinical Research unit. However, the Zacks analyst is apprehensive about rising direct costs, which might weigh on the margin.
Lower Traffic & Currency Woes Weigh on Gap's (GPS) Top-Line
Per the Zacks analyst, soft store traffic and adverse currency are hurting Gap's top-line that lagged estimates for third straight time.
Haemonetics (HAE) Gains Ground on Growing Plasma Business
Per the Zacks analyst, high end-market demand for biopharmaceuticals should continue driving Haemonetics' plasma unit growth. The ongoing development and launch of NexSys PCS should compliment growth.
Solid Mortgage Insurance in Force Aids Radian (RDN)
Per the Zacks analyst, Radian is poised to grow on solid mortgage insurance in force driven by a combination of continued level of persistency and an increase in new mortgage insurance business.
Project Pipeline, Acquisitions Aid Canadian Solar (CSIQ)
Per the Zacks analyst, Canadian Solar has a strong pipeline of projects and carries out various acquisitions and strategies to further consolidate its position on a global scale.
Change in Customer Use, Lack of Formal Deal Ail SABESP (SBS)
Per the Zacks analyst SABESP can suffer due to change in customer usage post the drought conditions, while lack of formal deal with few municipalities can lead to cancellation, impacting results.
Murphy USA (MUSA) Hurt by Weak Gasoline Prices
The Zacks analyst believes that the declining profitability for gasoline, attributable to a glut in supply, might continue to hamper Murphy USA's bottom line.
Increased SG&A Expenses a Worry for Best Buy's (BBY) Margins
Best Buy anticipates SG&A expenses to increase at a low single-digit rate in fiscal 2020. Per the Zacks analyst, this, along with investments in supply chain poses threats to the company's margins.
Xylem Inc. (XYL) : Free Stock Analysis Report
U.S. Bancorp (USB) : Free Stock Analysis Report
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report
GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
Duke Energy Corporation (DUK) : Free Stock Analysis Report
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