Thursday, May 9, 2019
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 Cigna (CI), EOG Resources (NYSE:EOG) and Northrop Grumman (NOC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Cigna’s shares have lost -8.5% over the past year, underperforming the Zacks Multi-Line Insurance industry, which has declined -1.2% over the same period. However, Cigna’s first-quarter earnings surpassed expectations by 4.3% but declined 5.1% year over year. The Zacks analyst thinks Cigna’s acquisition of Express Scripts (NASDAQ:ESRX) is likely to fuel long-term growth.
The company’s expanding international business provides diversification. Its group disability and other businesses are expected to perform well, led by personalized and affordable solutions. Its growing membership has aided revenue growth.
Along with top-line growth, Cigna has been able to maintain bottom-line profitability as well. Its strong capital position enables investment in business. An increase in leverage might pose financial risks. Rise in operating expenses may weigh on margins.
Shares of Buy-ranked EOG Resources have declined -21% over the past year, outperforming the Zacks Oil & Gas E&P Industry, which has slumped -33.5% over the same period. EOG Resources holds premium acreages in the Permian, Bakken and Eagle Ford shale plays, among others, where it has identified 9,500 premium undrilled wells that could lend access to 9.2 billion barrels of oil equivalent estimated potential reserves.
In the Eagle Ford alone, EOG Resources has identified 2,300 locations that will drive the firm’s oil production. The Zacks analyst likes the fact that the company has been focused on consistently returning cash to shareholders.
Taking into account the latest quarterly dividend hike, the upstream energy player has managed to hike dividend payments by almost 72% since 2017. Notably, the upstream energy firm recently reported strong first-quarter 2019 earnings, thanks to higher oil equivalent production volumes. Moreover, the company emphasizes on reducing cash operating expenses and expects to lower costs through 2019, thereby boosting its bottom line.
Buy-ranked Northrop Grumman’s shares have underperformed the Zacks Aerospace Defense industry over the past year, losing -11% over the period versus the industry’s -1.4% decline. Northrop Grumman ended first-quarter 2019 on a mixed note. While its earnings surpassed expectations, revenues missed the consensus mark. However, results remained impressive on a year-over-year basis.
The Zacks analyst likes the fact that as a major U.S. defense contractor, Northrop Grumman continues to enjoy a strong position in the Air Force, Space & Cyber Security programs. In a bid to boost its growth trajectory, Northrop Grumman completed the acquisition of rocket-maker Orbital ATK for $9.2 billion last year. Increasing international opportunities are expected to boost the company’s margin growth.
Currently, the company is getting ready to move into full-rate production for Triton. However, it continues to incur high operating expenses on account of increasing product costs. This may disappoint investors.
Other noteworthy reports we are featuring today include Sherwin-Williams (SHW), Baxter (BAX) and Eaton Corp (NYSE:ETN).
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While Sherwin-Williams should gain from synergies of the Valspar acquisition, hefty costs related to the buyout will weigh on its FY19 earnings, per the Zacks analyst.
Per the Zacks analyst, Baxter's Renal Care segment continues to boost its topline.
Per the Zacks analyst, BB&T's inorganic expansion strategy, steady loan growth, higher rates and solid asset quality will aid profitability, while mounting operating costs remains a near-term concern.
Per the Zacks analyst, strength in global brands led to AB InBev's organic sales growth in the first quarter, backed by improving key market trends and premiumization in the majority of its markets.
Per the Zacks analyst, Eaton's presence in 175 countries across the globe and organic growth due to improvement in end-market conditions will continue to boost performance.
Per the Zacks analyst, the KeyW acquisition, focus on infrastructure, aerospace and cybersecurity bodes well for Jacobs.
Per the Zacks analyst, HubSpot's expanding portfolio of Hubspot One holds promise.
Vertex's new cystic fibrosis (CF) drug, Symdeko is contributing significantly to CF revenue growth. The Zacks analyst is encouraged by the fast-moving studies on triple combination CF regimens.
Per the Zacks analyst, numerous divestitures have released funds to invest in core areas. The buyout of Validus and Ellipse should expand business.
Per the Zacks analyst, MasTec is poised to gain from record 18-month backlog of $8 billion, fiber deployments and the beginning of 5G rollouts along with recent strategic acquisitions.
Per the Zacks analyst, Teradata is being adversely impacted by lower consulting revenues due to its focus on targeting high-margin megadata companies in the long haul.
Per the Zacks analyst, rise in supply of office real estate assets in Cousins Properties' key markets will likely hurt rent growth. Also, a huge development pipeline escalates operational risks.
Per the Zacks analyst, lower production volume of vehicles in North America, Europe and China hampers American Axle's revenues.
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