Wednesday, June 1, 2022
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 Eli Lilly and Company (LLY), ConocoPhillips (COP), and The PNC Financial Services Group, Inc. (PNC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see
all of today’s research reports here >>>
Eli Lilly
shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+59.6 % vs. +26.0%) on the back of Lilly’s solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. Lilly’s revenue growth is being driven by higher demand for drugs like Trulicity, Taltz, and others. It is regularly adding promising new pipeline assets through business development deals. It has an exciting pipeline of potential new medicines including tirzepatide for type II diabetes and donanemab for early Alzheimer’s disease. Both candidates have multibillion-dollar sales potential.
However, generic competition for several drugs, rising pricing pressure in the United States mainly on key drug, Trulicity, and price cuts in some international markets like China, Japan and Europe are some top-line headwinds.
(You can
read the full research report on Eli Lilly here >>>
)
ConocoPhillips
shares have modestly outperformed the Zacks Oil and Gas – Integrated – United States industry over the past year (+96.1% vs. +89.5%). The company holds a bulk of acres in the unconventional plays of Eagle Ford shale, Permian Basin and Bakken shale. The Zacks analyst believes that significant opportunities are there for the firm in the Bakken Shale, where it owns about 750 undrilled locations that could provide access to huge reserves.
Notably, the company has revised its expected 2022 return of capital to shareholders upward to $10 billion, reflecting an increase from the prior-mentioned $8 billion. COP projects its 2022 production at 1.76 MMBoe/d, suggesting an improvement from 1.6 MMBoe/d reported last year. Also, the company’s balance sheet is significantly less leveraged than the industry it belongs to. Its massive liquidity position will enable it to pay off the short-term debt of $1,160 million. Given these tailwinds, ConocoPhillips is considered a preferred energy firm to own now.
(You can
read the full research report ConocoPhillips here >>>
)
PNC
shares have declined -8.0% over the past year against the Zacks Banks – Major Regional industry’s decline of -12.4%. The Zacks analyst believes that mounting expenses will likely keep denting the bottom line in the near term. Though the Fed has hiked interest rates and signaled more hikes this year, the overall low interest rate environment might strain the bank’s net interest margin (NIM) in the near term. The lack of diversification in the loan portfolio is concerning.
However, Economic growth and robust pipelines are expected to support loan and deposit balances, aiding its balance sheet. Planned investments in inorganic expansion strategies will strengthen its banking franchise and diversify its business mix. Sound capital deployment activities are other positives.
(You can
read the full research report on PNC here >>>
)
Other noteworthy reports we are featuring today include Equinix, Inc. (EQIX), Edwards Lifesciences Corporation (EW), and Freeport-McMoRan Inc. (FCX).
Sheraz Mian
Director of Research
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>>>
Today’s Must Read
Eli Lilly (LLY) Boasts Solid Diabetes & Alzheimer’s Pipeline
ConocoPhillips (COP) Banks On Oil-Rich Bakken Shale Assets
Inorganic Growth Aids PNC Financial (PNC) Despite High Costs
Featured Reports
Acquisitions Aid Equinix (EQIX) Amid Intense Competition
Per the Zacks Analyst, acquisitions will expand its data-center footprint and enhance interconnection offerings. However, stiff competition is expected to unfavorably impact its pricing power.
Edwards (EW) Rides on Solid TAVR Arm Growth Amid Forex Woes
The Zacks analyst is impressed with Edwards’s TAVR segment growth in the first-quarter 2022 led by increased adoption of the SAPIEN 3 Ultra platform. Foreign exchange woes remain a concern.
Exploration Progress, Debt Reduction to Aid Freeport (FCX)
Per the Zacks analyst, Freeport will gain from its progress in exploration activities to expand production capacity and efforts to deleverage balance sheet amid headwind from higher costs.
Marathon (MPC) Gains from Sale of Speedway Retail Unit
The Zacks analyst likes Marathon’s sale of Speedway business, which provided a much-needed cash infusion and came with a supply agreement ensuring a steady revenue stream.
AIG Benefits From Strong Revenues and Cost-Control Measures
Per the Zacks analyst, higher premiums combined with rate hikes in the Commercial lines business are driving revenues. Cost-saving efforts are aiding margins.
CrowdStrike (CRWD) Rides on Product Strength, Acquisitions
Per the Zacks analyst, CrowdStrike is gaining from solid contributions of its growth-oriented products, primarily Falcon platform. Also, strategic buyouts like SecureCircle and Humio are a positive.
Western Digital (WDC) Gains from Higher Demand for Storage
Per the Zacks analyst, Western Digital’s performance is being driven by higher demand from cloud customers especially for nearline products. Supply chain woes and higher costs remain headwinds.
New Upgrades
W.R. Berkley (WRB) Set to Grow on Solid Insurance Business
Per the Zacks analyst, W.R. Berkley’s Insurance business is set to grow on rate increases, reserving discipline, and improving premiums from international unit supported by the emerging markets.
Business Transformation Plan Benefits Louisiana-Pacific (LPX)
Per the Zacks analyst, solid housing and repair/remodel activity, strategic business transformation, effective cash management and inorganic moves have been benefiting Louisiana-Pacific.
Nexeo Buyout, Productivity Actions Aid Univar (UNVR)
Per the Zacks analyst, Univar will benefit from significant synergies of the Nexeo Solutions acquisition. Its cost and productivity improvement actions should also lend support to margins.
New Downgrades
Urban Outfitters (URBN) Witnesses Supply-Chain & Other Issues
Per the Zacks analyst, Urban Outfitters has been battling supply-chain challenges. In addition, inflationary pressures from inbound freight costs and raw materials have been hurting performance.
Rising Inflation & Supply Chain Woes Ails Hibbett (HIBB)
Per the Zacks analyst, Hibbett has been reeling under supply-chain issues, rising inflation, the absence of stimulus and geopolitical challenges. These factors are likely to hurt FY23 results.
Wildfire expenses and weak solvency impacts PG&E Corp (PCG)
Per the Zacks Analyst, higher wildfire mitigation expenses might weigh on the company’s operational results in the coming days. Also, its weak solvency position remains a bottleneck.
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