Friday, June 2, 2023
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 Exxon Mobil Corporation (XOM), AstraZeneca PLC (AZN) and Netflix, Inc. (NFLX). 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 >>>
Exxon Mobil shares have outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+7.9% vs. -0.9%). This company’s bellwether status and an optimal integrated capital structure that has historically produced industry-leading returns make it a relatively lower-risk energy sector play. The firm has made more than 30 discoveries in offshore Guyana since 2015.
ExxonMobil also has a strong presence in the Permian Basin, the most prolific resource in the United States. It recently reported strong first-quarter earnings, thanks to solid contributions from the Energy Products business line. This was offset partially by lower earnings from upstream operations.
Also, weak industry margins and lower sales from the Chemical Products business line are hurting the energy major’s operations. Moreover, the integrated firm’s dividend yield is lower than the composite stocks belonging to the industry. As such, the stock warrants a cautious stance.
(You can read the full research report on Exxon Mobil here >>>)
Shares of AstraZeneca have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+13.3% vs. +9.0%). The company’s key drugs, mainly cancer medicines, Lynparza, Tagrisso and Imfinzi, should keep driving revenues. Its pipeline is strong with several phase III data readouts lined up for 2023.
It has also been engaged in external acquisitions and strategic collaborations to boost its pipeline while investing in geographic areas of high growth like emerging markets. Cost-cutting efforts should drive earnings. The Alexion buyout strengthened its immunology franchise, adding several rare disease drugs that are boosting its top line.
However, AstraZeneca’s diabetes franchise faces stiff competition while pricing pressure hurts sales in the respiratory unit. Sales are slowing down in its key market, China.
(You can read the full research report on AstraZeneca here >>>)
Shares of Netflix have outperformed the Zacks Broadcast Radio and Television industry over the year-to-period (+36.7% vs. +16.4%) as the company is widely seen as having come out of ahead of its competitors in the 'streaming war'. The company is expected to continue dominating the, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content.
However, Netflix is suffering from stiff competition in the streaming space from the likes of Apple, Amazon Prime Video, HBO Max, Disney+, Peacock, Paramount+ and TikTok. It launched paid sharing in four countries during the first quarter.
Although it witnessed cancellations at the initial stage of the launch, engagement gradually improved. Netflix’s leveraged balance sheet and a higher streaming obligation are concerns. Additionally, unfavorable forex is expected to hurt operating income in the second quarter of 2023.
(You can read the full research report on Netflix here >>>)
Other noteworthy reports we are featuring today include American Express Company (AXP), 3M Company (MMM) and NetApp, Inc. (NTAP).
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
ExxonMobil (XOM) Gains From Discoveries at Stabroek Block
Cancer Drugs Aid AstraZeneca (AZN) Sales; Pipeline Strong
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Robust Revenues & Cash Flows Aid American Express (AXP)
Per the Zacks analyst, several growth-related initiatives such as product launches coupled with increased consumer spending aid revenue growth. Robust cash flows have enabled business investments.
End Market Strength Drives 3M Company (MMM), Amid Forex Woes
Per the Zacks analyst, strength in 3M's end markets, including electrical, automotive aftermarkets and abrasives is likely to drive its revenues. However, forex woes remain a concern.
Weak IT Spending Environment Ails NetApp (NTAP) Performance
Per the Zacks analyst, NetApp's performance was affected by weak IT spending environment. However, the company remains well-poised to gain from data-driven digital and cloud transformations.
QIAGEN (QGEN) Thrives on Verogen Buyout, Forex Woes Ail
The Zacks analyst is optimistic about acquisition of Verogen, fortifying QIAGEN's position in the fast-growing field of Human ID and forensics. Yet, foreign exchange woes remain a concern.
Strong Bookings Aid Norwegian Cruise (NCLH), High Cost Ail
Per the Zacks analyst, solid booking environment, robust onboard revenue generation and fleet-expansion efforts are aiding Norwegian Cruise. However, high cost and geopolitical tensions hurt.
Rates, Loans Aid Hancock Whitney (HWC), Asset Quality a Woe
Per the Zacks analyst, Hancock Whitney benefits from robust loans and deposit balances, business expansion initiatives and higher interest rates. Rising costs and weak asset quality are concerns.
Upbeat Air-Travel Demand Aids SkyWest (SKYW), High Costs Ail
Upbeat air-travel demand is driving SKYW's top line. The Zacks analyst is, however, worried about escalated fuel costs that are limiting bottom-line growth.
Solid Top Line, Strong Cash Flows Aid Unum Group (UNM)
Per the Zacks analyst, its strong revenues driven by higher overall persistency, disciplined sales trends have led to significant growth. Moreover, healthy balance sheet should drive long-term growth.
Solid Demand for its Storage Solutions Boost Sunpower (SPWR)
Per the Zacks analyst, with the solar-plus-storage market expanding, SunPower has been increasingly attaching its Helix and Equinox storage systems its solar systems, thereby boosting revenue growth
AMERISAFE (AMSF) Rides on Premium Growth & Policy Retention
Per the Zacks analyst, AMERISAFE's intensified focus on hazardous industries will keep fetching higher premiums. Also, its solid policy retention rates will provide a strong platform for growth.
Escalating Costs and Seasonality Trouble H&R Block (HRB)
Per the Zacks analyst, the increasing costs have been acting as a headwind to H&R Block's performance. The seasonality of the business adds to such friction.
Lionsgate (LGF.A) Suffers from Lower Spending By Streamers
Per the Zacks analyst, Lionsgate is suffering from lower spending on content by streaming platforms like Disney+ and Netflix amid rising macroeconomic challenges.
Volatile Capital Markets, Costs Hurt LPL Financial (LPLA)
Per the Zacks analyst, rising costs due to an increase in compensation costs will hurt LPL Financial's profits. Ambiguity over the performance of the capital markets might hamper commission revenues.
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