Tuesday, February 25, 2020
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 Johnson & Johnson (JNJ), Morgan Stanley (MS) and Sinopec (SNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Johnson & Johnson’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+7.2% vs. +5.3%). The Zacks analyst believes that J&J is witnessing significant generic/biosimilar headwinds in the Pharma unit.
However, the unit is performing above-market levels, supported by contribution from new drugs like Tremfya and successful label expansion of cancer drugs like Imbruvica and Darzalex and immunology drug, Stelara. J&J is also making rapid progress with its pipeline and line extensions.
It gained FDA approval for two new drugs in 2019, Balversa and Spravato. Several pivotal data readouts and regulatory milestones are expected in 2020. Headwinds like biosimilar/generic competition and pricing pressure remain. J&J faces numerous lawsuits, which allege personal injuries to patients caused by the use of its products. These lawsuits have resulted in uncertainty.
Shares of Morgan Stanley have gained +23.7% in the past six months against the Zacks Investment Banking industry’s rise of +16.8%. The Zacks analyst believes that the company’s planned acquisition of E*Trade Financial for $13 billion will further support Wealth Management business.
Improving economy and focus on corporate lending operation are expected to continue supporting profitability. The company has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters.
Although dependence on capital markets to generate trading and investment banking revenues, lower rates and continuously rising operating expenses are major near-term concerns, initiatives to further strengthen investment management operation are likely to support top-line growth. Also, enhanced capital deployment activities reflect a strong balance sheet position and will enhance shareholder value.
Sinopec’s shares have lost 9.2% over the past three months against the Zacks Integrated Oil industry’s fall of 7.3%. The Zacks analyst believes that Sinopec’s natural gas business has immense potential for growth over the coming years as China intends to move from coal to natural gas.
Sinopec is among the largest integrated energy players in China, with significant presence in upstream and downstream businesses. Further, the company has made major progress in identifying economically-viable oil & gas reserves. A huge scale of prospective new reserves was discovered in a number of prolific oil & gas resources like Sichuan Basin & Jiyang Depression.
However, the disruption in China’s economy owing to the outbreak of coronavirus will continue to hurt the firm’s refining business. With declining demand for chemical products, the firm’s chemicals operations are expected to take a hit.
Other noteworthy reports we are featuring today include Blackstone Group (BX), American Electric Power (AEP) and Kinder Morgan (KMI).
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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
Per the Zacks analyst, Blackstone is poised to capitalize from its fund-raising ability, higher assets balance, acquisitions and global reach.
Per the Zacks analyst, expanding renewable generation portfolio should boost American Electric’s growth.
The Zacks analyst expects the PHP Pipeline project to fetch Kinder Morgan stable and additional fees-based revenues.
Per the Zacks analyst, its growing top-line driven by increasing admissions has led to significant growth of the company.
Per the Zacks analyst, systematic investments in infrastructure development projects bolster Sempra Energy. Its credit rating has been reduced in recent past that may affect its credibility.
Oasis Outsourcing adds to Paychex’s top line. However, the Zacks analyst is worried about rising expenses due to PEO insurance costs, buyouts, investment in sales, marketing and product development.
Per the Zacks Analyst, company’s systematic capital investment plan for infrastructure development bolsters growth prospects. However, stringent utility regulations could be detrimental to growth.
Per the Zacks Analyst, SunPower is storage pipeline expansion and strategies to consolidate its position will drive earnings. It also witnesses strong demand for its varied product offering.
Per the Zacks analyst, eBay is benefiting from strengthening managed payments offerings which deliver better shopping experience. This in turn is aiding the company’s customer momentum.
Per the Zacks analyst, consistent increase in investment income over the years has contributed to the company’s topline. Its solid balance sheet enables investment in business.
The Zacks analyst is concerned by HollyFrontier’s cost escalation associated with maintenance downtime and unplanned refinery shutdowns.
Per the Zacks analyst, Shopify’s increasing spend on fulfillment network, infrastructure and platform, amid stiff competition in the e-commerce market is likely to weigh on profitability.
Per the Zacks analyst, Scientific Games is negatively impacted by intensifying competition and a highly leveraged balance sheet.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.