Top Analyst Reports for Chevron, IBM & Medtronic

Monday, April 1, 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 Chevron (CVX), IBM (IBM) and Medtronic (MDT). 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 >>>

Chevron’s shares have gained +9.7% in the past year, outperforming the Zacks Integrated Oil industry's +3.4% increase as its financial results have greatly improved over the period. In fact, Chevron's free cash flow and upstream production for 2018 hit a record.

The Zacks analyst thinks the company’s existing oil and gas development project pipeline is among the best in the industry, targeting a CAGR of 3-4% through 2023 thanks to the planned expansion in the Permian Basin. Moreover, growing free cash flow should enable Chevron to deliver stable and rising dividend in the foreseeable future.

However, there are worries of a drop in its downstream earnings that have been cutting into overall gains from rising E&P income. The massive capex might also play a spoilsport. Hence, investors are advised to wait for a better entry point before buying shares in Chevron.

(You can read the full research report on Chevron here >>>).

Shares of IBM have outperformed the broader market on a year-to-date basis, increasing +24.2% vs. the S&P 500’s +13.1% gain. IBM provides advanced information technology solutions, including computer systems, software, storage systems and microelectronics.

The Zacks analyst thinks IBM’s improving position in hosted cloud, security and analytics bodes well for investors. The RedHat acquisition, aimed at enhancing its hybrid cloud platform, is likely to pave the way for IBM's growth prospects. However, softness in Systems revenues and technology & cloud platforms remain a concern.

Stiff competition does not bode well for the Storage hardware segment. Strategic imperatives will take some more time to report meaningful growth and offset weakness in the traditional business. IBM’s ongoing heavily time-consuming business model transition to cloud is a headwind. Additionally, ballooning debt levels have been troubling IBM over time.

(You can read the full research report on IBM here >>>).

Medtronic’s shares have outperformed the Zacks Medical Products industry in the past year, gaining +17.5% vs. +15.5%. The Zacks analyst thinks Medtronic is successfully registering sustainable growth across major groups and regions, in addition to displaying successful achievement of synergy targets.

The company is focusing on geographical diversification of its businesses. This apart, the company has been seeing certain favorable developments in its Diabetes business. The updated 2019 guidance with raised EPS view increases investors’ confidence on the stock.

Meanwhile, the recently-closed acquisition of Mazor Robotics, which is expected to fortify Medtronic's position in spine surgery, is a major positive. Yet, the declining CRHF segment raises concerns. Escalating costs and expenses continue to weigh on Medtronic’s bottom line.

(You can read the full research report on Medtronic here >>>).

Other noteworthy reports we are featuring today include GlaxoSmithKline (GSK), lululemon (LULU) and Carnival (CCL).

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

See Stocks Today >>

Mark Vickery
Senior Editor

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

Chevron (CVX) Aided by Permian Output, Downstream Woes Hurt

Adoption of Cloud, Security & Analytics Solutions Aids IBM

Mazor Buy Aids Medtronic's (MDT) Spine Arm, CRHF Prospects Bright

Featured Reports

Glaxo's (GSK) Pipeline Growing Amid Generic Woes for Advair

The Zacks analyst likes Glaxo's efforts to boost its pipeline, especially oncology. However, a generic of its top-selling drug, Advair was approved in February which can erode its sales in 2019.

lululemon's (LULU) Tracks Well With E-commerce Growth Plans

Per the Zacks analyst, lululemon is enhancing e-commerce channel by investing in new product categories and website. E-commerce penetration was 26% in fiscal 2018, ahead of fiscal 2020 target of 25%.

BlackBerry (BB) Rides on Strong Software Business, and Cylance Buyout

Per the Zacks analyst, solid software business led by a comprehensive service portfolio should enhance BlackBerry's operating cash flow. The buyout of Cylance will help stoke its competitive position.

American Eagle's (AEO) Sturdy Comps Trend to Fuel Top Line

Per the Zacks analyst, American Eagle has a solid comparable sales trend, delivering growth for 16 straight quarters. Strategic efforts and ability to boost market share for brands should drive sales.

Dividends & Buybacks Buoy Trinity (TRN) Amid Debt Woes

The Zacks analyst appreciates the company's efforts to reward shareholders through dividends & buybacks.

RH (RH) Banking on Strategic Measures, Soft Sales Hurt

Although RH's new operating platform and focus on lifting profit margins are raising profitability, weakness in the luxury housing market raises concerns, per the Zacks analyst

Pipeline Development to Boost Immune Design (IMDZ)

Per the Zacks analyst, Immune Design's efforts on pipeline development are appreciable.

New Upgrades

Credit Card Business Strength, Loans Aid Capital One (COF)

Per the Zacks analyst, strength in credit card and online banking businesses, higher loans and deposits, and strong balance sheet position will continue supporting Capital One's profitability.

Domestic High Margin Assets, Investments Aid Devon (DVN)

Per the Zacks analyst, Devon's consistent investments to develop its high margin domestic oil assets will continue to boost performance.

High Premiums & Declining Expenses Aid RenaissanceRe (RNR)

Per the Zacks analyst, RenaissanceRe's rising gross premiums driven by the Casualty and Specialty and the Property segments and declining expenses backed by operational efficiency should drive growth.

New Downgrades

Rising Net Cruise Costs Likely to Hurt Carnival (CCL)

Per the Zacks analyst, higher net cruise costs and political uncertainty in Germany and France are likely to hurt Carnival. During fiscal 2019, it expects net cruise costs per ALBD to be up 0.5%.

Uncertainty in Europe, High Expenses to Hurt LKQ Corp. (LKQ)

Per the Zacks analyst, economic uncertainty in Europe is dampening LKQ Corp.'s revenue generation. Also, escalating rent, utilities, freight & fuel expenses are likely to hamper the company's margin.

Higher Operating Costs Hurt Jefferies Financial's (JEF) Growth

Per the Zacks analyst, elevated operating expense levels (mainly due to rise in compensation and technology costs) will likely continue to hamper Jefferies Financial's bottom line growth to an extent.

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Medtronic PLC (MDT) : Free Stock Analysis Report
 
lululemon athletica inc. (LULU) : Free Stock Analysis Report
 
International Business Machines Corporation (IBM) : Free Stock Analysis Report
 
GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Carnival Corporation (CCL) : Free Stock Analysis Report
 
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