Top Analyst Reports for Royal Dutch Shell, Morgan Stanley & Aetna

Thursday, October 12, 2017

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 Royal Dutch Shell (RDS.A), Morgan Stanley (MS) and Aetna (AET). 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 >>>

Royal Dutch Shell shares are up +12.6% so far in 2017 vs. the +1.8% gain for the Zacks Integrated Oil industry. The integrated behemoth's upstream unit have benefited from the steady oil recovery, while production contribution of BG assets continues to be strong.

The supermajor has also been able to reduce operating costs and progress on its large divestment program. Importantly, the company generated a surge in cash flows during the most recent quarter, allowing it to cut debt and cover its cash dividend.

However, with oil unable to stay above the psychologically-critical $50 threshold for more than a few days, Shell's near-to-medium term revenue outlook remains cloudy. The Zacks analyst is also apprehensive that the group's disposal program could affect production, which fell 11% sequentially in second quarter. Hence, the analyst advises investors to wait for a better entry point before buying shares in Europe's largest oil company.

(You can read the full research report on Royal Dutch Shell here >>>).

Morgan Stanley's shares have outperformed the Zacks Investment Bank industry, over the last six months (+20.8% vs. +16.4%). The performance was supported by the company’s impressive earnings surprise history. It surpassed the Zacks Consensus Estimate for earnings in all the trailing four quarters.

The company’s efforts to offload its non-core assets to lower balance sheet risk and cost saving initiatives (Project Streamline) will likely lead to improvement in profitability. However, continued fall in corporate loan balances remains a near-term concern. This is significantly hurting the company's interest income growth.

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

Buy-rated Aetna’s shares outperformed the Zacks Health Maintenance Organization industry year to date, increasing +26% vs. a gain of +24.7%. The Zacks analyst expects the company to derive long-term growth from its Government business. Cost-reduction initiatives and growing ACO collaborations pave the way for long-term growth.

A strong balance sheet is another positive. Its International expansion is also perceived as an opportunity in the face of increased regulation in the U.S. Following strong second-quarter results, Aetna rasied its earnings guidance which cements investors' confidence in the company. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 6.3% upward over the last 90 days.

Aetna has, however, been incurring losses in its public exchange business and has been exiting exchanges to avoid losses from this business. Furthermore, its membership growth remains under pressure. Increasing medical benefit ratios are also likely to hurt margins.

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

Other noteworthy reports we are featuring today include Johnson Controls International (JCI), CSX (CSX) and LyondellBasell Industries (LYB).

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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

Royal Dutch Shell (RDS.A) Aided by BG Acquisition Synergies

Cost Control Aids Morgan Stanley (MS), Interest Income a Woe

Strong Medicare and International Business Aids Aetna (AET)

Featured Reports

Anadarko (APC) Benefits from its presence in DJ Basin & GOM

Per the Zacks analyst strong production from Anadarko's international assets and its high quality assets in Delaware, DJ Basin and Deepwater Gulf of Mexico will drive its performance

Acquisitions, Box Demand Drive Packaging Corporation (PKG)

Per the Zacks analyst, Packaging Corporation of America's acquisition of Sacramento Container's assets will boost its operations. Rise in demand in boxes due to e-commerce growth also bodes well.

Coal Volume Growth Aids CSX Corp. (CSX), High Debt a Woe

The Zacks analyst likes the improving coal volumes, which is boosting the company's top line. Efforts to reward shareholders also impress.

News Corp (NWSA) Boosting Digital Offerings to Lift Revenue

Per the Zacks analyst, News Corp is augmenting its revenue streams through strategic buyouts, operational enhancement and enhanced digital offerings.

Juniper (JNPR) Hurt by Product & Customer Mix, Dim Q3 View

Per the Zacks analyst, higher mix of low-margin switch business and expansion into Asia Pacific has negatively impacted Juniper's product and customer mix.

Akamai (AKAM) Drives on Expanding Cybersecurity Offerings

Per the Zacks analyst, expanding security portfolio including Kona, Prolexic, Bot Manager and Web Application Protector is the key catalyst.

Unit Sale Aids Johnson Controls (JCI), Commodity Price Hurts

Per the Zacks analyst, increased focus on high-growth markets while sale of low-margin business, aids Johnson Controls.

New Upgrades

Ethylene Expansion, HDPE Project Buoy LyondellBasell (LYB)

The Zacks analyst believes that LyondellBasell's ethylene expansion initiatives and HDPE project on the U.S. Gulf Coast should boost its annual production capacity and improve margins.

Buyout Deal With NxStage Buoys Fresenius Medical (FMS)

The Zacks analyst is bullish on Fresenius Medical's agreement to acquire NxStage Medical for $2 billion, which is set to close by 2018. The takeover will boost sales at the Care Coordination segment.

Zoetis' (ZTS) Strong Companion Animal Portfolio Boost Growth

Per the Zacks analyst, Zoetis is poised for growth driven by Apoquel, Cytopoint and Simparica. The recent acquisition of Nexvet Biopharma will further Zoetis' chronic pain management franchise.

New Downgrades

Cosan Limited (CZZ) Suffers From High Debt, Costs of Sales

Per the Zacks Analyst, Cosan Limited's (CZZ) high debt of R$20.5 billion might raise its financial obligations and hurt its profitability. Also, rising cost of sales is an issue.

High Financing Costs & Litigation Issues Hurt Navient (NAVI)

Per the Zacks analyst, regulatory claims and litigation issues owing to Navient's practices in handling loans remains a concern. Also, increasing financing costs on volatility in markets is a headwind

Lower Dayrates & Utilization for Floaters Hurt Ensco (ESV)

Reduced rig operating days following lower utilization of floaters continues to hurt Ensco's net cashflow from operations, according to the Zacks analyst.

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Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Morgan Stanley (MS) : Free Stock Analysis Report
 
LyondellBasell Industries NV (LYB) : Free Stock Analysis Report
 
Johnson Controls International PLC (JCI) : Free Stock Analysis Report
 
CSX Corporation (CSX) : Free Stock Analysis Report
 
Aetna Inc. (AET) : Free Stock Analysis Report
 
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