Top Research Reports for Union Pacific, AT&T & Blackstone

Friday, September 23, 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 Union Pacific Corporation (UNP), AT&T Inc. (T) and Blackstone Inc. (BX). 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 >>>

Union Pacific shares have outperformed the Zacks Transportation - Rail industry over the past year (+2.6% vs. -2.1%). UNP's strong free cash flow generating ability supports its shareholder-friendly activities. The company hiked dividend twice in 2021. In May 2022, UNP further upped its quarterly dividend by 10%.

The uptick in overall volumes as labor woes ease is an added positive. The railroad operator is also active on the buyback front. Management expects share repurchases in 2022 to be in line with the 2021 levels.

However, escalation in fuel costs as oil prices move north is worrisome. This phenomenon induced a 20% rise in the operating expenses during first-half 2022. Fuel costs surged 82% in the period. Fuel costs are likely to be high in the September quarter as well. Results will be out on Oct 20. High capital expenditures may also be a downside.

(You can read the full research report on Union Pacific here >>>)

AT&T’s shares have declined -41.7% over the past year against Verizon's -27.8% decline and -16.8% pullback in the S&P 500 index. The company is struggling with a steady decline in its legacy telephony Internet and wireline services. High-speed Internet revenues are also contracting due to a decline in the legacy digital subscriber line. With the divesture of WarnerMedia, AT&T must build upon its core businesses to improve its value proposition as spectrum crisis and cord-cutting remain challenges.

However, AT&T is witnessing solid subscriber momentum. A customer-centric business model, is providing the company with healthy growth in its postpaid wireless business alongside a lower churn rate and higher-tier unlimited plans.

The company is actively investing in key areas of 5G and fiber and adjusting its business according to the evolving market scenario to fuel long-term growth. While optimizing operations, it is aiming to increase efficiencies to lower operating costs.

(You can read the full research report on AT&T here >>>)

Blackstone’s shares have declined -33.3% over the past year against the Zacks Financial - Miscellaneous Services industry’s decline of -27.2%. The company’s elevated operating expenses are expected to hurt the company's bottom line in the near term. Our estimates for total expenses (GAAP) suggest a CAGR of almost 17% over the next three years.

Additionally, lower chance of sustainability of its capital deployment activities (given the volatile nature of its earnings) remains another major near-term concern and hence makes us apprehensive. However, Blackstone remains well-poised to benefit from its strong fund-raising ability, revenue mix and global footprint.

The buyout of DCI is expected to further enhance its digital capabilities. Additionally, continued net inflows are expected to support Blackstone's assets under management (AUM) growth, going forward. Our estimates for total AUM indicate a rise of 8.5% for 2022.

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

Other noteworthy reports we are featuring today include The Southern Company (SO), Gilead Sciences, Inc. (GILD), and Waste Management, Inc. (WM)

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

Dividends & Buybacks Aid Union Pacific (UNP), Cost Woes Stay

AT&T (T) Rides on Solid Subscriber Momentum, Unlimited Plans

Fund-Raising Ability Aids Blackstone (BX), High Costs Ails

Featured Reports

Southern Company (SO) Buoyed by Regulated Customer Growth
The Zacks analyst believes that an increase in Southern's regulated business customer base will support its revenue growth but is concerned over timing and cost overrun of the Vogtle project.

Biktarvy Fuels Gilead (GILD) Amid Generic Competition
Per the Zacks analyst, strong performance from flagship HIV therapy Biktarvy and contribution from the oncology franchise boost Gilead as some other drugs face generic competition and slowdown.

Focused Differentiation Aids Waste Management (WM), Debt Ails
Per the Zacks analyst, differentiation through capitalization of extensive assets ensures long-term profitable growth for Waste Management. A highly leveraged balance sheet remains a concern.

Pioneer Natural (PXD) Banks On Oil-Rich Permian Basin Assets
The Zacks analyst believes that Pioneer Natural's one-million-plus high-quality acreages in the Permian Basin will drive long-term oil production growth. Yet, rising production costs are concerning.

Improving Fees and Commissions Aid Arthur J. Gallagher (AJG)
Per the Zacks analyst, Arthur J. Gallagher is poised to grow on improving fees and commissions that in turn is driving organic revenues growth. However, rising expenses weighing on margin concerns.

Competitor's Product Recall Aids ResMed (RMD), Mask Sales Up
The Zacks analyst is upbeat about a voluntary recall of CPAP and ventilator devices by ResMed's competitor leading to a demand shift toward ResMed products. Mask sales climb on patient flow recovery.

Expansion Efforts to Aid Restaurant Brands (QSR), Costs High
Per the Zacks analyst, Restaurant Brands is likely to benefit from unit expansion efforts, menu innovation and loyalty program. However, a rise in labor and commodity costs is a concern.

New Upgrades

Cadence (CDNS) Benefits from Product Portfolio & Acquisitions
Per the Zacks analyst, Cadence's performance is gaining from robust demand for the company's diversified product portfolio. Synergies from recent acquisitions also bode well.

Capacity Expansion, Cost Reduction to Aid Albemarle (ALB)
According to the Zacks analyst, Albemarle should gain from its actions to boost its global lithium derivative capacity. Its cost-saving actions will also support margins.n

Investment, Appalachian Assets Aid National Fuel Gas (NFG)
Per the Zacks analyst National Fuel Gas' systematic investment to further strengthen its midstream operations and strong presence in the Appalachian region will drive its performance.

New Downgrades

Chip Crisis, Cost Inflation Hurt Standard Motor (SMP) Margins
Per the Zacks analyst, ongoing chip crisis has delayed material sourcing for Standard Motor. Also, with steel and aluminum being pricey, manufacturing costs have increased, thereby dampening margins.

Input Cost Inflation Hurts HanesBrands' (HBI) Gross Margin
Per the Zacks analyst, HanesBrands is battling input cost inflation. The company's second-quarter adjusted gross margin was 37.8%, down almost 120 basis points due to inflation among other reasons.

NVIDIA (NVDA) Hurt by Weakening Demand, Supply Chain Issues
Per the Zacks analyst, NVIDIA is hurt by weakening demand for its gaming chips and ongoing supply-chain issues which are negatively impacting its data center end market business.

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Southern Company The (SO) : Free Stock Analysis Report
 
Blackstone Inc. (BX) : Free Stock Analysis Report
 
AT&T Inc. (T) : Free Stock Analysis Report
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
Waste Management, Inc. (WM) : Free Stock Analysis Report
 
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