Brian Nelson

Disney’s Top Line Growing as It Leverages Film Successes

by

Image Source: David Holt Media giant Disney has been executing well of late as it leverages its successful content into a broader scope of entertainment, but competition may be heating up related to its pending acquisition of Twenty-First Century Fox’s media assets. By Kris Rosemann Worldwide entertainment company Walt Disney (DIS) operates in four business segments: ‘Media Networks’ (cable and broadcast television networks, including ABC, ESPN and the Disney Channel), ‘Parks and Resorts’ (resorts in Florida, California, Paris and more), ‘Studio Entertainment’ (films under the Walt Disney Pictures, Pixar, Marvel, Lucasfilm and Touchstone banners), and ‘Consumer Products & Interactive Media’ (the licensing of trade names, characters and literary properties). The company’s ‘Media Networks’ operation is the largest portion of its … Read more

Top 5 Burning Questions on Gilead Sciences

by

Image Source: Gilead Lab We felt answers to a few burning questions pertaining to the abysmal first-quarter 2018 earnings release by Gilead Sciences would be of value to our readers. We are not in the least bit impressed by the earnings print, but we feel patience may be well rewarded. The Questions: 1. When will the decline in the Hepatitis C franchise abate? 2. Which new product will drive future revenue growth? 3. Will Cytokine Release Syndrome sink the potential of Yescarta? 4. How durable is Gilead’s HIV franchise? 5. What else is in Gilead’s pipeline? << Read our write-up on Gilead’s first-quarter 2018 results By Alexander J. Poulos Question Number 1 – When will the decline in the Hepatitis … Read more

Boeing’s Long-Term Strength Intact; Embraer Deal Nearing?

by

Image Source: Robert Sullivan Boeing’s first-quarter report was highlighted by stable top-line growth, impressive bottom-line expansion, and increased full-year guidance. The long-term health of its business is supported by its massive backlog of unfulfilled deliveries. By Kris Rosemann Former simulated Dividend Growth Newsletter idea Boeing (BA) turned in a solid first quarter report April 25, and the drivers of its long-term strength remain fully intact as it continues to generate impressive levels of free cash flow and pursue a deal with Embraer’s (ERJ) commercial aviation operations. Revenue in the first quarter grew 6% on a year-over-year basis thanks to higher commercial deliveries, defense contract volume and services growth. The company’s GAAP operating margin in the period expanded more than 2 … Read more

Omega’s First-Quarter Results Not Terrible; Dividend Still Intact

by

Image Source: Omega Healthcare, March 2018 Investor Presentation Omega Healthcare is a healthcare real estate investment trust (REIT) that has been battling concerns within its customer base regarding rent payments. Just how healthy its customer line-up truly is will likely play out in coming years, but for now, management is leaving the dividend intact. Shares yield 9%+ at the time of this writing. By Brian Nelson, CFA We’ve been concerned about the healthcare REIT arena ever since healthcare REIT HCP (HCP) slashed its payout in late 2016, “Dividend Aristocrat No More: HCP Cuts Its Payout,” leaving behind its long-term track record of consecutive annual dividend increases and the coveted Dividend Aristocrat nameplate. Omega Healthcare (OHI) has been one that we … Read more

Soft Guidance Weighs on Booking Holdings Despite Solid First Quarter

by

Image Source: Luca Conti You may have read this sentiment before: shares of Booking Holdings, formerly Priceline, are facing pressure following a solid quarterly report as management continued its habit of issuing conservative quarterly guidance. By Kris Rosemann Shares of simulated Best Ideas Newsletter idea Booking Holdings (BKNG) faced selling pressure following its first quarter report, which came after the close May 9, as Mr. Market was disappointed once again by management’s second quarter guidance, a dynamic that has played out multiple times in recent years for the company formerly known as Priceline. Nevertheless, Booking Holdings turned in solid first quarter results as room nights booked grew 13% from the year-ago period, and gross bookings advanced 21%. Consolidated revenue climbed … Read more

Generic Drug Deflation Continues to Hamper Cardinal Health and AmerisourceBergen

by

A severe case of rampant generic drug deflation continues to hamper the share prices of Cardinal Health and AmerisourceBergen. We are monitoring the drug deflation numbers posted by the drug wholesalers as a key gauge of the investment merits of the group. By Alexander J. Poulos Key Takeaways Our interest in the drug-distribution industry centers on the group’s highly-predictive revenue model and the strong competitive positions of many underlying participants, emanating from their difficult-to-replicate distribution networks. The drug distribution industry is currently an oligopoly with McKesson, Cardinal Health and AmerisourceBergen controlling over 90% of the business. Generic drug price deflation continues to have a noticeable impact on the drug distribution industry as witnessed by the poor performance during the past … Read more

Realty Income Occupancy Highest in More Than a Decade

by

Image source: Realty Income Simulated Dividend Growth Newsletter portfolio idea Realty Income delivered a solid first quarter 2018 report that included impressive occupancy rates, steady adjusted funds from operations growth, and ongoing dividend expansion. By Kris Rosemann As concerns over what the long-term outlook for retail truly is weigh on many retail REITs, Realty Income (O) is not slowing down. Instead, the company is focused on finding the right tenants in the highest quality spaces, and it may just pay off for the REIT as it ended the first quarter of 2018 with its highest quarter-end occupancy rate in more than ten years at 98.6%. To put some context behind that figure, a mere 75 of its 5,326 properties were … Read more

Gilead Sciences at the Crossroads; HIV and Oncology Franchises Promising

by

Image Source: Gilead Sciences’ first-quarter 2018 results The loss of a key revenue-generating molecule is a tough, yet oftentimes manageable, portion of a pharma entity’s overall life cycle. Gilead Sciences is in the midst of a key turnaround as the loss of revenue from its Hepatitis C franchise is beginning to abate, while new novel treatments embark on the early stages of their respective revenue cycles. That said, we’d like to see traction in its HIV and oncology franchises, and perhaps the addition of a new franchise to the portfolio, or we will sour on the stock long-term. By Alexander J. Poulos Key Takeaways We are not at all surprised by the continued decline in revenue posted by Gilead’s HCV … Read more

Oil Majors Benefit from Higher Energy Resource Prices

by

Exxon Mobil, ConocoPhillips, and Chevron reported improved earnings and cash flow during the first quarter of 2018, thanks largely to higher realized energy resource pricing. The group may be better positioned for further bottom-line expansion moving forward as volume growth is expected to continue over the course of the year. By Kris Rosemann Key Takeaways Crude oil markets continue to improve, and higher realized prices are benefitting major oil producers, but geopolitical uncertainty and strong growth in US production continue to cast shadows over the space. The unpredictable nature of commodity prices, and the geopolitical uncertainty that sometimes drives them, will never go away. Exxon Mobil’s earnings and free cash flow generation improved thanks to higher realized prices, and its … Read more

Growth Continues at Bristol-Myers; Eliquis Fantastic

by

Image Source: Bristol-Myers Bristol-Myers Squibb continues to put up nice revenue growth as demand for Eliquis is coming in better than expectations. The company’s hopes to win first-line therapy in combination therapy for non-small cell lung cancer have been dealt a severe blow, however. We haven’t liked Bristol-Myers’ share-price performance of late and remain on the sidelines. However, we are watching its equity closely for addition to the simulated newsletter portfolios. By Alexander J. Poulos Key Takeaways We remain astounded by the stellar growth of Eliquis as the product remains a runaway blockbuster for Bristol-Myers. The growth of Eliquis has surpassed our most optimistic expectations as it is now the market leader. We believe the growth in Opdivo is far … Read more