Thursday, June 13, 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 Visa (V), Netflix (NASDAQ:NFLX) and Accenture (NYSE:ACN). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa’s shares have outperformed the Zacks Financial Transaction Services industry in the past year, gaining +27.7% vs. a +19.7% increase. The Zacks analyst thinks the company is gaining from consistent growth in payments volume, cross-border volume and processed transactions.
Numerous strategic acquisitions and alliances plus technology upgrades and effective marketing have paved the way for long-term growth and a consistent increase in revenues. The acquisition of Visa Europe is a long term growth strategy for the company. Its international business has been expanding and adds diversification benefits.
Visa is well-poised to gain from the growing electronic payment processing and a solid brand name. Its strong capital position facilitates business investments. Nevertheless, high client incentives and operating expenses weigh on its operating margins. Adverse foreign exchange volatility imparts instability to the company’s earnings.
Shares of Netflix have gained +29.1% year to date, outperforming the Zacks Broadcast Radio and Television industry’s rally of +22% during the same period. The Zacks analyst thinks the company’s strong subscriber addition rate reflects growing appeal of the streaming platform, primarily driven by a solid content portfolio.
This is also helping the company counter competition from the likes of YouTube, HBO and Amazon (NASDAQ:AMZN) Prime video. Reportedly, the company is set to launch video games based on its popular shows like Stranger Things. The initiative is expected to create a buzz that is likely to drive the stock. However, Netflix’s weak guidance for second-quarter U.S. streaming paid net additions, due to a price hike, is a concern.
Moreover, high streaming content obligations and increased spending related to the gaming endeavor is expected to hurt cash flow generation. In fact, higher cash burn rate in 2019 is a major headwind.
Accenture’s shares have outperformed the Zacks Consulting industry year to date, gaining +30.9% vs. +28.7%. The Zacks analyst thinks Accenture has been steadily gaining traction in its outsourcing and consulting businesses. It has been strategically enhancing its cloud and digital marketing suite through acquisitions and partnerships.
The company’s strong operating cash flow has helped it reward its shareholders in the form of dividends and share repurchases. Further, it has enabled Accenture to pursue opportunities in areas that show true potential. Accenture is currently a global leader in the Salesforce implementation service space.
On the flip side, Accenture continues to face pricing pressure due to significant competition from strong companies like Genpact, Cognizant (NASDAQ:CTSH) and Infosys. Global presence exposes Accenture to foreign currency exchange rate fluctuations. Buyout-related integration risks can impact the company’s organic growth.
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Per the Zacks analyst, efforts to develop its portfolio beyond oncology into MS and haemophilia is impressive. Rise in demand for new drugs and label expansion of existing drugs are other positives.
Per the Zacks analyst, focus on growing e-commerce sales and digital capabilities, favorable markets and successful turnaround of its Canada business will drive growth.
Per the Zacks analyst, Smucker's top line is likely to continue benefitting from acquisitions.
Per the Zacks analyst, Fortinet is benefiting from strong global demand for Security Fabric offerings which is aided by digital transformation and security refresh cycle across most industries.
Per the Zacks analyst, strong traction of RBC Bearings' aerospace business fueled by higher defense and aerospace OEM demand should continue to drive sales.
The Zacks analyst likes the increase in passenger revenues at Spirit Airlines on the back of strong demand for air travel.
Per the Zacks analyst, Canadian Solar has a strong pipeline of projects and carries out various acquisitions to further consolidate its position.
Per the Zacks analyst, performance of Cosentyx, Entresto, Kisqali and Promacta drive Novartis. The separation of the Alcon business will allow Novartis to invest resources on its legacy business.
The Zacks analyst is optimistic about Hasbro's turnaround as its U.S. and Canada segment returned to growth in the first-quarter 2019. Hasbro is also witnessing improvement in commercial market.
Per the Zacks analyst, CNA Financial's history of maintaining the combined ratio at favorable levels, even in a tough operating environment, indicates its superior underwriting discipline.
The Zacks analyst believes that rising operating expenses (owing to higher general and administration costs) remain a near-term concern for BlackRock amid a tough operating environment.
The Zacks analyst believes that Conocophillips' profit levels will suffer from surging production costs and operating expenses.
Per the Zacks analyst, significant amount of overseas operations suffer from unfavorable currency fluctuations. An aggressive acquisition strategy poses integration risks.
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