Thursday, January 4, 2018
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 Wal-Mart (WMT), Citigroup (C) and Qualcomm (QCOM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Wal-Mart’s shares have been strong performers lately, with the stock up +32% over the last six months, outperforming the S&P 500's +11.8% gain in the same time period. Wal-Mart Stores (NYSE:WMT), recently announced plans to drop the “hyphen” and “stores” from its name to officially emerge as an omnichannel retailer.
The company has been riding on its robust past record, which derives strength from constant e-commerce initiatives, like buyouts, alliances, surging grocery business and improved delivery systems. Thanks to these trends, along with solid traffic, Walmart’s third-quarter fiscal 2018 marked its ninth and 13th straight quarter of positive earnings surprise and comps growth, respectively.
Also, the company’s international business remains a growth driver. However, costs associated with technological and e-commerce investments; mix impact from growing e-commerce operations and a compelling pricing strategy have been hurting Walmart’s gross margin for a while now. Stiff competition and volatile consumer spending also pose threats.
Shares of Citigroup have underperformed the Zacks Major Banks industry over the last six months, gaining +8.9% vs +11.3%. Yet, the company boasts an impressive earnings surprise history. The company has surpassed expectations for earnings in all the trailing four quarters.
The Zacks analyst thinks the company’s restructuring and streamlining efforts, strategic investments in core business and expense management will likely support profitability going forward. Moreover, expansion of wealth management business in Australia will act as a tailwind.
Notably, following the recent Federal Reserve interest rate hike, Citigroup raised its prime lending rate from 4.25% to 4.50%. Yet, several issues, including litigation burden are cause for concern. Also, in spite of rising rates, margins are under pressure due to persistent decline in the company’s legacy holdings portfolio.
Qualcomm's shares have gained +26% over the last three months vs +11.2% for the Zacks Wireless Equipment industry. Qualcomm, Verizon and Ericsson (BS:ERICAs) jointly completed the first Massive MIMO (Multiple Input-Multiple Output) trial with a fully-compatible customer device. Qualcomm achieved a 5G data connection with the Snapdragon X50 5G modem chipset on 28GHz mmWave spectrum.
Qualcomm is teaming up with Verizon and Novatel Wireless for 5G NR mmWave technology trial. This marks Qualcomm’s leadership in 5G, chipset market and mobile connectivity. Qualcomm is extending a cash tender offer for its pending NXP Semiconductor deal.
Qualcomm rejected Broadcom (NASDAQ:AVGO)'s takeover offer on grounds of inadequacy. However, the company continues to receive charges for unfair business practices and licensing royalty payments. Regulatory disputes and aggressive competition in the mobile phone chipset market continues to bother.
Other noteworthy reports we are featuring today include S&P Global (SPGI), Sherwin-Williams (SHW) and Baxter (BAX).
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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>>>
While Cabot's cost management and attractive Marcellus program bode well, the Zacks analyst would prefer to wait for further natural gas price recovery before recommending investors purchase shares.
The Zacks analyst is optimistic about Frontier's growth prospects from the broadband services' expansion in rural areas. Decline in access lines and subscriber loss continue to hurt.
According to the Zacks analyst, ADP's dominant position in the payroll processing and HCM markets is driving growth. However, higher spending on new initiatives hurt profitability.
Per the Zacks analyst, continuous rise in Discover Financial's top line has been largely supported by its strong Direct Banking business.
Per the Zacks analyst, Bank of the Ozarks' organic and inorganic growth strategy and easing margin pressure remain impressive. However, rise in expenses remains a major near-term concern.
The Zacks analyst is bullish on Baxter's launch of oXIRIS set for continuous renal replacement therapy and sepsis management protocols.
Per the Zacks analyst, Lennar is well positioned to capitalize on the housing recovery given its diverse revenue mix and solid order growth.
Per the Zacks analyst, S&P Global's strategic portfolio restructuring initiatives for core focus, positive industry trends and global expansion in emerging markets are likely to drive growth.
The Zacks analyst likes its decision to focus exclusively on software business. Strong software sales is a huge positive. Its differentiated product portfolio also raises optimism in the stock.
The Zacks analyst believes that Sherwin-Williams should gain from synergies of the Valspar acquisition. Moreover, its actions to cut operating costs should also lend support to its margins.
Per the Zacks analyst, winding down of cost-reimbursable LNG project in Asia-Pacific region and rise in cost on IPL & Calpine power projects are weighing on Chicago Bridge & Iron's bottom line.
Per the Zacks analyst, rising demand for tech-savvy watches has been dragging down Fossil's traditional watch sales. This, alongside margin pressures, has compelled management to lower 2017 view.
The Zacks analyst is worried about the company's high operating expenses mainly due to increased research and development costs. This is likely to limit bottom-line growth going forward.
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