Monday, October 15, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Amazon (AMZN), Broadcom (AVGO) and Lockheed Martin (LMT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Amazon 's shares have outperformed the broader market year to date by a wide margin. (the stock is up +53% vs. the +3.6% gain for the S&P 500 as a whole). The Zacks analyst thinks Amazon continues to ride on its robust performance in the retail space on the back of its vast e-commerce platform, fast delivery services, Prime program, increasing engagement of Prime customers and solid third-party selection.
Moreover, Amazon's expanding distribution footprint bodes well for Prime. Further, Amazon Web Services (AWS) also continues to perform well, owing to its expanding enterprise customer base. Notably, AWS generates much higher margins than retail, positively impacting Amazon's profitability.
Additionally, the company's advertising business is also gaining traction. However, an anticipated increase in fulfillment costs prior to the holiday season can put margins under pressure. Moreover, intensifying competition in the cloud computing market from the likes of Microsoft Azure and Google cloud is a significant headwind.
(You can read the full research report on Amazon here >>> ).
Shares of Buy-ranked Broadcom have underperformed the Zacks Electronics - Semiconductors industry over the past year, losing -+5.5% vs. a +0.6% increase. However, the Zacks analyst likes Broadcom's broad-based product portfolio which serves multiple applications to diversified end markets. This is likely to aid it in gaining significant market share.
The company is also benefiting from solid demand for its wireless solutions which positions it well to address the needs of rapidly growing technologies like IoT and 5G. Strong ties with leading OEMs across multiple target markets will help the company to gain key insights into the requirements of customers.
Nonetheless, the company faces intensifying competition and integration risks due to frequent acquisitions. The company's leveraged balance sheet and customer concentration continue to be headwinds.
Buy-ranked Lockheed Martin 's shares have gained +2.7% over the past one year, underperforming the Zacks Aerospace Defense sector, which has gained +14.6% over the same period. The Zacks analyst emphasizes that Lockheed Martin, being the largest defense contractor in the world, enjoys strong demand for its high-end military equipment in domestic as well as international markets.
Consequently, strong order growth has been a primary growth driver for this company. Lately, the company has been witnessing strong demand for its equipment, ranging from C-130J aircraft in France and Germany to helicopters in Poland to missile defense systems in the Asia-Pacific, Europe, and Middle East regions. It continues to be a strong cash generator, helping it to take important cash deployment decisions. However, it faces intense competition for its broad portfolio of products and services in both domestic and international markets.
Other noteworthy reports we are featuring today include Procter & Gamble (PG), BCE Inc. (BCE) and American Electric (AEP).
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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 Trendsand Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Per the Zacks analyst, easing margin pressure with the rise in rates is likely to continue to aid State Street's top-line. Yet, higher restructuring and compensation related costs might curb profits.
Per the Zacks analyst, SunTrust is poised for revenue growth, given the rise in rates along with loan growth. Yet, its high exposure toward real estate loans is a concern and might hurt financials.
The Zacks analyst is impressed by the company's strong growth in passenger unit revenues despite struggling with escalating fuel prices.
Per the Zacks analyst, expansion in international markets is a key aspect of lululemon's long-term growth strategy.
Per the Zacks analyst, favorable markets, investments in e-commerce and digital capabilities will likely drive growth for Grainger.
Per the Zacks analyst, BCE remains poised to benefit from steady investments in broadband network, accelerating wireless services, improving customer service and a competitive cost structure.
Per the Zacks analyst, American Electric's incremental investments in renewable generation and transmission projects along with an expanding renewable portfolio bode well for its future earnings.
Per the Zacks analyst, P&G's margins are pressured due to higher commodity and shipping costs, adverse currency and increased higher brand investments. This is likely to persist throughout 2018.
Per the Zacks analyst, Fiserv's core banking products and services are part of a highly competitive market. The pressure to remain technologically updated and high debt are concerns.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.