Top Analyst Reports for AT&T, Philip Morris & Square
Wednesday, September 23, 2020
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 AT&T (T), Philip Morris International (PM) and Square (SQ). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
AT&T shares' underperformance of the Zacks Wireless National industry in the year-to-date period (-27% vs. -3.5%) reflects the market's negative outlook for the business given competitive challenges on the wireless side and secular issues on the wirlines/Time Warner side, in addition to a debt-heavy balance sheet. But the Zacks analyst believes that AT&T is well placed to benefit from the streaming services of its newly launched HBO Max.
The company is committed to a three-year financial framework with sustained investments and debt-reduction efforts. However, AT&T is witnessing a steady decline in linear TV subscribers, legacy services and wireline division.
Continued cord-cutting remains a perennial challenge as consumers increasingly cancel pay TV packages for cheaper streaming options. As it tries to woo customers with discounts, freebies and cash credits, margins tend to fall. Spectrum crunch in a saturated wireless market is another operational headwind.
AT&T intends to deploy a standards-based, nationwide mobile 5G network to spur growth. The company expects to gain a competitive edge through edge computing services that offer the flexibility to better manage data traffic.
Shares of Philip Morris have gained +7.6% over the past year against the Zacks Tobacco industry’s rise of +0.5%. The Zacks analyst believes that the company has been benefiting from its pricing power, which also aided its second-quarter 2020 results. During the quarter, both top and bottom lines beat the consensus mark.
Notably, favorable pricing variance was an upside, though it was countered by adverse volume/mix, mainly stemming from low cigarette volumes. The company has been battling soft cigarette volumes for a while due to rising health consciousness and stern regulations.
Apart from this, management does not expect a near-term recovery in the duty-free business due to travel-related uncertainties amid the pandemic. Also, a delay in minimum price enforcement in Indonesia is a concern. All said, revenues are likely to decline in 2020. Nonetheless, strength in RRPs, especially IQOS, is expected to offer respite.
Square shares have gained +236% over the past six months against the Zacks Internet Software industry’s rise of +93.6% on the back of gains from strong Cash App engagement and its growing active customer base.
Further, growing bitcoin revenues owing to robust Cash App are contributing well to the top-line. Furthermore, strong adoption of Cash Card is a major positive. Additionally, the company’s strengthening momentum in online channels and growing card-not-present GPV are expected to remain tailwinds. Moreover, robust online products, such as Square Online Store, Invoices, Virtual Terminal and eCommerce API are expected to accelerate the GPV growth in the near term.
However, weak momentum across seller ecosystem owing to COVID-19 led shelter-in-place restrictions is a major concern. Further, declining unit sales of hardware devices is an overhang. Also, rising product development expenses are risks.
Other noteworthy reports we are featuring today include Zoom Video Communications (ZM), Royal Dutch Shell (RDS.A) and Vale (VALE).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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
Per the Zacks analyst, Zoom Video is benefiting from the coronavirus-induced remote working and Internet-based education wave.
The Zacks analyst believes that Shell's position as a major supplier of LNG should benefit its long-term cash flow growth but is worried over its reserve replacement ratio of just 76%.
Per the Zacks analyst, Vale is well poised to gain from high iron ore prices, lower debt levels, and focus on lowering costs and improving quality and productivity.
The Zacks analyst is upbeat about INSPIRIS RESILIA aortic valve's strong momentum despite the pandemic.
Per the Zacks analyst, a strong rise in demand for the company's varied defense products leads to organic growth.
Per the Zacks analyst, solid traction of Emerson's Automation Solutions segment, fueled by robust backlog level and healthy project bookings, will drive its sales.
Per the Zacks analyst, the company's solid retirement business has generated substantial premiums, which in turn drove the top line.
According to the Zacks analyst, Dow is well placed to benefit from cost synergy savings and productivity initiatives and its investment in high-return growth projects.
The Zacks analyst is impressed with the rise in revenues from rentals of flight equipment.
Per the Zacks analyst, Navient's efforts to drive operational efficiency through cost-control measures are encouraging. Also, the company is focused on growth opportunities to boost overall business.
The Zacks analyst is concerned about the weakness in Landstar's truck-transportation segment, thanks to softness in freight demand caused by the coronavirus outbreak.
Per the Zacks analyst, Stitch Fix is grappling with elevated SG&A expenses. This is hurting the company's bottom line, evident from a wider-than-expected loss per share in fourth-quarter fiscal 2020.
Per the Zacks analyst, Plexus is suffering from end-market volatility. Soft aerospace and defense end-market and moderating demand for critical healthcare products are likely to hurt top-line growth.
Click to get this free report
Zoom Video Communications, Inc. (ZM): Free Stock Analysis Report
VALE S.A. (VALE): Free Stock Analysis Report
ATT Inc. (T): Free Stock Analysis Report
Square, Inc. (SQ): Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report
Philip Morris International Inc. (PM): Free Stock Analysis Report
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.