Top Research Reports for April 11: AAPL, WFC, T

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Tuesday April 11, 2017

Today's Research Daily features new research reports on 16 major stocks, including Apple (AAPL), Wells Fargo (WFC) and AT&T (T).

Buy-rated Apple shares have gained +22% over the last six months and have outperformed the broader market with the S&P 500 gaining +9.6% over the same period. The increase in iPhone demand caused by the launch of iPhone 7 and 7 Plus was the primary factor for such strong numbers. Also, "Services" revenues, which include App store, Apple Music and Apple Pay were impressive with App store sales in December alone topping $3 billion.

The buzz surrounding iPhone 8, which is already labeled a "super cycle," should allay investors fear about iPhone sales trajectory. However, macroeconomic headwinds in some key regions, most importantly in China along with increasing competition remain a concern. (You can read the full research report onApple here . )

Shares of Wells Fargo have gained +20.3% over the last six months, underperforming the Zacks Major Banks industry which has gained +26% over the same period. The bank has yet to fully recover from the scandal even after a $190-million settlement with regulators. Recently, the Board of Directors released the findings of the independent investigation into the company's retail banking sales practices and related matters which resulted in the compensation actions, among the largest in corporate history.

The new management team is making all the right moves, and further downside risks in the stock are low at this stage. But it will likely take a while for clouds to be fully lifted, though continued growth in loans and deposits and expansion moves should support its growth profile. Also, the company raised its prime lending rate to 4.00%, following the recent Fed interest rate hike, which is likely to alleviate margin pressure in the coming period. (You can read the full research report on Wells Fargo here. )

AT&T shares have lost -1.5% over the three months, but have still fared better than the Zacks Wireless industry and competitor Verizon, which have declined -2.7% and -7.9% over the same period. AT&T has decided to acquire Straight Path Communications to accumulate millimeter wave wireless spectrums for 5G wireless network. The AT&T-Time Warner deal gained European Union's approval but still awaits U.S. Justice Department's nod.

Market participants also appear to be satisfied with AT&T's strategic moves like the DirectTV purchase and the Time Warner deal even as Verizon's path seems muddled. That said, there is no shortage of issues facing the company, like a saturated wireless market where spectrum crunch is a big issue, persistent losses in access lines, and stringent regulatory mandates. (You can read the full research report on AT&T here. )

Other noteworthy reports we are featuring today include Microsoft (MSFT), Eli Lilly (LLY) and Dow Chemical (DOW).

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Mark Vickery

Senior Editor

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

Apple's (AAPL) iPhone & Services Business to Boost Revenues

Wells Fargo (WFC) Poised to Grow; Cost Woes Linger

AT&T (T) to Buy Straight Path Communications for 5G Wireless

Featured Reports

Edison International (EIX) Poised to Grow, Regulations Hurt

The Zacks analyst thinks Edison International's focus on transmission and distribution infrastructural development will boost its top line.

Southwest Airlines (LUV) March Traffic Up; RASM View Intact

The covering analyst is impressed by Southwest Airlines' investor as well as employee-friendly measures. Increased costs, however, are expected to hurt its bottom line in Q1.

Bed Bath & Beyond (BBBY) Tops Q4 Earnings, Sales; View Soft

The Zacks analyst thinks Bed Bath & Beyond's fourth quarter was driven by strong sales that gained from buyouts, new stores and higher comps.

Dow (DOW) Poised on Cost, Portfolio Actions Amid Headwinds

The covering analyst thinks that Dow should gain from its cost-cutting and portfolio management actions as well as strategic investments and cost synergies amid pricing and market-based headwinds.

Lilly (LLY) to Focus on New Drugs in 2017; Alimta Woes Remain

Lilly's new drugs are expected to see high revenues in 2017. However, the Zacks analyst feels Alimta will continue to be hurt by competition.

CBOE Holdings (CBOE) Poised to Grow on Compelling Portfolio

The Zacks analyst thinks diversified product portfolio, focusing on expanding proprietary product offering, extending global customer reaches and core competencies fuel CBOE's growth prospects.

Illinois Tool Works' (ITW) Growth Potential Solid, Runs Risks

Illinois Tool will likely benefit from its growing end markets, strategic initiatives and capital allocation policy. However, it runs risks from competition, forex issues and economic uncertainties.

New Upgrades

Diamond Offshore (DO) to Gain from Improving Oil Prices

Oil price is again approaching the $55 per barrel physiological mark. The Zacks analyst expects the improvement in the crude front to result in more drilling contracts for Diamond Offshore.

Becton (BDX) Poised on Acquisition of Caesarea Medical

The covering analyst is bullish on acquisition of infusion pump systems manufacturer Caesarea Medical Electronics. The recent FDA approval for the company's flow cytometer system is added positive.

Penske Automotive (PAG) Upgraded on Increasing Dealerships

The Zacks analyst thinks Penske Automotive is expected to grow due to its increasing network of dealerships. Moreover, recent acquisitions and focus on shareholder returns are also likely to benefit.

New Downgrades

Microsoft (MSFT) Acquires Deis, Invests in India's Flipkart

According to the Zacks analyst, the Deis acquisition expands Microsoft's container portfolio. Moreover, the investment in Flipkart will the boost company's position in India's e-commerce market.

Mondelez's (MDLZ) Weak Volumes Remain a Concern

The covering analyst stresses that Mondelez's volume trends have remained weak since 2014 due to volume erosion from higher pricing and category weakness because of lower demand.

BP Plc (BP) Continues to Suffer from Macondo Oil Spill Issue

The Zacks analyst believes that the 2010 Macondo oil spill incident is still affecting BP. To clear the huge litigation expenses related to the spill, BP sold some major operating assets.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Wells Fargo & Company (WFC): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

Eli Lilly and Company (LLY): Free Stock Analysis Report

Dow Chemical Company (The) (DOW): Free Stock Analysis Report

Apple Inc. (AAPL): 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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