Wednesday, October 3, 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 Cisco (CSCO), Procter & Gamble (PG) and Citigroup (C). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Cisco 's shares have outperformed the Zacks Computer Networking industry over the past year, gaining +46.6% vs. +42.9%. The Zacks analyst thinks Cisco is benefitting from expanding footprint in the rapidly growing security market which represents a significant growth opportunity.
Strong contributions from acquisitions, security, Infrastructure Platforms and applications remains a positive. Strengthening collaboration portfolio which now includes Webex Teams and AI-based Accompany bodes well. Partnerships with Telenor, Apple, IBM, Microsoft and Google Cloud are positive. Divestiture of a portion of Cisco's NDS video assets is likely to mitigate the sluggishness witnessed in other product segment.
Further, Duo Security acquisition should help the company expand its IT and data security businesses, which will only become more vital going forward. However, weakness in switching and routing is a headwind. Ongoing transition to subscription-based model will continue to hurt the top line.
(You can read the full research report on Cisco here >>> ).
Shares of Buy-ranked Procter & Gamble have gained +8.2% over the past three months, outperforming the Zacks Soap and Cleaning Materials industry, which gained +4.6% over the same period. The Zacks analyst thinks that this increase was driven by an impressive earnings surprise history, which continued in fourth-quarter fiscal 2018, marking its 13th consecutive beat.
The company's focus on product improvement, packaging and marketing initiatives, and productivity cost-savings plan bodes well. It is benefiting from higher demand for skincare products, along with fabric and home care products.
However, the company is witnessing strained margins owing to increased commodity and shipping costs, adverse currency, higher business investments and aggressive pricing from private-label products amid intense competition. Moreover, sales remain muted due to weak demand and lower prices.
While the company expects recently announced price increases to help rebound sales and margins, its likely impact on demand and consumption is a worry. Also, softness in the grooming and baby care businesses remains a concern.
Citigroup 's shares have outperformed the Zacks Major Regional Banks industry over the past six months (+3.5% vs. -0.9%). Further, the company possesses an impressive earnings surprise history, beating expectations in all the trailing four quarters.
The Zacks analyst thinks the company's restructuring and streamlining efforts, strategic investments in core business, lower tax rate and expense management will likely support profitability. The recent capital plan approval reflects strong capital position.
Yet several issues, including litigation burden, are cause for concern. Nevertheless, with rising rates, margin pressure seems to be easing. Notably, the bank expects third-quarter 2018 fixed income and equity trading revenues likely to be flat to slightly higher on a year-over-year basis.
Other noteworthy reports we are featuring today include IBM (IBM), Qualcomm (QCOM) and General Electric (GE).
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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, despite soft industry conditions and stiff competition, Qualcomm aims to retain leadership in the chipset market with technological achievements and innovative product launches.
Per the Zacks analyst, portfolio-restructuring moves will likely prove beneficial to General Electric's growth. However, the lackluster Power segment's business remains a drag.
Per the Zacks analyst, Toyota's plan of shifting production to new cost-saving platforms by 2020 will help it to cut costs by 20%. However, frequent vehicle recalls are adding to expenses.
A strong portfolio of upstream projects will help BP boost oil and gas production. Moreover, rising free cashflow reflects healthy operations, per the Zacks analyst.
Per the Zacks analyst, BlackRock's focus on inorganic growth routes along with efforts to strengthen the iShares and ETF operations are favorable. However, escalating costs is an unfavorable factor.
Per the Zacks analyst, Ford's $11.5 billion fitness initiatives have opened up cost and efficiency opportunities.
Per the Zacks analyst, Conagra is set to keep gaining from acquisitions.
Per the Zacks analyst, Schwab's focus on improving trading revenues by taking several measures and higher interest rates aid revenues. Enhanced capital deployment plan reflects strong balance sheet.
Per the Zacks analyst, Progressive is poised for growth on solid policies in force and sturdy retention ratio driving premiums higher.
The Zacks analyst likes the company's efforts to reward shareholders and modernize its fleet. Unit revenue growth is an added positive.
Per the Zacks analyst, IBM is having a tough time, given the ongoing time-consuming business model transition to cloud. Also, stiff competition in most of the markets is a major concern.
Allergan faces loss of exclusivity for key drugs like Namenda XR and Restasis, which worries the Zacks analyst. The first generic version of Namenda is out while that of Restasis may come out soon
Per the Zacks analyst, Moody's efforts to grow inorganically are likely to keep costs high, thus hurting bottom line growth. Also, stiff competition across the credit rating industry remains a woe.
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