Friday, March 2, 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 Intuit (INTU), Express Scripts (ESRX) and Southwest Airlines (LUV). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Intuit 's shares have underperformed the Zacks Software industry over the last year, increasing +29.9% vs. a gain of +33.8%. However, Intuit reported encouraging Q2 results. Its revenue and earnings performance improved on a year-over-year basis, backed by better-than-expected growth in Turbo Tax and QuickBooks Online.
The company also issued impressive earnings guidance for the third quarter. The Zacks analyst likes Intuit's growing SMB exposure and believes that its strategic acquisitions will fortify this segment. Due to the continuously emerging new technologies and current market trends, cloud-based business and financial software solutions have been gaining momentum.
As Intuit is already a market leader in this segment, the increased adoption helped it gain new customers, in turn, boosting the overall performance. Moreover, the company's strategy of shifting its business to cloud-based subscription model will help generate more stable revenues over the long run.
(You can read the full research report on Intuit here >>> ).
Shares of Express Scripts have outperformed the Zacks Medical Services industry over the last one year, gaining +3.5% vs. +0.5%. Express Scripts ended the fourth quarter on a solid note, beating both earnings and revenue estimates.
The company has been benefitting from a rise in patient claims and strong customer retention lately. Express Scripts' solid guidance for 2018 holds promise. The company recently inked an agreement to acquire eviCore healthcare for $3.6 billion. Express Scripts' pharmacy-benefit management segment (PBM) coupled with eviCore's complementary medical-benefit solutions is likely to build a comprehensive PBM solution worldwide.
On the flip side, the company recently announced that its biggest customer and leading health insurer Anthem is not likely to extend its PBM agreement with Express Scripts anymore. Persistent drug pricing issue is also anticipated to affect the stock. Intensifying competition also adds to the woes.
Southwest Airlines ' shares have outperformed the Zacks Airline industry over the past six months, gaining +11.2% vs. +10.9%. Further, the stock has outperformed its fellow low-cost carrier, JetBlue Airways, which has gained +6.4% over the same period.
In fact, Southwest seems to benefit from robust growth in passenger revenues backed by strong demand for air travel. This is further highlighted in the company's impressive January traffic report.
Additionally, Southwest's projection on unit revenues for the first quarter of 2018 is encouraging. The Zacks analyst is also impressed with the company's efforts to upgrade its fleet.
Moreover, efforts to reward shareholders through dividends and buybacks raise optimism in the stock. The new tax law is an added positive for Southwest. However, high operating expenses mainly due to the rise in fuel costs are hurting the bottom line.
Other noteworthy reports we are featuring today include Kroger (KR), Sempra Energy (SRE) and Agilent (A).
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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, Exelixis' lead drug, Cabometyx should gain further market share in 2018. However, the company's dependence on the same and increasing competition might be a cause for concern.
Per the Zacks analyst, First Data benefits from an innovative product and services portfolio and expanding enterprise business.
Per the Zacks analyst, a systematic investment plan has been boosting Sempra Energy's infrastructural development projects. However, recent tax cuts initially weighed on its results.
Per the Zacks analyst, Agilent is benefiting from an expanding product portfolio, end-market strength and robust performance in China and Europe.
Per the Zacks analyst, Gap's balanced growth strategy, focused on expanding growth brands and digital portals, has aided bottom lines in recent quarters, while negative currency translations hurt.
Per Zacks Analyst, lower corporate tax rate, meaningful business buyouts (like Hinds-Bock Corporation) and ongoing distribution changes are likely to boost Middleby's near-term profitability.
The Zacks analyst likes the strong growth in ad revenues. Efforts to reward shareholders are encouraging as well.
Per the Zacks analyst, Masimo's SET pulse oximetry business represents considerable growth opportunities in international markets. An expanding product portfolio is a key catalyst.
Per the Zacks analyst, Henry Schein should continue gaining from its global foothold and channel mix. A 60% stake in ABASE will boost its Brazil arm and diversify its relationship with suppliers.
Per the Zacks analyst, Kroger's customer 1st strategy, restock program and digital endeavors will help drive growth. The company remains well poised to enhance identical supermarket sales and margins.
Per the Zacks analyst, high customer concentration and consolidation in the wireless industry are likely to hurt the top line. New techniques are reducing demand for site leases and raising costs.
Per the Zacks analyst, increase in apartment supply is anticipated to affect UDR Inc.'s profitability. Competition from other housing alternatives also remains a concern for the company.
The Zacks analyst believes that a challenging sales environment in the U.S. restaurant space, along with high labor costs and increased commodity prices are hurting Papa John's revenues and earnings.
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