Top Stock Reports for Microsoft, Alibaba & Medtronic

Tuesday, March 14, 2023

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 15 major stocks, including Microsoft Corp. (MSFT), Alibaba Group Holding Ltd. (BABA) and Medtronic plc (MDT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Shares of Microsoft have gained +4.9% over the past six months against the Zacks Computer - Software industry’s gain of +6.3%. The company is benefitting from consistent execution across renewal sales motions, including strong recapture rates and growth in Azure cloud platform amid accelerated global digital transformation.

Slow yet steady performance of Office 365 and Dynamics is aiding user growth thereby driving the top-line. Strength in Marketing Solutions and steady performance in Talent Solutions is driving LinkedIn revenues boosted by recovery in advertising and job market. We expect fiscal 2023 revenues to grow by 4.7% over fiscal 2022.

However, a slowdown in its cloud business and declining videogame sales were headwinds. Decrease in Xbox content and services and Xbox hardware hurt gaming sales due to a decline in first-party content. Increasing spend on Azure enhancements amid stiff competition in the cloud space from Amazon is likely to dent margins.

(You can read the full research report on Microsoft here >>>)

Alibaba’s shares have outperformed the Zacks Internet - Commerce industry over the past year (+7.6% vs. -25.5%). The company’s top-line was driven by growing momentum across Alibaba’s international commerce retail business. The Zacks analyst expects the business to be up 9.1% in fiscal 2023 on a year-over-year basis.

Additionally, solid momentum across financial services, education and automobile industries is driving the company’s cloud business. This apart, strength across the local consumer services and Cainiao logistics services, Alibaba Health and Freshippo is contributing well.

However, uncertainties associated with coronavirus pandemic remain major concerns, especially for Alibaba’s domestic businesses. Also, rising expenses associated with new initiatives are overhangs.

(You can read the full research report on Alibaba here >>>)

Shares of Medtronic have declined -24.9% over the past year against the Zacks Medical - Products industry’s decline of -39.3%. The company’s innovations and market expansion efforts are helping it offset the impact of the high inflation and supply disruptions. The Zacks analyst expects its 2023 adjusted earnings will dip 4.8% from the year-ago period on 2% revenue growth at CER.

However, Medtronic is strategically expanding its global presence to address the unmet demand for advanced medical technologies. We expect Medtronic to register an international sales CAGR of 2.5% through 2025. Within cardiovascular, Medtronic is gaining market share, banking on product launches. Within MedSurg, Medtronic is scaling production of Hugo RAS.

Medtronic’s strong liquidity position should allow it to meet its near-term debt obligations. All these factors support our bullish stance on the stock.

(You can read the full research report on Medtronic here >>>)

Other noteworthy reports we are featuring today include Equinor ASA (EQNR), Illinois Tool Works Inc. (ITW) and Fiserv, Inc. (FISV).

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

Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)

Retail & Cloud Businesses Momentum Benefits Alibaba (BABA)

Medtronic (MDT) Gains in Market Share, MedSurg Growth Robust

Featured Reports

Equinor (EQNR) to Gain From Ambitious Energy Transition Plan
The Zacks analyst likes Equinor's ambitious goal of becoming a net-zero emissions company by 2050. However, rising exploration expenses continue to hurt the energy major.

Finxact Buyout Boosts Fiserv (FISV), Low Cash Balance Hurts
Per the Zacks analyst, the Finxact acquisition is expected to boost Fiserv's digital banking strategy. However, low cash balance is worrisome.

Expansion Actions to Drive Southern Copper (SCCO), Costs Ail
The Zacks analyst believes Southern Copper is poised well to gain from its industry-leading copper reserves and expansion actions. However, higher fuel and labor costs will hurt margins.

Investment on Infrastructure & Clean Assets Aid NiSource (NI)
Per the Zacks analyst, NiSource's planned $15B investment to strengthen its natural gas and electric infrastructure and add more clean assets in generation portfolio will drive its operation

Acquisitions Aid Builders FirstSource (BLDR) Amid High Costs
Per the Zacks analyst, Builders FirstSource has been driving growth from increased net sales and gross margin, backed by solid contribution from acquisitions amid high costs and supply woes.

Supply Chain & Macroeconomic Issues Ails V.F. Corp (VFC)
Per the Zacks analyst, V.F. Corp has been witnessing tough operating environment and continued supply-chain headwinds including higher lead times. As a result, it trimmed its fiscal 2023 view.

New Upgrades

Strong Demand, Dividends & Buybacks Aid Illinois Tool (ITW)
Illinois Tool is gaining from strong demand in the capital equipment and industrial businesses. The Zacks analyst is encouraged by its efforts to reward shareholders through dividends and buybacks.

Arista (ANET) Buoyed by Healthy Cloud Networking Traction
Per the Zacks analyst, Arista is likely to benefit from the expanding cloud networking market driven by a scalable infrastructure and a leading position in 100-gigabit Ethernet switching segment.

Solid Excess & Surplus Lines of Business Aids Kinsale (KNSL)
Per the Zacks analyst, Kinsale Capital is set to grow on its focus on the excess and surplus lines of business aiding high retention rates arising from renewals, improved margins and lower loss ratios

New Downgrades

Corcept's (CORT) Dependence on Korlym for Growth A Woe
The Zacks Analyst is concerned about Corcept's overdependence on the its marketed product Korlym. A decline in the drug's sales can significantly hinder the company's future prospects

Escalating Costs, Soft Cash Flows Hurt Select Medical (SEM)
Per the Zacks analyst, a rise in expenses due to higher cost of services might dent the company's margins. A decline in operating cash flows remains a concern.

Persistently Rising Expenses to Hurt Schwab's (SCHW) Profits
Per the Zacks analyst, Schwab's expenses are likely to remain elevated in the near term due to its inorganic growth efforts. Thus, higher costs are expected to hurt the bottom line to an extent.

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Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Medtronic PLC (MDT) : Free Stock Analysis Report

Fiserv, Inc. (FISV) : Free Stock Analysis Report

Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report

Equinor ASA (EQNR) : 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.


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