Tuesday, October 27, 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 Microsoft (MSFT), Tesla (TSLA) and AT&T (T). 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 >>>
Microsoft shares have outperformed the S&P 500 in the year-to-date period (+33.7% vs. +5.8%) on the back of continued momentum in Azure, impressive Teams user growth triggered by coronavirus crisis led work-from-home, the online learning wave and tele healthcare trends.
Solid uptake of Surface devices and Xbox Game Pass aided growth. The company is gaining from growing user base of its different applications including Office 365 commercial, and Dynamics. Also, it is well poised to expand the total addressable market through acquisitions of GitHub and ZeniMax Media.
The company has positive record of earnings surprises in recent quarters. However, macroeconomic weakness in job market and lower spend on advertising due to coronavirus pandemic are likely to weigh on LinkedIn and Search revenues. Also, delays in consulting business are anticipated to limit growth.
(You can read the full research report on Microsoft here >>>)
Shares of Tesla have literally been on fire lately, up +551.4% over the past year against the Zacks Domestic Automotive industry’s rise of +162.9%. The Zacks analyst believes that Tesla has a first-mover advantage in the EV space with high range vehicles, superior technology, and software edge.
Robust Model 3 demand, ramp up of Model Y production, Shanghai Gigafactory prospects, amazing line-up of upcoming products and aggressive expansion efforts bode well for the firm. However, high R&D, SG&A costs and massive capex may clip the margins.
Tesla is investing heavily to boost production capacity and sales as well as build gigafactories in Berlin and Austin, which are likely to strain its near-term prospects. Waning margins for Model S/X is another concern. Thus, investors are recommended to wait for a better entry point.
(You can read the full research report on Tesla here >>>)
AT&T shares have lost -11.7% over the past six months against the Zacks Wireless National industry’s rise of +4.1%. The Zacks analyst believes that AT&T is well placed to benefit from the streaming services of its newly launched HBO Max and nationwide 5G deployment.
AT&T reported relatively healthy third-quarter 2020 results with solid subscriber growth backed by a resilient business model and robust cash flow position driven by a diligent execution of operational plans. While adjusted earnings marginally missed the Zacks Consensus Estimate, revenues beat the same despite coronavirus hitting top-line growth.
However, AT&T is witnessing a steady decline in linear TV subscribers, legacy services and wireline division. Continued cord-cutting remains a challenge as consumers 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 concern.
(You can read the full research report on AT&T here >>>)
Other noteworthy reports we are featuring today include Apple (AAPL), Abbott Laboratories (ABT) and Oracle (ORCL).
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Sheraz Mian
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
Microsoft (MSFT) Rides on Robust Adoption of Azure & Teams
Rising Model 3/Y Demand Buoy Tesla (TSLA), High Capex Ail
AT&T (T) Rides on Healthy Subscriber Growth, 5G Momentum
Featured Reports
Robust Portfolio, Services Strength to Benefit Apple (AAPL)
Per the Zacks analyst, Apple's robust portfolio with the launch of the new iPhone 12, iPad Air, Apple Watch, and Watch SE will drive top-line growth.
Abbott (ABT) Thrives on Procedure Volume Gain, iCGM Launch
The Zacks analyst is optimistic about Abbott's testing and procedure volumes gain in hospital-based businesses.
Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships
Per the Zacks analyst, Oracle is benefiting from solid adoption of its cloud infrastructure solutions. Also, partnership with Accenture is helping the company expand its cloud-based clientele.
Resilience of SpaceOAR Products Aids Boston Scientific (BSX)
The Zacks analyst is upbeat about Boston Scientific's urology/pelvic health arm's SpaceOAR products, which showed better resilience.
Biogen (BIIB) Focuses on Aducanumab Amid Rising Competition
The Zacks analyst notes that the approvability of Alzheimer's drug, aducanumab, has improved after its BLA received the priority tag.
PayNet Buyout Buoys Equifax (EFX), Cyber Attack Impacts Ail
Per the Zacks analyst, the PayNet acquisition has strengthened Equifax's commercial business and analytics capabilities.
Masco (MAS) Rides on Inorganic & Cost-Saving Strategies
Per the Zacks analyst, Masco is likely to benefit from cost-saving initiatives such as business consolidations and headcount reductions.
New Upgrades
Buyouts & Focus on Affordable Homes to Aid PulteGroup (PHM)
Per the Zacks analyst, PulteGroup continues to benefit from its land acquisition strategies that have resulted in higher revenues and profitability.
China Market Strength & Solid Liquidity to Aid Autoliv (ALV)
Per the Zacks analyst, the gradual recovery of vehicle production and sales, especially in China, will buoy Autoliv's earnings. Structural Efficiency Program of the firm is boosting its liquidity profile.
Truck Transportation Revenues Boost Landstar System (LSTR)
The Zacks analyst is impressed with the increase in revenues at Landstar's primary segment, truck transportation. The increase in rail intermodal revenues is also encouraging.
New Downgrades
Occupancy Declines, Dispositions to Hurt Welltower (WELL)
Per the Zacks analyst, ongoing weakness in the seniors housing market is resulting in occupancy loss for Welltower.
Catastrophe Exposure, Higher Expenses Hurt RLI Corp (RLI)
Per the Zacks analyst, RLI Corp.'s exposure to cat losses has been weighing on underwriting profitability and thus deteriorating combined ratio. Higher expenses have been inducing margin contraction.
Low Upstream Spending to Hurt Dril-Quip's (DRQ) Profits
The conservative spending from explorers will keep demand for drilling and production equipment low affecting Dril-Quip's ability to generate profits, which concerns the Zacks analyst.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
