Wednesday, February 21, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 17 major stocks, including Walmart (WMT), Cisco (CSCO), Intel (INTC) and UPS. These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Walmart 's shares have been strong performers lately, with the stock up +17.6% over the last six months, outperforming the S&P 500's +10.9% gain in the same time period. Walmart, which recently emerged as an omni-channel retailer officially, has been riding on constant growth efforts - both in stores and online.
The company's robust e-commerce initiatives, like buyouts, alliances, online grocery and improved delivery systems have been working well. These trends helped Walmart post its 14th straight quarter of U.S. comps growth in fourth-quarter fiscal 2018, wherein earnings and sales rose year over year.
However, gross margin remained strained owing to mix impact from growing e-commerce operations, price investments and higher markdowns. Also, the rate of e-commerce growth slowed down sequentially.
Nevertheless, management expects U.S. e-commerce sales to jump nearly 40% in fiscal 2019, which should help the company revert to its track of surpassing the industry. The Zacks analyst expects these factors and projected gains from tax reforms to fuel the bottom line.
Shares of Buy-rated Cisco have outperformed the Zacks Networking industry over the past year, gaining +29.3% vs. +27.3%. Cisco reported impressive second-quarter fiscal 2018 results. Both earnings and revenues increased on a year-over-year basis. The growth was driven by strong contribution from acquisitions, security, Infrastructure Platforms and applications.
The Zacks analyst thinks the company's expanding footprint in the rapidly growing security market presents a significant growth opportunity. Additionally, partnerships with Telenor, Apple, IBM, Microsoft, Google Cloud, Viacom and Alibaba and aggressive share buybacks are other positives. However, weakness in the switching and routing is a headwind.
Moreover, ongoing transition to subscription-based model will continue to hurt the top line. Further, weakness in the service provider business segment and intense competition from the likes of Huawei, Juniper and Arista Networks are other major concerns.
(You can read the full research report on Cisco here >>> ).
Buy-rated Intel 's shares have underperformed the Zacks General Semiconductor industry over the past one year, gaining +28.5% vs. +53.3%. However, Intel reported stellar fourth-quarter results and provided an encouraging guidance. The company is benefiting from robust performance of the DCG, IoT Group, NSG and PSG. These segments form the crux of Intel's data-centric business model.
Further, the launch of FPGA SDK for OpenCL solution, Xeon Scalable, Core 8 chips, Myriad X and next-generation desktop processors are key catalysts. Lately, Intel's Movidius vision processing has gained strong adoption. The processor was selected by Alphabet's Google division and Amazon.com's DeepLens. Intel also announced level through five autonomous driving platform based on EyeQ5 and Atom, which will sample over the next few months.
Its partnerships with BMW, Nissan, Volkswagen AG and Ferrari will boost sales of processing chips, sensor-chips, cloud software and many more, which will drive top-line growth. However, stiff competition from peers adds to its woes.
(You can read the full research report on Intel here >>> ).
Shares of Buy-rated UPS have underperformed the Zacks Air Freight and Cargo industry as well as rival FedEx in a year's time. While UPS has lost -0.9%, the industry it belongs to and FedEx have rallied +8.7% and +24.3%, respectively. Despite the unimpressive price performance, UPS outperformed in the fourth quarter of 2017.
Also, revenues and earnings per share improved year over year. Results were aided by strong export volumes. Moreover, UPS performed well in the most recent holiday season on the back of e-commerce growth. In February 2018, UPS announced its decision to increase quarterly dividends which is an added positive.
Furthermore, the new tax law (Tax Cuts and Jobs Act), which reduces corporate tax rate significantly, is encouraging. However, high costs continue to limit bottom-line growth. Its forecast for 2018 capex, which is higher than 2017 levels, might push up costs further.
(You can read the full research report on UPS here >>> ).
Other noteworthy reports we are featuring today include Deere (DE), Glaxo (GSK) and Wynn Resorts (WYNN).
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Today's Must Read
The Zacks analyst thinks that Linzess holds blockbuster potential with several label expansion under review. However, competition in the IBS-C market is intensifying.
Per the Zacks analyst, favorable budget proposal by Trump will boost Huntington Ingalls' shipbuilding business. Also the company benefits from a slew of order inflows from the Pentagon.
The Zacks analyst believes NiSource will benefit from customer additions and its long term plans to invest $30 billion to strengthen its existing gas and electric infrastructure.
Per the Zacks analyst, International Flavors & Fragrances' acquisitions of Fragrance Resources and PowderPure in 2017 will prove advantageous going forward. However, rising costs remain an issue.
The Zacks analyst believes that Cabot's large acreage holdings in the fast-growing Marcellus Shale will enable the company to deliver strong production growth.
The Zacks analyst believes that, continued strong performance from Washington National segment aids CNO Financial's both top and bottom lines.
The Zacks analyst believes that a high debt burden makes it difficult for Wynn Resorts to finance its upcoming projects.
Accuray rides on the market's solid response to the Radixact platform. The Zacks analyst feels that the platform is generating favorable pricing and margins for the company.
Per the Zacks analyst, Deere's construction business will benefit from Wirtgen buyout. Also, strong order activity in both Combine Early Order Program and large tractors will drive growth.
Per the Zacks analyst, Akamai's strong media division traffic, growing adoption of cloud-based security solutions and robust over-the top (OTT) content viewing will drive the top and bottom line.
Per the Zacks analyst, rising expenditure on product development and infrastructure is affecting Shopify also, lack of significant presence in the Asia-Pacific market continues to be a headwind.
Per the Zacks analyst, DDR Corp.'s aggressive asset disposition is anticipated to affect its earnings. Competition from e-commerce platforms remain a concern for the company.
The Zacks analyst thinks generic competition and price erosion are hurting Glaxo's sales. Its top selling drug Advair is expected to face generic competition in the U.S in 2018.
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