Tuesday, November 17, 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 Philip Morris International (PM), Lockheed Martin (LMT) and Advanced Micro Devices (AMD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Philip Morris shares have outperformed the Zacks Tobacco industry in the year to date period (-7.6% vs. -12%). The Zacks analyst believes that the company has long been benefiting from its pricing power, which continued to aid its third-quarter 2020 results, wherein top and bottom lines beat the Zacks Consensus Estimate.
Also, management raised its earnings guidance for 2020 on the back of improved shipment volume trends, though the latter is still expected to decline. However, the management does not expect a near-term recovery in the duty-free business due to travel-related uncertainties amid the pandemic.
Also, a delay in minimum price enforcement in Indonesia is a concern. Apart from this, cigarette volumes have been soft for a while due to rising health consciousness and stern regulations. Furthermore, revenues are likely to fall in 2020. Nonetheless, strength in RRPs, especially IQOS, is expected to offer respite.
Shares of Lockheed Martin have lost -4% over the past year against the Zacks Aerospace Defense industry’s fall of -29.8%. The Zacks analyst believes that expansionary budgetary provisions made by the U.S. administration will immensely boost this defense prime’s business. It continues to be a strong cash generator.
Lockheed Martin enjoys strong demand for its high-end military equipment in domestic and international markets, being the world's largest defense contractor. Keeping up with its usual trend, Lockheed Martin was successful in clinching several notable deals during the third quarter.
However, forced cost reduction initiatives for F-35 program might hamper its operating results. America and Turkey's tiff on the latter accepting Russian products may hurt Lockheed's component supply from Turkey. It is facing performance issues in relation to some of its products, which in turn may hurt it results.
AMD shares have gained +53.4% over the past six months against the Zacks Electronics – Semiconductors industry’s rise of +42.4%. The Zacks analyst believes that AMD is benefiting from robust uptick in Ryzen and EPYC server processors, courtesy of increasing proliferation of AI and Machine Learning (ML) in industries like cloud gaming and supercomputing domain.
Further, the Xilinx acquisition will boost AMD's data center business. Growing clout of 7 nanometer (nm) products in the data center vertical, driven by work-from-home and online learning trends, remains a key catalyst. Also, partnerships with Amazon, Microsoft, Baidu and JD.com are opening newer business avenues.
However, broad-based macroeconomic weakness due to COVID-19 crisis is likely to put pressure on desktop processor-related sales. Rising spend on product development amid stiff competition from NVIDIA and Intel are likely to dent margins at least in near term.
Other noteworthy reports we are featuring today includeStarbucks (SBUX), Boeing (BA) 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 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
Per the Zacks analyst, enhanced customer experience and digitalization bode well for Starbucks.
Per the Zacks analyst, Boeing boasts a $2.6 trillion market opportunity for defense and space, which in turn would bolster its growth.
Per a Zacks analyst, solid contract wins by General Electric (GE), especially to provide turbines, are likely to aid performances in the quarters ahead.
Per the Zacks analyst, Infosys is benefiting from large deal wins and higher investments by clients in digital transformation, artificial intelligence, and automation.
Per the Zacks analyst, UBS Group’s cost-saving measures are encouraging. However, a low rate environment in the European economy continues to hurt its revenues.
Enterprise will generate additional cashflows from its midstream growth projects that are under construction. But, excessive exposure to debt capital concerns the Zacks analyst.
Per the Zacks analyst, strength in Baxter’s Acute Therapies segment, driven by higher product demand, boosts the company’s growth. However, an increase in operating costs raises concern.
The Zacks analyst appreciates BP’s plan to raise spending on renewable energy since there has been mounting demand for cleaner energy. The firm also banks on a strong portfolio of upstream projects.
Per the Zacks analyst, the current low-cost funding environment amid the Fed’s accommodative monetary policy will drive net interest spread for AGNC Investment (AGNC) in the upcoming quarters.
Per the Zacks analyst, Foot Locker’s focus on digitization has been aiding top-line growth. Management is on track with improving mobile and web platforms as well as data analytics capabilities.
Per the Zacks analyst, soaring operating and selling, general and administration expenses will dent AutoZone’s bottom line. Rising debt levels also restrict the firm’s financial flexibility.
Per the Zacks analyst, the company’s rising expenses will exert pressure on margins. Also, higher capital expenditure for fiscal 2021 will affect its ability to generate free cash flows.
Per the Zacks analyst, Michaels is witnessing soft margins for the past few quarters. Gross margin contracted 570 bps in Q2 owing to wholesale store closures, negative channel mix, and higher tariffs.
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Starbucks Corporation (SBUX): Free Stock Analysis Report
Philip Morris International Inc. (PM): Free Stock Analysis Report
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
General Electric Company (GE): Free Stock Analysis Report
The Boeing Company (BA): Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
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