Monday, August 24, 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 Apple (AAPL), Alibaba Group (BABA) and Sony (SNE). 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 >>>
Apple shares continue to stand out for their gravity-defying performance (the stock is up +69.4% this year vs. +5.5% for the broader market), with the stock-split announcement adding to the momentum. The Zacks analyst sees the trend continuing on the back of momentum in the Services segment, driven by a robust performance of App Store, Apple Music, video, and cloud services.
Moreover, Apple devices also continued to gain traction among enterprises, particularly healthcare providers. Although Apple didn’t provide any guidance due to uncertainties triggered by the coronavirus pandemic, it expects fiscal fourth-quarter iPhone sales to benefit from strong demand for iPhone SE.
Further, Apple stated that sale of new iPhones will begin a few weeks later against the usual late September. It also expects iPad and Mac to post strong year-over-year growth. Further, Apple Watch and AirPod are other notable drivers in the long haul. However, increasing scrutiny and legal woes over App Store is a headwind.
(You can read the full research report on Apple here >>>)
Alibaba shares have lagged the Zacks Internet Commerce industry over the past 6 months (+29.3% vs. +57.2%, likely reflecting a China discount. But the stock is otherwise an impressive performer given its dominant standing in the fast-growing Chinese market.
Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining momentum. This is aiding growth in Tmall Import, Hema fresh food grocery business and Intime Department Stores.
Alibaba Group’s fiscal first-quarter 2020 earnings were driven by a steady improvement in core commerce and strong cloud business. However, higher costs associated with new initiatives remain a major concern. Also, COVID-19 related economic uncertainties and macro headwinds in China are major concerns. In addition, rising competition from e-commerce players poses a risk.
(You can read the full research report on Alibaba here >>>)
Sony’s shares have gained +24.5% over the past three months against the Zacks Audio Video Production industry’s rise of +23.2%. The Zacks analyst believes that the company is witnessing solid momentum in the Game & Network Services segment, courtesy of game software sales and PlayStation Plus, as well as in the Financial Services segment.
It continues to expand user engagement for the launch of PlayStation 5. In the Music segment, the company’s paid subscription streaming services continue to grow. Measures to realign its business portfolio like withdrawing from the PC business and selling the battery business are helping Sony.
Sony is concentrating on the premium segment of the branded products market to maximize growth. However, Sony is facing challenges in the Electronics Products & Solutions segment due to decline in unit sales of digital cameras and televisions.
(You can read the full research report on Sony here >>>)
Other noteworthy reports we are featuring today include Citigroup (C), BlackRock (BLK) and Southern Company (SO).
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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
Robust Portfolio, Services Strength to Benefit Apple (AAPL)
Alibaba (BABA) Drives On Cloud Growth; Investments Hurt
Robust G&NS and Financial Services Segments Drive Sony (SNE)
Featured Reports
Cost Control Aids Citigroup (C), Low Consumer Banking A Woe
Per the Zacks analyst, downtrend in operating costs will aid Citigroup’s bottom-line expansion. However, low rates and subdued consumer banking business are concerns.
Active Equity Focus Aids BlackRock (BLK), High Costs a Woe
Per the Zacks analyst, BlackRock’s efforts to restructure its active equity business will support revenue growth.
Southern Company (SO) Buoyed by Regulated Customer Growth
The Zacks analyst believes that increase in Southern Company’s regulated business customer base will support its revenue growth.
Free Cash Flow Ups Norfolk Southern (NSC) Despite Low Volumes
The Zacks analyst is worried about the overall stressed volumes due to coronavirus-led disruptions.
Dollar General’s (DG) Sturdy Comps Run to Propel Top-Line
Dollar General boasts impressive comparable sales run. Per the Zacks analyst, better price management and operational initiatives should drive sales.
Core Subscription Segment Aids Veeva (VEEV) Amid Competition
Veeva has been gaining from strong contributions of its core Subscription business segment. The Zacks analyst is apprehensive about the intense competition in the healthcare IT market.
Investment Aids American Electric (AEP), Rate Dependency Hurts
Per the Zacks Analyst, it plans to invest $26.6 billion over the 2021-2024 period in regulated operations to boost earnings.
New Upgrades
Lowe’s (LOW) Strategic Efforts & Online Business Bode Well
Per the Zacks analyst, Lowe’s is benefiting from its growth endeavors like retail fundamental strategy and improved digital efforts. Notably, online sales grew 135% in the second-quarter fiscal 2020.
Growing Healthcare and Packaging Business Drives Jabil (JBL)
Per the Zacks Analyst, growing demand for affordable healthcare and dependable consumer packaging is driving the top-line growth for Jabil.
Strong Liquidity Position to Aid TechnipFMC (FTI)
The Zacks analyst likes TechnipFMC’s strong liquidity position, which at nearly $7 billion is sufficient to cover its total debt of $5.4 billion.
New Downgrades
Canadian National (CNI) Hit by Volume Woes and Cost Concerns
The Zacks analyst is worried about the overall tepid volumes due to coronavirus-led disruptions. Deterioration in the operating ratio, mainly due to high costs, is also a negative.
Lower Production, Operational Headwinds Hurt Freeport (FCX)
Per the Zacks analyst, declining copper production will exert pressure on the company’s volumes and margins. It is also exposed to operational challenges across certain mines.
Xerox (XRX) Hurt by Lower Demand for Paper Related Products
The Zacks analyst believes that decreasing demand for paper-related systems and products due to technological advancements is expected to hurt Xerox.
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Southern Company The (SO) : Free Stock Analysis Report
Sony Corporation (SNE) : Free Stock Analysis Report
Citigroup Inc. (C) : Free Stock Analysis Report
BlackRock, Inc. (BLK) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
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