Wednesday July 19, 2017
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 IBM (IBM), Lockheed Martin (LMT) and Netflix (NASDAQ:NFLX) (NFLX). 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 >>>
IBM’s shares have underperformed the broader market on a year to date basis, losing -7.2% vs. the S&P 500’s +10.1% gain. IBM’s recently announced second-quarter 2017 results exhibited the company’s growing focus on “Strategic Imperatives” as long-term growth drivers. However, revenue growth remained elusive as these “Strategic Imperatives” failed to offset the weakness in traditional businesses.
Moreover, third-quarter revenue guidance reflects negative impact from seasonality, which is anticipated to be partially neutralized by higher contributions from the new Mainframe z14 product and services contracts. However, the Zacks analyst likes the fact that despite sluggish revenue growth projections in the near term, IBM maintained 2017 earnings guidance suggesting improving strength in cloud, mobile, security and social products as well as cost savings.
Intensifying competition in most of the markets remains a major concern. (You can read the full research report on IBM here >>>).
Shares of Buy-rated Lockheed Martin have gained +11.7% over the past year, underperforming the aerospace/defense sector, which has gained +26.2% over the same period. Lockheed Martin’s second-quarter results comfortably surpassed expectations on both the top- and bottom-line fronts. In particular, the Aeronautics segment posted a strong, double-digit growth, which, in turn, boosted the company’s sales.
The increased outlook for 2017 also buoyed optimism. The Zacks analyst likes the fact that since it is the largest defense contractor in the world, Lockheed Martin continues to be a strong cash generator. Apart from its formidable domestic presence, the company also boasts of strong opportunities in the ever-expanding international defense market.
The recently passed defense policy bill for 2018, which promises a $696 billion budget, is also expected to boost growth of defense majors. However, a comparative analysis of the company’s historical EV/EBITDA ratio reflects a relatively gloomy picture when compared with its broader industry. (You can read the full research report on Lockheed Martin here >>>).
Netflix’s shares have gained +108.8% over the past 12 months, outperforming the Zacks Broadcast Radio/TV industry, which has gained +30.4% over the same period. Netflix’s second-quarter earnings missed expectations but revenues beat the same. In the second quarter, Netflix added more subscribers than the guided number, benefitting from its focus on original programming and international expansion.
In the third quarter, Netflix expects to add 0.75 million subscribers in the domestic streaming segment and 3.65 million in the international segment. Moreover, the company expects to report profits from International operations in the upcoming quarter. Nonetheless, investments in original/acquired content remain a drag on profitability. The Zacks analyst thinks Netflix’s ability to effectively manage costs will dictate its future prospects. (You can read the full research report on Netflix here >>>).
Other noteworthy reports we are featuring today include PayPal (PYPL), BlackRock (BLK) and Nucor (NUE).
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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
Featured Reports
V.F. Corp.'s (VFC) Soft Sales View Suggests More Troubles
Per the Zacks analyst, V.F. Corp.'s drab sales guidance for 2017 reflects concerns over the persistence of currency headwinds and tough conditions. Currency is likely to hurt 2017 sales by two percent.
Equity Focus to Brace BlackRock (BLK), Marketing Costs a Woe
Per the Zacks analyst, BlackRock is well positioned to drive revenues up with efforts to strengthen active equity business.
Demand for Student Loans Aid Navient (NAVI), Legal Costs a Woe
Per the Zacks analyst, the declining unemployment rate has led to a rise in demand for student loans, which shall bolster Navient's growth.
Shutterfly (SFLY) Banks on Restructuring, Costs a Concern
Shutterfly's plan to shift to a single Consumer platform and reduce workforce bodes well for the long-term but charges associated with the same could mar near-term margins, per the Zacks analyst.
IDEXX (IDXX) Benefits from Growing Companion Animal Business
The Zacks analyst is bullish on IDEXX due to strong global growth of companion animal business.
Interpublic (IPG) Organic Growth Marred by Account Loss Risk
Interpublic's digital capabilities and diversified businesses offer competitive advantage, although lower marketing budgets are likely to slow down organic growth and lead to potential account loss.
Snap-On (SNA) Rides on Financing Business, Acquisitions
Per the Zacks analyst, robust financing business and the Norbar Torque & Car-O-Liner acquisitions will boost Snap-On's profits.
New Upgrades
Corcept's (CORT) Key Drug Korlym's Growth Prospects Promising
Per the Zacks analyst, Corcept's only marketed drug-Korlyum's growth prospects look promising. Corcept's efforts on label expansion of the drug are also encouraging and bode well for long-term growth.
PayPal (PYPL) Draws Strength from Partnership with Visa
The covering analyst believes that strategic partnerships with the likes of Visa and MasterCard will continue to be a strong driving force behind PayPal's top-line growth.
Rise in Interest Income & Loan Growth Supports Synovus (SNV)
Per the Zacks analyst, Synovus is well poised to enhance its interest income driven by steady growth in loan demand and gradual economy recovery. Further, easing margin pressure is a favorable factor.
New Downgrades
Acorda's (ACOR) Ampyra Sales Declining on Patent Issues
Per the Zacks analyst, Acords's key drug Ampyra sales is declining as a district court recently invalidated four of its patents. Thus, over dependence on the drug for revenues may hurt future results.
Concho (CXO) Pressured by Permian Service Cost Inflation
Rising rig prices in the Permian Basin on the back of stronger demand, together with surging land rates, has made the Zacks analyst turn bearish on Concho Resources.
Downbeat Q2 View, Weak Steel Mills Unit Weigh on Nucor (NUE)
According to the Zacks analyst, Nucor's Q2 results are expected to be hurt by weaker performance of its steel mills unit. The company sees earnings to fall sequentially in the second quarter.
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Nucor Corporation (NYSE:NUE): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
Lockheed Martin Corporation (NYSE:LMT): Free Stock Analysis Report
International Business Machines Corporation (NYSE:IBM): Free Stock Analysis Report
BlackRock, Inc. (BLK): Free Stock Analysis Report
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