Monday, January 4, 2021
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), Procter & Gamble (PG) and QUALCOMM (QCOM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Microsoft shares have outperformed the S&P 500 over the past year (+39.9% vs. +17.7%). The Zacks analyst believes that Microsoft is benefiting from momentum in Azure, impressive Teams user growth triggered by coronavirus-led digital transformation, work-from-home, online learning wave and tele healthcare trends.
Solid uptake of Surface devices and Xbox Game Pass is expected to boost growth. Further, the company is gaining from a growing user base of its different applications including Microsoft 365 suite, and Dynamics. Additionally, it is well positioned to expand the total addressable market through acquisitions of GitHub and ZeniMax Media.
However, broad-based macroeconomic weakness in the job market and lower spend on advertising due to the coronavirus pandemic are likely to put pressure on LinkedIn and Search revenues. Also, delays in consulting business are anticipated to limit growth.
Shares of Procter & Gamble have gained +14.5% in the last six months against the Zacks Soap and Cleaning Materials industry’s gain of +12.6%. The Zacks analyst believes that the nature of Procter & Gamble’s business led to increased consumer demand for its hand soaps, detergents and surface cleaning products during the pandemic.
The company’s solid first-quarter fiscal 2021 earnings mark the continuation of its earnings surprise trend. Earnings and sales improved year over year in the reported quarter on gains from significant sales increase, related fixed cost leverage and ongoing productivity efforts.
Cost savings aided core currency-neutral gross and operating margin, which expanded 170 bps and 350 bps, respectively. Driven by the robust results, the company raised its outlook for fiscal 2021. However, currency headwinds are likely to affect results in fiscal 2021. Also, stiff competition remains a woe.
QUALCOMM’s shares have gained +27.8% over the past three months against the Zacks Wireless Equipment industry’s rise of +20.1%. The Zacks analyst believes that with the rollout of 5G technology, Qualcomm is benefiting from investments toward building a licensing program in mobile.
The company is focused on retaining its leadership in the 5G chipset market and mobile connectivity. It resolved a dispute with Huawei and inked a new long-term patent license agreement, which augurs well for long-term revenues.
Qualcomm launched low-priced 5G chips for the masses for a seamless transition to 5G while delivering low-power resilient multi-gigabit connectivity. However, lower handset shipments due to the COVID-19 pandemic remain a near-term headwind. Qualcomm is expected to face softness in demand from China.
Other noteworthy reports we are featuring today include T-Mobile US (TMUS), Amgen (AMGN) and Automatic Data Processing (ADP).
These Stocks Are Poised to Soar Past the Pandemic
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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, T-Mobile is well-positioned to benefit from the largest nationwide 5G network that covers more than 270 million people across 1.4 million square miles.
Amgen expects several important data readouts from its pipeline in the near term. It also pursues external opportunities as evident from the purchase of Otezla and the stake in China’s BeiGene.
The Zacks analyst likes ADP’s buyout strategy to boost its position in the human capital management market.
Per the Zacks analyst, reduction in costs, mainly due to low fuel prices and increased operational efficiency, is partly offsetting CSX’s revenue declines from the coronavirus-led volume softness.
Per the Zacks analyst, ABB is poised to gain from strength in multiple end markets including food & beverage, transport, and e-mobility.
Per the Zacks analyst, systematic capital investment boosts Edison International’s infrastructure and customer reliability. Yet, increasing wildfire-related charges are hurting its credit rating.
Per the Zacks analyst, Baker Hughes is well placed to capitalize on multiple LNG terminal contracts around the globe. However, conservative upstream spending hurts its oilfield services.
Per the Zacks analyst, United Rentals is benefitting from rising demand for specialty construction products and used equipment. Notably, the demand for post-pandemic-led restrictions is encouraging.
Per the Zacks analyst, its solid inorganic growth story on the back of a number of acquisitions and strategic alliances over the past few years have helped the business grow its scale of business.
The Zacks analyst believes that strength in supply chain solutions in cloud and data center remain tailwinds. Also, contributions from acquisitions and contract wins will continue to drive growth.
Per the Zacks analyst, its operating expense level, which has been increasing over the past years, continues to weigh down the margins. Also, its balance sheet position remains a concern.
Per the Zacks analyst, ViacomCBS is suffering from sluggish advertising demand and lowered budgets due to coronavirus outbreak, in addition to production delays in television and film programming.
Per the Zacks analyst, soft demand due to weakness in global industrial markets will hurt the company’s top line. It also faces a headwind from lower pricing in certain bulk commodities.
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TMobile US, Inc. (TMUS): Free Stock Analysis Report
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
Procter & Gamble Company The (PG): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Amgen Inc. (AMGN): Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report
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