Friday, July 14, 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 Facebook (NASDAQ:FB) (FB), Verizon (VZ) and Merck (MRK). 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 >>>
Facebook’s shares have outperformed the S&P 500 index over the last one year, gaining +35.8% vs. +13.1%. Apart from mobile and video, the potential for monetization of its Instagram, Messenger, WhatsApp and Oculus assets, a huge user base and room for higher engagement levels remain at the core of the company's attractive fundamentals.
Longer term, Facebook's investments in augmented reality/virtual reality (AR/VR) and artificial intelligence (AI) technologies also remain promising. On the flip side, Facebook has stated that revenues will now face tougher year-over-year comparisons. Stiffening competition for ad dollars is another major concern. (You can read the full research report on Facebook here >>>).
Shares of Verizon have been laggards over the past year -- the stock is down -22.1% over the past 12 months vs. AT&T (NYSE:T)'s -15.6% decline and the +13% gain for the S&P 500 index. Verizon's underperformance reflects the market's concerns about the company's muddled strategy in the digital media domain and rising competitive pressures in its core U.S. wireless business.
The Yahoo (NASDAQ:AABA) purchase, as well as other previously acquired digital properties like AOL, Huffington Post will boost its digital media suite. The long-term expectation is that these assets will give it a sizable enough platform to capture digital marketing dollars. The jury is still out on the long-term viability of these efforts, but the company is also trying to be a player in the online TV streaming space and defend its leadership position in the wireless market through 5G wireless network trials.
However, a full-phased 5G wireless network will be offered only in 2020.The company's dividend appears safe (currently yields more than 5%), but the inherent capital intensity of its core business and the need for purchases on the digital side ends up eating up more than it generates in its operations. In the updated research report issued today, the Zacks analyst discusses the pros and cons of investing in Verizon shares at present. (You can read the full research report on Verizon here >>>).
Buy-rated Merck’s shares have outperformed the Large Cap Pharmaceuticals industry over the last one year, gaining +5.4% versus the industry’s -1.1% decline. This momentum reflects the progress it has made with product pipeline.
While generic competition for several drugs and pricing pressures as are material in the Merck story as they are for many of its peers, the Zacks analyst points out that the company's new products like Keytruda and Zepatier hold great potential. Also, Merck will continue to focus on cost-cutting initiatives to drive the bottom line.
Estimates have remained stable ahead of the company’s Q2 earnings release. Merck has a positive record of earnings surprises in the recent quarters. The Zacks analyst discusses all of these issues in the updated research report issued today. (You can read the full research report on Merck here >>>).
Other noteworthy reports we are featuring today include ExxonMobil (XOM), Pepsi (PEP) and HCA Healthcare (HCA).
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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
Logitech (LOGI) Rides on Retail Business, Astro Buyout
Per the Zacks analyst, spectacular momentum in Logitech's retail segment businesses will continue to drive growth. The recent Astro Gaming buyout is also expected to act as a growth catalyst.
Under Armour (UAA) DTC Business Bodes Well, Debt a Concern
Per the Zacks analyst, Under Armour's efforts to boost DTC business have increased its contribution to total sales.
Alliance Data's (ADS) Data-Driven Marketing Aids, Cost Woes
Per the Zacks analyst, Alliance Data is poised to gain from current trend in consumer-based businesses shifting their marketing spend to data-driven marketing strategies.
Strong Cash Flow Aids HCA Healthcare (HCA)
Per the Zacks analyst, the company's strong cash flow has enabled it to take a number of merger and acquisitions leading to business volume growth.
PetMed's (PET) Ad Campaigns, Product Mix shift to Boost SaleS
The Zacks analyst is bullish about PetMed's recent strategic initiatives including investment in advertising campaign and strategic shift to high-margin items.
Streamlining Supports CIT Group (CIT), Personnel Costs a Woe
Per the Zacks analyst, CIT Group's efforts to streamline operations with a goal to become a regional commercial bank are impressive.
Unit Revenue Growth Buoys Hawaiian (HA) Amid High Costs
The Zacks analyst likes the company's performance with respect to unit revenues. The metric's impressive performance is likely to continue.
New Upgrades
Pepsi's (PEP) Productivity Improvement Plans to Spur Growth
The Zacks analyst believe Pepsi's aggressive marketing, new product lineup, productivity improvement and cost-saving initiatives should give a boost to profits.
Total System (TSS) Rides on its Strong NetSpend Business
Per the Zacks analyst, the purchase of NetSpend in Jul 2013 has enhanced Total System's share in the U.S. prepaid card industry & bolstered long-term growth. Investment in technology has aided growth.
Agnico Eagle (AEM) to Gain from Actions to Boost Production
The covering analyst is impressed by Agnico Eagle's efforts to boost its production profile and also believes that it will gain from good progress at its major growth projects.
New Downgrades
Dependence on Costly Offshore Drilling to Hurt Exxon (XOM)
The upstream business of Exxon is significantly dependent on offshore resources. However, drilling in those areas is getting more expensive, which might dent cashflow, according to the Zacks analyst.
Lack of Control of Third party Assets to Hurt Devon (DVN)
The Zacks analyst believes Devon's lack of control on certain properties operated by third parties and fluctuating commodity prices will hurt its prospects.
Excessive North American Exposure Weakens EOG Resources (NYSE:EOG)
EOG Resources is highly exposed to the struggling North American energy market. This has affected the company's financials, according to the Zacks analyst.
Exxon Mobil Corporation (NYSE:XOM
Verizon Communications Inc. (NYSE:VZ
Pepsico, Inc. (NYSE:PEP
Merck & Company, Inc. (NYSE:MRK
Facebook, Inc. (FB): Free Stock Analysis Report
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