Tuesday, November 28, 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 Estee Lauder (EL), Broadcom (NASDAQ:AVGO) (AVGO) and General Dynamics (GD). 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 >>>
Strong Buy-rated Estee Lauder’s shares are up +59.2% over the last one year, outperforming the Zacks Cosmetics industry, which is up +11.8% over the same period, gaining from its solid focus on buyouts and product launches; strength in emerging markets and robust online business. Driven by these efforts, Estee Lauder marked its 13th and 3rd straight earnings and sales beat, respectively in first-quarter fiscal 2018, wherein both top and bottom lines grew year over year.
Results were aided by contributions from BECCA and Too Faced. Moreover, the company witnessed strength across nearly all regions and product categories, with skin care and China standing out. Growth in travel retail and online channels also remained strong.
Management expects continued growth opportunities in the global prestige beauty industry, which encouraged it to raise its outlook. However, soft retail traffic in the United States remains a hurdle. Also, management remains cautious about other economic and political issues that can affect consumer spending.
(You can read the full research report on Estee Lauder here >>>).
Shares of Buy-rated Broadcom have handily beaten the technology sector as well as the red-hot semiconductor space in the year-to-date period, gaining +61%. The company is benefiting from strong demand of its wireless solutions, which is expected to continue in the fiscal fourth quarter. Broadcom now expects fourth-quarter revenue growth to be in the double-digit range on a year-over-year basis, much similar to the second and third quarter.
However, gross margin is expected to contract slightly due to unfavorable product mix (higher mix of low margin wireless business). The company recently completed the long-pending Brocade acquisition, which is positive for the stock.
Moreover, the company made an unsolicited bid for Qualcomm (NASDAQ:QCOM), which was rejected. Nevertheless, the company intends to pursue the Qualcomm deal more aggressively and is also planning to redomicile in the United States.
(You can read the full research report on Broadcom here >>>).
General Dynamics’ shares have gained +14.8% over the last one year, underperforming the Zacks Aerospace - Defense industry, which increased +29.5% over the same period. However, the company’s diverse portfolio of products and services along with its wide customer base provides it with an opportunity to generate solid revenues from different sources.
General Dynamics is one of the only two contractors in the world equipped to build nuclear-powered submarines. Moreover, the fiscal 2018 defense policy bill, which includes provisions to spend $6 billion on Navy shipbuilding, will surely boost the company's growth trajectory.
However, the company operates in a highly competitive market and has to rely on other companies to provide materials, components and subsystems for its products. It also faces foreign currency fluctuations.
(You can read the full research report on General Dynamics here >>>).
Other noteworthy reports we are featuring today include Roche (RHHBY), Carnival (LON:CCL) (CCL) and Barclays (LON:BARC) (BCS).
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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
Renewable Focus & Rising Demand Drives Pinnacle West (PNW)
The Zacks analyst believes Pinnacle West's focus to add more renewable sources in generation and rising demand due to improvement in economic conditions will continue to boost performance.
Solid Leasing Segment, Portfolio Revamp Aid St. Joe (JOE)
The Zacks analyst appreciates St. Joe's strong leasing segment and its efforts to achieve an optimal portfolio mix.
Kinder Morgan (NYSE:KMI) to Grow on Fee-Based Deals, Debts High
Kinder Morgan expects majority of its cash flow in 2017 to be generated from stable fee-based contracts. However, high dependence on debt financing could hurt the company, per the covering analyst.
Commercial Jet Order Aids Woodward (WWD), China Market Ails
Per the Zacks analyst, strong order backlog for commercial aircraft boost Woodward's commercial aftermarket business.
Broadridge (BR) Rides on Summit Buyout, Solid Business Model
Per the Zacks analyst, product launches, share repurchase program, dividend paying initiatives and strategic acquisitions are tailwinds for Broadridge.
Valspar Buyout to Aid Sherwin-Williams (SHW) Amid Cost Woes
The Zacks analyst thinks while Sherwin-Williams will gain from synergies of the Valspar acquisition, hefty costs related to the buyout and higher raw materials costs will weigh on its FY17 earnings.
Chiltern Buyout to Boost Covance Business of LabCorp (LH)
The Chiltern acquisition has started to strengthen LabCorp's strategic position in clinical development and is accelerating revenue and profit within Covance.
New Upgrades
Emergent (EBS) BARDA Deal for BioThrax Bodes Well for Growth
Per the Zacks analyst, Emergent's two-year contract with BARDA, for the delivery of its anthrax vaccine BioThrax to the strategic national stockpile will boost the company's topline in the near-term.
CNA Financial (CNA) Set to Grow on Sturdy Underwriting
Per the Zacks analyst, CNA Financial is poised for growth banking on solid underwriting, demonstrated by improving combined ratio. Improving rate environment and solid capital positon raise optimism.
Higher Premiums Continue to Drive Alleghany (Y)
Per the Zacks analyst, Alleghany's strong performance across insurance and reinsurance operations will drive premiums. Diversified portfolio and expanded international footprint support growth.
New Downgrades
Generics & Biosimilars Pose Threat to Roche's (RHHBY) Topline
Per the Zacks analyst, generics have impacted sales of Xeloda, Zelboraf and Pegasys with biosimilars posing threat to Roche's key drugs such as Avastin, Rituxan and Herceptin in the long term.
Carnival's (CCL) Margins Hurt By High Costs from Investments
The Zacks analyst stresses that high costs from additional brand investments coupled with negative currency translation remain headwinds for Carnival's profits.
Low Interest Rates Hurt Barclays' (BCS) Revenue Growth
Per the Zacks analyst, weak performance of the capital markets and a low rate environment are expected to continue hurting Barclays' revenue growth. Also, litigation issues remain a concern.
Roche Holding (SIX:ROG
General Dynamics Corporation (NYSE:GD
Estee Lauder Companies, Inc. (The) (NYSE:EL
Carnival Corporation (CCL): Free Stock Analysis Report
Barclays PLC (BCS): Free Stock Analysis Report
Broadcom Limited (AVGO): Free Stock Analysis Report
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Zacks Investment Research