Friday, August 21, 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 Facebook (FB), Walmart (WMT) and Morgan Stanley (MS). 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 shares have outperformed the S&P 500 in the year-to-date period (+31.1% vs. +5.1%), with worries about ad boycots and regulatory uncertainty more than offset by the company’s dominant position in the space. The Zacks analyst sees the company continuing to benefit from increasing mobile ad revenues, growing adoption of Stories by advertisers across Instagram, core Facebook app and Messenger, and initiatives to improve security.
However, Facebook expects user-base growth to be flat or slightly down in most of its regions in the third quarter of 2020, sequentially. The company expects ad-revenue growth on a year-over-year basis to be roughly 10%.
Facebook expects some of the recent surge in community engagement to normalize as regions reopen. Further, a number of companies have announced plans to freeze ad spending on Facebook due to its failure to eradicate hate speech and misinformation. This is expected to hurt top-line growth, at least in the near term.
(You can read the full research report on Facebook here >>>)
Shares of Walmart have gained +13.6% over the past six months against the Zacks Supermarkets industry’s rise of +12.6%. The Zacks analyst believes that the company has been benefiting from rising demand for grocery as well as general merchandise items amid coronavirus-led stay-at-home trends.
Stay-at-home trends are also boosting e-commerce sales, which soared 97% in the second quarter of fiscal 2021. During the quarter, the top and bottom lines beat the consensus mark and grew year over year, with U.S. comps rising for the 24th straight time.
In the U.S. segment, both store and online sales remained strong, supported by government stimulus. Clearly, Walmart’s efforts to enhance deliveries are yielding results. However, the company is seeing high COVID-19-related costs, especially related to special bonuses. Also, price investments are hurting gross margin to an extent.
(You can read the full research report on Walmart here >>>)
Morgan Stanley shares have gained +27% over the past three months against the Zacks Investment Banking industry’s rise of +16.9%. The Zacks analyst believes that company’s plan to acquire E*Trade Financial will likely support its Wealth Management segment. Focus on corporate lending operations and strength in Investment Management operations is expected to aid the top line.
Although the company is aiming to change the revenue mix and focus more on less capital-market driven sources, the financial impact from the same will be seen after some time. Thus, significant dependence on capital markets to generate trading and investment banking revenues remains a concern. Near-zero interest rates and higher costs are other concerns.
(You can read the full research report on Morgan Stanley here >>>)
Other noteworthy reports we are featuring today include Intuit (INTU), Estée Lauder (EL) and Equinor (EQNR).
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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
Featured Reports
Intuit (INTU) Rides on Product Refresh, Higher Subscriptions
Per the Zacks analyst, Intuit is benefiting from frequent product refreshes, which help it to gain customers.
Store Closures Weigh on Estee Lauder (EL), Cost Savings Aid
Per the Zacks analyst, store closures are likely to keep weighing on Estee Lauder’s sales, as witnessed in fourth-quarter 2020.
Equinor (EQNR) Banks on Oil & Gas Discoveries, Debts High
The world-class oil and gas discoveries made so far are likely to help Equinor reach the production growth target of 3% from 2019 through 2026. However, its debt burden concerns the Zacks analyst.
BB&T-SunTrust Deal Aid Truist Financial (TFC) Amid Low Rates
Per the Zacks analyst, ‘merger of equals’ deal between SunTrust-BB&T, which created Truist Financial, and solid balance sheet will support growth amid near-zero interest rates and economic slowdown.
Cost Reduction, Expansion Actions Aid Southern Copper (SCCO)
The Zacks analyst believes Southern Copper is poised well to gain from its focus on cost reduction, industry-leading copper reserves as well as expansion actions.
Regulated Investments & Cost Management Aid Exelon (EXC)
Per the Zacks analyst Exelon’s planned $26B investments through 2023 will strengthen its operation and cost management initiatives will have positive impact on margins.
Strategic Efforts & Solid Balance Sheet Aid MetLife (MET)
Per the Zacks analyst, strategic initiatives have enabled the company to control costs, which is driving margins.
New Upgrades
Expansion Actions & E-commerce Aid Advance Auto Parts (AAP)
Per the Zacks analyst, the company will gain from the expansion of its footprint through new stores and collaborations as well as progress on its DIY omnichannel e-commerce platform.
Sturdy Comps Run to Fuel BJ’s Wholesale Club (BJ) Sales
Per the Zacks analyst, BJ’s Wholesale focus on simplifying assortments and expanding into high-demand categories have been driving comparable club sales growth.
Landstar (LSTR) Aided by Dividend Payouts, Cost Controls
The Zacks analyst is impressed by Landstar’s measures to reward shareholders with dividends. The company’s cost-reduction efforts to boost the bottom line are also encouraging.
New Downgrades
Sluggish Search & Ride Hailing Businesses Ail Yandex (YNDX)
Per the Zacks analyst, softness in the advertising business is hurting Yandex’s Search segment. Further, coronavirus headwinds are impacting its ride-hailing business negatively.
Higher Production Costs to Weigh on Agnico Eagle (AEM)
Per the Zacks analyst, higher production and operation costs resulting from lower production due to reduced operating activities are likely to exert pressure on the company’s margins in 2020.
Coronavirus Woes, Sluggish Corporate Hurt Jack Henry (JKHY)
Per the Zacks analyst, Jack Henry is suffering from coronavirus headwinds which are concerns for its Payments segment.
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