Thursday, July 7, 2022
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 NVIDIA Corp. (NVDA), HSBC Holdings plc (HSBC) and 3M Co. (MMM). 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 >>>
NVIDIA
shares have declined -22.6% over the past year against the Zacks Semiconductor – General industry’s decline of -24.5%. The company’s management expects COVID-19 pandemic to negatively impact near-term revenues.
Moreover, the U.S.-China trade war remains a key concern. However, NVIDIA is benefiting from the work and learn-from-home wave. It is also benefiting from strong growth in GeForce desktop and notebook Graphic Processing Units, which is boosting gaming revenues.
Moreover, a surge in Hyperscale demand remains a tailwind for the company’s Data Center business. Expansion of NVIDIA GeForce NOW is expected to drive user base. Further, solid uptake of artificial intelligence-based smart cockpit infotainment solutions is a boon. Additionally, collaboration with Mercedes-Benz is expected to further strengthen NVIDIA’s presence in the autonomous vehicles and other automotive electronics space
(You can
read the full research report on NVIDIA here >>>
)
HSBC
shares have outperformed the Zacks Banks – Foreign industry over the past year (+18.6% vs. -9.6%). The company’s strong capital position, initiatives to strengthen digital capabilities, extensive network and improvement in operating efficiency through business restructuring will likely keep aiding growth. Exiting from U.S. and French retail banking operations is expected to help the company focus on Asia.
In sync with this, the acquisition of AXA Singapore insurance assets will expand the company’s business in the region. Though initiatives to improve market share in the U.K. and China will continue to support financials, these might lead to a rise in expenses, which will likely hurt HSBC’s bottom line to an extent in the near term. Relatively lower interest rates across the globe (despite rate hike expectations) will likely continue to hamper revenues.
(You can
read the full research report on HSBC here >>>
)
3M Co.
shares have declined -25.5% year to date versus the Zacks Diversified Operations industry’s decline of -22.1%. The Zacks analyst believes that headwinds related to raw material and logistics cost inflation are hurting 3M’s bottom line.
Supply chain woes are affecting production volumes in the electronics and automotive OEM markets. Due to these headwinds, shares of the company have declined 26.8% in the past six months. 3M’s high debt levels are also a concern.
However, 3M seems well-positioned to benefit from its portfolio reshaping actions. The company’s acquisition of the technology assets of LeanTec strengthen its ability to deliver a more connected, digital bodyshop solution via its RepairStack Performance Solutions. Strength across its several end-markets, such as, manufacturing, electronic materials, healthcare IT, home improvement, wound care and automotive/mobility are expected to support the top line. 3M’s efforts to reward its shareholders is encouraging.
(You can
read the full research report on 3M Company here >>>
)
Other noteworthy reports we are featuring today include BP p.l.c. (BP), Petróleo Brasileiro S.A. – Petrobras (PBR) and The PNC Financial Services Group, Inc. (PNC).
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
c
lick here>>>
Today’s Must Read
NVIDIA (NVDA) Rides on Strong Adoption of GPUs, Partnerships
Restructuring to Aid HSBC Holdings (HSBC), High Costs a Woe
End-Market Strength Aids 3M (MMM) Amid Supply Chain Woes
Featured Reports
Petrobras (PBR) Aided by Brazil’s Pre-Salt Oil Reserves
The Zacks analyst believes that Petrobras’ stake in Brazil’s huge pre-salt oil reserves puts it in an enviable position to maintain an impressive production growth profile for years to come.n
Loan Growth Supports PNC Financial (PNC), High Costs Ail
Per the Zacks analyst, PNC Financial’s solid balance sheet position is driven by loan and deposit growth. Yet, rising expenses due to acquisition-related integration costs might limit the bottom line.
Investments boost American Electric (AEP), Weak Solvency Woe
Per the Zacks analyst, American Electric hefty investments offer a stable earnings base and tend to boost its long-term growth potential. However, its weak solvency position remains a concern
Cost Management & High Margin Assets Aid Devon Energy (DVN)
Per the Zacks analyst Devon’s efficient cost management and strong production from its high margins assets will drive performance over the long run.
Old Dominion (ODFL) Rides on Dividends & Buyback, Expenses Ail
The Zacks analyst likes the shareholder-friendly measures adopted by Old Dominion. However, rising operating expenses are concerning as they are likely to keep the bottom line under pressure.
Pent-up Supply & Demand Aid Live Nation (LYV), Cost High
Per the Zacks analyst, Live Nation Entertainment is benefiting from pent-up supply & demand. For concerts, it has already sold more than 70 million tickets in 2022. Increase in costs remain a concern.
Strong Retail Sales Aid Walgreens (WBA) Amid Rising Costs
The Zacks analyst is encouraged by Walgreens’ strong performance across the U.S. retail business through digital and omnichannel growth. Yet, mounting expenses are weighing on the stock’s bottom line.
New Upgrades
BP to Benefit From Downstream Operations & Lower Debt
Per the Zacks analyst BP’s sizable downstream business can protect it during weak crude pricing scenario. Also, falling debt levels reflects a sound financial position.
Post Holdings (POST) Benefits From Prudent Acquisitions
Per the Zacks analyst, Post Holdings is benefiting from its focus on acquisitions. During second-quarter fiscal 2022, the company’s top line included $102.1 million in net sales from acquisitions.
Strong Demand in Infrastructure Segment to Aid Lindsay (LNN)
Per the Zacks analyst, Lindsay will gain from the momentum in infrastructure segment backed by demand for Road Zipper projects and focus on launching new products with advanced technology.
New Downgrades
Soft Product Shipment & Supply Chain Woes to Hurt Dolby (DLB)
Per the Zacks analyst, pandemic induced global supply chain troubles and higher product costs is a major concern for Dolby. Weakness in product shipment is an added concern
Escalating Expenses, High Debts Hurt Encompass Health (EHC)
Per the Zacks analyst, the company’s rising labor cost continues to exert pressure on the margins. A leveraged balance sheet constantly affects the company’s financial flexibility.
Sluggishness in Summer Travel Trends Hurts Expedia (EXPE)
Per the Zacks analyst, weakening momentum in summer travel is hurting Expedia. Further, disruptions in travel industry due to rapidly spreading new variants of COVID 19 and Monkeypox are concerns.
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