Friday, July 31, 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 The Procter & Gamble (PG), PayPal Holdings (PYPL) and QUALCOMM (QCOM). 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 >>>
Procter & Gamble shares have outperformed the Zacks Soap and Cleaning Materials industry over the past year (+12.6% vs. +10.3%), with the momentum expected to continue on the back of strong operating performance as reflected in the June-quarter results. On the flip side, the Zacks analyst cautions agains currency fluctuations that may weigh on the company’s margins.
Earnings and sales grew year over year in Q2, backed by rising demand for household cleaning, personal health and cleansing products stemming from the COVID-19 pandemic. Top line gained from organic sales growth, driven by rise in organic shipment volume and better pricing.
Encouragingly, it issued an upbeat fiscal 2021 view. Further, cost savings aided core currency-neutral gross and operating margin by 250 bps and 190 bps, respectively. Also, it delivered adjusted free cash flow productivity of 114% in the fiscal fourth quarter.
(You can read the full research report on Procter & Gamble here >>>)
Shares of PayPal have gained +66.8% over the past six months against the Zacks Internet Software industry’s rise of +40.7%. The Zacks analyst believes that uncertainties induced by the pandemic remains a major headwind. Further, increasing credit loss reserves owing to macroeconomic projections on account of coronavirus is a serious concern.
PayPal reported impressive second quarter results wherein both earnings and revenues surpassed the estimates and improved year over year. Robust growth in total payments volume (TPV) owing to increasing net new active accounts drove the top line.
Moreover, strengthening customer engagement on the company’s platform and Honey buyout benefits were positive. Further, strong performance by Venmo and merchant services contributed well to the TPV growth. Additionally, growing momentum of the company’s core peer to peer and PayPal Checkout experiences was a tailwind.
(You can read the full research report on PayPal here >>>)
QUALCOMM shares have gained +39.1% over the past three months against the Zacks Wireless Equipment industry’s rise of +30%. The Zacks analyst believes that Qualcomm is likely to face softness in demand from China with Huawei gaining prominence in the local market and coronavirus impacting sales.
Qualcomm reported solid third-quarter fiscal 2020 results, primarily driven by the ramp-up in 5G-enabled chips. The company has entered into a new long-term, global patent license agreement, including cross-license rights to certain Huawei’s patents, thus ensuring recurring revenues.
The company has launched a low-cost 5G chip for affordable smartphone for masses and is helping customers experience a seamless transition to super-fast 5G networks, delivering low-power resilient multi-gigabit connectivity with best-in-class security. It expects macroeconomic uncertainty to make a radical impact on device shipment. Competition from low-cost chip manufacturers like MediaTek is another concern.
(You can read the full research report on QUALCOMM here >>>)
Other noteworthy reports we are featuring today include Shopify (SHOP), HSBC Holdings (HSBC) and Advanced Micro Devices (AMD).
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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
Product Rollouts & Growing Merchant Base Aid Shopify (SHOP)
Per the Zacks analyst, Shopify is riding on solid uptake of new applications amid coronavirus crisis led e-commerce boom.
Strong Capital Position, Extensive Global Network Aids HSBC
Per the Zacks Analyst, HSBC’s strong capital position amid an uncertain macro environment bodes well for the company.
AMD Rides on Robust 7nm Product Portfolio & Partnerships
Per the Zacks analyst, Advanced Micro Devices is benefiting from strong adoption of latest 7 nm-based EYPC and Ryzen processors.
Growing Topline Aids Marsh & McLennan (MMC), Expenses Hurt
Per the Zacks analyst, its increasing topline driven by product offerings, geographic expansion and acquisitions has led to significant growth.
Favorable Budget Aids Northrop (NOC), Supplier Challenge a Woe
Per the Zacks analyst, expansionary U.S. defense budget boost growth prospects of Northrop. Yet, COVID-19 led supplier disruption may push up costs for the company.
Edwards Lifesciences (EW) Gains From Robust TruWave Uptake
The Zacks analyst is upbeat about TruWave’s strong momentum despite the pandemic. Strong adoption of SAPIEN technology and regulatory approvals buoy optimism.
Loan Growth Aids Mitsubishi (MUFG) Amid Low Interest Rates
Per the Zacks analyst, organic growth remains a key strength at Mitsubishi UFJ. Higher revenues reflect improving loan and deposit balances. Yet, domestic low rate environment is a woe.
New Upgrades
Murphy USA (MUSA) to Gain from Proximity to Walmart Stores
The Zacks analyst believes that the proximity of Murphy USA’s fuel stations to Walmart supercenters helps the company to leverage the strong and consistent traffic that these stores attract.
Buyouts and Diversified Businesses to Aid Rexnord (RXN)
Per a Zacks analyst, Rexnord (RXN) is focused on improving its product offerings and market reach through acquisitions. Also, it stands to gain from its exposure in multiple end markets.
Aegion (AEGN) Rides on Solid Insituform North America Unit
Per the Zacks analyst, strong revenues, new orders and backlog from flagship Insituform North America business are likely to benefit Aegion’s performance in near term.
New Downgrades
High Expenses, Exposure to Low Rate Ail CME Group (CME)
Per the Zacks analyst, CME Group’s high expenses due to higher technology cost are likely to put pressure on margin expansion. Diversified product portfolio exposed to volatile interest rate concerns.
Lower Volume & Weak Guidance Hurt Armstrong World (AWI)
Per the Zacks analyst, lower volumes in both the Mineral Fiber and Architectural Specialties segments have been impacting Armstrong World’s results. Also, weak 2020 guidance adds to the woes.
Weak End Markets & Escalating Costs Hurt RBC Bearings (ROLL)
Per the Zacks analyst, RBC Bearings is struggling with weakness across its industrial and commercial aerospace end markets amid the coronavirus outbreak. Also, high operating costs remain concerning.
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