Thursday, May 5, 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 Oracle Corporation (ORCL), Union Pacific Corporation (UNP), and Ford Motor Company (F). 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 >>>
Oracle
shares have done better than the broader Zacks Tech sector in the year-do-date period (-15.5% vs. -18.9%), but they have lagged the S&P 500 index (-15.5% vs. -9.8%), a function of sentiment shift on the sector in a rising interest rate environment.
The Zacks analyst believes that higher spending on product enhancements, especially toward the cloud platform, amid increasing competition in the cloud domain is likely to limit margin expansion.
On the other hand, Oracle is benefiting from the ongoing momentum across its cloud business, driven by the strong uptake of Oracle Cloud Infrastructure services and Autonomous Database offerings. Solid adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP), Fusion ERP and Fusion Human Capital Management (HCM), bodes well.
Solid demand for the Oracle Dedicated Region Cloud@Customer is anticipated to drive the top line. Partnerships with Accenture and Microsoft is helping Oracle win new clientele. The company’s share buybacks and dividend policy are noteworthy.
(You can
read the full research report on Oracle here >>>
)
Shares of
Union Pacific
have outperformed the Zacks Transportation – Rail industry over the past year (+4.4% vs. +0.7%). The Zacks analyst believes that Union Pacific’s efforts to reward its shareholders even in the current uncertain scenario is praiseworthy. The company hiked dividend twice in 2021. The railroad operator is also active on the buyback front.
UNP returned $3.5 billion to its shareholders in first-quarter 2022. Management anticipates share repurchases in 2022 to be in line with the 2021 levels of $7.3 billion. The company’s strong free cash flow generating ability supports its shareholder-friendly activities. Uptick in freight revenues (up 17% year over year in first-quarter 2022) as economic activities pick up the pace is an added positive.
However, escalation in fuel costs (up 74% in the March quarter) as oil prices move north induced a 16% rise in operating expenses. High debt/EBITDA ratio and tepid automotive demand are further concerns. High capex may also play spoilsport.
(You can
read the full research report on Union Pacific here >>>
)
Shares of
Ford Motor
have outperformed the Zacks Automotive – Domestic industry over the past year (+27.6% vs. +3.9%). The Zacks analyst believes that strong vehicle mix supported by F-series trucks and SUV models, including Escape, Explorer, Expedition, EcoSport and Edge, among others is expected to bolster Ford’s revenues. The robust electric vehicle (EV) lineup—with Mustang Mach-E, E-Transit and F-150 Lightning— is receiving great reception and is set to drive growth.
Upbeat 2022 guidance also spark optimism. Ford+ plan, with a focus on profitability growth, e-mobility future and enhancement of customer experience augurs well. Yet, massive electrification spending of over $50 billion by 2026 is likely to strain near-term cash flows. High commodity and freight expenses, a tough labor market and logistical challenges will mar near-term profits.
(You can
read the full research report on Ford Motor here >>>
)
Other noteworthy reports we are featuring today include Biogen Inc. (BIIB), PPG Industries, Inc. (PPG), and Expedia Group, Inc. (EXPE).
Director of Research
Sheraz Mian
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
Oracle (ORCL) Rides on Cloud Suite Adoption & Partnerships
Free Cashflow Lifts Union Pacific (UNP), Cost Woes Linger
Ford (F) Banks on EV Lineup for Growth Amid Cost Woes
Featured Reports
Biogen’s (BIIB) Upcoming Product Launches May Revive Growth
The Zacks analyst says that potential new product launches like lecanemab, zuranolone and additional biosimilars can help revive growth at Biogen, which is facing multiple challenges at present.
Consistent Investments, Renewable Focus Aid AVANGRID (AGR)
Per the Zacks analyst AVANGRID’s regular investments to strengthen infrastructure and expand clean energy generation assets are going to drive its operation.
Higher Average Daily Compression Volumes Aid Antero (AM)
Antero Midstream is gaining on higher average daily compression volumes. However, the company’s rising direct operating expenses concern the Zacks analyst.
Strong Demand & Acquisitions Aid Fortive’s (FTV) Performance
Per the Zacks analyst, strong customer demand trends and synergies from the acquisitions is driving Fortive’s top line performance. Growth in software business is another tailwind.
Loan Origination Growth Aid Sallie Mae (SLM) Despite High Debt
Per the Zacks analyst, secular growth trends in the private student lending industry will drive loan originations for Sallie Mae. Yet, high debt seems unmanageable relative to a smaller cash position.
Cost Reduction, Acquisitions to Aid PPG Industries (PPG)
Per the Zacks analyst, PPG will gain from cost savings through restructuring actions and synergies of acquisitions amid headwinds from higher raw material and logistics costs.
Expedia (EXPE) Benefits From Strengthening Gross Bookings
Per the Zacks analyst, increasing gross bookings owing to improving domestic as well as international travel demand, is aiding the performance of Expedia Group.
New Upgrades
Gartner (IT) Benefits From High-Quality Analysis Offering
The Zacks analyst believes that Gartner’s high-quality, timely, thought-provoking and comprehensive analysis offering helps it to counter growing competition.
World Wrestling (WWE) New Content Creation to Lift Revenues
Per the Zacks analyst World Wrestling’s focus on content creation, driving subscriber count, raising content rights fees and monetization of video content across digital and DTC platforms bodes well.
W.R. Berkley (WRB) Set to Grow on Solid Insurance Business
Per the Zacks analyst, W.R. Berkley’s Insurance business is set to grow on rate increases, reserving discipline, and improving premiums from international unit supported by the emerging markets.
New Downgrades
Dismal China Performance & High Costs Hurts Starbucks (SBUX)
Per the Zacks analyst, Starbucks results in the third and fourth-quarter fiscal 20222 likely to be impacted by resurgence of coronavirus cases in China and high costs.
Forex Woes, Mounting Expenses Hurt Align Technology (ALGN)
The Zacks analyst is concerned about Align Technology’s increasing operating expenses which build pressure on its bottom line. Unfavorable foreign currency movements continue to hamper financials.
Philip Morris’ (PM) Gross Margin Troubled by Cost Inflation
Per the Zacks analyst, Philip Morris is troubled by cost woes. Management expects 2022 gross margin to be hurt by initial cost of IQOS ILUMA devices and inflation across some key supply-chain elements
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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