Monday, July 11, 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 Berkshire Hathaway Inc. (BRK.B), The Walt Disney Co. (DIS) and CVS Health Corp. (CVS). 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 >>>
Berkshire Hathaway
shares have outperformed the Zacks Insurance – Property and Casualty industry over the past year (+0.3% vs. -5.0%). The Zacks analyst believes that Berkshire’s inorganic growth story remains impressive with strategic acquisitions.
A strong cash position supports earnings-accretive bolt-on buyouts and indicates the company’s financial flexibility. Continued insurance business growth fuels increase in float, drive earnings and generates maximum return on equity. The non-insurance businesses are delivering improved results with increased revenues over the past few years. A sturdy capital level provides further impetus.
However, exposure to catastrophe loss induces earnings volatility and also affects the property and casualty underwriting results of Berkshire. Huge capital expenditures remain a headwind for the company.
(You can
read the full research report on Berkshire Hathaway here >>>
)
Walt Disney
shares have declined -38.1% over the year to date period against the Zacks Media Conglomerates industry’s decline of -32.0%. The Zacks analyst believes that Disney+’s profitability is expected to be negatively impacted by higher investments in content, which will drive up programming and production costs at Media and Entertainment Distribution. Closure of its Asian theme park due to COVID-19 doesn’t bode well for the Parks, Experiences and Products top-line growth.
Nevertheless, the company benefits from the growing popularity of Disney+, owing to a strong content portfolio and a cheaper bundle offering. Availability in the Nordics, Latin America and other Asian territories is helping it in expanding user base. Revival in Parks business also hold promise in the long haul.
(You can
read the full research report on Walt Disney here >>>
)
CVS Health
shares have outperformed the Zacks Retail – Pharmacies and Drug Stores industry over the past year (+17.7% vs. +4.9%). The Zacks analyst believes that the company’s continued investments to address housing insecurities and enhance access to health care services in underserved communities seem encouraging.
The raised earnings per share (EPS) guidance for 2022 buoys optimism. In fact, CVS Health exited the first quarter of 2022 with earnings and revenues beating the Zacks Consensus Estimate.
Yet, the contraction of margins on escalating costs does not bode well. The decline in operating profit due to the pending litigation with the state of Florida to settle all opioid claims against CVS Health raises apprehension.
(You can
read the full research report on CVS here >>>
)
Other noteworthy reports we are featuring today include Lowe’s Companies, Inc. (LOW), Citigroup Inc. (C), and Canadian National Railway Co. (CNI).
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
Berkshire (BRK.B) Continues to Gain From Insurance Business
Disney (DIS) Banks on Disney+ Growth & Reopening of Parks
Robust Pharmacy Sales Aid CVS Health (CVS), Weak Margins Ail
Featured Reports
Lowe’s (LOW) Pro Customer Strategy May Help Lift Sales
Per the Zacks analyst, Lowe’s pro customer strategy, omni-channel efforts and merchandising initiatives may help boost sales. Pro customer sales increased 20% during the first quarter of fiscal 2022.
Citigroup (C) Progresses on Strategic Sales Amid Rising Costs
Per the Zacks analyst, Citigroup’s progress on the consumer banking business exit will help focus on core operations. Yet, revamping technology and risk management framework might elevate expenses.
Dividends & Buyback Aid Canadian National (CNI), Expenses Ail
The Zacks analyst likes the shareholder-friendly measures adopted by Canadian National. However, rising operating expenses are concerning as they are likely to keep the bottom line under pressure.
General Electric (GE) Benefits from Portfolio Restructuring
The Zacks analyst is optimistic about the company’s portfolio reshaping actions, which is expected to drive its growth. The company’s measures to reward its shareholders are encouraging.
Enterprise (EPD) Banks on $4.6B Major Midstream Projects
Per the Zacks analyst, Enterprise Products’ $4.6 billion of major capital projects under construction are likely to provide incremental fee-based revenues.
Momentum in Flash Business to Benefit Pure Storage (PSTG)
Per the Zacks analyst, Pure Storage is expected to benefit from robust demand for FlashArray and FlashBlade businesses. Supply chain woes and stiff competition remain concerns.
Customer Addition, Debt Management Aid UGI Corporation (UGI)
Per the Zacks analyst UGI Corporation’s continuous expansion of its customers is increasing demand for its services and efficient debt management will boost its profitability.
New Upgrades
Ingevity (NGVT) Gains on Strong Demand, Capacity Expansion
Per the Zacks analyst, strong demand for engineered polymers and industrial specialties applications will drive Ingevity’s top line. It will also gain from its actions to boost production capacity.
Cactus (WHD) to Gain From Higher Wellhead Equipment Sales
The Zacks analyst is upbeat about Cactus’ higher sales of wellhead and production-related equipment due to rising customer drilling activity. This will get translated into increased cashflows.
Strong E-commerce Demand Aids Air Transport Services (ATSG)
The Zacks analyst is impressed with upbeat e-commerce demand. Strong performance of the Cargo Aircraft Management unit is an added positive.
New Downgrades
Declining Demand For COVID-19 Treatments Impact Roche (RHHBY)
Per the Zacks analyst, reduced demand for its COVID-19 medicines and diagnostics, which fuelled growth in 2021 will impact Roche in 2022. Biosimilar competition for drugs weighs on performance as well
Rising Expenses & Declining Bitcoin Revenues Hurt Block (SQ)
Per the Zacks analyst, Block is suffering from increasing product development and Cash App marketing expenses. Also, declining bitcoin revenues due to slowdown in trading activities are concerns.
Inflationary Pressure & Higher Input Cost Hurt Otis (OTIS)
Per the Zacks analyst, Otis has been witnessing intense inflation, higher cost of the input and higher research and development expenses.
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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