Wednesday, December 14, 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 Verizon Communications Inc. (VZ), Honeywell International Inc. (HON) and CVS Health Corporation (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 >>>
Verizon
shares have underperformed the broader market (-27.1% vs. -17% for the S&P 500 index) and rival AT&T
T
(-22.2%) this year, with weak guidance at the last quarterly relase adding to the negative momentum. An intensely competitive market and hefty expenses on promotions and lucrative discounts to attract customers are likely to hurt profitability. Spectrum crunch with a saturated wireless market is another headwind.
However, Verizon plans to accelerate the availability of the 5G Ultra-Wideband network with C-Band deployment, focusing on 5G mobility, nationwide broadband, mobile edge compute and business solutions. It is offering various mix-and-match pricing in both wireless and home broadband plans.
Verizon is also aggressively expanding its fiber optics network to support 4G LTE, 5G wireless standards and wireline connections. Customer-focused planning, disciplined engineering and continued network upgrades will likely augment its market position.
(You can
read the full research report on Verizon here >>>
)
Honeywell
shares have outperformed the Zacks Diversified Operations industry over the past year (+2.5% vs. -15.2%) on the back of recovery in commercial flight hours, strong fire products and building management system sales, strong demand in the marine products business and strength in gas processing orders.
Following a strong third quarter, the company improved its earnings guidance for 2022. Pricing actions and cost-control measures support the company’s margins. Strong free cash flow generation capacity supports the company’s shareholder-friendly activities.
However, volume softness due to supply-chain disruptions, especially semiconductors and parts shortages, is concerning. Weakness in the Safety and Productivity Solutions unit due to lower personal protective equipment and warehouse automation volumes is also worrisome. Raw material cost-inflation and adverse foreign currency movements are other headwinds.
(You can
read the full research report on Honeywell here >>>
)
CVS Health
shares have been standout performers this year, outperforming the broader market (-1.9% vs. -17% for the S&P 500 index) and rival Walgreens Boots Alliance (
WBA
– down -21.4%), reflecting CVS’ robust sales growth across all three operating segments drove the top-line results.
Within the Health Care Benefits arm, the continued growth across the entire range of insured and self-insured medical, pharmacy, dental and behavioral health products and services instills optimism. The raised EPS guidance for 2022 is indicative of this growth momentum continuing.
However, the contraction of margins on escalating costs does not bode well. The decline in COVID-19 vaccinations and testing sales is a downside. Further, persistent pharmacy reimbursement headwinds also continued to impact business performance in the quarter under review.
(You can
read the full research report on CVS Health here >>>
)
Other noteworthy reports we are featuring today include Intuit Inc. (INTU), ICICI Bank Limited (IBN) and Incyte Corporation (INCY).
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
Verizon (VZ) Rides on 5G Rollout, Fiber Optics Expansion
Aerospace Unit Backs Honeywell (HON) Despite Cost Headwinds
CVS Health (CVS) Pharmacy Business Grows Amid Stiff Rivalry
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. Moreover, increase in subscriptions is driving stable revenue growth for the company.
Retail Loan Growth Aid ICICI Bank (IBN), High Costs a Woe
Per the Zacks analyst, ICICI Bank is poised for growth supported by continued rise in retail loans and a stable funding base. Higher costs due to investments in technology will likely hurt profits.
Incyte (INCY) Jakafi Fuels Growth, Competition a Concern
Per the Zacks analyst, Incyte maintains momentum driven by growth in patient demand for the lead drug, Jakafi, higher royalty revenues, and encouraging uptake of other recently approved drugs.
Chipotle (CMG) Banks on Digital Initiatives, High Costs Ail
Per the Zacks analyst, Chipotle’s consistent strength in digital sales and positive customer reception to new menu items bode well. However, commodity and wage inflation are a concern.
Diamondback (FANG) to Benefit from Low Breakeven Costs
The Zacks analyst likes Diamondback Energy’s extremely low oil price breakeven , wherein the company needs the commodity to be at just $50 a barrel to be profitable.
Delta Airlines (DAL) Rides on Air Travel Demand, Costs Ail
The Zacks Analyst is impressed with the fact that increased air-travel demand is aiding Delta Airlines’ top-line performance. However, rising fuel costs continues to weigh on the bottom line.
Investment on Infrastructure & Clean Assets Aid Evergy (EVRG)
Per the Zacks analyst, Evergy’s investment of $10.7B through 2026 to add clean sources to generate electricity, strengthen iinfrastructure to serve customers will boost its profitability.
New Upgrades
W.R. Berkley (WRB) is Set to Grow on Solid Insurance Business
Per the Zacks analyst, W.R. Berkley is set to grow on the strength of its Insurance business, growing international business, investment in alternative assets and solid capital position.
Diversified Portfolio and Strengthening Backlog Aid FLEX
Per the Zacks analyst, Flex’s performance benefited from strong revenue growth across all business segments owing to ongoing secular trends. Also, rising customer backlogs are major tailwinds.
Strong Demand, Acquisitions to Drive Commercial Metals (CMC)
The Zacks analyst believes that Commercial Metals will gain on the strong demand in North America. Efforts to increase its capabilities through construction of new mills and acquisitions bode well.
New Downgrades
Seasonal Demand, Competition From Clean Fuel Sources Ail UGI
Per the Zacks analyst UGI’s operation can get adversely impacted from strong competition coming from other clean energy sources and seasonal variation of demand can lower its profitability.
High Debt Level, Higher Reserve Charges Ail Manulife (MFC)
Per the Zacks analyst, Manulife’s high debt level inducing increase in expenses with low times interest earned concern. Manulife’s reserves to guarantee future liabilities drains the bottom line.
Higher Deposit Cost, Expenses Hurt First Republic (FRC)
Pressure on margins due to an unfavorable mix shift in deposits and higher funding costs as well as mounting expenses are key headwinds for First Republic. Its capital deployments look unsustainable.
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