Top Research Reports For Microsoft, Philip Morris And 3M
Zacks Investment Research | Jan 23, 2018 04:31AM ET
Tuesday, January 23, 2018
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 Microsoft (MSFT), Philip Morris (PM) and 3M (MMM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Microsoft’s shares have outperformed the Zacks Technology sector over the last year (up +41.6% versus +29.5%) The company is dealing with the recent security bug which poses a huge risk for users. In this context, it is rolling out patches to fix Windows kernels in order to address the vulnerability.
Additionally, Microsoft’s recent blockchain deals with Hapoalim and Accenture and its Coco framework are tailwinds. The Zacks analyst expects rapid adoption of Azure and Office 365 to remain the key catalysts in the near future. Further, collaborations with the likes of Amazon (NASDAQ:AMZN), Red Hat, Symantec (NASDAQ:SYMC), Cray and PAREXEL are positive for the company's growth prospects.
Microsoft’s strategic initiatives to enter the augmented reality and virtual reality market with the acquisition of Altspace VR and launch of mixed reality headsets will also be positives. However, intense competition from Sony’s PS4 is a headwind.
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Shares of Philip Morris have underperformed the Zacks Tobacco industry over the last six months (-8.4% vs. -2.9%). Though the company has been benefiting from enhanced volumes and revenues in the reduced risk products category, it has been suffering majorly due to consistent declines in cigarette volumes stemming from the shift of customer preference away from tobacco products.
Owing to such headwinds, Philip Morris continued with its drab performance in third-quarter 2017, wherein both earnings and revenues lagged the Zacks Consensus Estimate. These factors also compelled management to lower its 2017 view.
However, the Zacks analyst likes Philip Morris’ consistent efforts to improve the performance of its low risk products. In this category, the company’s IQOS smokeless cigarette has been steadily expanding owing to consumer demand. Higher cigarette pricing has also been favoring the company.
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Buy-rated 3M’s shares have gained +5.8% over the past three months, outperforming the Zacks Diversified Operations industry, which has declined -1.9% over the same period. The Zacks analyst likes 3M's global footprint, diversified product portfolio and ability to penetrate different markets.
The company’s ability to convert high R&D spends into up-cycle market share gains and strong pricing power determines its success. It remains focused on inventing new products, giving it a competitive advantage worldwide. Portfolio management, investment in innovation and business transformation are the three key levers on which the company intends to focus on.
3M also intends to continue investing in capital expenditures and R&D to support organic growth as it aims a prudent capital structure strategy and increased capital deployment. However, as exports form a significant part of the company’s operations and growth prospects, sustained strength in U.S. dollar will continue to negatively impact the company’s earnings in the short-term.
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Other noteworthy reports we are featuring today include Stryker (SYK), Schlumberger (SLB) and TJX Companies (NYSE:TJX).
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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
Today's Must Read/h6
Featured Reports/h6
The Zacks analyst believes ONEOK to gain from its existing pipelines spread across high resource regions and higher fee based contracts, which provides surety and visibility toward future earnings.
The Zacks analyst thinks Avery Dennison's aggressive cost-cutting and productivity actions are marred by its increased debt levels following the Yongle and Finesse acquisitions.
The Zacks analyst believes that Stryker is well-poised to report a strong topline result in the fourth quarter on solid performance in the MAKO platform.
Per the Zacks analyst, solid segmental performance as well as reinsurance, will continue to fuel premium growth for Markel
Per the Zacks Analyst, Welltower's focus on seniors housing assets amid a rising senior citizen population bodes well.
The Zacks analyst expects Yum! Brands' digital initiatives to drive growth.
Per the Zacks analysts, Medicines Co.'s lead candidate, Inclisiran holds huge potential given the lucrative market it targets.
The Zacks analyst believes ONEOK to gain from its existing pipelines spread across high resource regions and higher fee based contracts, which provides surety and visibility toward future earnings.
The Zacks analyst thinks Avery Dennison's aggressive cost-cutting and productivity actions are marred by its increased debt levels following the Yongle and Finesse acquisitions.
The Zacks analyst believes that Stryker is well-poised to report a strong topline result in the fourth quarter on solid performance in the MAKO platform.
Per the Zacks analyst, solid segmental performance as well as reinsurance, will continue to fuel premium growth for Markel
Per the Zacks Analyst, Welltower's focus on seniors housing assets amid a rising senior citizen population bodes well.
The Zacks analyst expects Yum! Brands' digital initiatives to drive growth.
Per the Zacks analysts, Medicines Co.'s lead candidate, Inclisiran holds huge potential given the lucrative market it targets.
New Upgrades/h6
According to the Zacks analyst, ADP's dominant position in the payroll processing and HCM markets is driving growth. Further, WorkMarket buyout will aid ADP in enhancing product offerings.
The Zacks analyst is impressed by the growth in volumes at the company's primary division - intermodal. Efforts to reward shareholders also raise optimism in the stock.
Per the Zacks analyst, TJX Companies has been gaining from strong merchandise margins, backed by its efficient inventory management. These factors place the company well for another solid quarter.
According to the Zacks analyst, ADP's dominant position in the payroll processing and HCM markets is driving growth. Further, WorkMarket buyout will aid ADP in enhancing product offerings.
The Zacks analyst is impressed by the growth in volumes at the company's primary division - intermodal. Efforts to reward shareholders also raise optimism in the stock.
Per the Zacks analyst, TJX Companies has been gaining from strong merchandise margins, backed by its efficient inventory management. These factors place the company well for another solid quarter.
New Downgrades/h6
Lack of exposure to profitable U.S. shale plays will reduce the number of oilfield service contracts for Schlumberger, according to the Zacks analyst.
The Zacks analyst is concerned about the declining advertisement revenues on the domestic front. High debt levels and programming expenses are also worrisome.
Per the Zacks analyst, Stanley Black & Decker (NYSE:SWK) remains exposed to headwinds arising from rising cost of sales and operating expenses. Huge debt level might also hurt results.
Lack of exposure to profitable U.S. shale plays will reduce the number of oilfield service contracts for Schlumberger, according to the Zacks analyst.
The Zacks analyst is concerned about the declining advertisement revenues on the domestic front. High debt levels and programming expenses are also worrisome.
Per the Zacks analyst, Stanley Black & Decker (NYSE:SWK) remains exposed to headwinds arising from rising cost of sales and operating expenses. Huge debt level might also hurt results.
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