Top Research Reports For Southern, Applied Materials & Vertex
Zacks Investment Research | Oct 16, 2019 02:13AM ET
Wednesday, October 16, 2019
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 Southern Company (NYSE:SO) (SO), Applied Materials (NASDAQ:AMAT) (AMAT) and Vertex Pharmaceuticals (NASDAQ:VRTX) (VRTX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Southern’s shares have outperformed the Zacks Electric Power industry year to date (38.2% vs. 18.3%). The Zacks analyst believes that leveraging the demographics of its operating territories, as in healthy population and job growth, the firm has gradually increased its customer base.
With good rate base growth and constructive regulation, Southern Company is expected to generate steady earnings and dividend growth in the coming years. However, elevated leverage of the firm, along with continued timing and cost overrun issues over its Vogtle project, are the major overhangs.
While the electric utility holding company’s debt-to-capital ratio of 56% restricts financial flexibility, its $25-billion Vogtle nuclear plant has already exceeded budget and is years behind schedule. As such, Southern Company warrants a cautious stance from its investors.
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Shares of Applied Materials have gained 20.6% in the past six months compared with the Zacks Semiconductor Equipment - Wafer Fabrication industry’s rise of 27.6%. The Zacks analyst thinks that Applied Materials is benefiting from rising need for specialty nodes in IoT, communications, automotive, power and image sensor applications. This is leading to increased customer spending in foundry and logic.
Further, the company is witnessing solid momentum across the United States and Taiwan which is a major positive. Additionally, strengthening momentum in conductor etch is aiding Applied Materials in gaining traction in DRAM and NAND. The company remains optimistic about the price elasticity of NAND, which is expected to bolster NAND customer spending in the near term.
However, market uncertainties remain headwinds. Softness in semiconductor and display markets on account of a slowdown in memory and display customers’ spending is a major concern.
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Vertex’s shares have lost 0.6% over the past three months compared with the Zacks Biomedical and Genetics industry’s decline of 4.7%. The Zacks analyst believes that Vertex’s third cystic fibrosis (CF) medicine, Symdeko, in a very short time, has become the main driver of its CF revenues.
Vertex rapidly advanced its triple combination CF regimen through late-stage development and regulatory filings. The regimen is crucial for long-term growth as it has the potential to treat up to 90% of CF patients. Meanwhile, Vertex’s non-CF pipeline, though early stage, looks interesting with several pipeline readouts expected in 2020-21.
However, competitive pressure is rising in the CF market with many other companies developing triple combo CF drugs. Also, Vertex’s dependence on just the CF franchise for growth is a concern. Shares have outperformed the industry this year so far. Estimates have gone up slightly ahead of Q3 earnings. Vertex has a positive record of earnings surprises in the recent quarters.
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Other noteworthy reports we are featuring today include BHP Group (BHP), NVIDIA (NVDA) and Edwards Lifesciences (EW).
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Today's Must Read/h6
Featured Reports/h6
Per the Zacks analyst, NVIDIA is benefiting from the rising traction of GeForce laptops and RTX GPUs in the gaming market.
The Zacks analyst is bullish about Edwards' strong THV sales in the domestic and global markets.
Per the Zacks analyst, V.F. Corp is gaining from its direct-to-consumer business that grew 14% in first-quarter fiscal 2020.
Per the Zacks analyst, Prudential is set to grow on solid pension risk transfer business, momentum in U.S. Financial Wellness and international operations.
Per the Zacks analyst Eaton's steady improvement in end market condition has resulted in organic growth.
Per the Zacks analyst, a strong uptick in Aruba Services is driving Hewlett Packard's Intelligent Edge segment.
Per the Zacks analyst, a number of acquisitions such as that of Fidelis Care and MHM Services poise the company well for growth.
Per the Zacks analyst, NVIDIA is benefiting from the rising traction of GeForce laptops and RTX GPUs in the gaming market.
The Zacks analyst is bullish about Edwards' strong THV sales in the domestic and global markets.
Per the Zacks analyst, V.F. Corp is gaining from its direct-to-consumer business that grew 14% in first-quarter fiscal 2020.
Per the Zacks analyst, Prudential is set to grow on solid pension risk transfer business, momentum in U.S. Financial Wellness and international operations.
Per the Zacks analyst Eaton's steady improvement in end market condition has resulted in organic growth.
Per the Zacks analyst, a strong uptick in Aruba Services is driving Hewlett Packard's Intelligent Edge segment.
Per the Zacks analyst, a number of acquisitions such as that of Fidelis Care and MHM Services poise the company well for growth.
New Upgrades/h6
Per the Zacks analyst, Chipotle's increased focus on food safety and enhancing customer experience, along with various sales-building and strategic initiatives bode well.
Fresenius Medical has been gaining consistently from its core Health Care Products segment. The Zacks Analyst is also optimistic about a strong view for 2019 and 2020.
The Zacks analyst is impressed by Agnico Eagle's efforts to boost its production profile and also believes that it will gain from good progress at its major growth projects.
Per the Zacks analyst, Chipotle's increased focus on food safety and enhancing customer experience, along with various sales-building and strategic initiatives bode well.
Fresenius Medical has been gaining consistently from its core Health Care Products segment. The Zacks Analyst is also optimistic about a strong view for 2019 and 2020.
The Zacks analyst is impressed by Agnico Eagle's efforts to boost its production profile and also believes that it will gain from good progress at its major growth projects.
New Downgrades/h6
The Zacks Analyst is concerned lower metal prices due to the prolonged trade war and higher unit costs due to natural field decline at petroleum and lower copper grades will impact BHP's results.
Per the Zacks analyst, high debt burden makes it difficult for Wynn Resorts to finance its upcoming projects.
The Zacks analyst is concerned that the weak natural gas prices will restrict Cabot's cash flow generation considering the company's 100% gas-weighted production.
The Zacks Analyst is concerned lower metal prices due to the prolonged trade war and higher unit costs due to natural field decline at petroleum and lower copper grades will impact BHP's results.
Per the Zacks analyst, high debt burden makes it difficult for Wynn Resorts to finance its upcoming projects.
The Zacks analyst is concerned that the weak natural gas prices will restrict Cabot's cash flow generation considering the company's 100% gas-weighted production.
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