Top Stock Reports For Berkshire Hathaway, Salesforce & Danaher
Zacks Investment Research | Jun 14, 2019 01:25AM ET
Friday, June 14, 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 Berkshire Hathaway (BRK.B), salesforce (CRM) and Danaher (DHR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Berkshire Hathaway’s shares have underperformed the Zacks Insurance - Property and Casualty industry in the past six months (+3.7% vs. +7.1%). However, the Zacks analyst thinks the company is poised for growth over the long term on its sturdy insurance business.
The company’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position supports earnings-accretive bolt-on buyouts. Demand for utilities is expected to rise in the future and drive earnings growth.
Continued insurance business growth also fuels increase in float. The company’s non-insurance businesses are also delivering improved results supporting overall performance.
A sturdy capital level provides further impetus. However, Berkshire Hathaway’s exposure to catastrophe loss remains a concern as its property and casualty insurance business generates maximum return on equity. Also, huge capital expenses due to railroad operations are worrying.
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Shares of salesforce have gained +10.1% year to date, underperforming the Zacks Computer Software industry, which has gained +28.6% over the same period. However, salesforce's first-quarter fiscal 2020 results gained from solid growth across all its four major cloud offerings.
The company is benefiting from deal wins in the international market. Rapid adoption of its diverse cloud offerings, given an upsurge in demand for digital transformation, is the constant key catalyst. Strengthening relationships with cloud companies like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOGL) and IBM (NYSE:IBM) are a positive.
Additionally, strategic acquisitions like MuleSoft, Datorama and Cloudcraze are helping it deliver a strong uptick. Nonetheless, stiff competition from Oracle (NYSE:ORCL) and Microsoft (NASDAQ:MSFT) is a concern.
Unfavorable currency fluctuations persist as a key headwind. Besides, increasing investments on international expansion and data centers are an overhang on near-term profitability.
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Danaher’s shares have gained +8.6% over the past three months, outperforming the Zacks Diversified Operations industry, which has increased +1% over the same period. The Zacks analyst thinks sturdier demand for products, Danaher Business System ("DBS") implementation and shareholder-friendly policies will likely bolster profitability going forward.
Also, it anticipates that the acquisition of General Electric (NYSE:GE)'s BioPharma business will boost its biologics workflow solutions business. Also, the divestiture of the dental business will improve its competency. However, rising cost of sales and unfavorable movements in foreign currencies might continue to restrict Danaher's growth.
For 2019, the company lowered adjusted earnings per share guidance from $4.75-$4.85 to $4.72-$4.80, primarily reflecting dilutive impact of funds raised for the BioPharma buyout. Earnings estimates for 2019 have improved in the past 60 days.
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Other noteworthy reports we are featuring today include Brown-Forman (BF.B), Halliburton (HAL) and American Airlines (AAL).
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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
Per the Zacks analyst, improving demand in end markets, cost cutting efforts and investment in digital initiatives like e-commerce will boost Caterpillar's results despite higher raw material costs.
Per the Zacks analyst, Brown-Forman's investments in the brands portfolio, including broadening of the Jack Daniel's family of brands and growing the super-premium spirits category, should aid growth.
The Zacks analyst believes rising international activity and higher offshore spending should aid Halliburton but is concerned about pricing pressure in North American hydraulic fracturing services.
Per the Zacks analyst, Science Applications is benefiting from new contracts supporting IT modernization. Moreover, strategic acquisitions like Engility bode well for growth.
Per the Zacks analyst, Ormat bears a solid opportunity to expand in the global geothermal energy market.
Per the Zacks analyst, expansion of hospitality and the extension of the RH brand bode well for RH.
Per the Zacks analyst, Mallinckrodt strong hospital portfolio (Inomax and Ofirmev) drive growth for the company.
Per the Zacks analyst, improving demand in end markets, cost cutting efforts and investment in digital initiatives like e-commerce will boost Caterpillar's results despite higher raw material costs.
Per the Zacks analyst, Brown-Forman's investments in the brands portfolio, including broadening of the Jack Daniel's family of brands and growing the super-premium spirits category, should aid growth.
The Zacks analyst believes rising international activity and higher offshore spending should aid Halliburton but is concerned about pricing pressure in North American hydraulic fracturing services.
Per the Zacks analyst, Science Applications is benefiting from new contracts supporting IT modernization. Moreover, strategic acquisitions like Engility bode well for growth.
Per the Zacks analyst, Ormat bears a solid opportunity to expand in the global geothermal energy market.
Per the Zacks analyst, expansion of hospitality and the extension of the RH brand bode well for RH.
Per the Zacks analyst, Mallinckrodt strong hospital portfolio (Inomax and Ofirmev) drive growth for the company.
New Upgrades/h6
Per the Zacks analyst, Cboe Global's trading volume growth has led to an increase in transaction fee and coupled with core competencies is helping the company to retain the organic growth momentum.
Per the Zacks analyst, Ciena is poised to benefit from its technology leadership and diversified customer base in high-growth markets alongside favorable industry dynamics and competitive advantage.
Per the Zacks analyst, Legg Mason's strong liquidity position keeps it well poised to grow through acquisitions.
Per the Zacks analyst, Cboe Global's trading volume growth has led to an increase in transaction fee and coupled with core competencies is helping the company to retain the organic growth momentum.
Per the Zacks analyst, Ciena is poised to benefit from its technology leadership and diversified customer base in high-growth markets alongside favorable industry dynamics and competitive advantage.
Per the Zacks analyst, Legg Mason's strong liquidity position keeps it well poised to grow through acquisitions.
New Downgrades/h6
The Zacks analyst is worried about its high debt levels. Flight cancellations due to the grounding of the Boeing (NYSE:BA) 737 MAX jets are intensifying passengers' woes, which in turn, might affect revenues.
The Zacks analyst thinks that lower U.S. steel prices will dent the company's earnings. Weakening steel demand across construction and automotive markets in China is another concern.
Slower demand, higher incentives due to challenging weather and changes in mix are likely to impact home deliveries in fiscal 2019.
The Zacks analyst is worried about its high debt levels. Flight cancellations due to the grounding of the Boeing (NYSE:BA) 737 MAX jets are intensifying passengers' woes, which in turn, might affect revenues.
The Zacks analyst thinks that lower U.S. steel prices will dent the company's earnings. Weakening steel demand across construction and automotive markets in China is another concern.
Slower demand, higher incentives due to challenging weather and changes in mix are likely to impact home deliveries in fiscal 2019.
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