Top Stock Reports For Microsoft, Home Depot & AbbVie
Zacks Investment Research | Sep 06, 2019 01:56AM ET
Friday, September 6, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Microsoft (MSFT), Home Depot (NYSE:HD) and AbbVie (ABBV). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
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Microsoft’s shares have gained +29.4% in the past year, outperforming the S&P 500’s’ gain of +2.4% during the same period. Microsoft is benefiting from growing user base of its different applications like Office 365 commercial, Dynamics, Outlook mobile and Teams. Moreover, Azure’s expanding customer base is a key catalyst.
Microsoft’s gaming segment is performing well, primarily driven by a combination of Xbox Live, Game Pass subscriptions and Mixer, which are driving user engagement. Further, acquisitions like PlayFab and GitHub expand Microsoft’s total addressable market (TAM) and penetration. Additionally, expanding partner base is notable.
However, projections of a moderating growth rate in commercial cloud gross margin, and OEM Pro and Windows commercial businesses is a headwind. Moreover, stiff competition from the like of Google (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Sony and Nintendo remains a headwind.
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Shares of Home Depot have gained +32.8% year to date, outperforming the Zacks Retail Building Products industry’s +28.3% increase. The Zacks analyst thinks that this is attributable to a positive earnings surprise trend recorded for more than five years, which continued in second-quarter fiscal 2019.
Earnings benefited from progress on strategic investments as well as a favorable U.S. consumer backdrop and a steady housing market. Meanwhile, the company’s top line lagged estimates but improved year over year on robust comps performance. Its efforts to provide an interconnected shopping experience to customers, with innovative products and improved productivity, position it for growth.
Despite these gains, lumber price deflation remained a drag on the company’s sales and comps in the fiscal second quarter. Further, it slashed its sales and comps view for fiscal 2019 on lumber price deflation and fears of potential impacts of the newly enacted tariffs.
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AbbVie’s shares have lost -27.3% year to date, versus the Zacks Large-Cap Pharmaceuticals industry's decline of -0.6%. AbbVie beat estimates for earnings and sales in the second quarter and raised its earnings guidance for the second time this year.
The Zacks analyst thinks AbbVie’s key drug, Humira, is performing well based on strong demand trends despite new competition. Imbruvica has multibillion dollar potential. AbbVie has been successful in expanding approvals for its cancer drugs, Imbruvica and Venclexta.
Moreover, it has an impressive late-stage pipeline, comprising several products with multibillion-dollar potential expected to be launched in the near term. The acquisition of Allergan (NYSE:AGN), if successful, should diversify AbbVie’s revenue base and accelerate its non-Humira business. Sales erosion due to direct biosimilar competition to Humira in international markets is a big headwind in 2019.
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Other noteworthy reports we are featuring today include Palo Alto Networks (PANW), Disney (DIS) and Host Hotels (HST).
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Note: Our Director of Research 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
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Featured Reports/h6
Per the Zacks analyst, Dycom is poised to benefit from strong telecom business.
Per the Zacks analyst, Finisar is expanding its optical subsystems portfolio through R&D efforts, while addressing high demand for products for 5G wireless transition and ROADMs for easy scalability.
Per the Zacks analyst, strategic repositioning efforts will likely improve Host Hotels' portfolio quality.
Wright Medical has been gaining from solid prospects of its core Upper Extremities segment. The Zacks analyst is however apprehensive about a slashed view for 2019.
Per the Zacks analyst, Palo Alto's partnerships with the likes of VMware, and acquisitions like that of Demisto, PureSec & TwistLock will steadily widen its portfolio and global reach.
The Zacks analyst appreciates Iron Mountain's efforts to expand in targeted markets through lucrative acquisitions and efforts to improve its service platform via new developments.
Per the Zacks analyst, Michaels' focus on integrating e-commerce and in-store operations to enhance the omni-channel experience bode well.
Per the Zacks analyst, Dycom is poised to benefit from strong telecom business.
Per the Zacks analyst, Finisar is expanding its optical subsystems portfolio through R&D efforts, while addressing high demand for products for 5G wireless transition and ROADMs for easy scalability.
Per the Zacks analyst, strategic repositioning efforts will likely improve Host Hotels' portfolio quality.
Wright Medical has been gaining from solid prospects of its core Upper Extremities segment. The Zacks analyst is however apprehensive about a slashed view for 2019.
Per the Zacks analyst, Palo Alto's partnerships with the likes of VMware, and acquisitions like that of Demisto, PureSec & TwistLock will steadily widen its portfolio and global reach.
The Zacks analyst appreciates Iron Mountain's efforts to expand in targeted markets through lucrative acquisitions and efforts to improve its service platform via new developments.
Per the Zacks analyst, Michaels' focus on integrating e-commerce and in-store operations to enhance the omni-channel experience bode well.
New Upgrades/h6
Per the Zacks analyst, MasTec is poised to gain from solid backlog and prospects across communications, transmission, and power generation segments.
The Zacks analyst believes that while U.S. Humira and hematological oncology franchise growth are driving sales in 2019, the loss of international Humira revenues to biosimilars is a big headwind.
Per the Zacks analyst, Huntington's strategic initiatives, including expansion moves should bolster revenue growth. Further, continued rise in deposits & loans are a favorable factor.
Per the Zacks analyst, MasTec is poised to gain from solid backlog and prospects across communications, transmission, and power generation segments.
The Zacks analyst believes that while U.S. Humira and hematological oncology franchise growth are driving sales in 2019, the loss of international Humira revenues to biosimilars is a big headwind.
Per the Zacks analyst, Huntington's strategic initiatives, including expansion moves should bolster revenue growth. Further, continued rise in deposits & loans are a favorable factor.
New Downgrades/h6
The Zacks analyst is worried about high non-fuel costs limiting Delta's bottom-line growth. Multiple flight cancellations due to Hurricane Dorian are also likely to hurt profitability.
Per the Zacks analyst, Disney's ongoing investments on ESPN+ and Disney+ platforms and higher programming and production costs hurts profitability.
Escalating contract drilling expenses are affecting Noble's bottom line. The company's leveraged balance sheet is also a concern, emphasizes the Zacks analyst.
The Zacks analyst is worried about high non-fuel costs limiting Delta's bottom-line growth. Multiple flight cancellations due to Hurricane Dorian are also likely to hurt profitability.
Per the Zacks analyst, Disney's ongoing investments on ESPN+ and Disney+ platforms and higher programming and production costs hurts profitability.
Escalating contract drilling expenses are affecting Noble's bottom line. The company's leveraged balance sheet is also a concern, emphasizes the Zacks analyst.
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