Top Stock Reports For Verizon, Abbott & Illinois Tool Works
Zacks Investment Research | May 08, 2019 02:03AM ET
Wednesday, May 8, 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 Verizon (VZ), Abbott (ABT) and Illinois Tool Works (ITW). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
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Verizon’s shares have gained +22.1% in the past year, outperforming the Zacks Wireless National industry’s increase of +10.2% during the same period. Verizon started 2019 on a promising note with solid performance in the first quarter, primarily backed by the wireless business.
The company recorded modest top-line growth and remains well poised to benefit from the impending 5G boom. The Zacks analyst thinks focus on online content delivery, mobile video and online advertising are likely to stoke further growth. Management also raised its earlier guidance on underlying strength of its business model.
However, Verizon continues to struggle in a competitive and saturated U.S. wireless market, where spectrum crunch has become a major issue. The wireline division is struggling with persistent losses in access lines owing to competitive pressure from VoIP service providers and aggressive triple-play offerings by cable firms. Verizon is also spending heavily on promotion and lucrative discounts to woo customers, which is also weighing on margins.
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Shares of Abbott have gained +29.5% over the past year, outperforming the Zacks Medical Products industry, which has increased +5.9% over the same period. Abbott exited first quarter 2019 with better-than-expected earnings and revenues figures.
The Zacks analyst likes the strong and consistent performance by the company’s EPD and Medical Devices segments on an organic basis. The company has been hogging the limelight within Diabetic Care on growth with FreeStyle Libre. Within Structural Heart, worldwide strong uptake of MitraClip has improved further following the FDA approval of its upgraded version.
This apart, synergies from Alere consolidation in the form of revenues from Rapid Diagnostics have been driving growth. Abbott's emerging market performance has been promising. On the flip side, sluggish Rhythm Management arm in the United States continues to dent growth. Increasing currency headwinds to some extent dented Abbott’s international performance in the last-reported quarter.
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Illinois Tool Works’ shares have outperformed the Zacks Industrial Machinery industry over the past six months, gaining +14.4% over the period versus the industry’s +10.3% increase. The Zacks analyst thinks Illinois Tool will gain from a diversified business structure, policy of rewarding shareholders handsomely, enterprise initiatives and skilled management team.
In first-quarter 2019, the company's earnings surpassed estimates but declined year over year due to weak sales, higher taxes, forex woes and restructuring costs. For 2019, it anticipates earnings per share to increase 4-8% year over year. Enterprise Strategy is anticipated to boost margins by 100 basis points (bps). Share buybacks are likely to amount to $1.5 billion.
However, organic sales are predicted to increase 0.5-2.5%, down from previously mentioned 1-3%. Also, high tax rate and unfavorable foreign exchange (that will lower earnings by 6 cents in the second quarter) remain concerns. Earnings estimates for 2019 have declined in the past 30 days.
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Other noteworthy reports we are featuring today include Moody's (MCO), Equinix (NASDAQ:EQIX) and Baker Hughes (BHGE).
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Mark Vickery
Senior Editor
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, the IBX expansion strategy will strengthen Equinix's global footprint in the data-center space. However, stiff competition may negatively impact its pricing power.
Per the Zacks analyst, Moody's efforts to diversify revenue base and inorganic growth strategy will aid profitability.
Per the Zacks analyst, demand for PACCAR's Class 8 truck is rising due to continued economic and freight growth in America and Europe.
The Zacks analyst expects Baker Hughes to gain from a series of profitable LNG projects.
Per the Zacks analyst, MSCI is benefiting from strong demand for custom and factor index modules and the increasing adoption of the ESG solution into the investment process.
Per the Zacks analyst, continued strong demand across its businesses will aid International Paper's results despite the impact of elevated input and distribution costs.
The Zacks analyst is optimistic about rapid growth in ResMed's Software-as-a-Service business driven by continued expansion of Brightree and Healthcare first.
Per the Zacks analyst, the IBX expansion strategy will strengthen Equinix's global footprint in the data-center space. However, stiff competition may negatively impact its pricing power.
Per the Zacks analyst, Moody's efforts to diversify revenue base and inorganic growth strategy will aid profitability.
Per the Zacks analyst, demand for PACCAR's Class 8 truck is rising due to continued economic and freight growth in America and Europe.
The Zacks analyst expects Baker Hughes to gain from a series of profitable LNG projects.
Per the Zacks analyst, MSCI is benefiting from strong demand for custom and factor index modules and the increasing adoption of the ESG solution into the investment process.
Per the Zacks analyst, continued strong demand across its businesses will aid International Paper's results despite the impact of elevated input and distribution costs.
The Zacks analyst is optimistic about rapid growth in ResMed's Software-as-a-Service business driven by continued expansion of Brightree and Healthcare first.
New Upgrades/h6
Per the Zacks analyst, focus on initiating new business against the backdrop of macroeconomic headwinds should bolster Northern Trust's revenues. Moreover, its diverse products are a strength.
Per the Zacks analyst, Vulcan Materials is well poised given broad-based shipment growth, price improvements and operating efficiencies in aggregates business.
Per the Zacks analyst, AES Corp is expanding its renewables overseas footprint. It also maintains a flexible liquidity position and expects to generate $4 billion in discretionary cash in 2019-2022.
Per the Zacks analyst, focus on initiating new business against the backdrop of macroeconomic headwinds should bolster Northern Trust's revenues. Moreover, its diverse products are a strength.
Per the Zacks analyst, Vulcan Materials is well poised given broad-based shipment growth, price improvements and operating efficiencies in aggregates business.
Per the Zacks analyst, AES Corp is expanding its renewables overseas footprint. It also maintains a flexible liquidity position and expects to generate $4 billion in discretionary cash in 2019-2022.
New Downgrades/h6
Per the Zacks analyst, unfavorable funding dynamics and compressed spreads will impact Annaly's performance. The company also slashed its quarterly dividends.
ABIOMED is being plagued by pricing pressures and foreign exchange headwinds recently. The Zacks analyst is also apprehensive about the intensely competitive MedTech insutry.
Per the Zacks analyst, intensifying competition from peers and lack of geographic diversity in terms of end-customers are headwinds.
Per the Zacks analyst, unfavorable funding dynamics and compressed spreads will impact Annaly's performance. The company also slashed its quarterly dividends.
ABIOMED is being plagued by pricing pressures and foreign exchange headwinds recently. The Zacks analyst is also apprehensive about the intensely competitive MedTech insutry.
Per the Zacks analyst, intensifying competition from peers and lack of geographic diversity in terms of end-customers are headwinds.
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