Wednesday, December 4, 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 TOTAL (TOT), Broadcom (AVGO) and United Parcel Service (UPS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
TOTAL’s shares have outperformed the Zacks Integrated International Oil industry year to date (-0.7% vs. -5.2%). The Zacks analyst believes that TOTAL continues to benefit from strong contribution from startups and the expanding upstream portfolio that has above industry-average exposure to the faster-growing hydrocarbon producing regions of the world.
Strategic acquisitions and divestment of assets that are not in sync with its long-term objectives are going to boost performance and further strengthen the company’s cash flow generation capability. Cost-saving initiatives are also aiding it to boost margins.
However, TOTAL's operations in some politically-troubled regions and increasing competition might affect profitability. Due to its global presence, it is exposed to risks associated with pursuing business abroad.
(You can read the full research report on TOTAL here >>>)
Shares of Broadcom have gained 5.3% in the past three months against the Zacks Electronics - Semiconductors industry’s rise of 9.6%. The Zacks analyst believes that Broadcom is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G.
Further, strong ties with leading OEMs across multiple target markets are expected to help the company to gain key insights into the requirements of customers. Moreover, the company intends to strengthen presence in the infrastructure software vertical particularly.
In this regard, acquisition of CA and Symantec’s Enterprise Security Business remain extremely significant. Nonetheless, the company faces intensifying competition and integration risks due to frequent acquisitions. The company’s leveraged balance sheet and customer concentration are concerns.
(You can read the full research report on Broadcom here >>>)
United Parcel Service's shares have gained 19.1% over the past six months against the Zacks Transportation - Air Freight and Cargo industry's rise of 10.8%. The Zacks analyst is appreciative of UPS' efforts to reward its shareholders through dividends and buybacks.
In 2018, UPS rewarded its shareholders with $4.2 billion. Sustaining its pro-investor approach, it has returned more than $2.5 billion in the first nine months of 2019. Additionally, UPS increased its quarterly dividend by 5.5% in February to 96 cents per share. Strong free cash flow generation ($3.2 billion in the first nine months) by the company supports the possibility of a dividend hike going forward. E-commerce growth is an added positive for UPS.
Owing to these tailwinds, shares of the company have outperformed its industry in a year. However, UPS' high capital expenditures are worrisome. Additionally, trade-related uncertainty with China impedes its growth potential. The company's high debt-equity ratio is an added headwind.
(You can read the full research report on United Parcel Service here >>>)
Other noteworthy reports we are featuring today include Deere (DE), Norfolk Southern (NSC) and HP (HPQ).
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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 Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Cost Savings, Production Boost from Startups Aid TOTAL (TOT)
Wireless Products & Acquisitions to Drive Broadcom (AVGO)
E-Commerce Growth, Dividends & Buybacks Aid UPS, Costs Ail
Featured Reports
Cost Cuts, Dividends & Buybacks Aid Norfolk Southern (NSC)
The Zacks analyst is impressed by the improvement in the company's operating ratio, courtesy of its cost-control measures. Additionally, its efforts to reward shareholders are encouraging.
Strong Commercial PC Sales Aid HP (HPQ), Consumer PC Ails
Per the Zacks analyst, HP is gaining from rising demand for commercial PCs, backed by Windows 10 refresh cycle. However, Intel's CPU supply shortage is a persistent overhang on consumer business.
Kroger's (KR) Customer 1st, Restock Program to Aid Top Line
Per the Zacks analyst, Kroger's customer 1st strategy, restock program and digital endeavors will help drive growth.
Loan Growth, Acquisitions Aid KeyCorp (KEY), Rate Cuts a Woe
Per the Zacks analyst, while continued loan growth is expected to aid top line, its net interest margin will likely be hurt due to the recent decline in rates.
Growing Loans Aid First Republic (FRC) Amid Margin Pressure
Per the Zacks analyst, First Republic's rising loan and deposit balances are likely to boost top-line growth.
Solid Momentum in Driver Assistance Benefits Maxim (MXIM)
Per the Zacks analyst, Maxim is gaining traction in the automotive end market owing to solid momentum across driver assistance in electric vehicle content.
Core Oncology Arm Aids Varian (VAR), Stiff Competition a Woe
Per the Zacks analyst, Varian continues to benefit from solid prospects in its core Oncology segment. However, stiff competition in the nascent proton therapy market raises concern.
New Upgrades
Fortinet (FTNT) Rides on Strong Demand for Security Fabric
Per the Zacks analyst, Fortinet is benefiting from strong global demand for Security Fabric offerings which is aided by digital transformation and security refresh cycle across most industries.
Improving Trading Activity Benefits E*TRADE (ETFC)
The Zacks analyst believes E*TRADE is poised to growth through improving trading activities as DARTs continue to rise. Moreover, restructuring moves and strategic initiatives is favorable.
Acquisitions and Expansion Actions to Aid U.S. Silica (SLCA)
The Zacks analyst believes that the Sandbox and EP Minerals buyouts will support U.S. Silica's margins. The company will also likely gain from expansion actions in the Permian Basin.
New Downgrades
Higher Costs & Weak Agricultural Markets Hurt Deere (DE)
Per the Zacks Analyst, Deere's results will be impacted by higher raw material costs owing to implementation of tariffs, lingering uncertainties in the U.S agriculture market and low commodity prices.
Natural Gas Pricing Headwinds Weigh on Diamondback (FANG)
The Zacks analyst is concerned about the extremely low natural gas prices prevailing in the Permian basin, which continue to drag down Diamondback's earnings.
Weak End Market & China Exposure Hurt IPG Photonics (IPGP)
Per the Zacks analyst, IPG Photonics is hurt by sluggishness in additive manufacturing and metal cutting end markets. Also, significant China exposure amid tariffs and trade challenges is concerning.
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United Parcel Service, Inc. (UPS): Free Stock Analysis Report
TOTAL S.A. (TOT): Free Stock Analysis Report
Norfolk Southern Corporation (NSC): Free Stock Analysis Report
HP Inc. (HPQ): Free Stock Analysis Report
Deere & Company (DE): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
