Monday, April 15, 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 JPMorgan (JPM), Visa (V) and Chevron (CVX). 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 >>>
JPMorgan’s shares have increased +2.3% in the past six months, significantly outperforming the Zacks Major Regional Banks industry’s decline of -0.9%. The bank has an impressive earnings surprise history, having surpassed expectations in three of the trailing four quarters. Its first-quarter 2019 results were driven by higher rates, improved investment banking performance and decent loan growth.
The Zacks analyst thinks expansion into new markets by opening branches, focus on strengthening credit card business, higher rates and improving loan balance will continue supporting the company’s revenues. Also, its steady capital deployments reflect a strong balance sheet position. However, dismal mortgage banking performance remains a major concern.
Further, the company's significant dependence on capital markets revenues is a cause for worry. These factors are expected to hamper the bank's fee income growth to an extent.
(You can read the full research report on JPMorgan here >>>).
Shares of Visa have outperformed the Zacks Financial Transaction Services industry in the past year, gaining +31% vs. a +25.6% increase. Its results were driven by growth in payments volume, cross-border volume and processed transactions, and a lower tax rate.
The Zacks analyst thinks numerous strategic acquisitions and alliances, technology upgrades and effective marketing have paved the way for long-term growth and consistent increase in revenues. Visa is well poised to gain from growing electronic payment processing and a solid brand name. Its strong capital position enables investments in business.
Nevertheless, high client incentives and operating expenses, and foreign exchange volatility might put pressure on margins. Softness in cross border volumes is another concern.
(You can read the full research report on Visa here >>>).
Chevron’s shares have underperformed the Zacks Integrated Oil industry year to date (+10.1% vs. +11.6%). Chevron retains its Neutral rating following the announcement of its acquisition of Anadarko Petroleum in a $50 billion deal. The Zacks analyst thinks the strategic rationale for the transaction is compelling for Chevron given the access to potentially lucrative Permian Basin acreage, LNG operations in Mozambique, as well as attractive deepwater infrastructure in the GoM.
Additionally, the buyout is expected to improve Chevron’s cash flow profile together with substantial annual cost synergies and attractive returns for shareholders. On the whole, the acquisition results in an energy powerhouse enjoying very strong cash flow.
However, there are worries of a drop in its downstream earnings that have been cutting into overall gains from rising E&P income. The massive capex might also play a spoilsport. Hence, investors are advised to wait for a better entry point before buying shares in Chevron.
(You can read the full research report on Chevron here >>>).
Other noteworthy reports we are featuring today include IBM (IBM), TJX Companies (TJX) and General Dynamics (GD).
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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
Branch Expansion to Aid JPMorgan (JPM), Mortgage Fees a Woe
Growing Top-line Aids Visa (V), Escalating Expenses Hurt
Chevron (CVX) to Boost Permian Position with Anadarko Buy
Solid Comps to Fuel TJX Companies (TJX), Wage Costs a Worry
Per the Zacks analyst, TJX Companies is set to keep gaining from comps, which is expected to rise 2-3% in fiscal 2020 on solid merchandise efforts. However, high wage costs are likely to hit earnings.
Rising Demand Aids General Dynamics (GD), Competition Hurts
Per the Zacks analyst, a strong rise in demand for the company's varied defense products leads to organic growth. However, it faces stiff market competition due to peer price pressure.
Biogen (BIIB) Rides on Alliances, Spinraza Competition Could Hurt
The Zacks analyst likes Biogen's efforts to in-license assets, some of which have transformative potential.
Guidewire (GWRE) Rides on Expanding Clientele & Partnerships
Per the Zacks analyst, Guidewire's growth continues to be driven by high demand for its cloud-based products.
Fleet Upgrade Boosts Spirit Airlines (SAVE) Amid Cost Woes
The Zacks analyst appreciates the company's efforts to modernize its fleet. High operating expenses are, however, a concern.
Favorable Markets Aid Commercial Metals (CMC), High Debt Ails
Per the Zacks analyst, Commercial Metals will gain on favorable key markets, growth in the United States and Poland despite higher manufacturing costs and interest expenses.
Alternate Fuel Systems Drives Westport (WPRT), Costs a Woe
Per the Zacks analyst, Westport's range of appropriate fuel systems and components for alternative-fuel vehicle will drive sales across markets.
Passenger Revenues, Dividends & Buybacks Buoy Delta (DAL)
The Zacks analyst is impressed by the company's efforts to reward shareholders through dividends & buybacks. Passenger revenue growth on the back of strong demand for air travel is also encouraging.
Acuity Brands (AYI) Banks on Innovative Lighting Solutions
Per the Zacks analyst, diversified portfolio of innovative lighting control solutions and energy-efficient luminaries are the driving factors for Acuity Brands.
Strong Orthopedic & General Surgery Arms Aid CONMED (CNMD)
CONMED continues to gain from solid prospects of its Orthopedic and General Surgery units. The Zacks analyst is also optimistic about the CONMED's solid product portfolio.
Ongoing Business Transition to Cloud & Seasonality Hurts IBM
Per the Zacks analyst, IBM is having a tough time, given the ongoing time-consuming business model transition to cloud. Stiff competition from peers & high indebtedness is another concern.
Adverse Regulations, Costs Hurt Edison International (EIX)
Per the Zacks analyst, adverse regulatory decisions for 2018 GRC application may impact financial performance. Inability to recover uninsured wildfire-related costs may is another concern.
Weak Airfares & High Costs Weigh on Ryanair (RYAAY)
The Zacks analyst is concerned about low airfares which are affecting Ryanair's profit. Additionally, despite the moderation in oil prices, the same might hurt the company's bottom line moving ahead.
Visa Inc. (V) : Free Stock Analysis Report
The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
General Dynamics Corporation (GD) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
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