Tuesday, December 1, 2020

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 Microsoft (MSFT), The Procter & Gamble Company (PG) and T-Mobile US (TMUS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

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You can see all of today’s research reports here >>>

Microsoft shares have outperformed the S&P 500 in the year-to-date period (+35.7% vs. +12.7%) on the back of momentum in Azure as well as impressive Teams user growth triggered by the pandemic led work-from-home, online learning wave and tele healthcare trends.

Solid uptake of Surface devices and Xbox Game Pass is expected to boost growth. Further, the company is gaining from growing user base of its different applications including Microsoft 365 suite, and Dynamics. Additionally, it is well positioned to expand the total addressable market through acquisitions of GitHub and ZeniMax Media.

However, broad-based macroeconomic weakness in job market and lower spend on advertising due to coronavirus pandemic are likely to weigh on LinkedIn and Search revenues. Also, delays in consulting business are anticipated to limit growth.

(You can read the full research report on Microsoft here >>>)

Shares of Procter & Gamble have gained +13.4% over the past year against the Zacks Soap and Cleaning industry’s gain of +27.2%. The Zacks analyst believes that the company’s continued investment in business alongside efforts to offset macro cost headwinds and balance top and bottom-line growth underscores its productivity efforts.

Further, earnings and sales improved year over year in the first quarter on gains from significant sales increase, related fixed cost leverage and ongoing productivity efforts. Sales were aided by strength across all segments as well as robust shipments, pricing and mix. Cost savings aided core currency-neutral gross and operating margin, which expanded 170 bps and 350 bps, respectively.

Also, it delivered adjusted free cash flow productivity of 95% in the fiscal first quarter. Driven by the robust results, the company raised its outlook for fiscal 2021. However, currency headwinds are likely to affect results in fiscal 2021. Also, stiff competition remains a woe.

(You can read the full research report on Procter & Gamble here >>>)

T-Mobile shares have gained +32.3% over the past six months against the Zacks National Wireless industry’s rise of +10.9%. The Zacks analyst believes that several promotional activities to lure customers from rivals have eroded its profitability.

T-Mobile has more than 100 million wireless customers and the United States’ largest 5G network. It overtook AT&T to become #2 in U.S. wireless. The company is confident of its ability to deliver $43 billion of synergies and achieve $6 billion of annualized savings from the Sprint merger. It is targeting more than $1.2 billion of synergies in 2020. T-Mobile’s mid-band 5G network covers more than 30 million people.

It expects to reach 100 million people by the end of 2020. For the second half of 2020, T-Mobile raised its guidance for profitability and cash flow. However, the company operates in a fiercely competitive and saturated U.S. telecom market. Low-priced plans for consumers and small enterprises have not improved its bottom line.

(You can read the full research report on T-Mobile here >>>)

Other noteworthy reports we are featuring today include Boeing (BA), Advanced Micro Devices (AMD) and Goldman Sachs (GS).

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Sheraz Mian

Director of Research

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

Microsoft (MSFT) Rides on Robust Adoption of Azure & Teams

P&G (PG) Gains from Higher Coronavirus-Led Product Demand

T-Mobile (TMUS) Rides on Sprint Merger Synergies Amid Rivalry

Featured Reports

Strategic Mergers Aid Boeing (BA), Low 737 Deliveries Hurt

Per the Zacks analyst, strategic mergers made by Boeing boost overall growth. However, low 737 deliveries raise concerns.

AMD Banks on Strength in Product Portfolio Amid Competition

Per the Zacks analyst, Advanced Micro Devices is benefiting from the robust adoption of the thlatest EYPC, Ryzen, and Radeon processors.

Cost Savings Strategy Aids Goldman (GS), Capital Level Solid

Per Zacks analyst, Goldman's cost-savings efforts to drive efficiency are encouraging and might neutralize the impact of high legal costs.

Vertex's (VRTX) Trikafta Ups 2020 Sales, Focus on Pipeline

Per the Zacks analyst, Vertex's triple combo cystic fibrosis pill has been a key top-line driver. Its non-CF pipeline is progressing rapidly with multiple data readouts expected by 2021.

Equinor (EQNR) to Ride on Dogger Bank Wind Renewable Energy

Equinor's massive Dogger Bank wind farm will generate significant cash flows. However, its levered balance sheet concerns the Zacks analyst.

Gold Prices to Drive Franco-Nevada (FNV), Energy Assets Ail

Per the Zacks analyst, a debt-free balance sheet and the ongoing rally in gold prices will drive Franco-Nevada despite the impact of low oil prices.

Investments Aid Edison International (EIX), Rising Costs Ail

Per the Zacks analyst, systematic investments help Edison International in enhancing its customer reliability. However, rising costs may hurt its earnings.

New Upgrades

Cost Control & Strategic Acquisitions Aid BancorpSouth (BXS)

Per Zacks analyst, BancorpSouth's efforts to drive operating efficiency through cost control and strategic deals are encouraging. Yet, high exposure to consumer mortgage and commercial loans ails.

Portfolio Strength, Capital Outlay Pickup Aid ADTRAN (ADTN)

Per the Zacks analyst, ADTRAN is well poised to benefit from a gradual pickup in capital spending across markets and strength in a comprehensive portfolio of software-defined access and 10G solutions.

Recovering PSS Arm and Growing Bed Orders Aid Hill- Rom (HRC)

The Zacks analyst is optimistic about Hill-Rom experiencing a sequential rebound in Patient Support Systems. Also, quoting activities are reaching pre-COVID levels due to easing access restrictions.

New Downgrades

Weak Passenger Revenues Mar United Airlines' (UAL) Prospects

The Zacks analyst is concerned about the coronavirus-led low passenger revenues. A surge in non-fuel unit costs due to capacity cuts is a bane too.

Weak Digital Camera Demand Hurts Nikon's (NINOY) Prospects

Per the Zacks analyst, Nikon is suffering from sluggish demand for cameras due to the spread of the coronavirus, in addition to the continuous shrinkage of the digital camera market.

Gamble For Mobile Homes

Ligand's (LGND) Overdependence on Partners Raises Concern

Gimbal For Mobile And Camera

Per the Zacks analyst, Ligand is highly dependent on its partners for revenues that pay royalties on sales of drugs developed using the company's Captisol technology.