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Research Daily

Thursday, March 3, 2017

Today's Research Daily features new research reports on 16 major stocks, including JPMorgan (JPM), Caterpillar (CAT) and Broadcom (AVGO).

JPMorgan shares have gained +37.2% over the past six months vs. +33.1% gain for the Major Banks industry. The company’s fourth-quarter earnings handily surpassed expectations, on the back of improved trading and mortgage banking fees. The company remains well positioned to benefit from the improved rate scenario and rising loan demand.

Synergies from retail banking performance and cost-containment efforts will help improving its profitability, going forward. However, a persistent fee income growth challenge remains a major headwind. Also, litigation hassles remain a concern. (You can read the full research report on JPMorgan here.)

Caterpillar shares have gained +2.8% year-to-date, underperforming the Zacks Manufacturing - Construction and Mining industry which has increased +5.8% over the same period. Caterpillar’s guidance for 2017 reflects a 15% drop in earnings and a 3% dip in revenues. Further, results will be impacted by unfavorable sales mix, labor cost inflation and a lower backlog. In construction, Asia Pacific is showing promise while leading indicators of U.S. non-residential construction signal robust conditions ahead.

The Zacks analyst stresses that Caterpillar continues to cut down costs to counter weak demand and will gain immensely from Trump’s $1 trillion infrastructure spend plan. However, Caterpillar is currently facing a federal probe regarding export filings related to its Swiss subsidiary CSARL. If the allegations are proved true, it will negatively impact the company. (You can read the full research report on Caterpillar here.)

Broadcom’s shares have handily beaten the technology sector as well as the red-hot semiconductor space in the year-to-date period, gaining +23.7%. The Zacks analyst likes the synergistic benefits gained from the merger with Avago, which will drive future profitability. This was evident from the recently announced first-quarter fiscal 2017 results. Management reiterated its long-term view based on the synergies from Avago and Brocade acquisitions.

The company’s divestiture of some of Brocade’s assets to ARRIS International will accelerate the acquisition process as well as lower leverage. However, weakness in wireless and enterprise storage businesses is also a major concern. (You can read the full research report on Broadcom here.)

Other noteworthy reports we are featuring today include Mondelez (MDLZ), Ford (F) and Becton, Dickinson (BDX).

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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 Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here >>>

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