Friday, May 12, 2023

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 Corporation (MSFT), BP p.l.c. (BP) and Zoetis Inc. (ZTS). 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 >>>

Microsoft shares largely tracked the Zacks Tech sector this year, but the stock hasn't looked back since the very strong Q1 earnings release on April 25th. As a result, Microsoft share now up +28.4% this year vs. +22% for the Zacks Tech sector and the +8.6% gain for the S&P 500 index.  

The company is benefitting from strong Intelligent Cloud and Productivity and Business Processes revenues. Intelligent Cloud revenues were driven by growth in Azure and other cloud services. Productivity and Business Processes revenues increased due to strong adoption of Office 365 Commercial solutions. Microsoft is also seen as having a better offering on the artificial intelligence (AI) front than rival Alphabet. 

Continued momentum in the small and medium businesses and frontline worker offerings, as well as gain in revenue per user drove top-line growth. However, More Personal Computing revenues decreased due to weak Windows and Devices businesses.

Steady performance in Talent Solutions aided LinkedIn revenues. However, declining gaming revenues has been a headwind. Increasing spend on Azure enhancements amid stiff competition in the cloud space remains a concern.

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

Shares of BP have outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+24.4% vs. +10.2%). The company has a strong portfolio of upstream projects, backing impressive production growth. The company boasted that the target of adding a net production of 900 thousand barrels of oil equivalent per day by 2021 from key projects was met successfully.

BP expects $2-$3 billion of divestment and other proceeds in 2023. Before reporting its June-quarter results, the integrated energy major is willing to complete an additional $1.75 billion in share buy-backs. Also, BP reported better-than-expected first-quarter earnings resulting from an increase in oil-equivalent production volumes.

However, the energy giant’s balance sheet is considerably more levered than most peers, limiting its financial flexibility. Also, increasing exploration expenses have been affecting the company’s income. As such, the stock warrants a cautious stance.

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

Zoetis shares have outperformed the Zacks Medical - Drugs industry over the past year (+12.9% vs. -1.8%). The company’s innovative portfolio of pet care parasiticides, including Simparica Trio and key dermatology products maintain momentum for the company.

The strong uptake of Librela and Solensia in Europe, its new monoclonal antibody therapies for osteoarthritis pain in dogs and cats, is encouraging. The launch of innovative products bolstered the portfolio and should fuel growth.

However, Zoetis had earlier faced supply challenges which impacted demand. Although the constraints have eased out, a similar situation will impact growth. Stiff competition from animal health business wings of Merck and Bayer remains a woe.

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

Other noteworthy reports we are featuring today include ServiceNow, Inc. (NOW), Lululemon Athletica Inc. (LULU) and Weyerhaeuser Company (WY).

Director of Research

Sheraz Mian

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>>>