Tuesday, August 30, 2016

Today's must-read reports are for HSBC Holdings (HSBC), Facebook (FB) and Boeing (BA).

The performance momentum in Buy-rated Facebook shares should continue (stock is up 20% year-to-date) given the stock's positive estimate revisions momentum. The Zacks Consensus EPS estimates for this year and next have gone up in excess of 10% over the last two months. This positive estimates revisions trend reflects greater appreciation for the business model's earnings power, particularly the potential from mobile and video ads and believes they are its biggest growth drivers. Going forward, growth is likely to be driven by its huge user and advertisers’ base, higher engagement levels along with monetization opportunities presented by its subsidiaries. (You can read the full research report on Facebook here>>)

London-based HSBC Holdings may be one of the largest European banks, but it's primarily an Asian operator, with more than 60% of its recent earnings coming from that region. European banks have been laggards lately and HSBC is no different, though it has been doing better lately on the back of better execution of its restructuring plan that essentially involves reducing the bank's footprint in some regions in order to focus more on its core Asian franchise. The recent sale of its Brazilian operations and using the sale procedes for share buybacks are part of that strategy. Management's committment to maintain and raise the dividend (currently yielding a juicy 5.5%) and cost saving initiatives are some of the positives in the HSBC story. (You can read the full research report on HSBC here>>)

Boeing shares have lagged lately on concerns about the health of the global commercial aviation market. Demand has cooled off as a result of a host of macro factors, including an uncertain global growth backdrop, low oil prices that is prompting airlines to hold on longer to their older planes and the broader drop in commodity prices that is weighing on the buying power of commodity-producing nations in Latin America and elsewhere. Boeing's recent decision to hold off on raising published prices is a reflection of this unfavorable reality. These headwinds notwithstanding, the long-term outlook for passenger and freight traffic remains strong. Boeing also stands to benefit from a number of programs in the defense budget request for fiscal 2017. (You can read the full research report on Boeing here.)

Other noteworthy reports we are featuring today include Coca-Cola (KO), Costco (COST), and General Mills (GIS)

You can find all of today's stock research reports here>>

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Sheraz Mian

Director of Research

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