Today's Must Read
Adoption of Azure & Office 365 Strength Aid Microsoft (MSFT)
T-Mobile (TMUS) Gains from Sprint Acquisition & 5G Network
Thursday, July 09, 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 Apple (AAPL), Microsoft (MSFT) and TMobile US (TMUS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple shares have outperformed the S&P 500 over the past year (+87.7% vs. +6.4%) on the back of continued momentum in the Services segment, driven by strong App Store sales and the robust adoption of Apple Music and Apple Pay.
Non-iPhone devices, particularly Apple Watch and AirPod, are other notable drivers in the long haul. However, iPhone sales are expected to remain bleak in the near term due to the negative impact of the coronavirus. In fact, the company expects iPhone and Wearables business revenues for the fiscal second quarter to be worse on a year-over-year basis than the fiscal first quarter.
On the contrary, iPad and Mac revenues are expected to improve but lower economic activity will hurt AppleCare and advertising businesses. The company didn’t provide any guidance due to the pandemic-triggered uncertainty.
Shares of Microsoft have gained +32% over the past six months against the S&P 500’s fall of -2.6%. The Zacks analyst believes that Microsoft is benefiting from momentum in Azure, impressive Teams user growth led by coronavirus-induced work-from-home wave, uptick in Surface devices and significant demand for Windows 10 PCs.
Moreover, the company is gaining from growing user base of its different applications including Office 365 commercial, and Dynamics. Azure’s expanding customer base remains a key catalyst. Furthermore, it is well poised to expand the total addressable market through acquisition of GitHub.
However, broader macroeconomic weakness and lower spend on advertising owing to the coronavirus outbreak are likely to weigh on LinkedIn and Search revenues. Delays in consulting business contract renewals and supply chain constraints in China are also anticipated to limit growth.
TMobile’s shares have gained +24.1% over the past three months against the Zacks National Wireless industry’s rise of +7.3%. The Zacks analyst believes that the company will provide 5G to 99% of the U.S. population. Also, it will likely provide average 5G speeds above 100 Mbps to 90% of the population. T-Mobile’s business plan is built on covering 90% of rural America with average 5G speeds of 50 Mbps, up to two times faster than broadband.
T-Mobile continues to deploy 5G with a mid-band 2.5 GHz spectrum from Sprint. 2.5 GHz 5G is currently live in parts of Chicago, Los Angeles, New York and Philadelphia. The wireless carrier offers 5G coverage in all 50 states and Puerto Rico. Its 5G network is 1.5 times faster than its LTE speeds.
Customers get 5G services in almost 6,000 cities and towns, covering more than 225 million people. T-Mobile divested Sprint’s prepaid wireless business to DISH. However, it operates in a fiercely competitive and almost saturated U.S. telecom market.
Other noteworthy reports we are featuring today include Thermo Fisher Scientific (TMO), Goldman Sachs (GS) and Cigna (CI).
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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>>>