Today's Must Read
PayPal (PYPL) Benefits From Increasing Total Payment Volume
Qualcomm (QCOM) Rides on 5G Chipset Strength, Huawei Deal
Friday, July 31, 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 The Procter & Gamble (PG), PayPal Holdings (PYPL) and QUALCOMM (QCOM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Procter & Gamble shares have outperformed the Zacks Soap and Cleaning Materials industry over the past year (+12.6% vs. +10.3%), with the momentum expected to continue on the back of strong operating performance as reflected in the June-quarter results. On the flip side, the Zacks analyst cautions agains currency fluctuations that may weigh on the company’s margins.
Earnings and sales grew year over year in Q2, backed by rising demand for household cleaning, personal health and cleansing products stemming from the COVID-19 pandemic. Top line gained from organic sales growth, driven by rise in organic shipment volume and better pricing.
Encouragingly, it issued an upbeat fiscal 2021 view. Further, cost savings aided core currency-neutral gross and operating margin by 250 bps and 190 bps, respectively. Also, it delivered adjusted free cash flow productivity of 114% in the fiscal fourth quarter.
Shares of PayPal have gained +66.8% over the past six months against the Zacks Internet Software industry’s rise of +40.7%. The Zacks analyst believes that uncertainties induced by the pandemic remains a major headwind. Further, increasing credit loss reserves owing to macroeconomic projections on account of coronavirus is a serious concern.
PayPal reported impressive second quarter results wherein both earnings and revenues surpassed the estimates and improved year over year. Robust growth in total payments volume (TPV) owing to increasing net new active accounts drove the top line.
Moreover, strengthening customer engagement on the company’s platform and Honey buyout benefits were positive. Further, strong performance by Venmo and merchant services contributed well to the TPV growth. Additionally, growing momentum of the company’s core peer to peer and PayPal Checkout experiences was a tailwind.
QUALCOMM shares have gained +39.1% over the past three months against the Zacks Wireless Equipment industry’s rise of +30%. The Zacks analyst believes that Qualcomm is likely to face softness in demand from China with Huawei gaining prominence in the local market and coronavirus impacting sales.
Qualcomm reported solid third-quarter fiscal 2020 results, primarily driven by the ramp-up in 5G-enabled chips. The company has entered into a new long-term, global patent license agreement, including cross-license rights to certain Huawei’s patents, thus ensuring recurring revenues.
The company has launched a low-cost 5G chip for affordable smartphone for masses and is helping customers experience a seamless transition to super-fast 5G networks, delivering low-power resilient multi-gigabit connectivity with best-in-class security. It expects macroeconomic uncertainty to make a radical impact on device shipment. Competition from low-cost chip manufacturers like MediaTek is another concern.
Other noteworthy reports we are featuring today include Shopify (SHOP), HSBC Holdings (HSBC) and Advanced Micro Devices (AMD).
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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>>>