Today's Must Read
Alibaba (BABA) Drives On Cloud Growth; Investments Hurt
Robust G&NS and Financial Services Segments Drive Sony (SNE)
Monday, August 24, 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), Alibaba Group (BABA) and Sony (SNE). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple shares continue to stand out for their gravity-defying performance (the stock is up +69.4% this year vs. +5.5% for the broader market), with the stock-split announcement adding to the momentum. The Zacks analyst sees the trend continuing on the back of momentum in the Services segment, driven by a robust performance of App Store, Apple Music, video, and cloud services.
Moreover, Apple devices also continued to gain traction among enterprises, particularly healthcare providers. Although Apple didn’t provide any guidance due to uncertainties triggered by the coronavirus pandemic, it expects fiscal fourth-quarter iPhone sales to benefit from strong demand for iPhone SE.
Further, Apple stated that sale of new iPhones will begin a few weeks later against the usual late September. It also expects iPad and Mac to post strong year-over-year growth. Further, Apple Watch and AirPod are other notable drivers in the long haul. However, increasing scrutiny and legal woes over App Store is a headwind.
Alibaba shares have lagged the Zacks Internet Commerce industry over the past 6 months (+29.3% vs. +57.2%, likely reflecting a China discount. But the stock is otherwise an impressive performer given its dominant standing in the fast-growing Chinese market.
Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining momentum. This is aiding growth in Tmall Import, Hema fresh food grocery business and Intime Department Stores.
Alibaba Group’s fiscal first-quarter 2020 earnings were driven by a steady improvement in core commerce and strong cloud business. However, higher costs associated with new initiatives remain a major concern. Also, COVID-19 related economic uncertainties and macro headwinds in China are major concerns. In addition, rising competition from e-commerce players poses a risk.
Sony’s shares have gained +24.5% over the past three months against the Zacks Audio Video Production industry’s rise of +23.2%. The Zacks analyst believes that the company is witnessing solid momentum in the Game & Network Services segment, courtesy of game software sales and PlayStation Plus, as well as in the Financial Services segment.
It continues to expand user engagement for the launch of PlayStation 5. In the Music segment, the company’s paid subscription streaming services continue to grow. Measures to realign its business portfolio like withdrawing from the PC business and selling the battery business are helping Sony.
Sony is concentrating on the premium segment of the branded products market to maximize growth. However, Sony is facing challenges in the Electronics Products & Solutions segment due to decline in unit sales of digital cameras and televisions.
Other noteworthy reports we are featuring today include Citigroup (C), BlackRock (BLK) and Southern Company (SO).
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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>>>