Today's Must Read
Coca-Cola (KO) to Streamline Portfolio for Enhanced Recovery
Starbucks (SBUX) Banks on Unit Expansion, Dismal Comps Hurt
Thursday, September 3, 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 Intel (INTC), Coca-Cola (KO) and Starbucks (SBUX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Intel shares have underperformed the Zacks General Semiconductor industry in the year to date period (-14% vs. +36.7%), reflecting the market's disappointment with the company's recent operating performance. The Zacks analyst believes that Intel is benefiting from strength across both PC-centric and Data-centric domains.
Robust mix of high-performance second-generation Xeon Scalable processors and solid demand from Cloud service providers are expected to boost growth. Strong momentum for 10 nanometer (nm) mobile CPU bodes well. Notably, the company provided encouraging 2020 guidance.
Further, solid uptake of 5G networking solutions, higher Wi-Fi and modem sales and solid notebook demand, improvement in NAND pricing trends led higher ASPs, and Optane bit growth, remain tailwinds. However, anticipated decline in PC total addressable market, and production delays pertaining to 7 nm ramp up remain concerns.
Shares of Coca-Cola have lost -13.8% over the past six months against the Zacks Soft Drinks Beverages industry’s fall of -6.4%. The Zacks analyst believes that driven by a shift in consumer behavior due to the coronavirus pandemic, Coca-Cola has been witnessing a surge in e-commerce with the growth rate of the channel doubling in many countries.
Coca-Cola boasts of a robust earnings surprise trend that continued in second-quarter 2020. This marked the third straight quarter of earnings beat. Gains from aggressive cost management and timing of expenses aided the bottom line. It is poised to gain from the streamlining of portfolio by exiting of Zombie brands that will help divert resources toward brands with more growth potential.
The company’s top line missed estimate on declines in away-from-home channels, which account for nearly half of its revenues. It also lost global value share in NARTD beverages driven by negative channel mix owing to softness in the away-from-home channel.
Starbucks shares have lost -10.1% over the past year against the Zacks Food & Restaurants industry’s fall of -1.4%. The Zacks analyst believes that the company continues to benefit from operating fundamentals such as solid global footprint, successful innovations and digital offerings.
Despite the coronavirus, the company is on track to open minimum 500 net new stores this fiscal year. It has also strengthened its relationship with Alibaba. Earnings Estimates for 2020 have increased over the past 30 days, depicting optimism regarding the stock growth potential.
However, dismal global retail and comparable sales, along with decline in store traffic due to social distancing protocols, continue to hurt the company. Notably, for fiscal 2020 comps are expected to be down 15% to 20% compared with prior estimate of decline of 10% to 20%. Also, the company’s high debt level remains a concern.
Other noteworthy reports we are featuring today include Intuitive Surgical (ISRG), Caterpillar (CAT) and Zoetis (ZTS).
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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>>>