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Research Daily

Monday, September 14, 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 Toyota Motor (TM), NIKE (NKE) and Honeywell International (HON). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Toyota shares have modestly underperformed the Zacks Foreign Automotive industry in the year to date period (-6.6% vs. -5.8%), reflecting this large global automaker's cyclcial exposure. The Zacks analyst believes that expanding portfolio of product lines is driving Toyota’s prospects.

With the EV trends getting hotter with each passing day, the Japanese auto giant is ramping up efforts to develop green vehicles. It aims to achieve half of its global sales from EVs by 2025. Partnership with Subaru and Mazda are likely to drive Toyota's electrification plans. The firm is also working on hydrogen fuel stations in collaboration with various partners.

However, Toyota expects consolidated vehicle sales of 7.2 million units, indicating a decline from roughly 9 million units recorded in fiscal 2020 amid the coronavirus pandemic crisis. High R&D costs on advanced technologies for the development of EVs and driverless cars are also likely to dent near-term margins. Its high debt levels also remain a concern. As such, the stock warrants a cautious stance.

(You can read the full research report on Toyota here >>>)

NIKE shares have outperformed the broader market in the year-to-date peirod (+17.2% vs. +3.8% for the S&P 500 Index), with the stock really coming into its own recent days as the broader market has lost some of its mojo. The Zacks analyst credits the company's strong digital performance, which demonstrates the strength of its brands and investments to improve digital consumer experiences.

While store closures across North America, EMEA and APLA impacted results in the June-quarter report, the company benefited from robust double-digit digital sales across all regions. It will be interesting to see if these online sales trends will continue in the coming quarterly report that comes out after the market's close on September 22nd. 

Moreover, the company benefited from Greater China returning to currency-neutral growth in the fiscal fourth quarter as stores in the region resumed operations. Nonetheless, the company reported lower than expected top and bottom line in the fiscal fourth quarter on soft revenues and gross margin due to coronavirus-related impacts.

(You can read the full research report on NIKE here >>>)

Honeywell shares have gained +1% over the past year against the Zacks Diversified Operations industry’s fall of -0.2%. The Zacks analyst believes that strength in defense and space businesses as well as solid demand for warehouse automation products are likely to boost Honeywell’s revenues in the near term.

Solid demand for personal protective equipment and medical sensors along with a strong backlog conversion rate are likely to act as tailwinds. Increased commercial and operational excellence initiatives are likely to improve its near-term profitability. It is committed to rewarding shareholders handsomely.

The company believes that the coronavirus outbreak-led market downturn and a volatile oil market will adversely impact its near-term results. Given its extensive geographic presence, its business is subject to political, economic and geopolitical issues. Rise in debt levels can increase its financial obligations.

(You can read the full research report on Honeywell here >>>)

Other noteworthy reports we are featuring today include 3M Company (MMM), Advanced Micro Devices (AMD) and Anthem (ANTM).

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Sheraz Mian

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>>>

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