Today's Must Read
Increasing Revenues, Solid Balance Sheet Aid Visa (V)
Upstream Unit Buoys PetroChina (PTR) Amid Gas Import Losses
Thursday, September 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 Alphabet (GOOGL), Visa (V) and PetroChina Company (PTR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alphabet shares have underperformed the Zacks Internet Services industry in the year-to-date period (+5.3% vs. +11.5%), reflecting the perceived exposure of the company's ad business to cyclical forces. The Zacks analyst believes that Alphabet's strengthening cloud unit is aiding substantial revenue growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space.
Further, major updates in its search segment are enhancing the search results, which is a major positive. Moreover, Google’s robust mobile search is gaining solid momentum. Additionally, strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term.
Also, its deepening focus on wearables category remains a tailwind. However, the company’s growing litigation issues and increasing expenses might hurt profitability. Further, the company faces persistent pressure from advertisers to tighten controls on YouTube video service. This remains a concern.
Shares of Visa have gained +11.5% over the past year against the Zacks Financial Transaction Services industry’s rise of +5.8%. The Zacks analyst believes that numerous acquisitions and alliances together with technology upgrades have paved the way for long-term growth for Visa.
The acquisition of Visa Europe is a growth strategy as well. Its strong balance sheet enables it to make acquisitions and fund capital expenditure. Its strong cash position enables effective capital deployment measures for its shareholders.
Meanwhile, Visa’s high operating expenses owing to personnel-related costs have put operating margins under pressure. Also, ramped-up client initiatives might dent the top line. It is likely to see a slowdown in cross-border business due to the coronavirus outbreak.
PetroChina shares have lost -8.7% over the past six months against the Zacks International Integrated Oil industry’s fall of -12.5%. The Zacks analyst believes that the stock stands to gain from higher energy production and lower lifting costs.
PetroChina's E&P unit posted 7% increase in production in the first six months of 2020, while oil and gas lifting costs were down 14% from what it averaged in the first half of last year. However, the historic oil price crash has hit PetroChina hard.
Further, in a sign of weakness in the company’s downstream business, earnings plunged due to depressed domestic demands, lower refined products sales and a drop in price.
Other noteworthy reports we are featuring today include UnitedHealth Group (UNH), SAP SE (SAP) and Honeywell International (HON).
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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>>>