Today's Must Read
BHP Group (BHP) Bets on Liquidity & High Iron Ore Prices
Product Rollouts & Growing Merchant Base Aid Shopify (SHOP)
Wednesday, October 7, 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 Comcast (CMCSA), BHP Group (BHP) and Shopify (SHOP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Comcast shares have underperformed the Zacks Cable Television industry in the year-to-date period (-1.3% vs. +5%), reflecting the imapct of social distancing stipulations on the company's theme parks business. These and other headwinds notwithstanding, the Zacks analyst sees Comcast benefiting from solid high-speed Internet customer wins.
Its strategy to provide high-speed Internet at an affordable price plays a pivotal role in providing connectivity and improving customer experience. Moreover, coronavirus-led increased media consumption, work-from-home and online-learning wave well for Comcast. Peacock’s launch has been a key catalyst. However, Comcast persistently suffers video-subscriber attrition due to cord cutting.
Theme-park revenues are expected to suffer from lower footfall and indefinite closure of Hollywood park. Further, Sky’s third and fourth quarter EBITDA on a combined basis is expected to decline roughly 60% year over year. Weakness in film business is also a headwind. Moreover, a leveraged balance sheet is a concern.
Shares of BHP have gained +8.9% over the past year against the Zacks Mining - Miscellaneous industry’s rise of +17.6%. The Zacks analyst believes that strong cash generation, investment in growth projects and higher operational efficacy aided by adoption of technology, and recovery in metal prices will drive BHP Group’s results.
BHP Group’s iron ore production rose 4% year over year to a record 248 Mt in fiscal 2020. In fiscal 2021, it expects to produce 244-253 Mt of iron ore. The recent surge in iron and copper prices holds promise. The consensus estimate for earnings for the current fiscal year has thus undergone positive revisions lately.
The company plans to simplify its coal portfolio and concentrate on higher quality coking coals backed by demand from steel makers and is also likely to divest mature oil and gas assets. BHP Group has six major projects under development in petroleum, copper, iron ore and potash, which will drive growth in the long run.
Shopify has established itself as a leader in enabling Main Street businesses to go online and efficiently offer their products/services to customers digitally. The company had been benefiting from the secular migration to the digital realm over the last few years, but the trend accelerated manifold in the wake of Covid-19.
No doubt, Shopify shares have been stellar performers lately, up +153.6% over the past six months against the Zacks Internet Services industry’s rise of +30.9%. The Zacks analyst believes that the company is well poised to benefit from robust growth in the merchant base.
Exponential surge in buying of essential items due to COVID-19 led lockdowns and shelter-in-place guidelines are driving growth. Moreover, robust performance of Shopify Shipping, Shopify Payments and Shopify Capital are key catalysts. Furthermore, solid uptake of new merchant-friendly applications amid evolving retail environment bodes well.
Additionally, partnerships with Walmart and Facebook are expected to expand merchant base. Initiatives aimed at international expansion are noteworthy. However, higher investments on product development and fulfillment platform are likely to limit margin expansion in the near term.
Other noteworthy reports we are featuring today include International Business Machines (IBM), BlackRock (BLK) and Enbridge (ENB).
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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>>>