Today's Must Read
Walmart's (WMT) Sales to Gain on Robust Ecommerce Business
Abbott (ABT) Thrives on COVID-19 Tests and New iCGM Approval
Monday, October 12, 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 Visa (V), Walmart (WMT) and Abbott Laboratories (ABT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa shares have modestly outperformed the Zacks Financial Transaction Services industry in the year-to-date period (+10% vs. +7.5%), but has lagged Mastercard (MA) given Visa's greater exposure to cross-border transactions that have suffered due to pandemic-related travel restricitons. These issues notwithstanding, the Zacks analyst believes that numerous acquisitions and alliances have paved the way for long-term growth .
Consistent investments in newer technologies have enabled Visa to further strengthen its leading position in the payments market. Also, the shift to new payment methods such as mobile, cards, online and via wearables bodes well for the long haul. 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. However, high operating expenses put operating margins under pressure. Ramped-up client initiatives will dent the top line. It is likely to see a slowdown in cross-border business due to the coronavirus outbreak.
Walmart shares have performeed in-line with the Zacks Supermarkets industry’s +20.2% gain the year-to-date period on the back of rising demand for grocery and general merchandise items amid coronavirus-led stay-at-home trends. Walmart's long-term outlook has also improved significantly given the company's material digital investments as a result of which online sales have been growing strongly.
Stay-at-home trends are also boosting e-commerce sales, which soared 97% in second-quarter fiscal 2021. During the quarter, sales and earnings beat the consensus mark and grew year over year, with U.S. comps rising for the 24th straight time. In the U.S. segment, store and online sales remained strong, supported by government stimulus and the company's concerted delivery efforts.
To this end, the recently unveiled Walmart+ plan is likely to be fruitful. Further, Walmart is set to gain from its measures like additional hiring to address customers’ core shopping patterns this holiday season. Such upsides are likely to help the company battle high COVID-19- costs.
Abbott shares have gained +27.7% over the past six months against the Zacks Medical Products industry’s rise of +14.6%. The Zacks analyst believes that Abbott's second-quarter 2020 figures declined year over year due to the pandemic-led fall in procedure volumes in many businesses.
However, the company’s Diabetes Care, Nutrition, and EPD arms collectively grew more than 9% in the first half of 2020 leveraging on the pandemic situation. Apart from the latest EUA for COVID-19 rapid antigen test, the company also obtained FDA for Libre 2 as an iCGM. It also received CE Mark for TriClip.
However, Abbott’s Core Laboratory Diagnostics, cardiovascular and neuromodulation sales were significantly down in the reported quarter affected by lower demand in the past few months.
Other noteworthy reports we are featuring today include UnitedHealth Group (UNH), Oracle (ORCL) and AbbVie (ABBV).
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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>>>