Today's Must Read
Workday (WDAY) Benefits from Strong Demand for HCM Offerings
Buyouts, Diversification Aid Moody's (MCO), High Costs Ails
Monday, October 26, 2020
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Advanced Micro Devices (AMD), Workday (WDAY) and Moody's (MCO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
AMD shares have outperformed the Zacks Electronics - Semiconductors industry in the year to date period (+75.8% vs. +30.7%). The Zacks analyst believes that AMD is benefiting from robust adoption of 7 nanometer-based Ryzen, Radeon and latest second-generation EPYC server processors, courtesy of increasing proliferation of AI and ML in industries like cloud gaming and supercomputing domain.
Growing clout of AMD’s products in the data center vertical, driven by work-from-home and online learning trends, remains a key catalyst. Further, partnerships with Amazon, Microsoft, Baidu and JD.com are opening newer business avenues.
However, broad-based macroeconomic weakness owing to coronavirus-induced lockdowns is likely to put pressure on desktop processor-related sales. Also, increasing expenses on account of product development amid stiff competition from NVIDIA and Intel are likely to dent margins at least in near term.
Shares of Workday have gained +46.7% over the past year against the Zacks Internet Software industry’s rise of +104.7%. The Zacks analyst believes that Workday is poised to gain from solid adoption of subscription-based software solutions, which is driving revenues.
Also, the company raised fiscal 2021 guidance for subscription and professional revenues on strong backlog and solid pipeline. Moreover, synergies from Scout RFP acquisition are helping it secure deal wins. Extended capabilities and tools in Human Capital Management and Financial Management solutions are likely to boost user base.
Also, strong balance sheet and cash flow generating ability are anticipated to drive growth initiatives in the long haul. However, stiff competition from Oracle and SAP is likely to hurt profitability at least in the near term. Moreover, coronavirus-induced layoffs might negatively impact contract renewals, which is a headwind.
Moody's shares have gained +14.7% over the past six months against the Zacks Financial Miscellaneous Services industry’s rise of +23.9%. The Zacks analyst believes that the company remains well poised for growth on the back of the dominant position in the credit rating industry and strong balance sheet position. Inorganic growth strategy is expected to help in further diversifying revenue sources.
Its earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters. Earnings estimates have been going up ahead of its third quarter 2020 results. However, volatility and a challenging macro-economic environment will likely hamper the company's financials to an extent.
Persistently mounting costs, mainly owing to investments in franchise and acquisitions, will likely hurt bottom line to some extent. Stiff competition is expected to put pressure on pricing, which in turn might hamper the company's financials in the long run.
Other noteworthy reports we are featuring today include Ericsson (ERIC), IDEXX Laboratories (IDXX) and State Street (STT).
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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>>>