Today's Must Read
Branch Expansion Efforts Aid JPMorgan (JPM) Amid Low Rates
Cisco (CSCO) to Gain From Security Products & Webex Adoption
Tuesday, November 10, 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 Berkshire Hathaway (BRK.B), JPMorgan Chase (JPM) and Cisco Systems (CSCO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Berkshire Hathaway shares have outperformed the Zacks Insurance - Property and Casualty industry in the year to date period (-2.2% vs. -7.6%). The Zacks analyst believes that continued insurance business growth fuels increase in float, drive earnings and generates maximum return on equity. Also, the non-insurance businesses are delivering improved results with increased revenues over the past few years.
The company is one of the largest property and casualty insurance companies measured by premium volume. Berkshire's inorganic growth story remains impressive with strategic acquisitions. A strong cash position supports earnings-accretive bolt-on buyouts and indicates the company's financial flexibility.
A sturdy capital level provides further impetus. However, exposure to catastrophe loss induces earnings volatility and also affects the property and casualty underwriting results of the company. Huge capital expenditure remains a headwind for the company.
Shares of JPMorgan have lost -10% over the past year against the Zacks Major Regional Banks industry’s fall of -23.2%. The Zacks analyst believes that branch openings in new regions, acquisition of InstaMed, strong mortgage banking business and focus on credit card operations are likely to continue supporting the bank's financials.
Further, despite restriction of capital deployments to conserve liquidity, the company’s cash position remains robust. However, the Federal Reserve’s accommodative policy and near-zero rates are expected to hurt the bank’s interest income and margins.
Also, coronavirus-induced economic downturn is likely to continue hampering business activities. Thus, loan demand will be muted in the near term.
Cisco’s shares have lost -11.8% over the past six months against the Zacks Computer Networking industry’s fall of -11.4%. The Zacks analyst believes that Cisco is poised to gain from robust adoption of identity and access, advanced threat and unified threat management security solutions amid high growth in Internet traffic.
Ongoing momentum in Webex video conferencing and business productivity offerings on account of COVID-19 induced work-from-home demand environment remains noteworthy. Also, strong demand for Catalyst 9000 family of switches holds promise. Moreover, strength across WiFi 6 products in wireless vertical, is a positive.
However, Cisco is bearing the brunt of weakness in the commercial, service provider and enterprise end markets and coronavirus crisis-led supply chain constraints, which is likely to weigh on revenues. Also, weak demand for servers, and sluggish enterprise IT spending, remain concerns.
Other noteworthy reports we are featuring today include Bank of America (BAC), Comcast (CMCSA) and PetroChina Company (PTR).
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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>>>