Today's Must Read
BlackRock (BLK) Well Positioned For Growth, Cost Issues Persist
Focus on Strengthening ISR Wing Benefiting Northrop (NOC)
Thursday April 13, 2017
Today's Research Daily features new research reports on 16 major stocks, including Microsoft (MSFT), BlackRock (BLK) and Northrop Grumman (NOC).
Microsoft shares lagged the Zacks Tech sector through the fall, but have led the way over the last six months (up +13.6% versus +8.8%) on greater appreciation for the company's reorganization and repositioning. The Zacks analyst points to the company's continuing enterprise strength, benefits from the Office 365 subscription model, strong growth prospects of Azure and promising new products.
Further, the addition of LinkedIn will boost the company's presence in the social media market. The recently announced Dies acquisition and investment in Flipkart is also positive. All in all, the company has emerged as a leader in the cloud space that promises momentum on a number of fronts. Estimates have been stable lately ahead of the company’s fiscal Q3 earnings release. However, a strong U.S. dollar and stiff competition remain major concerns. (You can read the full research report on Microsoft here.)
Shares of BlackRock have marginally underperformed the Zacks categorized Investment Management industry over the last one year (up +7.4% vs. +7.5%). Estimates have been going up ahead of the company’s first-quarter 2017 earnings release. The Zacks analyst likes the manner in which the company has expanded globally via acquisitions and remains well positioned to capitalize on opportunistic deals, driven by its strong liquidity position.
In order to meet changing client needs, the company is restructuring its actively managed equities business. However, increased dependence on overseas revenues and regulatory restrictions can negatively affect the company’s financials. In addition, increase in regulatory compliance costs, compensation costs as well as higher marketing costs are expected to keep expenses high in the near term. (You can read the full research report on BlackRock here.)
Buy rated Northrop Grumman has gained +2.9% year-to-date, underperforming the Zacks categorized Aerospace – Defense industry, which has gained +8.7% over the same period. The Zacks analyst stresses that the company is one of the largest U.S. defense contractors and has a strong presence in Air Force, Space & Cyber Security programs. Its product innovation and focus on strengthening its ISR wing will help maintain a stable earnings stream amid the rapidly changing needs of the defense landscape.
A strong upside in foreign military sales also raises optimism. The company maintains a strong balance sheet and steady cash flow that offer substantial financial flexibility. However, challenging economic and political factors and weak sales over the past few years have been raising concern. (You can read the full research report on Northrop Grumman here.)
Other noteworthy reports we are featuring today include NVIDIA (NVDA), Vertex (VRTX) and Illumina (ILMN).
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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 >>>