Today's Must Read
Order Growth Aids Lockheed (LMT), F-35 Cost Issue Poses Risk
AMD Rides on Robust 7 nm Product Portfolio & Partnerships
Tuesday, November 17, 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 Philip Morris International (PM), Lockheed Martin (LMT) and Advanced Micro Devices (AMD). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Philip Morris shares have outperformed the Zacks Tobacco industry in the year to date period (-7.6% vs. -12%). The Zacks analyst believes that the company has long been benefiting from its pricing power, which continued to aid its third-quarter 2020 results, wherein top and bottom lines beat the Zacks Consensus Estimate.
Also, management raised its earnings guidance for 2020 on the back of improved shipment volume trends, though the latter is still expected to decline. However, the management does not expect a near-term recovery in the duty-free business due to travel-related uncertainties amid the pandemic.
Also, a delay in minimum price enforcement in Indonesia is a concern. Apart from this, cigarette volumes have been soft for a while due to rising health consciousness and stern regulations. Furthermore, revenues are likely to fall in 2020. Nonetheless, strength in RRPs, especially IQOS, is expected to offer respite.
Shares of Lockheed Martin have lost -4% over the past year against the Zacks Aerospace Defense industry’s fall of -29.8%. The Zacks analyst believes that expansionary budgetary provisions made by the U.S. administration will immensely boost this defense prime’s business. It continues to be a strong cash generator.
Lockheed Martin enjoys strong demand for its high-end military equipment in domestic and international markets, being the world's largest defense contractor. Keeping up with its usual trend, Lockheed Martin was successful in clinching several notable deals during the third quarter.
However, forced cost reduction initiatives for F-35 program might hamper its operating results. America and Turkey's tiff on the latter accepting Russian products may hurt Lockheed's component supply from Turkey. It is facing performance issues in relation to some of its products, which in turn may hurt it results.
AMD shares have gained +53.4% over the past six months against the Zacks Electronics - Semiconductors industry’s rise of +42.4%. The Zacks analyst believes that AMD is benefiting from robust uptick in Ryzen and EPYC server processors, courtesy of increasing proliferation of AI and Machine Learning (ML) in industries like cloud gaming and supercomputing domain.
Further, the Xilinx acquisition will boost AMD's data center business. Growing clout of 7 nanometer (nm) products in the data center vertical, driven by work-from-home and online learning trends, remains a key catalyst. Also, partnerships with Amazon, Microsoft, Baidu and JD.com are opening newer business avenues.
However, broad-based macroeconomic weakness due to COVID-19 crisis is likely to put pressure on desktop processor-related sales. Rising spend on product development amid stiff competition from NVIDIA and Intel are likely to dent margins at least in near term.
Other noteworthy reports we are featuring today includeStarbucks (SBUX), Boeing (BA) and General Electric (GE).
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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>>>