Today's Must Read
Coca-Cola's (KO) Marketing, Cost Saving Plans to Spur Growth
Starbucks (SBUX) Initiatives Impress, Macro Woes Stay
Friday April 21, 2017
Today's Research Daily features new research reports on 16 major stocks, including Verizon (VZ), Coca Cola (KO) and Starbucks (SBUX).
Verizon shares have been laggards over the past year - the stock is down -5.2% over the past 12 months vs. AT&T's +5.6% gain and the +16.7% gain for the S&P 500 index. Verizon posted weak first quarter 2017 financial results with the loss of 0.307 million postpaid and 0.017 million prepaid customers. Despite losses, Verizon gained 35,000 FiOS Internet subscribers.
Meanwhile, Verizon is likely to venture into online TV streaming service. Verizon has started conducting 5G wireless network trials in 11 U.S. cities and plans to deploy its fixed wireless version in 2018. The company’s decision to launch FiOS Prepaid plan, FiOS Internet service and to zero-rate its data on FiOS Mobile App should help it gain subscribers while unlimited data plans have heated up the wireless industry.
The Verizon-Yahoo deal underwent a discount revision of $350 million. But it will likely take a while before these actions bear fruit. In the updated research report issued today, the Zacks analyst discusses the pros & cons of investing in Verizon shares at this stage. (You can read the full research report on Verizon here.)
Buy rated Coca Cola shares have gained +3.7% in the year-to-date period compared to the roughly flat showing for the Zacks Consumer Staples sector as a whole. Coca-Cola’s increased marketing investments are driving volume growth in stable markets like North America.
Moreover, the company is on track to achieve total annualized productivity of approximately $3.6 billion by 2019 from the initiatives implemented under this program since its beginning. Also, Coca-Cola’s new revenue platforms should drive growth over the long term. However, the top line needs to show sustained improvement. Coca-Cola’s sales are getting affected by declining demand in certain emerging and developing markets and shift in consumer preference.
Also, severe macroeconomic challenges in certain international markets and the stronger U.S. dollar have impacted results for the cola giant, which generates about half of its sales abroad. (You can read the full research report on Coca Cola here.)
Shares of Starbucks are up +8.5% year to date, outperforming the Zacks Retail-Food & Restaurants (up +4.5%) and the S&P 500 (up +5.1%). Starbucks is strengthening its portfolio with significant innovation around beverages and core food offerings. The Zacks analyst likes Starbucks’s strong operating fundamentals – solid global retail footprint, successful innovations, best-in-class loyalty program and digital offerings.
Again, digital initiatives like mobile order/pay, delivery services and third-party loyalty partnerships can stimulate stronger sales trends in the Americas. CPG growth across the world as well as China/Asia expansion will also enhance value creation.
However, economic, geopolitical and consumer headwinds continue to impact Starbucks’ results. Starbucks has also lowered its full-year revenue growth guidance from double-digit growth to the 8–10% range. (You can read the full research report on Starbucks here.)
Other noteworthy reports we are featuring today include Yahoo (YHOO), Danaher (DHR) and Express Scripts (ESRX).
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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 >>>