Today's Must Read
High Iron Prices, Liquidity Aid BHP Group (BHP), Demand Ails
Tower Buyouts Aid American Tower (AMT), Churn Woes Linger
Tuesday, November 24, 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 PayPal (PYPL), BHP Group (BHP) and American Tower (AMT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
PayPal shares have modestly underperformed the Zacks Internet Software industry in the year to date period (+86.4% vs. +89.4%), but the stock has otherwise been a stellar performer on the back of accelerating transaction revenues. However, increasing credit loss reserves owing to macroeconomic projections on account of coronavirus is a serious matter of concern.
PayPal reported strong third quarter results wherein both earnings and revenues topped the estimates and grew year over year. Robust growth in total payments volume (TPV) owing to increasing net new active accounts drove the top line.
Moreover, strengthening customer engagement on the company’s platform and Honey buyout benefits were positive. Further, strong performance by Venmo and merchant services contributed well to the TPV growth. Additionally, growing momentum of the company’s core peer to peer and PayPal Checkout experiences was a tailwind.
Shares of BHP have gained +10.9% over the past year against the Zacks Mining - Miscellaneous industry’s rise of +16.7%. The Zacks analyst believes that efforts to make operations more efficient through smarter technology adoption across the entire value chain are likely to bolster the company’s margins.
BHP Group’s iron ore production rose 8% year over year to 66 Mt in first-quarter fiscal 2021 driven by record production at Jimblebar and strong supply chain performance. In fiscal 2021, it expects to produce 244-253 Mt of iron ore. The surge in iron prices holds promise. Its focus on lowering debt will fuel growth.
The company plans to simplify its coal portfolio and concentrate on higher quality coking coals. BHP Group has six major projects under development in petroleum, copper, iron ore and potash, which will drive growth in the long run. However, the expected decline in global steel demand, as growth in China will be offset by weak demand elsewhere due the impact of the pandemic, remains a major concern.
American Tower shares have lost -5.4% over the past six months against the Zacks REIT and Equity Trust industry’s rise of +12.5%. The Zacks analyst believes that American Tower’s deal to acquire InSite Wireless Group’s towers will mark the company’s entry in Canada and boost the U.S. business.
Its impressive third-quarter results were supported by strong organic tenant billing growth. Going forward, American Tower is well-positioned to benefit from incremental carrier network investments, driven by increasing mobile data usage and growth in 5G deployment. These are likely to drive leasing activity over the long term.
The company’s strong balance sheet also support its expansion plans. However, tenant concentration is concerning as any consolidations or reduction in network spending might adversely impact the company’s top-line growth. Stiff competition and elevated churn in certain emerging markets remain woes.
Other noteworthy reports we are featuring today include Zoom Video Communications (ZM), Target (TGT) and Deere (DE).
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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>>>