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Research Daily

Thursday April 27, 2017

Today's Research Daily features new research reports on 17 major stocks, including Caterpillar  (CAT), AT&T (T), Lockheed Martin (LMT) and DuPont (DD).

Strong Buy rated Caterpillar shares have gained +12.9% year-to-date, underperforming the Zacks Manufacturing - Construction and Mining industry which has increased +11.9% over the same period. In the first quarter, Caterpillar reported year-over-year improvement in both its top and bottom line for the first time in 10 quarters and beat expectations on both counts.

Also, Caterpillar hiked 2017 revenue guidance to the range of $38–$41 billion. In construction, Asia Pacific is showing promise while leading indicators of U.S. non-residential construction signal robust conditions ahead.

The Zacks analyst stresses that Caterpillar continues to cut down costs to counter weak demand and will gain immensely from Trump’s $1 trillion infrastructure spend plan. (You can read the full research report on Caterpillar here.)

Shares of AT&T shares have lost -3.7% over the three months, but have still fared better than the Zacks Wireless industry and competitor Verizon, which have declined -3.9% and -4.5% over the same period. AT&T posted mixed first quarter 2017 financial results where the top line lagged expectations while the bottom line came in line.

Additionally, AT&T added 2.7 million of net wireless subscribers. AT&T has decided to acquire Straight Path Communications to accumulate millimeter wave wireless spectrums for 5G wireless network. Also, AT&T plans to launch 5G Services in 2018 while its unlimited data plans have heated up the wireless industry. 

The AT&T-Time Warner deal gained European Union’s approval but still awaits U.S. Justice Department’s nod. However, saturated wireless market, losses in access lines, operating expenses, regulatory norms and union issues are other near-term risks for AT&T. (You can read the full research report on AT&T here.)

Lockheed Martin shares have gained +16.1% over the past year, underperforming the aerospace/defense sector, which has gained +22.2% over the same period. Lockheed Martin’s earnings comfortably surpassed expectations while revenues fell short, even though they improved year over year. The defense major also raised its top-line guidance for 2017.  

Driving this momentum is Lockheed Martin’s status as a bellwether for the defense space and the company's impressive cash flow generation abilities which it generously shares with its shareholders. The Zacks analyst likes the company's solid outlook, impressive revenue growth and potential share buybacks.

Further, increased budget for the Department of Defense is expected to boost defense giants like Lockheed Martin. However, tough competition remains a major dampener for the stock. (You can read the full research report on Lockheed Martin here.)

Shares of DuPont have gained +22.9% over the one year vs. +16.8% gain for the Zacks Diversified Chemicals industry. DuPont’s adjusted earnings for first-quarter 2017 topped expectations, aided by its cost management actions and healthy demand for new products. Revenues also rose year over year and exceeded estimates.

DuPont is moving forward with its planned mega-merger with Dow Chemical, which is expected to create significant synergies. However, DuPont continues to face challenges in the agriculture business. Additionally, the company is exposed to currency headwinds and volatility in energy and raw material costs. (You can read the full research report on DuPont here.)

Other noteworthy reports we are featuring today include PayPal (PYPL), Illumina (ILMN) and United Continental (UAL).

Zacks' 2017 IPO Watch List
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Mark Vickery

Senior Editor

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 >>>

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