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Research Daily

Monday May 1, 2017

Today's Research Daily features new research reports on 17 major stocks, including Microsoft (MSFT), Intel (INTC), 3M (MMM) and UPS (UPS).

Microsoft shares lagged the Zacks Tech sector through the fall, but have led the way over the last six months (up +15.2% versus +14.6%) on greater appreciation for the company's reorganization and repositioning. Microsoft reported impressive third-quarter fiscal 2017 results beating expectations on both lines.

The Zacks analyst stress that results demonstrated continuing enterprise strength, strong Office 365 adoption and robust penetration of Azure. Further, the addition of LinkedIn has improved the company's presence in the social media market. The recently announced Dies acquisition and investment in Flipkart are other positives.

All in all, the company has emerged as a leader in the cloud space that promises momentum on a number of fronts. However, a strong U.S. dollar and stiff competition remain major concerns. (You can read the full research report on Microsoft here.)

Shares of Intel have gained only +4.1% since election results were announced on Nov 8, lagging the broader Tech sector (up +12.8%) as well as the red-hot semiconductors space (up +21.9%). Intel’s first-quarter 2017 results demonstrated a turnaround in the company’s businesses after a long time.

The improving PC shipment data – as per Gartner and IDC – is positive for the company. The upcoming launch of Skylake is anticipated to benefit data center results in the second half. Moreover, the company revised up its 2017 revenue and EPS outlook based on improving average selling price (ASP).

The Zacks analyst sees the Data center business as promising. Further, growing clout in the Internet of Things (IoT) and autonomous driving market are key catalysts. (You can read the full research report on Intel here.)

Buy rated 3M shares have gained +18.2% over the last six months, outperforming the Zacks Diversified Operations industry, which has gained +11.3% over the same period. 3M started 2017 on a positive note with strong first-quarter results. The Zacks analyst likes 3M's global footprint, diversified product portfolio and ability to penetrate different markets.

During 2016–2020, 3M expects 8–11% growth in earnings per share driven by an organic sales growth of 2–5%. 3M is standardizing its business processes through a new, global ERP system and expects $500 to $700 million in annual operational savings by 2020.

The company has raised its earlier guidance for 2017 on strong quarterly results and improved business outlook. However, the company is facing increased pension expenses as its workforce begins to retire. In addition, the company is susceptible to high commodity price risks. (You can read the full research report on 3M here.)

Shares of United Parcel Service shares rallied 2.6% in the last one year, underperforming the Zacks Transportation-Air Freight industry’s gain of 3.7% in the period. Shares of UPS have also lagged those of rival FedEx, which have gained 13.2% in the same time span. However, United Parcel reported better-than-expected earnings and revenues in the first quarter of 2017.

The outperformance came despite headwinds like higher fuel costs and foreign exchange-related issues. Results were aided by the substantial increase in operating profit of the Supply Chain and Freight unit. Additionally, the Zacks analyst likes the company's efforts to reward shareholders. Moreover, United Parcel Service's expansion-related efforts raise optimism in the stock. (You can read the full research report on United Parcel here.)

Other noteworthy reports we are featuring today include Starbucks (SBUX), Raytheon (RTN) and State Street (STT).

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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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