Today's Must Read
P&G (PG) Gains from Higher Coronavirus-Led Product Demand
T-Mobile (TMUS) Rides on Sprint Merger Synergies Amid Rivalry
Tuesday, December 1, 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 Microsoft (MSFT), The Procter & Gamble Company (PG) and T-Mobile US (TMUS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Microsoft shares have outperformed the S&P 500 in the year-to-date period (+35.7% vs. +12.7%) on the back of momentum in Azure as well as impressive Teams user growth triggered by the pandemic led work-from-home, online learning wave and tele healthcare trends.
Solid uptake of Surface devices and Xbox Game Pass is expected to boost growth. Further, the company is gaining from growing user base of its different applications including Microsoft 365 suite, and Dynamics. Additionally, it is well positioned to expand the total addressable market through acquisitions of GitHub and ZeniMax Media.
However, broad-based macroeconomic weakness in job market and lower spend on advertising due to coronavirus pandemic are likely to weigh on LinkedIn and Search revenues. Also, delays in consulting business are anticipated to limit growth.
Shares of Procter & Gamble have gained +13.4% over the past year against the Zacks Soap and Cleaning industry’s gain of +27.2%. The Zacks analyst believes that the company’s continued investment in business alongside efforts to offset macro cost headwinds and balance top and bottom-line growth underscores its productivity efforts.
Further, earnings and sales improved year over year in the first quarter on gains from significant sales increase, related fixed cost leverage and ongoing productivity efforts. Sales were aided by strength across all segments as well as robust shipments, pricing and mix. Cost savings aided core currency-neutral gross and operating margin, which expanded 170 bps and 350 bps, respectively.
Also, it delivered adjusted free cash flow productivity of 95% in the fiscal first quarter. Driven by the robust results, the company raised its outlook for fiscal 2021. However, currency headwinds are likely to affect results in fiscal 2021. Also, stiff competition remains a woe.
T-Mobile shares have gained +32.3% over the past six months against the Zacks National Wireless industry’s rise of +10.9%. The Zacks analyst believes that several promotional activities to lure customers from rivals have eroded its profitability.
T-Mobile has more than 100 million wireless customers and the United States’ largest 5G network. It overtook AT&T to become #2 in U.S. wireless. The company is confident of its ability to deliver $43 billion of synergies and achieve $6 billion of annualized savings from the Sprint merger. It is targeting more than $1.2 billion of synergies in 2020. T-Mobile’s mid-band 5G network covers more than 30 million people.
It expects to reach 100 million people by the end of 2020. For the second half of 2020, T-Mobile raised its guidance for profitability and cash flow. However, the company operates in a fiercely competitive and saturated U.S. telecom market. Low-priced plans for consumers and small enterprises have not improved its bottom line.
Other noteworthy reports we are featuring today include Boeing (BA), Advanced Micro Devices (AMD) and Goldman Sachs (GS).
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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>>>