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Research Daily

Tuesday May 2, 2017

Today's Research Daily features new research reports on 16 major stocks, including Kraft Heinz (KHC), Nike (NKE) and Stryker (SYK).

Kraft Heinz shares have gained +2.4% year to date, outperforming the beleaguered Zacks categorized Food-Miscellaneous/Diversified industry which has lost -1.1% over the same period. Estimates have also remained stable ahead of the company's first quarter earnings release. Cost savings initiatives and strong gains from innovation continue to have a positive impact on the company’s performance.

The Zacks analyst also likes the company’s productivity improvement initiatives including zero-based budgeting; modernization and capability building. However, the company is experiencing top-line weakness over the past several quarters.

Soft spending by U.S. shoppers and shift in consumer preference toward natural and organic ingredients over packaged and processed food are hurting the company’s categories. Unfavorable currency translation continued to be a dampener for the segment through 2016 and is likely to hurt results in 2017 as well. (You can read the full research report on Kraft Heinz here.)

Shares of Nike have underperformed the Zacks Consumer Discretionary sector on a year-to-date basis, gaining +8.2% vs. +11.6% for the sector. But the Zacks analyst likes the company’s customer-centric approach, innovative products and strong brand portfolio. This, along with the company’s desire for increasing its global footprint, popularity and market share demonstrates its growth appetite.

These factors, along with SG&A leverage and ecommerce growth have helped Nike to beat earnings for 19 straight quarters now. However, Nike’s top-line fell prey to stiff competition and a tough retail backdrop in the last reported quarter. Persuaded by these factors, management provided soft sales growth outlook for fourth-quarter fiscal 2017. It also expects currency headwinds to linger and hurt revenues in the fiscal.

But Nike remains confident of driving sustainable and profitable capital efficient growth in the long term. Moreover, its shareholder-friendly moves bode well. (You can read the full research report on Nike here.)

Stryker shares have gained +17.4% over the last six months, outperforming the Zacks Medical Products industry, which has gained +11.2% over the same period. Stryker ended the first quarter of 2017 on a solid note, squarely beating expectations. The Zacks analyst thinks the company's innovative product pipeline will be a key catalyst in the near term.

Additionally, growing adoption of MAKO will drive sales in the orthopedic and reconstructive surgery market. Additionally, the acquisitions of Sage Products and Physio Control and the tie-up with Indo UK Institute of Health's Medicity Program are major positives.

On the flip side, China might prove to be a challenging market for the company. Coming to supply-side headwinds, the company has been grappling with issues in the spine business for a while. Additionally, challenging global economic conditions raise concerns. (You can read the full research report on Stryker here.)

Other noteworthy reports we are featuring today include DISH Network (DISH), TD Ameritrade (AMTD) and Freeport-McMoRan (FCX).

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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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