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Research Daily

Wednesday May 3, 2017

Today's Research Daily features new research reports on 16 major stocks, including MasterCard (MA), CVS Health (CVS) and Colgate-Palmolive (CL).

MasterCard has outperformed the Zacks Financial Services Transaction sector over the last one year (up +22.7% vs. +17.3%) and is also marginally ahead of rival Visa (up +20.1%) MasterCard’s earnings surpassed expectations and increased year over year The company remains well positioned for growth on the back of its solid market position, ongoing expansion and digital initiatives and significant opportunities from the secular shift towards electronic payments.

The acquisition of VocaLink and NuData Security complement the company’s efforts to participate in new payment flows and enhance its safety and security offerings. However, escalating costs, a challenging forex environment and legal issues remain concerns. (You can read the full research report on MasterCard here.)

Shares of CVS Health have underperformed the Zacks categorized Retail- Drug Stores industry year to date gaining +0.1% vs. +1.6%. CVS Health posted mixed first-quarter with adjusted earnings beating expectations but declining year over year. Slower revenue growth on poor Retail/LTC numbers and a margin debacle resulted in a dull earnings performance.

But the Zacks analyst likes the strong Pharmacy Services numbers that benefited from the upside in Specialty Pharmacy. Also despite a soft bottom-line scenario, the company reiterated its earnings 2017 outlook indicating chances of recovery ahead. Both the Omnicare and Target Pharmacy buyouts, which have already started to benefit CVS on multiple prospects, should drive enterprise value significantly higher in the days ahead. (You can read the full research report on CVS Health here.)

Colgate-Palmolive shares are up +8.1% in the year-to-date period, outperforming the Zacks Consumer Staples sector, which has gained +6.5% over the same period. After posting in-line earnings for two straight quarters, Colgate delivered a positive earnings surprise in first-quarter 2017. Also, the bottom line grew year over year, aided by margin expansion and lower tax rate.

The Zacks analyst likes its product innovation, globally recognized brands and presence in both developed and emerging economies. The company has been witnessing enhanced margins for a while now, driven by the cost-savings from the funding-the-growth and 2012 Restructuring Program.

Offsetting these positives are uncertain global markets and lingering currency woes, which may impact results in 2017. However, organic sales are expected to improve sequentially throughout the year. Colgate’s shareholder-friendly moves are also noteworthy. (You can read the full research report on Colgate-Palmolive here.)

Other noteworthy reports we are featuring today include Charter Communications (CHTR), BNY Mellon (BK) and Norfolk Southern (NSC).

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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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