Today's Must Read
Caterpillar (CAT) Bets on Cost Control Amid Weak Demand
Micron (MU) Benefits from Growing Memory-Chip Demand
Monday, December 7, 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 NextEra Energy, Inc. (NEE), Caterpillar Inc. (CAT) and Micron Technology, Inc. (MU). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Shares of NextEra Energy have gained +23.8% over the past year against the Zacks Utility - Electric Power industry’s decline of -7.1%. The Zacks analyst believes that the company has a well-chalked out capital investment plan to strengthen its infrastructure and add clean assets to the generation portfolio.
NextEra extended long-term growth outlook through 2023 and is on course to achieve the same despite disruptions caused by the pandemic outbreak. It is poised to benefit from $50-$55B investment plan through 2022.
However, its nature of business is subject to complex and comprehensive federal, state, as well as other regulations. If the planned nuclear plant outages last longer or an unplanned outage occurs, the company’s operations and profitability might be hampered.
Caterpillar shares have outperformed the Zacks Manufacturing - Construction and Mining industry in the year to date period (+23.4% vs. +22.7%), but for the fourth quarter the company anticipates demand to remain weak but at improved levels than the third quarter. A weak backlog, lowering of inventory by dealers and weakness in non-residential construction will impact results in 2020. However, its ongoing cost reduction efforts will sustain margins in this scenario.
Further, a recovering manufacturing sector, resumption of spending at miners, improved North American residential construction and strong construction demand in China hold promise. Further, strong liquidity position, investments in expanded offerings and services and digital initiatives will fuel growth.
Micron Technology shares have gained +36.4% in the year-to-date period against the S&P 500’s rise of +15.1%. The Zacks analyst believes that Micron is witnessing growing demand for memory chips from cloud-computing providers and acceleration in 5G adoptions.
A rising mix of high-value solutions, enhancement in customer engagement and improvement in cost structure are growth drivers as well. Further, 5G (fifth-generation) adoption beyond mobile is likely to spur demand for memory and storage, particularly in IoT (Internet of Things) devices and wireless infrastructure.
Nonetheless, Micron’s near-term performance might be hurt by the bleak memory-chip demand as customers are adjusting inventories in response to the economic recession caused by the coronavirus outbreak. Further, soft server demand from several enterprise OEM (original equipment manufacturer) customers is a concern.
Other noteworthy reports we are featuring today include CME Group Inc. (CME), Dominion Energy, Inc. (D) and Emerson Electric Co. (EMR).
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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>>>