Today's Must Read
Visa (V) Grows on Europe Acquisition, High Incentives Hurt
Verizon's (VZ) 5G Network, OTT TV Streaming Services on Track
Citigroup (C) Continues with Divestiture, Legal Woes Linger
Tuesday, June 13, 2017
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 17 major stocks, including Amazon (AMZN), Visa (V), Verizon (VZ) and Citigroup (C).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Amazon’s shares have outperformed the broader market in the year-to-date period (the stock is up +30.6% vs. the +8.8% gain for the S&P 500 as a whole). The company delivered strong first quarter results with both earnings and revenues beating expectations.
The Zacks analyst likes the company’s solid loyalty system in Prime and its FBA strategy, and content addition continues to add selection to Prime memberships. Also, the AWS generates much higher margins than retail, so it has a very positive impact on Amazon’s profitability. Devices and IoT is also a potential growth area. However, Prime saturation in the U.S. market and competition in online retail remains concern.
Shares of Visa have outperformed the Zacks Financial Transaction Services industry as well as MasterCard in the year-to-date period (Visa is up +21.2% vs. +18.5% gain for MA and +15.7% for the industry). Driving this momentum is the acknowledgement that Visa's brand, global network, and leading market share position it to be a key beneficiary of the secular global shift to electronic transactions. Initial concerns about a changing competitive landscape, large on account of new payment options, have also started receding.
The company's strong results in recent quarters reflect this favorable backdrop. On the flip side, forex volatility, increased client incentives and global economic uncertainty are some of the headwinds.
Verizon’s shares have been laggards over the past year -- the stock is down 11.9% over the past 12 months vs. AT&T's 3.5% decline and the +17% gain for the S&P 500 index. Verizon’s latest deal to acquire Straight Path Communications for $3.1 billion is part of its recent efforts to maintain its wireless leadership while branching out into adjacent opportunities.
The company’s decision to launch FiOS Prepaid plan, FiOS Internet service and to zero-rate its data on FiOS Mobile App should help it gain subscribers while unlimited data plans have heated up the wireless industry.
The Verizon-Yahoo deal underwent a discount revision of $350 million, but is part of the company's efforts to add content; a TV streaming service is reportedly being contemplated. In the updated research report issued today, the Zacks analyst discusses the pros & cons of investing in Verizon shares at this stage.
Shares of Citigroup have gained around +8.8% year to date, outperforming the Zacks Major Banks industry, which has gained +2.8% over the same period. The Zacks analyst likes the company’s restructuring and streamlining efforts, strategic investments in core business and expense management. Recently, the firm has entered into an agreement to vend its Fixed Income Analytics and Index Businesses to London Stock Exchange Group plc in order to focus on core operations.
Moreover, the recently approved Financial Choice Act which seeks to eradicate a number of core financial regulations will act as a tailwind for the company in coming quarters. However, several issues including a substantial litigation burden remain concerns.
Other noteworthy reports we are featuring today include Morgan Stanley (MS), Walgreens (WBA) and Duke Energy (DUK).
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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>>>