Today's Must Read
Intel Corp (INTC) Hurt By Increasing Competition from AMD
Kraft Heinz's (KHC) ZBB Cost Saving Plan Impresses
Monday June 26 2017
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including United Technologies (UTX), Intel Corp (INTC) and Kraft Heinz (KHC).These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy rated United Technologies shares have outperformed the Zacks Conglomerates sector as well as the S&P 500 index in the year-to-date period (the stock is up +11.3% vs. +2.4% gain for the sector) on the back of a revamped aerospace unit and improved growth outlook through strategic acquisition opportunities. While questions remain about the new administration's ability to ramp up defense spending, this favorable expectation is nevertheless a positive for the company. The improving outlook for the global economy is another macro tailwind for UTX. The company remains in excellent financial health and pays a stable dividend (currently yielding 2.2%), but value-oriented investors will likely have issues with the stock's current elevated valuation.
Shares of Intel have lost -1.6% since election results were announced on Nov 8, in contrast to the broader Tech sector (up +16.5%) as well as the red-hot semiconductors space (up +23.2%). Top-PC makers like HP, Lenovo, and Asus are set to launch PCs based on Qualcomm’s ARM-based Snapdragon processor, which intensifies competition for Intel. Additionally, increasing competition from AMD is also a headwind. Nevertheless, the Zacks analyst thinks IBM’s upcoming launch of Skylake will drive data center results in the second half. Also, the company revised its 2017 revenue and EPS outlook upward based on improving average selling price (ASP). Further, anticipated improvement in cost structure and lower spending, primarily due to improving operational efficiency will aid in expansion of margins going forward. Additionally, aggressive share buyback will boost the bottom line in 2017.
Kraft Heinz’s shares have gained +1.9% year to date, outperforming the categorized Food-Miscellaneous/Diversified industry which is down -3.7% during the same period. Strong brand portfolio, cost savings initiatives, innovation and marketing efforts raise growth prospects for the company. However, the company is seeing top-line weakness over the past several quarters. The Zacks analyst stresses that Kraft Heinz has been struggling due to the shift in consumer preference toward natural and organic ingredients over packaged and processed food. Again, unfavorable currency translation is a major headwind for Kraft Heinz that is likely to hurt results in 2017.
Other noteworthy reports we are featuring today include HCA Holdings (HCA), Red Hat (RHT) and EQT Corp. (EQT).
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Research Investment Coordinator
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>>>