Today's Must Read
New Branches, Loan Balance Aid JPMorgan (JPM) Amid Low Rates
Cost Cuts Amid Volume Weakness Boost Union Pacific (UNP)
Wednesday, December 23, 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 Apple (AAPL), JPMorgan Chase (JPM) and Union Pacific (UNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple shares have outperformed the broader market in the year to date period (+79.6% vs. +16.3%). The Zacks analyst believes that the company is benefiting from continued momentum in the Services segment, driven by a robust performance of App Store, Apple Music, video and cloud services.
Moreover, demand remains healthy for other Apple devices including iPad, Mac and Wearables. Although Apple didn’t provide any guidance due to uncertainties triggered by the coronavirus pandemic, it expects iPhone sales to grow in the first quarter of fiscal 2021.
Apple’s near-term prospects are bright, driven by new iPhones that support 5G, revamped iPad and Mac line-up of devices, health-focused Apple Watch 6 and robust growth in the Services business. Moreover, a solid balance sheet and strong cash flow generating ability are key catalysts. However, increasing scrutiny and legal woes over App Store are headwinds.
Shares of JPMorgan have lost -11.6% over the past year against the Zacks Major Regional Banks industry’s loss of -21.1%. The Zacks analyst believes that branch openings in new regions, acquisition of InstaMed, strong mortgage banking business and focus on credit card operations are likely to continue supporting the bank's financials.
Further, despite restriction of capital deployments with an to conserve liquidity, the company’s cash position remains robust. However, the Federal Reserve’s accommodative policy and near-zero rates are expected to hurt the bank’s interest income and margins.
Additionally, coronavirus-induced economic downturn is likely to continue hampering business activities. Thus, loan demand will be muted in the near term.
Union Pacific’s shares have gained +21.7% over the past six months against the Zacks Rail industry’s rise of +28.4%. The Zacks analyst is pleased by the company's efforts toward promoting safety and enhancing productivity.
Echoing the last few quarters' performance, Union Pacific’s fourth-quarter 2020 results are expected to be hurt by dwindling freight revenues due to coronavirus-induced depressed volumes. Deterioration in the debt-to-EBITDA ratio is an added woe.
However, efforts to control costs, courtesy of the precision scheduled railroading model, are a positive, particularly, in the wake of revenue concerns. Mainly owing to cost-cutting efforts, the operating ratio (operating expenses as a % of total revenues) is predicted to improve.
Other noteworthy reports we are featuring today include Pfizer (PFE), Shopify (SHOP) and Lockheed Martin (LMT).
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Director of Research
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>>>