Today's Must Read
Expense Saving Supports Bank of America (BAC) Amid Low Rates
Streamlining Efforts, Expense Savings Support Citigroup (C)
Wednesday, December 30, 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 PayPal (PYPL), Bank of America (BAC) and Citigroup (C). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
PayPal shares have outperformed the Zacks Internet Software industry in the year to date period (+114.1% vs. +108.5%). The Zacks analyst believes that PayPal is benefiting from robust growth in total payments volume owing to increasing net new active accounts. Further, strengthening customer engagement on the company’s platform is a major positive.
Furthermore, Venmo’s improving monetization efforts and rising adoption rate across various platforms are aiding the total active accounts. Additionally, growing momentum of core peer to peer and PayPal Checkout experiences is a tailwind.
Also, benefits from Honey buyout are positives. However, increasing credit loss reserves owing to macroeconomic projections on account of coronavirus is a serious matter of concern. Further, intensifying digital payment competition is a risk.
Shares of Bank of America have lost -14.8% over the past year against the Zacks Major Regional Banks industry’s loss of -19.5%. The Zacks analyst believes that opening of new branches, steady improvement in digital offerings and efforts to manage expenses are likely to support profitability.
A strong balance sheet and liquidity position are expected to continue aiding the company's financials amid economic slowdown. Further, its capital deployments are decent. However, near-zero interest rates and no near-term chance of any change in the same are expected to continue hurting the bank’s margins and interest income.
Additionally, coronavirus-induced concerns are likely to further hamper business activities. Thus, loan growth is expected to be muted in the near term.
Citigroup shares have gained +21.1% over the past six months against the Zacks Major Regional Banks industry’s rise of +28.3%. The Zacks analyst believes that Citigroup’s streamlining efforts, along with strategic investments in core business, bode well.
Also, net interest revenues will likely be supported by loan growth and mix, despite low interest rates environment. Further, manageable debt level makes Citigroup less risky in case of any economic downturn. Though, pending litigations and subdued consumer banking business remain concerns, Citigroup's shrinking costs base due to the wind-down of legacy assets is aiding bottom-line expansion.
Notably, the company recently announced to have passed the Fed's second round of stress test and will resume buybacks in 2021.
Other noteworthy reports we are featuring today include Intel (INTC), Zoom Video Communications (ZM) and Goldman Sachs (GS).
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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>>>