Today's Must Read
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Caterpillar (CAT) Bets on Cost Control Amid Weak Demand
Thursday, January 7, 2021
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 UnitedHealth Group (UNH), Netflix (NFLX) and Caterpillar (CAT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
UnitedHealth shares have outperformed the Zacks Medical Insurance industry over the past year (+21.4% vs. +11.2%). The Zacks analyst believes that the company’s top line has benefited significantly from new deals, renewed agreements and expansion of service offerings. Its numerous acquisitions bode well for its inorganic growth profile.
Expansion of the company’s health services segment provides significant diversification benefits. UnitedHealth remains well poised to benefit from its government business, comprising both Medicaid and Medicare Advantage.
A solid balance sheet and consistent cash flow generation not only encourage investments in business but also add shareholder value. However, the company is witnessing a slowdown in its international operations. Increased joblessness stemming from the COVID-19 induced volatilities might hurt Commercial membership.
Shares of Netflix have lost -0.4% in the last six months against the Zacks Broadcast Radio and Television industry’s gain of +18.2%. The Zacks analyst believes that Netflix is dominating the streaming space, on the back of heavy investments in the production and distribution of localized, foreign-language content.
Higher number of originals is expected to aid user base growth in 2021. Moreover, the launch of low-priced mobile plans in India, Indonesia, Malaysia, Philippines and Thailand is expanding Netflix’s subscriber base in Asia Pacific.
However, the absence of new season of popular show Stranger Things is likely to affect subscriber growth in the fourth quarter of 2020. Additionally, rising competition from Apple, Amazon prime video, HBO Max, Disney+, Peacock and TikTok is a headwind. Netflix’s leveraged balance sheet and higher streaming obligation is a concern.
Caterpillar shares have gained +23.7% over the past three months against the Zacks Construction and Mining industry’s rise of +24.4%. The Zacks analyst believes that a weak backlog, lowering of inventory by dealers and weakness in non-residential construction will impact the company’s results in 2020. Its 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.
A robust liquidity position, investments in expanded offerings, and services and digital initiatives will also fuel growth. The earnings estimates for Caterpillar's current fiscal year have undergone positive revisions lately.
Other noteworthy reports we are featuring today include General Electric (GE), American Express (AXP) and GlaxoSmithKline (GSK).
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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>>>