Today's Must Read
Expense Saving Supports Bank of America (BAC) Amid Low Rates
Salesforce (CRM) Rides on Robust Demand for its Solutions
Wednesday, February 17, 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 Visa (V), Bank of America (BAC) and salesforce.com (CRM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa shares have modestly underperformed the Zacks Financial Transaction Services industry in the year-to- date period (-4.9% vs. -4.2%), reflecting the impact of restricted international travel on cross-border transactions. That sadi, the Zacks analyst believes that numerous acquisitions and alliances paved the way for long-term growth and consistently drove Visa’s revenues. Technological upgrades via investments also bode well for Visa.
The acquisition of Visa Europe is a strategic fit as well. The coronavirus vaccine development and the gradual revival of consumer confidence will drive spending, expanding the company's business volumes in turn.
A strong balance sheet enables investment in business. However, high operating expenses stress the operating margins. Ramped-up client initiatives will dent the top line. Also, a sluggish cross-border business due to the pandemic is a major concern.
Shares of Bank of America have gained +34.2% in the last six months against the Zacks Major Regional Banks industry’s gain of +39.9%, with the recent uptrend long-term interest rates helping the outlook for the bank as well as the group as a whole. The Zacks analyst believes that opening of new branches, improvement in digital offerings and efforts to manage costs are likely to aid the company’s profitability.
Also, a strong balance sheet and liquidity position are expected to continue aiding its financials. However, near-zero interest rates and no near-term chance of any change in the same are expected to keep hurting the bank’s margins and interest income.
Coronavirus-induced concerns are likely to further hamper business activities and thus, loan growth is expected to be muted in the near term.
Salesforce shares have lost -3.3% over the past three months against the Zacks Computer Software industry’s rise of +14.1%, reflecting the market's skepticism about the Slack (WORK) transaction. The Zacks analyst is optimistic about the stock's long-term outlook and believes that the company is benefiting from a robust demand environment as customers are undergoing a major digital transformation.
The rapid adoption of its cloud-based solutions is driving demand for its products. The company’s sustained focus on introducing more aligned products as per customer needs is driving its top-line. Continued deal wins in the international market is another growth driver.
However, stiff competition is a concern. Besides, unfavorable currency fluctuations along with increasing investments in international expansions and data centers are an overhang on near-term profitability.
Other noteworthy reports we are featuring today include Zoom Video (ZM), U.S. Bancorp (USB) and CME Group (CME).
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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>>>