Today's Must Read
Netflix (NFLX) Banks on Original Content to Boost User Base
Honeywell (HON) Remains Well Poised on Holistic Growth Model
Thursday, September 21, 2017
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 Mastercard (MA), Netflix (NFLX) and Honeywell International (HON). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated MasterCard’s stock has outperformed the industry year to date (+37.7% vs. +27.3%). The company is well positioned for growth given its solid market position, ongoing expansion and digital initiatives, and significant opportunities from the secular shift toward electronic payments.
Revenue growth has remained strong and will continue to grow on the back of its strong market position and attractive core business that continues to be driven by new deals, renewed agreements and expansion of service offerings. The acquisition of VocaLink and NuData Security, complement the company’s efforts to participate in new payment flows and enhance its safety and security offerings. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 2.6% upward over the last 60 days.
In the past year, Netflix shares have vastly outperformed the industry, gaining +93.6% vs. +33%. Netflix is benefitting from its focus on original programming and international expansion. The recent Emmy Award wins reflect the growing popularity of Netflix’s original content. The strength in content portfolio will help it to gain more subscribers across the globe.
Going forward, the company expects to add 0.75 million subscribers in the domestic streaming segment and 3.65 million subscribers in the international segment in the third quarter. The company’s efforts to attract viewers through investing in more regional programming should also boost user base.
Moreover, the company expects to report profits from International operations in the quarter. Nonetheless, investments in original/acquired content remain a drag on profitability. The Zacks analyst believe that Netflix’s ability to effectively manage costs will dictate its future prospects.
Shares of buy-rated Honeywell have outperformed the industry in the year to date period, increasing +19.7% vs. a -2.1% decline. The company’s diversified business portfolio has the potential to earn consistent above-average returns and mitigate operating risks through a balanced organic and inorganic model.
The company’s balanced mix of long- and short-cycle businesses, along with a decent organic growth in new products and expansion in high-growth regions augur well on a long-term perspective. A diligent focus on working capital management, free cash flow generation and a conservative balance sheet remain key positives.
With a flexible yet disciplined focus on cost and productivity, Honeywell remains focused on increasing its presence in high-growth regions. However, adverse foreign currency translations, high R&D expenses to fend off competition and volatility in commodity prices are likely to peg back its growth momentum to some extent.
Other noteworthy reports we are featuring today include Home Depot (HD), Goldman Sachs Group (GS) and BHP Billiton (BHP).
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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>>>