Today's Must Read
Visa Europe Acquisition, Strong Balance Sheet Buoys Visa (V)
United Technologies (UTX) Set to Gain from Rockwell Merger
Thursday, October 26, 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 Visa (V), Coca-Cola (KO) and United Technologies (UTX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-rated Visa's shares have outperformed the Zacks Financial Transaction Services industry in the year-to-date period and is only marginally below rival MasterCard during this period (Visa is up +40.3% vs. +41.7% gain for MA and +32.6% for the industry). The company’s fiscal fourth-quarter earnings surpassed expectations and grew year over year.
Numerous strategic acquisitions and alliances, technology upgrades and effective marketing have paved the way for the company's long-term growth that have led to consistent revenue growth over the past several years. The Zacks analyst thinks Visa is well poised to gain from the growing electronic payment processing and strong international business.
A solid balance sheet ensures effective capital deployment. Strong earnings guidance instills confidence in the company. However, higher client incentives and forex volatility are some near-term headwinds.
Shares of Coca-Cola have outperformed the Zacks Soft Drinks Beverages industry since the beginning of the year, (+11.1% vs. +10.7%). Coca-Cola reported better-than-expected third-quarter 2017 results. However, Coca-Cola's total sales decreased 15%, marking the 10th consecutive quarterly decline in revenues.
Although top line needs to show sustained improvement, the Zacks analyst is encouraged by the company’s strategic efforts in making its portfolio as a total beverage company with improved marketing and innovation, focus on driving revenues by improved price/mix, digital focus, and productivity initiatives toward driving margins. Further, solid performance of Coke Zero Sugar globally (growing high single digit) is quite encouraging.
United Technologies’ shares have outperformed the Zacks Conglomerates sector in the year-to-date period (the stock is up +8.5% vs. the -1.2% decline for the sector). United Technologies reported solid third-quarter 2017 results driven by superior organic growth and diligent execution of operational plans.
The Zacks analyst thinks the acquisition of Rockwell Collins will provide the company with bigger clout in the industry and increase its bargaining power as it would emerge as one of the largest global aircraft equipment manufacturers. Management further increased its guidance for 2017 on healthy growth dynamics.
However, United Technologies is exposed to market price volatility and availability risks related to raw materials, which hamper its ability to meet delivery schedules and increase operating costs. Fluctuations in foreign currency exchange rates affect its net investment in foreign subsidiaries and cause instability in cash flows. The company is also susceptible to high operating risks following the Brexit referendum.
Other noteworthy reports we are featuring today include Eli Lily (LLY), AT&T (T) and Novartis (NVS).
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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>>>