Today's Must Read
Growing Top-line Aid Visa (V), Escalating Expenses Hurt
PayPal (PYPL) Benefits From Increasing Total Payment Volume
Tuesday, April 6, 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 Alphabet (GOOGL), Visa (V), and PayPal Holdings (PYPL). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alphabet shares have outperformed the Zacks Internet Services industry in the year to date period (+25.9% vs. +19.3%). The Zacks analyst believes that Alphabet's strengthening cloud unit is aiding substantial revenue growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space.
Further, major updates in its search segment are enhancing the search results, which is a major positive. Moreover, Google’s robust mobile search is gaining solid momentum. Additionally, strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term.
However, the company’s growing litigation issues and increasing expenses might hurt profitability. Further, the company faces persistent pressure from advertisers to tighten controls on YouTube video service.
Visa shares have gained +8% over the last six months against the Zacks Financial Transaction Services industry’s gain of +8.9%. The Zacks analyst believes that numerous acquisitions and alliances have paved the way for long-term growth and consistently drove revenues for Visa.
Also, technological as well as a shift in payments to digital modes is a boon for the company. 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.
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 coronavirus looms on.
Shares of PayPal have gained +7.6% in the past three months against the Zacks Internet Software industry’s loss of -10.2%. 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. Additionally, solid momentum of core peer to peer and PayPal Checkout experiences is a tailwind. Also, well-performing merchant services 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.
Other noteworthy reports we are featuring today include Costco Wholesale (COST), Bristol-Myers Squibb (BMY) and Target (TGT).
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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>>>