Today's Must Read
5G Mobile Network Boosts AT&T (T), Regulatory Issues Ail
Cisco (CSCO) Rides on Security Products & Broadsoft Buyout
Tuesday, December 19, 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 Wells Fargo (WFC), AT&T (T) and Cisco (CSCO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Wells Fargo’s shares have underperformed the Zacks Major Banks industry year to date, increasing +10.6% vs. a gain of +19.6%. However, the company has an impressive earnings surprise history. The company surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters. Wells Fargo plans $4 billion of cost cuts by 2019.
Further, rising rates are easing margin pressure to an extent. Notably, following the recent Federal Reserve interest rate hike by 25 bps, Wells Fargo raised its prime lending rate from 4.25% to 4.50%. While the current crisis related to the revelation of illegally opening millions of illegal accounts last year at the company will take some time to alleviate, the Zacks analyst thinks consistent growth in loans and deposits and expansions will likely support its growth profile.
Shares of AT&T have increased +0.1% over the past three months, underperforming the Zacks Wireless National industry's gain of +0.9%. However, the company recently announced a 2% dividend hike, backed by strong cash flows and business outlook. AT&T’s 5G network trials in different cities are in sync with its plan to offer 5G services from 2018.
The company’s streaming service DIRECTV NOW reported more than 1 million subscribers, despite cord-cutting. Meanwhile, AT&T-Verizon have teamed up with Tillman to build cell towers in the United States. AT&T’s NetBond is gearing up to offer multiple cloud connections. Also, AT&T is exploring a strategic option to sell a major part of its Latin American pay-TV operations.
However, AT&T-Time Warner had to extend their proposed deal closure deadline to Apr 22, 2018 to clear-off regulatory issues. AT&T continues to struggle in the competitive U.S. wireless market. Loss in access lines, operating expenses and union issues are other headwinds.
Cisco’s shares have outperformed the Zacks Networking industry on a year to date basis, gaining +27.4% vs. +26.1%. Recently, it unveiled the Cisco Security Connector, which is now available in the App Store on iOS devices. The Zacks analyst thinks the company’s expanding footprint in the rapidly growing security market presents a significant growth opportunity.
Additionally, partnerships with Telenor, Apple, IBM and Microsoft are positive in our view. Additionally, the company’s Application Centric Infrastructure (ACI) solution is currently used by more than 4K customers. The ACI solution was recently enhanced with new features that have aided growth.
Further, the planned acquisition of Broadsoft will boost company's recurring revenue base. Moreover, the company's collaboration with Google Cloud to offer hybrid cloud solution is a key catalyst. However, intense competition from peers and challenges in the emerging markets remains a headwind.
Other noteworthy reports we are featuring today include Oracle (ORCL), IBM (IBM) and Abbott (ABT).
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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>>>