Today's Must Read
New Branches, Strategic Expansion Aid JPMorgan (JPM) Growth
Intelligrated Unit Drives Honeywell (HON), Weak Demand Ails
Monday, April 19, 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 Microsoft (MSFT), JPMorgan Chase (JPM), and Honeywell International (HON). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Shares of Microsoft have slightly underperformed the S&P 500 over the past year (+48.5% vs. +51.2%). The Zacks analyst believes that Microsoft is benefiting from momentum in Azure, impressive Teams user growth triggered by coronavirus-led digital transformation, work-from-home, online learning wave and tele healthcare trends.
Further, the company is gaining from growing user base of its different applications including Microsoft 365 suite, and Dynamics. However, macroeconomic weakness in job market and lower spend on advertising due to coronavirus pandemic are likely to put pressure on LinkedIn and Search revenues.
Moreover, delays in consulting business are anticipated to limit growth. Increasing expenditure on Azure enhancements amid stiff competition from Amazon Web Services, is likely to impede margin expansion.
JPMorgan’s shares have gained +51.8% over the last six months against the Zacks Major Regional Banks industry’s gain of +57.2%. The Zacks analyst believes that branch openings in new regions, inorganic expansion efforts and a strong mortgage banking business are likely to keep supporting financials.
While the Fed's accommodative policy and near-zero rates are expected to hurt interest income and margins, gradual economic recovery will likely lead to rise in demand for loans. However, coronavirus-induced economic downturn has not only hampered business activities but also continues to hurt loan demand.
Its impressive capital deployments reflect earnings strength and solid balance sheet. These capital deployment actions are likely to enhance shareholder value.
Shares of Honeywell have gained +11% in the past three months against the Zacks Diversified Operations industry’s gain of +10.7%. The Zacks analyst believes that strength in defense and space businesses as well as solid demand for warehouse automation products are likely to boost Honeywell’s revenues in the quarters ahead.
Also, strong demand for personal protective equipment, along with a strong backlog conversion rate, will act as major tailwinds. Furthermore, increased commercial and operational excellence initiatives are likely to improve its near-term profitability.
The company believes that the coronavirus outbreak-led market downturn and weak commercial aerospace will adversely impact its near-term results. Given its extensive geographic presence, its business is subject to political, economic and geopolitical risks.
Other noteworthy reports we are featuring today include Adobe (ADBE), Novo Nordisk (NVO) and Starbucks (SBUX).
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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>>>