Today's Must Read
Focus on Core Operations Aid Citigroup (C), Legal Woes Linger
Massive MIMO Trial Lifts Qualcomm (QCOM), Legal Disputes Hurt
Thursday, January 4, 2018
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 Wal-Mart (WMT), Citigroup (C) and Qualcomm (QCOM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Wal-Mart’s shares have been strong performers lately, with the stock up +32% over the last six months, outperforming the S&P 500's +11.8% gain in the same time period. Wal-Mart Stores, recently announced plans to drop the “hyphen” and “stores” from its name to officially emerge as an omnichannel retailer.
The company has been riding on its robust past record, which derives strength from constant e-commerce initiatives, like buyouts, alliances, surging grocery business and improved delivery systems. Thanks to these trends, along with solid traffic, Walmart’s third-quarter fiscal 2018 marked its ninth and 13th straight quarter of positive earnings surprise and comps growth, respectively.
Also, the company’s international business remains a growth driver. However, costs associated with technological and e-commerce investments; mix impact from growing e-commerce operations and a compelling pricing strategy have been hurting Walmart’s gross margin for a while now. Stiff competition and volatile consumer spending also pose threats.
Shares of Citigroup have underperformed the Zacks Major Banks industry over the last six months, gaining +8.9% vs +11.3%. Yet, the company boasts an impressive earnings surprise history. The company has surpassed expectations for earnings in all the trailing four quarters.
The Zacks analyst thinks the company’s restructuring and streamlining efforts, strategic investments in core business and expense management will likely support profitability going forward. Moreover, expansion of wealth management business in Australia will act as a tailwind.
Notably, following the recent Federal Reserve interest rate hike, Citigroup raised its prime lending rate from 4.25% to 4.50%. Yet, several issues, including litigation burden are cause for concern. Also, in spite of rising rates, margins are under pressure due to persistent decline in the company’s legacy holdings portfolio.
Qualcomm's shares have gained +26% over the last three months vs +11.2% for the Zacks Wireless Equipment industry. Qualcomm, Verizon and Ericsson jointly completed the first Massive MIMO (Multiple Input-Multiple Output) trial with a fully-compatible customer device. Qualcomm achieved a 5G data connection with the Snapdragon X50 5G modem chipset on 28GHz mmWave spectrum.
Qualcomm is teaming up with Verizon and Novatel Wireless for 5G NR mmWave technology trial. This marks Qualcomm’s leadership in 5G, chipset market and mobile connectivity. Qualcomm is extending a cash tender offer for its pending NXP Semiconductor deal.
Qualcomm rejected Broadcom's takeover offer on grounds of inadequacy. However, the company continues to receive charges for unfair business practices and licensing royalty payments. Regulatory disputes and aggressive competition in the mobile phone chipset market continues to bother.
Other noteworthy reports we are featuring today include S&P Global (SPGI), Sherwin-Williams (SHW) and Baxter (BAX).
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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>>>