Today's Must Read
Mobile Ad Growth, Expanding User Base Drives Facebook (FB)
Data-Centric Growth & Stable PC Market Drives Intel (INTC)
Air Traffic Boom, Solid Cash Flow Boost Boeing's (BA) Growth
Monday, April 30, 2018
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 17 major stocks, including Microsoft (MSFT), Facebook (FB), Intel (INTC) and Boeing (BA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Microsoft’s shares have outperformed the Zacks Technology sector over the last year (up +38% versus +15.3%) Microsoft reported impressive third-quarter results driven by solid Azure growth and strong adoption of Office 365. LinkedIn results continued to impress as increasing sessions reflected acceleration in engagement.
Microsoft provided bullish guidance for fiscal 2019. The Zacks analyst thinks continuing transition to cloud services will drive top-line growth. The company’s unique position as a hybrid cloud solution provider is expected to drive server products and cloud services revenues. The company’s strategic growth investments in cloud business and artificial intelligence (AI) as well as stable PC market are positives.
Further, Microsoft’s strategic initiatives to enter the augmented reality and virtual reality market will drive growth in the long haul. However, its business reorganization and “cloud-first mobile-first” execution risks remain. Competition also remains stiff.
Shares of Facebook have underperformed the S&P 500 index in the last three months, losing -7.2% vs. -5.8%. Facebook reported solid first-quarter 2018 results on the back of robust growth in advertising and user base. The Zacks analyst thinks the company is benefiting from rising mobile conversions on its platform, which is driving mobile ad growth.
Increasing effectiveness of Instagram ads is also positive. Apart from mobile and video, the monetization opportunities of Messenger, WhatsApp and Oculus and a huge user base are expected to drive growth going ahead.
However, the recent data scandal which affected 87 million users has put Facebook in a spot. Facebook's sizable investments to tighten security on the platform which along with continued investments in video, AR/VR and AI, will dent operating margins going ahead.
Intel’s shares have outperformed the Zacks General Semiconductor industry over the past three months, gaining +9.5% vs. +0.2%. Intel’s first-quarter 2018 results benefited from robust data-centric growth. DCG, IOTG, NSG, PSG segments along with MobilEye form the crux of Intel’s data-centric business model.
DCG segment revenues gained from strong demand for high-performance products. The Zacks analyst thinks that the company’s strategy of expanding TAM beyond CPU to adjacent product lines like silicon photonics, fabric, network ASICs, and 3D XPoint memory is bearing fruit. Further, expanding customer base in the PSG segment drove top-line growth.
Moreover, a stable PC market is also positive for the company. Lower spending helped in expanding operating margins. Intel raised 2018 guidance based on these solid growth trends. However, a delay in transition to 10-nm process is a concern. Moreover, intensifying competition remains a headwind.
Shares of Buy-ranked Boeing have surged +86.9% in the last year, outperforming the Zacks Aerospace & Defense sector, which gained +42% during the same time period. Boeing started off 2018 on an impressive note. The company’s first-quarter earnings as well as revenue figures comfortably surpassed their respective expectations.
The Zacks analyst stresses that the company is the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Considering the huge global demand for commercial jets, Boeing has been enjoying an enormous flow of orders from all over the world. In this regard, the company’s 20-year market outlook forecasts commercial jetliner demand to increase by 3.6%.
Boeing expects single-aisle jets to be the major driver behind this demand growth. Meanwhile, Middle East has emerged as another promising market for Boeing, as is evident from its latest JV worth $450 million with Saudi Arabia. Yet, this aerospace giant continues to face challenges from stiff competition.
Other noteworthy reports we are featuring today include Thermo Fisher (TMO), Qualcomm (QCOM) and Valero (VLO).
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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>>>