Today's Must Read
Solid Loan Balance Aids PNC Financial (PNC) Amid High Costs
Acquisitions and Cost-Reduction Initiatives Aid Aon (AON)
Thursday, June 3, 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 Danaher Corporation (DHR), The PNC Financial Services Group, Inc. (PNC) and Aon plc (AON). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Danaher shares have modestly outperformed the Zacks Diversified Operations industry in the last three-month period (+12.9% vs. +11.3%), with the Zacks analyst expecting the stock to continue its momentum on the back of steady gains from the Danaher Business System (“DBS”), the policy of rewarding shareholders and investment in product innovation in the quarters ahead.
For second-quarter 2021, the company anticipates core revenue growth, including Cytiva, of a mid-20 percent range. The pandemic-led tailwinds are expected to boost core sales by low-double digits in the quarter.
However, a rise in costs and expenses can be concerning for the company. Also, high debts raise financial obligations and international businesses as well as international operations have associated risks.
Shares of PNC Financial have modestly lagged the Zacks Banks - Major Regional industry in the last six-month period (+37.1% vs. +39.3%), but have otherwise been standout performers on the back of steadily improving interest rate backdrop, cyclical leverage and an impressive earnings surprise history.
The Zacks analyst believes that the company’s commitment to expand the middle-market lending franchise, and bolster digital products and services offerings bode well. Given a strong balance sheet position, execution of inorganic growth strategies to diversify revenue sources is likely to keep supporting the performance of the company.
However, with growing business and new investments in technology, continuously mounting expenses will likely keep hurting the bottom line of PNC Financial in the near term. Further, the net interest margin is anticipated to remain under pressure in the near-term due to Fed’s accommodative monetary policy stance.
Shares of Aon outperformed the Zacks Insurance - Brokerage industry in the last six-month period (+19.5% vs. +18.7%). The Zacks analyst believes that Aon’s top line has been growing over the past few years on buyouts and collaborations, which have enhanced its capabilities. Its position in the evolving commercial insurance market for small and medium-sized businesses also impresses.
The company has been divesting its non-core operations to streamline its business and focus on more profitable operations to generate a higher return on equity. It has taken up restructuring initiatives to reduce the workforce and rationalize technology. This has generated substantial cost savings for the company and provided an impetus to its margins.
However, its rising long-term debts compared with a lower cash balance raise concerns about the solvency level. Its exposure to forex volatility bothers.
Other noteworthy reports we are featuring today include Advanced Micro Devices, Inc. (AMD), Canadian Pacific Railway Limited (CP), and Enterprise Products Partners L.P. (EPD).
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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>>>