Today's Must Read
Portfolio Revamp Aids Simon Property (SPG) Amid Retail Blues
Growth in Energy Storage Deployments to Aid Tesla (TSLA)
Friday, June 15, 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 Phillip Morris (PM), Tesla (TSLA) and Simon Property Group (SPG). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Philip Morris’ shares have underperformed the Zacks Tobacco industry over the last three months (-21.8% vs. -15.7%) due to persistent declines in cigarette volumes, stemming from consumers’ rising health consciousness and stringent government regulations on tobacco products. These factors, which have been marring cigarette industry volumes for a while now, led to a 5.3% drop in Phillip Morris’ cigarette volumes during first-quarter 2018.
Nevertheless, the Zacks analyst thinks solid revenues from the reduced risk products (RRPs) category are a major driver for Phillip Morris. The company is making constant efforts to expand in the space.
In fact, the top and the bottom line grew year over year during the first-quarter, courtesy of favorable cigarette pricing and solid RRP performance, with the latter being driven by consistent success of IQOS. Further, management uplifted its earnings view for 2018, as it expects recent tax reforms to aid bottom-line growth.
Shares of Buy-ranked Tesla have gained +5.6% over the past six months, outperforming the -0.3% decline for the Zacks Domestic Automotive industry. The Zacks analyst likes Tesla’s decision to downsize its workforce in order to become sustainably profitable without compromising on its Model 3 sedan production goals.
The company is focusing on growing its energy storage deployment and aims to deploy at least three times of what is deployed in 2017. Also, to deal with the shortage of lithium-ion batteries, the company is building a Gigafactory to produce the batteries in collaboration with various partners, including Panasonic.
The company is actively undertaking mergers and acquisitions to meet its targets and expand its business. Further, it is also looking for expansion of product portfolio, introduction of car-sharing services and development of self-driving capability.
Simon Property Group’s shares have outperformed the Zacks Retail REIT industry in the last three months (+4.4% vs. +2.7%). The trend in estimate revisions of current-year funds from operations (FFO) per share indicates a favorable earnings outlook for the company.
The Zacks analyst likes Simon Property’s diversified exposure to retail assets in the United States and abroad. The company boasts a strong and improving balance sheet. Moreover, it is focusing on overhauling its properties and increasingly adopting omni-channel strategies.
Recently, Simon announced the continuation of its plan to recapture former Sears locations across its portfolio, transforming those into retail, fitness, dining and entertainment hubs, thereby drawing more traffic at these shopping destinations. Nevertheless, the implementation of such measures requires a decent upfront cost and therefore, would limit any robust growth in its near-term profit margin. Also, rate hike has added to its woes.
Other noteworthy reports we are featuring today include IDEXX Laboratories (IDXX), Ross Stores (ROST) and Infosys (INFY).
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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>>>