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Research Daily

Monday, June 18, 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 Microsoft (MSFT), Home Depot (HD) and Verizon (VZ). 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 >>>

Microsoft’s shares have outperformed the Zacks Technology sector over the last year (up +41.3% versus +19.7%) Microsoft’s solid Azure growth and strong adoption of Office 365 is a key catalyst in the near future. 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 AI as well as stable PC market are positives. The Zacks analyst thinks Microsoft’s strategic initiatives to enter the AR and VR market will be positives. Further, LinkedIn’s acquisition should help Microsoft to explore opportunities in its business software market and also strengthen its position in professional social media market.

However, Google’s increasing foothold with its Android OS emerging and increasing customer addition for drives poses a serious threat to Microsoft. Also, Alphabet's lower-priced Chromebook and its dominant position in the Education Tech market add to its woes.

(You can read the full research report on Microsoft here >>>).

Shares of Home Depot have gained +26.2% over the last year, outperforming the Zacks Retail Building Products industry’s +22.3% increase. The Zacks analyst thinks that this performance is attributed to its five-year long trend of beating earnings estimates, which continued in first-quarter fiscal 2018. Both the top and bottom line improved year over year in the first quarter.

Results gained from strength in core business as well as relentless focus on affording innovative products, boosting interconnected customer experience and driving productivity. Steady housing market recovery and strong customer demand also remain tailwinds.

Going into the fiscal second quarter, the company continues to witness strength in all lines of business in the first few weeks of May. Consequently, it provided an optimistic view for fiscal 2018.

However, top line lagged estimates mainly due to colder-than-normal weather that led to softness in the spring season categories, particularly garden. This softness also resulted in a decline in comparable transactions.

(You can read the full research report on Home Depot here >>>).

Verizon’s shares have declined -0.6% over the last three months, outperforming the Zacks Wireless National industry’s loss of -3.8% during the same period. The Zacks analyst thinks Verizon’s unlimited data plans have heated up the wireless industry and helped it gain additional postpaid customers.

The company’s plan to launch 5G wireless broadband services in selected U.S. cities in 2018, in order to boost its market presence, remains well on track. Verizon expects growth in 2018 on the back of the expected savings from tax reform. However, Verizon continues to struggle in a highly competitive and saturated wireless market.

Losses in wireline access lines, higher marketing costs of promotional plans and competitive video market remain major impediments. Verizon’s wireline division is struggling with persistent losses in access lines owing to competitive pressure from VoIP service providers and aggressive triple-play offerings by cable companies. All these are likely to weigh on the company’s revenues and margins.

(You can read the full research report on Verizon here >>>).

Other noteworthy reports we are featuring today include Adobe (ADBE), Devon Energy (DVN) and PPG Industries (PPG).

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Senior Editor

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>>>

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