Today's Must Read
E-commerce Sales to Fuel Walmart (WMT), Soft Margins a Woe
Time Warner Deal & 5G Launch Aid AT&T (T), Access Line Ails
Tuesday, June 19, 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 UnitedHealth (UNH), Walmart (WMT) and AT&T (T). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
UnitedHealth's shares have outperformed the Zacks Medical Insurance industry year to date (up +15.6% vs. +13.3%). The Zacks analyst thinks the company's robust Government business and continued strong performance at Optum are driving long-term growth. Its international business and strong capital position driving business investment are the other positives.
The company has been witnessing an increase in membership over the past many years. It again lifted its 2018 earnings guidance, buoying optimism among investors in the stock. The company has witnessed its 2018 estimate increase by 1.2% to $12.62 over the past 90 days.
However, membership loss in its fee-based commercial as well as Brazilian businesses will contract the overall membership growth for UnitedHealth Group. Additionally, higher medical care ratio raises concern.
Shares of Walmart have lost -16% in the last six months, underperforming the Zacks Supermarkets industry's -14.5% decline in the same time period. The Zacks analyst thinks Walmart is poised to gain from its strong e-commerce initiatives, particularly expansion of online grocery delivery. This, along with efforts to drive brick-and-mortar sales should help the company maintain its sturdy U.S. comps trend.
Walmart is also undertaking efforts to improve the performance of its International unit, by shifting focus from underperforming regions to profitable countries like India and China. To this end, the company’s recent investment in Flipkart is however expected to dent the bottom line in the near term.
Further, investments related to the e-commerce initiatives and a compelling pricing strategy have been hurting Walmart’s gross margin. Nonetheless, the Flipkart deal bodes well for the long term, which along with focus on buyouts, alliances and improved delivery services should help Walmart stand firm against Amazon.
AT&T’s shares have decreased -11.4% in the last three months, underperforming the Zacks Wireless National industry's fall of -4.3%. AT&T is gearing up to launch the first standards-based mobile 5G services to consumers in multiple U.S. markets by the end of 2018.
The Zacks analyst thinks the company is likely to benefit from its long-pending merger with Time Warner. Given the scale of both AT&T and Times Warner, the merger is likely to reshape the industry dynamics, creating a media behemoth. The deal will allow the power packed combination of AT&T’s data and Time Warner's content.
However, AT&T’s profitability has been hurt with spectrum crunch in a saturated wireless market. In addition, the company’s wireline division is struggling with persistent losses in access lines due to competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play offerings by cable firms. These are weighing on AT&T’s revenues and margins.
Other noteworthy reports we are featuring today include NIKE (NKE), Thermo Fisher (TMO) and Anthem (ANTM).
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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>>>