Today's Must Read
Interest Rates, Loans Aid JPMorgan (JPM), Fee Income a Woe
Comcast (CMCSA) Banks On Wireless Service, Competition Hurts
Friday, June 29, 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 Alphabet (GOOGL), JPMorgan (JPM) and Comcast (CMCSA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alphabet’s shares have outperformed the Zacks Internet Services industry in the last year (the stock is up +21.2% vs. a +9.1% increase for the industry). The Zacks analyst likes the company's focus on innovation, AI, cloud, home automation space, strategic acquisitions and Android OS. These initiatives should continue to generate strong cash flows.
Alphabet's recent partnership with PayPal will strengthen its presence in the digital payment market. Alphabet has shown good execution to date, more or less maintaining its dominant share in a competitive, fast-growing search market. Its diversification strategy is also positive, but requires significant investment and involves uncertain payback periods, particularly since these efforts are at the cutting edge of technology.
However, the company's increased spending on its consumer gadgets, YouTube video app and cloud computing services remain concerns. Also, increasing litigation issues could continue to impact the company’s profits.
Shares of JPMorgan have outperformed the Zacks Major Regional Banks industry over the past year (+14.8% vs. +6.3%). This price performance is backed by impressive earnings surprise history, with the company surpassing expectations in each of the trailing four quarters.
The bank’s efforts to expand into new markets, focus on card business, higher interest rates and rising loan demand will likely continue to benefit its financials. Also, lower tax rates will aid profitability in the quarters ahead. Further, enhanced capital deployment plan reflects strong balance sheet.
However, fee income growth challenges (mainly due to a slowdown in capital market activities and dismal mortgage banking performance) remains a major concern for the company. Also, litigation hassles make us apprehensive.
Comcast’s shares have underperformed the Zacks Cable Television industry year to date, losing -18.5% vs. -17.4%. The Zacks analyst thinks Comcast is benefiting from an increasing number of high speed internet subscribers. Also, continuing investment on Theme Parks is a tailwind.
The nationwide rollout of wireless services under the Xfinity Mobile brand is expected to expand subscriber base. Moreover, the company’s plan to buy Fox’s assets will significantly expand its content portfolio and international presence. Moreover, acquisition will boost Comcast’s competitive position against the likes of Netflix and Amazon Prime. And the Sky deal is likely to provide synergies worth $500 million.
Estimates have remained stable lately ahead of company's Q2 earnings release. However, the debt level is expected to shoot up due to the higher bid for Fox’s assets and Sky. Moreover, the company continues to lose voice and video subscribers due to cord-cutting and stiff competition, which remains a concern.
Other noteworthy reports we are featuring today include American Express (AXP), PNC Financial (PNC) and Micron Technology (MU).
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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>>>