Today's Must Read
Branch Expansion to Support BofA (BAC), Mortgage Fees a Woe
PepsiCo's (PEP) Snacks Unit to Drive Sales, CSD Trends Hurt
Friday, September 28, 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), Bank of America (BAC), and PepsiCo (PEP). 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 >>>
Alphabet’s shares have outperformed the Zacks Internet Services industry over the past year (the stock is up +24% vs. a -2.7% decline for the industry). The Zacks analyst thinks Alphabet's robust mobile growth, strong network advertising revenues, cloud, hardware and Play revenues are driving factors. Alphabet's focus on innovation, AI, cloud, home automation space, strategic acquisitions and Android OS should continue to aid its top-line growth.
Further, its partnership with PayPal remains positive. Also, the company has shown good execution to date, more or less maintaining its dominant share in a competitive, fast-growing search market. However, the company suffers from litigation issues which might hurt its profitability.
Moreover, it's increased spending on its consumer gadgets, YouTube video app and cloud computing services remain concerns. In addition, rising competition in the online advertisement market poses serious risk to the company's position.
Shares of Bank of America have outperformed the Zacks Major Regional Banks over the past three months, gaining +6.2% vs. +3.5%. Also, the company possesses an impressive earnings surprise history, beating the Zacks Consensus Estimate in each of the trailing four quarters.
The Zacks analyst thinks rise in loan and deposit balances, higher interest rates and efforts to manage expenses as well as expansion into new markets are likely to support profitability. Also, lower tax rates, strong balance sheet position and easing of banking regulations will aid growth.
However, a fall in mortgage banking income due to lower volumes and a decline in refinancing activity along with uncertainty related to performance of capital markets remain major concerns. These are expected to hurt the bank's revenues to some extent.
PepsiCo’s shares have gained +2% in the past three months, outperforming the Zacks Soft Beverages industry's increase of +0.5%, driven by a solid earnings trend with beat recorded in the last 10 quarters, including second-quarter 2018. The Zacks analyst thinks strong performances in its international division, backed by higher revenue growth in developing and emerging markets have been aiding results.
Further, the company has reported positive sales surprise in six of the last eight quarters. The company is also gaining from significant strength in the snacks business, which has mostly offset the sluggishness in beverage category.
Moreover, the company’s product innovations to include healthier food assortments and non-carbonated drinks in its portfolio should boost sales. However, consumers’ awareness on health and wellness, alongside new taxes on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales.
Other noteworthy reports we are featuring today include Eli Lilly (LLY), TJX Companies (TJX) and Intuitive Surgical (ISRG).
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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>>>