Today's Must Read
Visa (V) Rides on Acquisitions, Technological Enhancement
Starbucks' (SBUX) Strong Global Footprint to Drive Growth
Monday, November 5, 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 Apple (AAPL), Visa (V) and Starbucks (SBUX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Apple’s shares have gained +22.6% year to date and have outperformed the broader market with the S&P 500 gaining +1.9% over the same period. Apple’s fourth-quarter fiscal 2018 results were driven by robust iPhone average selling price (ASP) as well as strength in the services and wearables segments.
The Zacks analyst thinks the Services segment has become the new cash cow for Apple and will grow strongly driven by increasing adoption of Apple Music & Apple Pay. Moreover, Apple is expected to benefit from an expanded portfolio with the launch of new iPhones. Further, robust demand for wearables is expected to drive top-line growth.
Apple’s foray into fast-growing technologies like autonomous vehicle, artificial intelligence (AI) & AR/VR will drive further growth. However, the company continues to lose share in the smartphone market. Moreover, increasing competition from Chinese handset makers remains a concern.
Shares of Visa have outperformed the Zacks Financial Transaction Services industry over the past year (+24.9% vs. +18.3%). Visa’s earnings beat expectations. Also, the bottom line improved year over year. Results were driven by growth in payments volume, cross-border volume and processed transactions, and a lower tax rate.
The Zacks analyst thinks numerous strategic acquisitions and alliances, technology upgrades and effective marketing have paved the way for long-term growth and consistent revenue rise. Visa is well poised to gain from the growing electronic payment processing and strong international business. Nevertheless, high client incentives and operating expenses and foreign exchange volatility may pressure margins.
Buy-ranked Starbucks’ shares are up +23.5% over the past three months, outperforming the Zacks Food & Restaurants industry, which is up +9.1% over the same period. The Zacks analyst thinks the trend is likely to continue, given its impressive performance in fourth-quarter fiscal 2018.
Results were primarily driven by robust Americas and U.S. comparable store sales. Starbucks’ largest market the United States, reported comps growth of 4%, which marks the strongest gain in the past five quarters. Also, the company’s operating fundamentals such as solid global footprint, successful innovations, best-in-class loyalty program and digital offerings are encouraging.
Again, digital initiatives like mobile order/pay, delivery services and third-party loyalty partnerships can further stimulate robust sales trends in the Americas. Additionally, Starbucks has teamed up with Nestle SA to revitalize their respective coffee domains. However, operating margin contraction over the past few quarters has been a major concern.
Other noteworthy reports we are featuring today include BP plc (BP), Anthem (ANTM) and BlackRock (BLK).
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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>>>