Today's Must Read
Micron (MU) Benefits from Growing Memory-Chip Demand
Inorganic Expansion Supports UBS Group AG's (UBS) Financials
Tuesday, May 17, 2022
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 Corporation (MSFT), Micron Technology, Inc. (MU), and UBS Group AG (UBS). 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 >>>
Shares of Microsoft Corporation have outperformed the Zacks Computer - Software industry over the past year (+10.2% vs. -2.3%) on the back of strong performance of Azure, Office 365, Dynamics, LinkedIn, and Server products. However, third-quarter earnings were negatively impacted by the Nuance acquisition to the tune of a penny which will be minimally dilutive in fiscal 2022 and accretive in fiscal 2023 to non-GAAP earnings.
The Zacks analyst has noted that unfavorable forex hurt earnings by three cents per share while the negative impact from the suspension of all new sales and services in Russia was a penny. Unfavorable forex and Russia-Ukraine conflict is expected to hurt revenues by 2% and $110 million, respectively along with increasing spending on Azure enhancements amid stiff competition in the cloud space is a headwind.
Micron Technology shares have declined -6.9% over the past year against the Zacks Semiconductor Memory industry’s decline of -10.3%, as a result of near-term profitability headwinds as a result of planned salary hikesand supply constraints for certain components. Additionally, a higher level of customer inventory in the cloud, graphics, and enterprise market is a key threat.
However, The Zacks analyst believes that Micron is benefiting from growing demand for memory chips from cloud-computing providers and acceleration in 5G (fifth-generation) cellular network adoptions. A rising mix of high-value solutions, enhancement in customer engagement, and improvement in cost structure are growth drivers as well. Further, 5G adoption beyond mobile is likely to spur demand for memory and storage, particularly in the Internet of Things (IoT) devices and wireless infrastructure.
Shares of UBS Group have outperformed the Zacks Banks - Foreign industry over the past year (+14.5% vs. -9.9%). UBS’s first-quarter performance was driven by a rise in net interest income (NII) while higher expenses were ailed. The strong capital position and efficiency initiatives will continue to aid profitability. The company remains focused on opportunistic expansion strategies in various areas by entering into partnerships with other firms. Such inorganic moves will aid long-term growth.
However, The Zacks analyst believes that UBS Group AG’s NII is expected to be persistently affected in the near term by the prevalent negative interest rates in Switzerland. Heightened regulatory supervision, flaring expenses, and unsustainable capital deployment activities are concerning. Nonetheless, UBS Group AG continues undertaking initiatives to digitalize its operations and serve clients better in the long run.
Other noteworthy reports we are featuring today include Thermo Fisher Scientific Inc. (TMO), Illinois Tool Works Inc. (ITW), and Enterprise Products Partners L.P. (EPD).
Director of Research
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>>>