Today's Must Read
UnitedHealth (UNH) to Ride on UnitedHealthcare & Optum Units
Decent Comparable Sales Run to Fuel Costco's (COST) Top Line
Monday, May 23, 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 Alphabet Inc. (GOOGL), UnitedHealth Group Incorporated (UNH), and Costco Wholesale Corporation (COST). 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 Alphabet have lagged the broader market this year (-21% vs. -16%), but have held up better than the Tech sector (-21% vs. -26.7%). The stock's weakness is a reflection of sentiment shift on faster-growing stocks in a rising rate environment. But the company is well positioned in the long run, given its search dominance, lucrative advertising business and a host of next generation investments.
The Zacks analyst believes that Alphabet's robust cloud division continues to be the key catalyst. Moreover, expanding data centres will continue to bolster its presence in the cloud space. Further, major updates in its search segment are enhancing the search results. Moreover, Google’s mobile search is constantly gaining solid traction. Also, strong focus on AI techniques and the home automation space should aid business growth. However, growing litigation issues and the Russia-Ukraine war remain concerns.
Shares of UnitedHealth have outperformed the Zacks Medical - HMOs industry over the past year (+18.2% vs. +16.2%) on the back of a strong market position and an attractive core business that continues to be driven by new deals, renewed agreements and expansion of service offerings.
UnitedHealth reported strong first-quarter 2022 results thanks to growth in its business segments. A sturdy balance sheet enables investments and prudent capital deployment through share buybacks and dividends. However, softness in commercial business due to the COVID-induced volatilities persists. Also, rising operating costs are hurting its profits.
Shares of Costco have outperformed the Zacks Retail - Discount Stores industry over the past year (+8.6% vs. -11.0%). The Zacks analyst believes that being a consumer defensive stock, Costco has been surviving the market turmoil pretty well. The discount retailer's key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping it register impressive sales and earnings numbers.
A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming. While it is trading at a premium to its peers, the Zacks analyst believes that the company’s long-term growth prospects should help the stock see a solid upside.
Other noteworthy reports we are featuring today include Cisco Systems, Inc. (CSCO), Wells Fargo & Company (WFC), and Sanofi (SNY).
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>>>