Today's Must Read
Higher Rates Aid Bank of America (BAC), Legal Issues Linger
Tesla (TSLA) Rides on Production & Energy Storage Deployment
Monday, December 3, 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 Tesla (TSLA). 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 on a year-to-date basis (the stock is up +5.4% vs. a -20.4% decline for the industry). Alphabet's strengthening cloud unit is aiding substantial revenue growth.
The Zacks analyst thinks the growing momentum of Google Cloud and expanding data centers will continue to bolster the company’s presence in the cloud space. Also, major updates in its search segment are enhancing the search results, which is a major positive. The company has shown good execution to date, more or less maintaining its dominant share in a competitive search market.
Additionally, Google’s strong focus on the innovation of its AI techniques and Android OS along with growing presence in the home automation space is driving its top-line growth further. However, the company’s growing litigation issues might hurt its profitability.
Although it's increased spending on consumer gadgets, YouTube video app and cloud computing services remain concerns. Rising competition in the online ad market is another risk.
Shares of Bank of America have outperformed the Zacks Major Regional Banks over the past year, losing -2.3% vs. -4.4%. Also, the company possesses an impressive earnings surprise history, beating expectations in each of the trailing four quarters.
The Zacks analyst thinks rise in loan and deposit balances, higher interest rates, expansion into new markets and efforts to manage expenses are likely to support profitability. Lower tax rates and a strong balance sheet position 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.
Strong Buy-ranked Tesla’s shares have gained +18.1% over the past six months, outperforming the -3.6% decline for the Zacks Domestic Automotive industry. Recently, Tesla reached the milestone of making 1,000 of its Model 3 sedans in a single day. After attaining this feat, the CEO wants all employees of Tesla to focus on maintaining that production rate and lowering costs.
In third-quarter 2018, Tesla produced 80,142 vehicles. This included 53,239 Model 3s, and 26,903 Model S and Model X vehicles. Deliveries to customers amounted to 55,840 Model 3 along with 27,660 Model S and X. These numbers are close to estimates and the Zacks analyst thinks they indicate that the company is making good progress despite hurdles.
The company is focusing on growing its energy storage deployment and aims to deploy at least three times of what is deployed in 2017. Moreover, over the past two months, the Zacks Consensus Estimates for both the current quarter and current year earnings are moving upward.
Other noteworthy reports we are featuring today include Thermo Fisher (TMO), IHS Markit (INFO) and Carnival (CCL).
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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>>>