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Research Daily

Friday, December 2, 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 Apple Inc. (AAPL), International Business Machines Corporation (IBM) and Elevance Health Inc. (ELV). 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 >>>

Apple shares held up better than the Zacks Tech sector  this year (down -17.5% vs. -30%), but have modestly lagged the S&P 500 index's -15.6% decline). The discretionary aspect of the iPhone handset purchase decision in a weakening macroeconomic landscape notwithstanding, the big uncertainty in the Apple story has been China and its zero-Covid policy.

Mac revenues are expected to be negatively impacted by forex. Apple expects Mac revenues to decline substantially year-over-year during the December quarter. Services revenue growth is expected to be negatively impacted by challenging macroeconomic conditions, unfavorable forex, as well as weakness in digital advertising and gaming.

However, Apple’s fourth-quarter fiscal 2022 results benefited from strong iPhone and Mac revenues. Although Services business grew at a slower pace, subscriber base continued to expand in the reported quarter.

(You can read the full research report on Apple here >>>)

Shares of IBM have outperformed the Zacks Computer - Integrated Systems industry over the past year (+27.6% vs. +7.6%). The company reported solid third-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate. Synergies from the Red Hat buyout are bolstering its competitive position in the hybrid cloud market.

IBM’s growth is expected to be driven primarily by analytics, cloud computing, and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely drive profitability in the forthcoming quarters.

However, IBM is facing stiff competition in the cloud computing market from the likes of Amazon Web Services and Microsoft Azure. Higher debt levels amid extensive restructuring activities pose a concern for the company. High integration risk from continuous acquisition spree is another headwind.

(You can read the full research report on IBM here >>>)

Shares of Elevance Health have outperformed the Zacks Medical Services industry over the past year (+31.4% vs. -27.3%). The company’s improving top-line can be attributed to premium rate increases and higher memberships. Acquisitions and collaborations have enabled the company to strengthen its business portfolio. Please note that Elevance is the new name of Anthem.

Its well-performing Medicare and Medicaid businesses, coupled with several contract wins, are expected to drive its membership going ahead. Adjusted net income is anticipated to be more than $28.95 per share, higher than the prior outlook of greater than $28.70.

However, the company's escalating costs continue to put pressure on margins. Declining cash flows are also concerning. Its balance sheet with a massive debt of more than $21 billion can affect financial flexibility. As such, the stock warrants a cautious stance.

(You can read the full research report on Elevance Health here >>>)

Other noteworthy reports we are featuring today include Intercontinental Exchange, Inc. (ICE), Charter Communications, Inc. (CHTR), and Archer-Daniels-Midland Company (ADM).

Sheraz Mian

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>>>

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