Today's Must Read
Cost Savings Aid PNC, High Exposure to Commercial Loans Ails
New Features, Security Focus to Aid Twitter's (TWTR) Growth
Tuesday, January 22, 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), PNC Financial (PNC) and Twitter (TWTR). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple’s shares have declined -11.4% in the past year and have underperformed the broader market with the S&P 500 losing -5.9% over the same period. Apple cut its first-quarter fiscal 2019 sales guidance citing weak demand in Greater China and fewer upgrades to its flagship device.
Reportedly, the company has also lowered new iPhone production plan by almost 10% for the next three months. Apart from weak China demand, Apple is suffering from its failure to penetrate rapidly growing but price sensitive markets of Asia, particularly India. The company continues to lose share in the smartphone market due to increasing competition from Chinese handset makers.
Nevertheless, the Zacks analyst thinks its services segment is likely to grow strongly driven by increasing adoption of Apple Music & Apple Pay. Further, robust demand for wearables is noteworthy. Meanwhile, estimates have been stable lately ahead of the company’s Q1 earnings release. The company has positive record of earnings surprises in recent quarters.
Shares of PNC Financial have underperformed the Zacks Major Regional Banks industry over the past six months, decreasing 13.1% vs. -8.8%. Yet, the company has an impressive earnings surprise history, having surpassed expectations in three of the trailing four quarters.
Fourth-quarter results were affected by decline in fee income and higher provisions. Yet, expanding margins and higher loans came as tailwinds. The Zacks analyst likes the company's efforts to expand middle market lending franchise and investments in digital products and services.
Moreover, involvement in strategic acquisitions helped it in boosting fee income. PNC Financial's top line continues to benefit from rising rate environment as well. However, the company’s rising cost base deters bottom-line growth. Also, lack of diversification in its loan portfolio is a concern.
Strong-Buy ranked Twitter’s shares have outperformed the Zacks Computer Software industry in the past year, gaining +46.2% vs. +5.8%. Twitter continues to add new features and ramp up its security measures to lure users to its platform and boost engagement levels.
The Zacks analyst thinks the company’s investment in series of live streaming deals is a positive. Twitter is also benefiting from strong growth in international markets and video advertisements. Growing adoption of video ad products like Video Website Cards & Video App Cards is driving top line for Twitter.
Notably, the company has a positive record of earnings surprises in recent quarters. However, lack of revenue diversification is a major concern for the company. Moreover, Twitter is now facing civil proceedings in Russia for failing to comply with local data laws, which is a headwind.
Other noteworthy reports we are featuring today include Northrop Grumman (NOC), Concho Resources (CXO) and TJX Companies (TJX).
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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>>>