Today's Must Read
Mobile Ad Growth, Instagram Strength Benefits Facebook (FB)
Cisco (CSCO) Rides on Security Products & Strategic Deals
Friday, February 15, 2019
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), Facebook (FB) and Cisco Systems (CSCO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked Alphabet’s shares have outperformed the Zacks Internet Services industry in the last six months (-7.7% vs. -11.2%). Alphabet's fourth-quarter earnings were driven by robust mobile search and YouTube.
However, higher expenses impacted operating margins. The company’s strengthening cloud unit 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 tailwind.
Additionally, Google’s strong focus on the innovation of its AI techniques and Android OS along with growing presence in the home automation space are driving its top-line growth. Notably, the stock has outperformed the industry it belongs to in the past one year. However, the company’s growing litigation issues might hurt its profitability.
Shares ofbuy-ranked Facebook have lost -7.5% over the past year, outperforming the Zacks Internet Services industry’s loss of -18.2% during the same period. Facebook is benefiting from solid mobile ad revenues driven by robust performance from both Instagram Stories and Feed. However, only Instagram Stories is expected to be the key catalyst for impression growth in 2019.
Moreover, Facebook needs to improve ad pricing to drive top-line growth. Further, the company’s plan to introduce commerce in Instagram is expected to be a major growth driver. Additionally, the company’s plan to integrate messaging apps — WhatsApp, Instagram and Messenger – will boost user experience by making the services more secure through end-to-end encryption.
Cisco’s shares have gained 4.4% in the last three months, outperforming the Zacks Computer Networking industry's increase of 4%. Cisco reported stellar second-quarter results. Moreover, both top and bottom-line increased year over year. Strength witnessed in the company’s Security and Applications segments drove year-over-year growth. Order strength and improving traction of the subscription-based model were other tailwinds.
Strong contribution from security, Infrastructure Platforms and applications is a positive. Order strength and improving traction of the subscription-based model are other tailwinds. Strengthening collaboration portfolio which now includes Webex Teams and Accompany bodes well. Further, buyout of Duo Security and Luxtera should help the company expand its IT and data center clientele. However, weakness in switching and routing is a headwind.
Other noteworthy reports we are featuring today include Home Depot (HD), Costco Wholesale (COST) and S&P Global (SPGI).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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>>>