Today's Must Read
Booking Holdings (BKNG) Rides on Gross Bookings Amid Risks
NSX, VeloCloud and vSAN Drives VMware (VMW) Top-line Growth
Wednesday, March 6, 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 salesforce.com (CRM), Booking Holdings (BKNG) and VMware (VMW). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Buy-ranked salesforce’s shares have gained +25.3% in the past year, outperforming the Zacks Computer Software industry, which has gained +15.9% over the same period. Salesforce's Q4 results benefited from strong growth across most of its business segments and deal wins in the international market.
The Zacks analyst thinks the rapid adoption of its diverse cloud offerings given the growing demand for digital transformation remains the key catalyst. Strengthening relationships with cloud companies like Amazon, Google and IBM are a positive. Additionally, strategic acquisitions like MuleSoft, Datorama and Cloudcraze is helping it deliver strong growth. The company is now aiming to achieve revenues of $26-$28 billion by fiscal 2023.
Nevertheless, stiff competition from Oracle and Microsoft is a concern. Currency fluctuations remain a key headwind. Besides, increasing investments for international expansions and data centers is an overhang on near-term profitability.
Shares of Booking Holdings have declined -8.2% over the past six months, outperforming the Zacks Internet Commerce industry, which has lost -13.3% over the same period. Booking Holdings reported strong fourth quarter results wherein both earnings and revenues have grown year over year on the back of improving gross bookings.
Moreover, solid growth in the booked room nights and strong momentum across global accommodation space contributed well to the gross bookings growth. Further, robust agency model continued to aid the company’s position in the international markets. Also, strong efforts toward ramping up of merchant business were positives.
The Zacks analyst thinks secular growth trend in the online travel booking market and growing mobile usage penetration are tailwinds. Moreover, the company’s strong position in international markets, growth opportunities in the domestic market and good execution of marketing strategies are major positives. However, sluggishness in the rental car days poses risk. Also, macro headwinds, increasing advertising spend and occupancy tax-related litigation remain overhangs.
VMware’s shares have gained +39% over the past one year, outperforming the Zacks Software industry which is up +15.9% over the same period. The Zacks analyst thinks VMware is benefiting from robust performance of NSX, VeloCloud and vSAN product lines.
The company has been consistently taking initiatives to diversify its product portfolio to include most of the IT infrastructure. VMware’s dominance in software-defined data center (SDDC) along with expanding customer base in cloud driven by partnerships with the likes of IBM and AWS is positive. The company has significant growth opportunities from rapid deployment of 5G.
Moreover, continuing enterprise deal wins will drive growth in the long haul. Nevertheless, VMware’s margins are expected to remain under pressure due to heavy spending. Intensifying competition is also a concern.
Other noteworthy reports we are featuring today include Sanofi (SNY), Marriott (MAR) and HP Inc. (HPQ).
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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>>>