Today's Must Read
Adoption of Cloud, Security & Analytics Solutions Aids IBM
Mazor Buy Aids Medtronic's (MDT) Spine Arm, CRHF Prospects Bright
Monday, April 1, 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 Chevron (CVX), IBM (IBM) and Medtronic (MDT). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Chevron’s shares have gained +9.7% in the past year, outperforming the Zacks Integrated Oil industry's +3.4% increase as its financial results have greatly improved over the period. In fact, Chevron's free cash flow and upstream production for 2018 hit a record.
The Zacks analyst thinks the company’s existing oil and gas development project pipeline is among the best in the industry, targeting a CAGR of 3-4% through 2023 thanks to the planned expansion in the Permian Basin. Moreover, growing free cash flow should enable Chevron to deliver stable and rising dividend in the foreseeable future.
However, there are worries of a drop in its downstream earnings that have been cutting into overall gains from rising E&P income. The massive capex might also play a spoilsport. Hence, investors are advised to wait for a better entry point before buying shares in Chevron.
Shares of IBM have outperformed the broader market on a year-to-date basis, increasing +24.2% vs. the S&P 500’s +13.1% gain. IBM provides advanced information technology solutions, including computer systems, software, storage systems and microelectronics.
The Zacks analyst thinks IBM’s improving position in hosted cloud, security and analytics bodes well for investors. The RedHat acquisition, aimed at enhancing its hybrid cloud platform, is likely to pave the way for IBM's growth prospects. However, softness in Systems revenues and technology & cloud platforms remain a concern.
Stiff competition does not bode well for the Storage hardware segment. Strategic imperatives will take some more time to report meaningful growth and offset weakness in the traditional business. IBM’s ongoing heavily time-consuming business model transition to cloud is a headwind. Additionally, ballooning debt levels have been troubling IBM over time.
Medtronic’s shares have outperformed the Zacks Medical Products industry in the past year, gaining +17.5% vs. +15.5%. The Zacks analyst thinks Medtronic is successfully registering sustainable growth across major groups and regions, in addition to displaying successful achievement of synergy targets.
The company is focusing on geographical diversification of its businesses. This apart, the company has been seeing certain favorable developments in its Diabetes business. The updated 2019 guidance with raised EPS view increases investors’ confidence on the stock.
Meanwhile, the recently-closed acquisition of Mazor Robotics, which is expected to fortify Medtronic's position in spine surgery, is a major positive. Yet, the declining CRHF segment raises concerns. Escalating costs and expenses continue to weigh on Medtronic’s bottom line.
Other noteworthy reports we are featuring today include GlaxoSmithKline (GSK), lululemon (LULU) and Carnival (CCL).
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>>>