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Research Daily

Monday, April 8, 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 Berkshire Hathaway (BRK.B), AT&T (T) and salesforce (CRM). 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 >>>

Buy-ranked Berkshire Hathaway’s shares have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+5.1% vs. +3.1%). Berkshire reported fourth quarter earnings of $5.7 billion, up 71.4% year over year on solid results across all segments. The Zacks analyst thinks the company is poised for growth over a longer-term banking on sturdy insurance business. Its property and casualty insurance business generate maximum return on equity.

The company’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position allows it to make earnings-accretive bolt-on buyouts. Demand for utilities is expected to rise in the future and drive earnings growth. Continued insurance business growth also fuels increase in float. A sturdy capital level provides further impetus.

However, its exposure to catastrophe loss remains a concern. Huge capital expenses due to railroad operations is a worry. Capital expenditure is estimated to be $10.5 billion in 2019.

(You can read the full research report on Berkshire Hathaway here >>>).

Shares of AT&T have decreased -8% in the past year, underperforming the Zacks Wireless National industry's increase of +7.8%. The Zacks analyst thinks AT&T is likely to continue its growth momentum in 2019 as it remains poised to benefit from the impending 5G boom and extended LTE coverage, while focusing on reducing its huge debt burden.

As part of the overhaul process of the newly minted WarnerMedia unit, AT&T intends to consolidate all its affiliates and ad sales groups under a unified platform and focus more on video streaming service. The company also aims to reinvent digital advertising and give a new dimension to its business model with integrated business platforms.

AT&T is facing a steady decline in linear TV subscribers and legacy services. The company’s wireline division is facing losses in access lines due to competitive pressure from voice-over-Internet protocol service providers. As AT&T tries to woo customers with discounts, freebies and cash credits, margin pressures tend to soar.

(You can read the full research report on AT&T here >>>).

salesforce’s shares have gained +35.3% in the past year, outperforming the Zacks Computer Software industry, which has gained +28.2% over the same period. The Zacks analyst thinks salesforce is benefiting from strong growth across most of its business segments and deal wins in the international market. Rapid adoption of its diverse cloud offerings given the growing demand for digital transformation remains a 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 to deliver strong growth.

Nevertheless, stiff competition from Oracle and Microsoft is a concern. Currency fluctuations remain a key headwind. Additionally, increasing investments for international expansion and data centers is an overhang on near-term profitability.

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

Other noteworthy reports we are featuring today include Facebook (FB), McDonald's (MCD) and Freeport-McMoRan (FCX).

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Mark Vickery
Senior Editor

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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