Today's Must Read
High Operating Costs Hurt Honeywell International (HON)
Strategic Buys, End-market Strength Aid Thermo Fisher (TMO)
Tuesday, April 9, 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 Mastercard (MA), Honeywell (HON) and Thermo Fisher (TMO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Mastercard’s shares have increased +35.2% in the past year, significantly outperforming the Zacks Financial Transaction Services industry’s rally of +25%. The Zacks analyst thinks the company is poised for growth, given its solid market position, ongoing expansion and digital initiatives, plus significant opportunities from the secular shift toward electronic payments. Its numerous acquisitions have aided revenue growth.
However, escalating costs will put pressure on the company’s bottom line. Also, in order to gain customers and new business, Mastercard has been incurring high levels of costs under rebates and incentives, which remains a concern. Nevertheless, its strong balance sheet enables its significant investments, thereby driving growth.
Shares of Honeywell have outperformed the Zacks Diversified Operations industry in the past year, gaining +11.3% vs. a +3.2% increase. Honeywell believes that strength in its commercial aftermarket and sensing businesses as well as solid demand for its productivity and commercial fire products will boost revenues in the quarters ahead.
The Zacks analyst thinks stronger sales volumes, increased productivity and ongoing commercial effectiveness actions will likely augment its near-term profitability. Notably, the company anticipates generating organic sales growth in the range of 2-5% in 2019. Rising costs of revenues are a worry for the company's gross margin.
Also, analysts have become increasingly bearish on the company over the past 90 days. A rise in debt levels may increase its financial obligations.
Buy-ranked Thermo Fisher’s shares have outperformed the Zacks Medical Instruments industry in the past three months (+16.5% vs. +8.1%). The Zacks analyst thinks Thermo Fisher is currently demonstrating strength in all end markets categorized either by customer type or geography. In the last-reported quarter, the company registered solid international performance with strong growth in the Asia-Pacific region including China.
A series of product launches with progress in precision medicine initiatives aided its performance. The company’s recent purchases of Advanced Bioprocessing business from BD and its initiative to buy Gatan to boost electron microscopy suite are encouraging moves.
Even after considering the impact of the company’s impending divestiture of its Anatomical Pathology business, its 2019 guidance looks pretty encouraging. On the flip side, Thermo Fisher’s business segments are getting impacted by unfavorable business mix. Also, competitive headwinds and escalating costs pose a threat.
Other noteworthy reports we are featuring today include Danaher (DHR), Cigna (CI) and Norfolk Southern (NSC).
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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>>>