Today's Must Read
Solid Product Demand & Acquired Assets Aid 3M (MMM)
Loan Growth Supports U.S. Bancorp (USB), Higher Costs a Woe
Tuesday, July 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 Boeing (BA), 3M (MMM) and U.S. Bancorp (USB). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Boeing’s shares have gained +1.2% in the past year, underperforming the Zacks Aerospace & Defense industry, which has increased +4.2% during the same time period. The Zacks analyst emphasizes that Boeing is the largest aircraft manufacturer globally in terms of revenues, orders and deliveries, and is one of the major aerospace and defense contractors.
In July 2018, Boeing and Embraer entered into a joint venture (JV) by signing a Memorandum of Understanding. The proposed partnership is expected to be accretive to Boeing's earnings at the start of 2020 and generate estimated annual pre-tax cost synergies of approximately $150 million by the third year.
However, Boeing’s commercial business has suffered a major setback lately due to lower 737 deliveries, following the company’s decision to ground these jets worldwide after two fatal crashes in the recent past. Consequently, its cash flow position was affected significantly.
Shares of 3M have lost -20.2% in the past three months, underperforming the Zacks Diversified Operations industry, which has gained +0.5% over the same period. The Zacks analyst thinks 3M stands to gain from efforts to innovate products, solid demand and portfolio restructuring moves in the long run.
Its acquisition of the technology business of M*Modal is likely to strengthen the Health Information Systems business in the months ahead. Also, the company's policy of rewarding shareholders handsomely through dividend payments and share buybacks works in its favor.
For 2019, the company lowered earnings projections from $10.45-$10.90 to $9.25-$9.75 per share, with organic sales expected to increase 1-2%, down from the earlier projection of 1-4%. Foreign currency translation is predicted to adversely influence sales by 1%. Also, rising costs and restructuring charges might become concerns for 3M.
(You can read the full research report on 3M here >>>).
U.S. Bancorp’s shares have outperformed the Zacks Major Banks industry over the past three months, gaining +7.4% vs. +3.1%. Further, the company possesses an impressive earnings surprise history, having beaten expectations in three of the trailing four quarters.
The Zacks analyst thinks U.S. Bancorp will likely get support from its solid business model, core franchise, lower tax rate, higher interest rates and diverse revenue streams. Also, its capital deployment activities continue to enhance shareholder value. Further, strategic acquisitions have strengthened the company's balance sheet. A rise in interest rates has also aided margins.
However, escalating expenses due to its ongoing investments in technology and likely increase in legal expenses remain concerns. Also, significant exposure to commercial loans remains a headwind for the company.
Other noteworthy reports we are featuring today include Biogen (BIIB), William Companies (WMB) and Disney (DIS).
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Note: SherazMian 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>>>