Today's Must Read
Intuit (INTU) Rides on Growing Adoption of Product Portfolio
Enterprise (EPD) Banks on $6B Midstream Growth Projects
Monday, August 26, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including salesforce (CRM), Intuit (INTU) and Enterprise Products (EPD). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
salesforce’s shares have lost -7% in the past six months, underperforming the Zacks Computer Software industry, which has gained +10.2% over the same period. salesforce reported strong second-quarter fiscal 2020 results. The Zacks analyst thinks the company is gaining from solid growth across all its cloud offerings and geographies.
Deal wins in the international market is a key driver. Rapid adoption of its diverse cloud offerings, given an upsurge in demand for digital transformation, is a key catalyst. Strengthening relationships with cloud companies like Amazon, Google and IBM are an upside. Additionally, strategic acquisitions like MuleSoft, Tableau, ClickSoftware and Salesforce.org are a positive.
However, stiff competition from Oracle and Microsoft is a concern. Unfavorable currency fluctuations persist as a key headwind. Also, increasing investments in international expansions and data centers are an overhang on near-term profitability.
Shares of Intuit have outperformed the Zacks Computer Software industry over the past year, increasing +31.5% vs. a gain of +14%. Intuit’s fourth-quarter fiscal 2019 results benefited from strong momentum in Online ecosystem revenues and growth in the Consumer business.
The Zacks analyst thinks that impressive growth in its Small Business and Self-Employed is a tailwind. The TurboTax Live offering is also driving strong growth in the Consumer tax business. Solid momentum of the company’s lending product, QuickBooks Capital is a positive. Moreover, the company’s strategy of shifting its business to cloud-based subscription model will help generate more stable revenues over the long run.
However, high costs and expenses remain a major concern. Moreover, the company expects total QuickBooks Online subscriber growth to moderate in the near term as it continues to focus on additional services.
Enterprise Products’ shares have gained +14.5% year to date, outperforming the Zacks Oil Production Pipeline MLP industry’s increase of +9.5%. Enterprise Products boasts an extensive network of pipelines that spreads across nearly 49,200 miles. Importantly, the pipeline network, which is connected to every major U.S. shale play, provides services to producers and users of commodities by transporting gas, liquids, and refined products.
The Zacks analyst thinks Enterprise is well positioned to generate additional fee-based revenues from growth capital projects of $6 billion that are currently under construction. Recently, the partnership reported strong second-quarter 2019 earnings, aided by record crude transported volumes.
However, gross operating margins were lower from the partnership’s natural gas processing activities. The partnership was also hurt by lower volumes and maintenance works at its NGL fractionation business. Moreover, Enterprise’s balance sheet is more levered than the sector.
Other noteworthy reports we are featuring today include VMware (VMW), Analog Devices (ADI) and Xcel Energy (XEL).
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