Today's Must Read
Chevron (CVX) to Gain from Stellar Permian Operation
VMware (VMW) Drives on Hybrid Cloud & SaaS, License Bookings
Wednesday, September 4, 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 Apple (AAPL), Chevron (CVX) and VMware (VMW). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Apple’s shares have outperformed the broader S&P 500 index on a year-to-date basis (+30.4% vs. +14.5%). The Zacks analyst thinks the company’s continued focus on strengthening the Services business and a strong slate of upcoming app releases, including its streaming service Apple TV+, are key catalysts. It is also expected to benefit from the refreshed Macbook and iPad product lines.
Apple is likely to unveil latest iPhones in an event scheduled on Sep 10. However, the ongoing U.S.-China trade war does not bode well for the company. Further, legal woes have increased due to a lawsuit from customers related to App Store charges.
The company has also been accused of unfair practices by Spotify. These are significant headwinds for investors, at least for the near term.
Shares of Chevron have outperformed the Zacks Integrated Oil industry year to date (+6.9% vs. -5.1%). The Zacks analyst thinks Chevron’s existing project pipeline is among the best in the industry. The company is targeting volume growth of around 4-7% in 2019 thanks to planned expansion in the Permian Basin.
Chevron pumped 55% more out of the West Texas shale play in the most recent quarter compared with the year-ago period, with output set to soar in coming years. Moreover, the growing free cash flow should enable Chevron to deliver safe and growing dividend for the foreseeable future.
However, there are worries over drop in its refining earnings that once again cut into 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.
VMware’s shares have gained +3.8% year to date, underperforming the Zacks Software industry which is up +27.9% over the same period. The Zacks analyst thinks VMware delivered impressive second-quarter fiscal 2020 results.
Both earnings and revenues increased on a year-over-year basis. The top line was primarily driven by robust performance from NSX, VeloCloud and vSAN product lines. VMware’s dominance in SDDC and expanding customer base in cloud driven by partnerships with the likes of IBM and AWS are positives.
The Pivotal and Carbon Black acquisitions are expected to drive recurring hybrid cloud subscription and SaaS revenues in the long haul. However, unfavorable revenue mix is expected to hurt license revenues in the third quarter. VMware’s margins are anticipated to remain under pressure due to heavy spending. Intensifying competition is a concern as well.
Other noteworthy reports we are featuring today include Workday (WDAY), Capital One (COF) and Cooper Companies (COO).
Legalizing THIS Could Be Even Bigger than Marijuana
Americans spend an estimated $150 billion in this industry every year… more than twice as much as they spend on marijuana.
Now that 8 states have fully-legalized it (with several more states following close behind), Zacks has identified 5 stocks that could soar in response to the powerful demand. One industry insider described the future as “mind-blowing” – and early investors can still get in ahead of the surge.
Note: Our Director of Research 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>>>