Today's Must Read
Expanding User Base, Instagram Strength Aids Facebook (FB)
Digital Transformation Efforts to Boost NIKE (NKE) Top Line
Thursday, September 5, 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 Facebook (FB), Mastercard (MA) and NIKE (NKE). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
Facebook’s shares have gained 42.8% year to date, outperforming the S&P 500’s increase of 15.8% during the same period. The Zacks analyst thinks the company benefits from continued user growth across Asia-Pacific. It is expected to benefit from solid mobile ad revenues, driven by impressive growth in Instagram Stories and Feed, as well as Facebook News Feed.
Facebook’s initiatives to improve privacy, transparency and authenticity of ads and removal of fake accounts from the platform are expected to boost user trust and engagement. However, the company’s rising regulatory headwinds, including the antitrust investigation, is a concern.
Meanwhile, the EU is investigating Libra. The integration of Libra-backed applications into WhatsApp and Messenger is also being investigated. The unfriendly regulatory environment is expected to delay Libra’s launch, which is a concern for investors.
Shares of Mastercard have increased +51.6% year to date, outperforming the Zacks Financial Transaction Services industry’s rally of +44.2%. The Zacks analyst thinks the company's revenues are gaining from higher switched transactions, increase in cross-border volume and gross dollar volume.
Numerous acquisitions made over the past many years have fueled its inorganic growth. The company's solid market position, ongoing expansion, investment in technology and opportunities from the shift toward electronic payments, paves path for long term growth. Its solid capital position enables investment in business.
Disciplined capital management by way of share buybacks and divided payments is commendable. However, escalating costs will put pressure on margins. Also, in order to gain customers and new business, Mastercard has been incurring high level of costs under rebates and incentives, which remains a concern.
NIKE’s shares have outperformed the Zacks Shoes and Retail Apparel industry year to date, gaining +16.4% vs. +15.6%. The Zacks analyst thinks the outperformance is attributable to a robust sales trend stemming from the execution of Consumer Direct Offense as well as strength in Wholesale and NIKE Direct businesses.
Fourth-quarter fiscal 2019 marked the ninth straight quarter of top-line beat for the company. Further, it expects strong sales results for fiscal 2020, driven by brand recognition, robust innovation pipeline, and positive response from Nike Direct and wholesale partners. However, NIKE’s earnings missed estimates in the fiscal fourth quarter, marking a negative surprise after 28 straight beats.
For fiscal 2020, it anticipates headwinds from higher SG&A expenses, tax rate and adverse currency to mar results. Further, the company expects gross margin gains to be partly offset by supply-chain investments and expansion of Air manufacturing innovation.
Other noteworthy reports we are featuring today include BB&T (BBT), Western Digital (WDC) and Phillips 66 (PSX).
It’s Illegal in 42 States, But Investors Will Make Billions Legally
In addition to the companies you read about above, today you get details on the newly-legalized industry that’s tapping into a “habit” that Americans spend an estimated $150 billion on every year.
That’s twice as much as they spend on marijuana, legally or otherwise.
Zacks special report revealing how investors can profit from this new opportunity. As more states legalize this activity, the industry could expand by as much as 15X. Zacks’ has just released a Special Report revealing 5 top stocks to watch in this space.
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>>>