Today's Must Read
Strong Service and Benefit Business Aids UnitedHealth (UNH)
Expansion Efforts Aid HSBC Holdings (HSBC), High Costs a Woe
Friday, October 18, 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 Facebook (FB), UnitedHealth (UNH) and HSBCHoldings (HSBC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Facebook’s shares have outperformed the S&P 500 year to date (45.2% vs. 19.6%). The Zacks analyst thinks that solid mobile ad revenues, driven by impressive growth in Instagram Stories and Feed, and Facebook News Feed, are expected to boost the top line.
Facebook’s initiatives to improve privacy, transparency and authenticity of ads, and remove fake accounts are likely to boost user trust and engagement. Further, partnerships with ESPN and Fox for sports related streaming on Facebook Watch are a positive. The acquisition of CTRL-Lab will drive growth in the long haul.
However, the company’s rising regulatory headwinds, including the antitrust investigation and the EU’s investigation of Libra, are a concern. The unfriendly regulatory environment is expected to delay Libra’s launch, which Facebook has targeted for the first half of 2020.
Shares of UnitedHealth have gained 9.9% in the past six months against the Zacks Medical Insurance industry’s rise of 8.6%. The Zacks analyst believes that higher revenues, strength in both segments — UnitedHealthcare and Optum — plus membership growth led to this outperformance.
UnitedHealth Group stands apart in the industry by virtue of healthcare services, technology and innovations offered by its unit, Optum. Numerous acquisitions made by the company have led to inorganic growth. Its solid balance sheet and consistent cash flow generation enables investment in business.
Also, capital management by dividend payout and share buyback is another positive. However, slowdown of growth in international operations and underperformance in Medicaid business are some concerns.
HSBC’s shares have lost 6% over the past three months against the Zacks Foreign Banks industry’s decline of 3.6%. The Zacks analyst believes that while the company’s initiatives to improve market share in the U.K. and China are likely to lead to an increase in expenses and hurt bottom-line growth, these efforts will support financials over the long term.
Also, initiatives to strengthen digital capabilities globally, improve operating efficiency and open 50 new retail banking branches in the United States will go a long way in supporting profits. Its steady capital deployments are impressive, reflecting strong balance sheet position and will enhance shareholder value.
Nevertheless, disappointing economic growth in Europe and weak loan demand are likely to hurt revenue growth to some extent. Additionally, uncertainty related to the implication of Brexit on its financials remains a major near-term concern.
Other noteworthy reports we are featuring today include JPMorgan Chase (JPM), PetroChina (PTR) and Netflix (NFLX).
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
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>>>