Today's Must Read
Strong China Business Contributes to NIKE's (NKE) Growth
Qualcomm (QCOM) Remains Poised to Gain from 5G Momentum
Tuesday, October 29, 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 Apple Inc. (AAPL), Nike, Inc. (NKE) and Qualcomm Inc. (QCOM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Apple’s shares have outperformed the Zacks Computer - Mini computers industry on a year to date basis (+57.8% vs. +55.3%). The Zacks analyst believes that the company’s focus on strengthening the Services business and a strong slate of upcoming app releases, including its streaming service Apple TV+, are key catalysts. The company is also expected to benefit from the launch of latest iPhones, refreshed Macbook, iPad and Apple Watch product lines.
However, the ongoing U.S.-China trade war does not bode well for the company. 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.
Nike’s shares have outperformed the Zacks Shoes and Retail Apparel industry over the past one-year period (+21.9% vs. +19.3%). The Zacks analyst believes that NIKE will continue investing in key capabilities to aid digital transformation and deliver robust growth in fiscal 2020 and beyond. Further, it expects results for fiscal 2020 to be driven by brand recognition, robust innovation pipeline, and positive response from Nike Direct and wholesale partners.
However, higher SG&A expenses and tax rate, as well as adverse currency are headwinds. The company expects SG&A expenses to increase high-single digit in second-quarter fiscal 2020. Further, the company is likely to witness prominent impacts from the recently-enacted tariffs in the fiscal second quarter, which should partly mar the gross margin.
Qualcomm’s shares have outperformed the Zacks Wireless Equipment industry so far this year (+45.9% vs. +17.2%). The Zacks analyst believes that Qualcomm has been trying to retain its leadership in 5G, chipset market and mobile connectivity with several technological achievements and innovative product launches. The company has redefined the computing and mobile ecosystem across the globe with the launch of QCA6390 Connectivity SoC product.
However, aggressive competition in the mobile phone chipset market from low-cost rival chipmakers and leading smartphone makers is likely to hurt Qualcomm. Margins have also decreased sharply due to high operating expenses and R&D costs.
Other noteworthy reports we are featuring today include eBay Inc. (EBAY), Phillips 66 (PSX) and DTE Energy Company (DTE).
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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>>>