Today's Must Read
Adobe (ADBE) Rides on Growing Adoption of Cloud Applications
Operational Efficiency Aid BHP Group (BHP), Low Prices Ail
Wednesday, November 6, 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 Berkshire Hathaway (BRK.B), Adobe Systems (ADBE) and BHP Group (BHP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Berkshire Hathaway’s shares have underperformed the Zacks Insurance - Property and Casualty industry year to date (8.2% vs. 9.3%). The Zacks analyst believes that a strong cash position supports earnings-accretive bolt-on buyouts. Continued insurance business growth also fuels increase in float.
Berkshire Hathaway’s third-quarter 2019 earnings of $3.21 per share beat the Zacks Consensus Estimate by 15.5% and improved 15.1% year over year on the back of better performance across all its segments. Its shares have outperformed its industry in a year’s time. It boasts to be one of the largest property and casualty insurance company measured by premium volume. Its inorganic growth story remains impressive with strategic acquisitions.
Its non-insurance businesses are delivering improved results. A sturdy capital level provides further impetus. However, exposure to catastrophe loss remains a concern. Huge capital expenses due to railroad operations pose concern.
Shares of Adobe have gained 4.4% in the past six months against the Zacks Software industry’s rise of 11.8%. The Zacks analyst remains optimistic about Adobe’s market position, compelling product lines, continued innovation, solid adoption of Creative Cloud and Adobe marketing cloud.
Also, the company’s Adobe Document Cloud and Adobe Experience Cloud products, along with growing subscription for cloud application are positives. It has been making great efforts toward establishing its presence in cloud-related software areas such as documents and marketing.
Adobe’s increasing demand for its creative products continues to drive its top-line growth. However, lower end-market demand and exposure to Europe remain overhangs. High acquisition expenses do not bode well for its margin expansion.
BHP’s shares have gained 3.9% over the past three months against the Zacks Mining - Miscellaneous industry’s rise of 4.7%. The Zacks analyst believes that trade volatility and slowdown in global growth have made investors apprehensive and affected commodity markets, which in turn will weigh on BHP Group’s results.
BHP Group anticipates unit costs to be higher in fiscal 2020 thanks to natural field decline at conventional petroleum, falling copper grades, lower by-product credits and higher deferred stripping costs at Escondida. Iron ore prices have declined lately amid signs of recovery in Brazilian supply. However, metal prices will recover eventually driven by demand-supply imbalance.
Thus, BHP Group is poised to gain from its investment plans in petroleum, copper, iron ore and potash. Further, the company’s efforts to make operations efficient by adopting smarter technology across its value chain will also drive results. Strong cash flow and lower debt also bode well.
Other noteworthy reports we are featuring today include BlackRock (BLK), Broadcom (AVGO) and Bayer Aktiengesellschaft (BAYRY).
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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>>>