Today's Must Read
Strategic Mergers Aid Boeing (BA), Low 737 Deliveries Hurt
NVIDIA (NVDA) Banks on Recovery in the Data Center Business
Friday, December 20, 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 JPMorgan Chase (JPM), Boeing (BA) and NVIDIA (NVDA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
JPMorgan’s shares have outperformed the Zacks Major Regional Banks industry year to date (+41.6% vs. +34.2%). The Zacks analyst believes that decent loan demand, acquisition of InstaMed, opening of new branches and focus on strengthening credit card business will aid financials.
JPMorgan's shares have outperformed the industry over the past six months. The company has an impressive earnings surprise history. The bank has surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Also, enhanced capital deployment plan reflects strong balance sheet position and will enhance shareholder value.
However, the Fed’s accommodative policy will likely hamper top line growth to some extent. The company’s significant dependence on capital markets revenues makes us apprehensive, given the several geopolitical concerns. Further, the company is likely to face challenges in expanding mortgage operations. Hence, these matters are expected to hamper fee revenue growth.
Shares of Boeing have lost 12% in the past three months against the Zacks Aerospace & Defense industry’s decline of 4.1%. The Zacks analyst believes that the company’s proposed joint venture with Embraer is expected to strengthen its commercial business significantly. The proposed partnership is expected to be accretive to Boeing’s earnings at the start of 2020 and generate estimated annual pre-tax cost synergies of approximately $150 million by the third year.
Boeing remains the largest aircraft manufacturer globally in terms of revenues, orders and deliveries, and one of the major aerospace and defense contractors. Its proposed joint venture with Embraer is expected to strengthen its commercial business significantly.
However, its commercial business has suffering due to lower 737 deliveries, following its 737 MAX product line's grounding and subsequent costs associated with it. Consequently, its revenues, earnings and cash flow position were affected significantly.
NVIDIA's shares have gained 57.5% over the past six months against the Zacks General Semiconductor industry's rise of 28.9%. The Zacks analyst believes that the company is benefiting from strong growth in GeForce desktop and notebook GPUs, which is boosting gaming revenues. Solid momentum of its real-time ray tracing technology is also a positive.
NVIDIA delivered better-than-expected third-quarter fiscal 2020 results. Increase in Hyperscale demand is a tailwind for Data Center business as well. Growing adoption in the inference market is an upside too. Further, the solid uptake of AI-based smart cockpit infotainment solutions is a boon.
Additionally, strength across mobile workstation products is aiding Professional Visualization revenues. However, the company’s bleak guidance for the fourth quarter due to seasonality is a concern. Management expects strong sequential growth in Data Center to be offset by a seasonal decline in GeForce notebook GPUs and SoC modules for gaming platforms.
Other noteworthy reports we are featuring today include Roche (RHHBY), AstraZeneca (AZN) and GlaxoSmithKline (GSK).
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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>>>