Today's Must Read
Alibaba (BABA) Banks on New Retail strategy, Cloud Business
Mastercard (MA) Rides on Buyouts, Investment in Technology
Friday, December 27, 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), Alibaba Group (BABA) and Mastercard (MA). 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 (+58.5% vs. +27.9%). The Zacks analyst believes that growth in Instagram Stories and Feed, and Facebook News Feed is expected to aid mobile ad revenues.
The company’s initiatives to improve privacy, transparency and authenticity of ads are likely to boost user trust and engagement. The launch of Facebook View app, Facebook Pay and catalogs in the WhatsApp Business app aimed at small businesses is noteworthy. Further, partnerships with ESPN and Fox for sports-related streaming on Facebook Watch are a positive.
However, a persistent mix shift toward Stories is anticipated to hurt ARPU. Also, the company’s rising regulatory headwinds, including the antitrust investigation and the EU’s investigation of Libra, are concerns.
Shares of Alibaba have gained +29.4% in the past three months against the Zacks Internet Commerce industry’s rise of +13.4%. The Zacks analyst believes that Alibaba is benefiting from steady improvement in core commerce along with strong growth in metrics.
Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining significant momentum in the market. This is aiding growth in its Tmall Import, Hema fresh food grocery business and Intime Department Stores.
Additionally, the consolidation of Ele.me and Cainiao Network is acting as a tailwind. However, the company’s increasing investments, uncertain economy and macro headwinds in China are major concerns. Also, rising competition poses a risk.
Mastercard's shares have gained +13.1% over the past six months against the Zacks Financial Transaction Services industry's rise of +8.4%. The Zacks analyst believes that the company's revenues are gaining from higher switched transactions, increase in cross-border volume and gross dollar volume.
Numerous acquisitions made over the years have fueled its inorganic growth. The company is benefiting from shifts in payments, from physical to digital. Investment in technology has also kept the company at the forefront of the rapidly changing payments industry. Its solid capital position enables investment in business.
The Zacks Consensus Estimate for current-year earnings has been revised 1.1% upward over the last 60 days. However, escalating costs might put pressure on margins. In order to gain customers and new business, Mastercard has been incurring high levels of costs under rebates and incentives, which remain a concern.
Other noteworthy reports we are featuring today include Citigroup (C), Abbott Laboratories (ABT) and Philip Morris International (PM).
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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>>>