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Research Daily

Monday, December 30, 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 Medtronic (MDT), United Technologies (UTX) and Union Pacific (UNP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Medtronic’s shares have outperformed the Zacks Medical Products industry year to date (+24.6% vs. +16.8%). The Zacks analyst believes that in recent times, all major business groups at Medtronic contributed to solid top-line growth at CER, which highlighted sustainability across groups and regions, in addition to displaying successful achievement of synergy targets.

In the second quarter fiscal 2019, within RTG, strong sales within spine and brain therapies more than offset slower growth in pain therapies. Within CVG, despite ongoing challenges, the company registered 1.3% growth at CER. MITG arm demonstrated sturdy growth on strength in across all businesses.

The 2020 guidance also looks promising. Medtronic has been outperforming the industry it belongs to for the past three months. On the flip side, the declining CRHF revenue raises concern for Medtronic. Escalating costs persistently put pressure on gross margin.

(You can read the full research report on Medtronic here >>>)

Shares of United Technologies have gained +12.3% in the past three months against the Zacks Diversified Operations industry’s rise of +12.4%. The Zacks analyst believes that strength in commercial aftermarket and military businesses, coupled with growth in commercial air traffic and high defense spending in the United States, is likely to boost revenues of the company’s aerospace business.

Also, favorable mix in Otis new equipment orders is likely to be a tailwind for the commercial business. However, the company is experiencing softness in its equipment orders at the Carrier segment due to persistent lower transport refrigeration orders. Also, rising cost of sales has been a major cause of concern.

Rise in debt levels can increase its financial obligations. Moreover, the company expects forex headwind to hurt its revenues and segmental operating profits by $550 million and $75 million, respectively, in 2019.

(You can read the full research report on United Technologies here >>>)

Union Pacific's shares have gained +5.8% over the past six months against the Zacks Rail Services industry's rise of +1.1%. The Zacks analyst impressed with Union Pacific's initiatives to reward its shareholders. Since November 2017, the company raised its quarterly dividend payout five times.

It is also active on the buyback front. Initiatives to control costs to drive the bottom line are also impressive. The company’s operating ratio has been constantly improving mainly owing to its cost-cutting initiatives. Operating ratio is anticipated to improve further. Backed by these tailwinds, shares of Union Pacific have outperformed its industry in a year's time.

However, sluggish overall volumes due to freight-related weakness are a major headwind. Notably, the company issued a lackluster forecast for fourth-quarter 2019 volumes at a conference in December. Union Pacific's escalated debt levels are concerning too. Also, the massive capex might be a headwind.

(You can read the full research report on Union Pacific here >>>)

Other noteworthy reports we are featuring today include Comcast (CMCSA), Vertex Pharmaceuticals (VRTX) and NextEra Energy (NEE).

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Mark Vickery
Senior Editor

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>>>

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