Today's Must Read
American Express (AXP) Gains From Increased Billed Business
Acquisitions Support Fidelity (FIS) Amid Intense Competition
Friday, January 17, 2020
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 Microsoft (MSFT), American Express (AXP) and Fidelity National Information Services (FIS). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Microsoft’s shares have outperformed the S&P 500 over the past year (+54.3% vs. +23.3%) and the Zacks analyst expects this momentum continuing on the back of a growing user base of its different applications like Office 365 commercial, Dynamics, Outlook mobile and Teams.
Moreover, Azure’s expanding customer base is a key catalyst. Microsoft’s gaming segment is performing well, primarily driven by a combination of Xbox Live, Game Pass subscriptions and Mixer, which are driving user engagement. Further, acquisitions like PlayFab and GitHub expand Microsoft’s total addressable market (TAM) and penetration. Additionally, latest contract wins from the Department of Defense remain notable.
However, projections of a moderating growth rate in commercial cloud gross margin, and OEM Pro and Windows commercial businesses is a headwind. Moreover, stiff competition from the likes of Google, Apple, and Sony is a woe.
Shares of American Express have gained +11.8% in the past three months against the Zacks Financial Miscellaneous Services industry's rise of +9.1%. The Zacks analyst believes that its expanding presence in the business-to-business market and investment in technology should drive long-term growth.
Its revenue growth is driven by a strong brand, continued efforts toward building business in new growth verticals, shift toward digital, focus on initiatives and a strong economy, which are driving consumer spending. Its strong capital position and disciplined capital management by way of share buyback and dividend payouts are impressive.
However, the company's reward expenses have been increasing over the past many quarters, which weigh on margins. Cost of card member services has been increasing over the years, indicating higher engagement level across its premium travel services.
Fidelity National Information Services’shares have gained +11.3% over the past six months against the Financial Transaction Services industry's rise of +10%. The Zacks analyst believes that the company remains well positioned for growth backed by attractive core business with a recurring revenue model and several ongoing strategic initiatives.
Acquisition of Worldpay is likely to accelerate its growth by boosting presence in faster growing markets. Also, the deal will provide synergies of $700 million from revenue and cost savings over next three years. However, the company remains exposed to consolidation in the banking sector and significant competition from new entrants. Also, unsustainable capital deployment activities remain a concern.
Other noteworthy reports we are featuring today include Apple (AAPL), Goldman Sachs (GS) and Southern (SO).
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Director of Research
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>>>