Today's Must Read
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Investment in Infrastructure and Renewable Aid NextEra (NEE)
Wednesday, February 19, 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 Facebook (FB), Netflix (NFLX) and NextEra Energy (NEE). 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 over the past year (+34% vs. +20.3%). The Zacks analyst believes that the company benefited from solid growth in Instagram Stories and Feed, and Facebook News Feed. Moreover, strong sales of Oculus Quest drove payment revenues.
Facebook’s fourth-quarter 2019 results were driven by continued user growth across all regions. Asia-Pacific remained its fastest growing region, driven by growth in India, Indonesia and the Philippines.
However, Facebook expects top-line growth to slow down due to increasing limitations in tracking user activity amid growing privacy-related regulations, changes made in mobile operating systems and browser platforms by Apple and Google and its own tools like the Off Facebook Activity controls. Moreover, a persistent mix shift toward Stories is anticipated to hurt ARPU. Also, rising regulatory headwinds are concerning.
Shares of Netflix have gained +29.7% in the past six months against the Zacks Broadcast Radio and Television industry's rise of +16.3%. The Zacks analyst believes that Netflix is expected to benefit from an expanding content portfolio despite increasing competition from the likes of HBO, Amazon prime video, Disney+ and Apple TV+.
Expanding bundle offerings through partnerships with Telefonica, KDDI, AT&T, Comcast, DISH, Verizon, Charter, Altice, T-Mobile and Sky are a key catalyst. Moreover, the launch of low-priced mobile plans in India, Indonesia and Malaysia is expected to expand the subscriber base in the Asia Pacific.
However, management expects net additions in the paid subscriber base to decline in first-quarter 2020. Moreover, high streaming content obligation and increased spending are expected to hurt free cash flow generation.
NextEra Energy’s shares have gained +19.9% over the past three months against the Zacks Electric Power industry's rise of +12.1%. The Zacks analyst believes that NextEra Energy is poised to benefit from ongoing investments, which are in turn going to boost its performance in the long run.
NextEra’s “30 by 30” plan will help the company meet the goal of making the generation portfolio cleaner. The $50-$55B investment through 2022 will add more clean power generation units, and modernize and strengthen its infrastructure. NextEra aims to lower emissions to 67% by 2025 from 2005 levels.
However, its nature of business is subject to complex and comprehensive federal, state and other regulations. If the planned nuclear plant outages last longer or an unplanned outage occurs, the company’s normal operations and profitability might be hindered.
Other noteworthy reports we are featuring today include Sanofi (SNY), GlaxoSmithKline (GSK) and T-Mobile US (TMUS).
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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>>>