Today's Must Read
Expense Saving Aids Bank of America (BAC) Amid Low Rates
Expense Control Aids Citigroup (C), Low Fee Income A Woe
Tuesday, March 24, 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 Visa (V), Bank of America (BAC) and Citigroup (C). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Visa’s shares have outperformed the Zacks Financial Transaction Services over the past six months (-22.5% vs. -27.8%). The Zacks analyst believes that the company is likely to see a slowdown in its cross-border business due to coronavirus outbreak.
Numerous acquisitions and alliances plus technology upgrades and effective marketing have paved the way for long-term growth and consistent increase in revenues. Shift in payments such as mobile, cards and online paved way for long-term growth and led to an increase in payments volume, cross-border volume and processed transactions.
The acquisition of Visa Europe is a long-term growth strategy for the company. Its international business has been expanding and adds diversification benefits. Its strong capital position is another positive. However, high client incentives and expenses weigh on its operating margin.
Shares of Bank of America have lost 28.3% over the past year against the Zacks Major Regional Banks’ fall of 35.1%. The Zacks analyst believes that opening branches in new regions, improved digital offerings, decent loan demand and efforts to control costs are expected to aid profitability despite near-zero interest rates.
Efforts to focus more on consumer banking business have started bearing fruit. The company's enhanced capital deployment actions reflect a solid liquidity position. However, significant dependence on capital markets performance makes us apprehensive, given its cyclical nature.
This is likely to hurt the company’s fee income growth, and in turn negatively affect the top line. A stretched valuation limits the stock's upside potential.
Citigroup’s shares have lost 50.9% over the past three months against the Zacks Major Regional Banks industry’s fall of 49%. The Zacks analyst believes that Citigroup’s streamlining efforts, along with strategic investments in core business, bode well for the long term.
Further, net interest revenues will likely be supported by loan growth and mix, despite low rates. Moreover, prudent expense management is likely to aid bottom-line expansion. However, pending litigation issues might keep legal expenses elevated.
Additionally, decline in equity-market revenues and volatile underwriting business are concerns. Notably, the current economic environment is uncertain due to the coronavirus outbreak and the company has temporarily suspended share buybacks through the second quarter of 2020.
Other noteworthy reports we are featuring today include Netflix (NFLX), Danaher (DHR) and Duke Energy (DUK).
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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>>>