Today's Must Read
Cost-Cutting Plan to Support Procter & Gamble (PG) Margins
Phillip Morris (PM) to Gain From Smoke-Free Product Category
Monday, March 30, 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 Alphabet (GOOGL), Procter & Gamble (PG) and Philip Morris International (PM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alphabet’s shares have outperformed the Zacks Internet Services industry over the past six months (-7.9% vs. -8.7). The Zacks analyst believes that Alphabet's strengthening cloud unit is aiding substantial revenue growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space.
Further, major updates in its search segment are enhancing the search results, which is a major positive. Moreover, Google’s robust mobile search is gaining solid momentum. Additionally, strong focus on innovation of AI techniques and the home automation space should aid business growth in the long term.
Further, its deepening focus on wearables category remains a tailwind. However, the company’s growing litigation issues and increasing expenses might hurt profitability. Further, the company faces persistent pressure from advertisers to tighten controls on YouTube video service. This remains a concern.
Shares of Procter & Gamble have gained +6.3% over the past year against the Zacks Soap and Cleaning Materials industry’s fall of -3.1%. The Zacks analyst believes that the company’s solid second-quarter fiscal 2020 earnings mark the continuation of its positive surprise trend.
Further, earnings and sales improved year over year in the reported quarter on gains from productivity efforts, robust volume, favorable mix and pricing. Total productivity cost savings aided core currency-neutral gross and operating margin by 120 bps and 220 bps, respectively. Further, it delivered adjusted free cash flow productivity of 100%.
Backed by strong organic sales growth, core earnings and returns to shareholders in the fiscal second quarter, the company raised its view for fiscal 2020. However, currency fluctuations remain concerning. Nevertheless, gains from acquisitions and divestitures are likely to partly offset the currency headwinds.
Philip Morris’ shares have lost -15.8% over the past three months against the Zacks Tobacco industry’s fall of -22.7%. The Zacks analyst believes that the company continues to battle receding cigarette volumes due to stringent regulations and rising health consciousness. Cigarette volumes are likely to drop in 2020.
The company said it doesn’t anticipate facing any out-of-stock situation in major operating income areas and expects customers to continue having access to its products amid the coronavirus. Apart from this, strong pricing aided its sales and adjusted operating income in fourth-quarter 2019.
Results were also aided by cost-efficiencies and gains from RRPs, which, in turn, is benefiting from broad-based IQOS growth. However, management is temporarily suspending all operations at MTB due to coronavirus.
Other noteworthy reports we are featuring today include SAP SE (SAP), Novo Nordisk (NVO) and Tesla (TSLA).
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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>>>