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Research Daily

Friday, September 30, 2016

Stocks are up today, as some of the more exaggerated fears surrounding Germany's Deutsche Bank (DB) have eased in the U.S. session, though worries weighed on Asian markets today. The German lender has been in the eye of the storm in recent days in the wake of U.S. Justice Department's reported penalty of $14 billion to settle mortgage related issues. Deustche Bank's thin capital cushion in the face of such a hit has put a spotlight on the weak capital positions of other European lenders a well.

In line with the market's Deustche Bank fixation, Research Daily today is featuring the industry stalwart JPMorgan (JPM). Other key reports today include Marriott (MAR), India's Infosys (INFY), and IBM (IBM).

JPMorgan shares have lagged the broader market this year, but they have nevertheless done better than the space as whole given its well-earned reputation for quality management, capital strength and operational excellence. It has been a tough period for banks as a whole given the Fed-inspired interest rate backdrop that has been weighing on the group's margins. JPMorgan has done better than others in navigating this environment, through a combination of cost-containment efforts and gains in the loan portfolio. The analysts expects these elements to show up in the bank's Q3 earnings report, which comes out before the market's open on October 14th. JPMorgan is expected to earn $1.37 on $23.96 billion in revenues in Q3, which would compare to $1.32 on $22.78 billion in revenues in the year-earlier period. (You can read the full research report on JPMorgan here>>)

Marriott’s recent completion of the Starwood purchase is expected to be a key positive in the long run, but the Zacks analyst identifies a number of near-term challenges that could weigh on the stock. These include asset sales and all aspects of integrating different parts of the units like loyalty programs. The steadily improving economy and favorable outlook for business and leisure travel should help the company. In the updated research report published today, the Zacks analyst discusses the pros & cons of investing in Marriott shares at present. (You can read the full research report on Marriott here>>)

India-based Infosys shares have struggled lately (the stock is down more than 5% year-to-date), despite the favorable growth outlook for the Indian economy. The company continues to do a decent job in its traditional core IT areas, but appears to have lagged its peers in the U.S. in the higher-end analytics and big-data type of work. The tough global spending environment of companies hesitating on technology and services isn't helping consulting firms like Infosys either. The Zacks analyst discusses the company's ability maintain existing clients and add new ones, but cites seasonality factors and competitive pressures as near-term concerns. (You can read the full research report on Infosys here>>)

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Sheraz Mian

Director of Research

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