Today's Must Read
AT&T (T) Rides on Streaming Services, Pledges to Reduce Debt
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Thursday, May 14, 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 UnitedHealth Group (UNH), AT&T (T) and Netflix (NFLX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
UnitedHealth’s shares have outperformed the Zacks Medical Insurance industry over the past year (+18.7% vs. +11.7%). The Zacks analyst believes that UnitedHealth has been benefiting from higher segmental contributions, which helped it counter the fallout from the coronavirus-led crunch.
It stands out from the rest in its industry by virtue of healthcare services, technology and innovations offered by its unit, Optum. Its numerous acquisitions bolstered its inorganic growth profile. Its revenues should continue to grow, driven by a strong market position and an attractive core business.
Its solid balance sheet and consistent cash flow generation encourage investment in business. By retaining its 2020 earnings guidance, the company restores investor confidence. However, the company is witnessing a slowdown in its international operations. Commercial membership may also suffer due to increased joblessness.
Shares of AT&T have lost -29.1% over the past six months against the Zacks Wireless National industry’s fall of -15.6%. The Zacks analyst believes that AT&T is well positioned to benefit from streaming services like AT&T TV and soon-to-be launched HBO Max.
AT&T reported relatively modest first-quarter 2020 results as coronavirus pandemic hit top-line growth, fueling uncertainty within the organization and limiting future visibility. The company is witnessing a steady decline in linear TV subscribers and legacy services. Its wireline division is also facing loss in access line due to competitive pressure from VoIP service providers.
As AT&T tries to woo customers with discounts, freebies and cash credits, margin fears tend to soar. However, the company is committed to its three-year financial framework with sustained investments and debt-reduction efforts. AT&T intends to deploy a standards-based, nationwide mobile 5G network in 2020 to fuel its growth engine.
Netflix’s shares have gained +15.4% over the past three months against the Zacks Broadcast Radio and Television industry’s fall of -6.3%. The Zacks analyst believes that the company is dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint.
Netflix’s first-quarter 2020 results benefited from strong subscriber growth as more and more people were compelled to stay at home due to the coronavirus pandemic. However, Netflix expects viewing and subscriber growth to decline once the coronavirus-related lockdowns and movement restrictions are lifted.
Moreover, absence of new seasons for popular shows like Money Heist and Stranger Things is expected to affect subscriber growth in the third and fourth quarter of 2020.
Other noteworthy reports we are featuring today include Procter & Gamble (PG), International Business Machines (IBM) and BlackRock (BLK).
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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>>>