Today's Must Read
E-Commerce Boosts Union Pacific (UNP) Amid Volume Weakness
Investment Plan Aids Duke Energy (DUK), Commodity Prices hurt
Tuesday, June 23, 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 Microsoft (MSFT), Union Pacific (UNP) and Duke Energy (DUK). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Microsoft’s shares have outperformed the S&P 500 over the past year (+46.9% vs. +5.9%). The Zacks analyst believes that Microsoft is benefiting from momentum in Azure, impressive Teams user growth led by coronavirus-induced work-from-home wave, uptick in Surface devices and significant demand for Windows 10 PCs.
Moreover, the company is gaining from growing user base of its different applications like Office 365 commercial, and Dynamics. Azure’s expanding customer base remains a key catalyst. Furthermore, it is well poised to expand the total addressable market through acquisitions of GitHub and PlayFab.
However, broader macroeconomic weakness and lower spend on advertising owing to the coronavirus outbreak are likely to weigh on LinkedIn and Search revenues. Further, delays in consulting business contract renewals and supply chain constraints in China are anticipated to limit growth.
Shares of Union Pacific have lost -5.6% over the past six months against the Zacks Rail industry’s fall of -6.5%. The Zacks analyst believes that the uptick in e-commerce demand in these coronavirus-ravaged times is aiding the company's parcel business immensely.
Union Pacific’s cost-cutting measures are aiding its bottom line. The company's ability to generate free cash flow is also a positive and supports its shareholder-friendly activities as well. In this respect, Union Pacific’s decision to continue paying out dividends despite the current turbulence is reflective of its strong cash flow-generating ability.
However, due to coronavirus-led disruptions, second-quarter 2020 volumes are expected to plunge close to 20%. Moreover, operating ratio will not improve in the June quarter despite the cost-controlling measures. Notably, the company withdrew its 2020 view with respect to operating ratio, headcount, volumes and buybacks due to the coronavirus woes.
Duke Energy’s shares have gained +14.8% over the past three months against the Zacks Electric Power industry’s rise of +16.8%. The Zacks analyst believes that its unfavorable financial ratios indicate that the company may face difficulty in paying off its debt obligations, at least in the near term.
Duke Energy invests heavily in infrastructure and expansion projects. The company expects to invest $42.7 billion in its overall growth projects within the 2020-2024 time frame. Backed by its clean energy initiatives, the company plans to at least double its portfolio of renewables by 2025.
Duke Energy has been an industry leader in driving down methane emissions, which also forms part of its transition toward clean energy. However, the coronavirus pandemic has started to affect the company’s operations since the beginning of the second quarter. For 2020, the company expects a decline of 3-5% in total retail volumes.
Other noteworthy reports we are featuring today include Apple (AAPL), Applied Materials (AMAT) and UBS Group (UBS).
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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>>>