Today's Must Read
Order Growth Aids Lockheed (LMT), Tiff With Turkey May Hurt
Decline in Expenses to Aid American Express' (AXP) Margins
Thursday, June 25, 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 Verizon Communications (VZ), Lockheed Martin (LMT) and American Express (AXP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Verizon’s shares have underperformed the Zacks Wireless National industry’s over the past year (-5.3% vs. -1.4%). The Zacks analyst believes that the company’s focus on online content delivery, mobile video and online advertising should stoke growth. Verizon's 5G Ultra Wideband network build-up is likely to accelerate a 5G rollout.
Despite crisis stemming from the coronavirus pandemic, Verizon started 2020 on a positive note primarily owing to the wireless business. It is also changing revenue mix toward newer growth services like cloud, security and professional services.
However, Verizon continues to struggle in a competitive U.S. wireless market with muted demand and tweaked 2020 guidance amid the coronavirus-led turmoil. The company's wireline division is struggling with losses in access lines due to competitive pressure from VoIP service providers. Also, Verizon is spending heavily on promotion and lucrative discounts to woo customers, which further erodes profitability.
Shares of Lockheed Martin have lost -8.9% over the past six months against the Zacks Aerospace Defense industry’s fall of -31.6%. The Zacks analyst believes that Lockheed Martin faces intense global competition for its broad portfolio of products and services. Furthermore, forced cost reduction initiatives for the F-35 program might hamper its operating results.
Lockheed Martin enjoys strong demand for its high-end military equipment in domestic and international markets, being the world's largest defense contractor. Expansionary budgetary provisions made by the current U.S. administration will immensely boost this defense prime's business. It continues to be a strong cash generator.
Furthermore, forced cost reduction initiatives for the F-35 program might hamper its operating results. America and Turkey's tiff on the latter accepting Russian products may hurt Lockheed’s component supply from Turkey. It is also facing performance issues in relation to some of its products, which in turn may hurt its results.
American Express’ shares have gained +3.3% over the past three months against the Zacks Financial Miscellaneous Services industry’s rise of +12.8%. The Zacks analyst believes that American Express’ strategic initiatives will help it in achieving growth and recover from the current weak market environment.
A decline in marketing expenses and card member service is likely to aid margins. The company’s investment grade rating along with a stable outlook places it in a favorable position to secure funding at reasonable costs and keep intact its borrowing capacity.
Nevertheless, maintenance of sufficient level of capital will provide flexibility to support future business growth. However, due to the COVID-19 outbreak, American Express is persistently witnessing weakness in spending volumes, which is likely to hurt its full-year operating performance. Drained profitability might continue given the adverse operating scenario.
Other noteworthy reports we are featuring today include Boeing (BA), Zoom Video Communications (ZM) and Micron Technology (MU).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
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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>>>