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The Zacks Analyst Blog Highlights: Pfizer, BioNTech, Mohawk Industries, Electrolux and Jabil

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For Immediate Release

Chicago, IL – November 10, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Pfizer Inc. (PFE - Free Report) , BioNTech SE (BNTX - Free Report) , Mohawk Industries, Inc. (MHK - Free Report) , AB Electrolux (publ) (ELUXY - Free Report) and Jabil Inc. (JBL - Free Report) .

Here are highlights from Monday’s Analyst Blog:

The Sea Looks Calm: Global Week Ahead

The Global Week Ahead woke up, before the open of trading on Monday, with news of 90% efficacy from a Pfizer and German biotech BioNTech COVID-19 mRNA-derived vaccine.

The rest of this week will see the wrap-up on the U.S. election, and a wrap-up on Q3 earnings.

This is not going to be an interesting week, relative to last week’s exhausting line-up of major events.

That’s OK with me.

I expect it is OK with you, too.

Zacks Research Director Sheraz Mian put up this Q3 EPS report last Friday.

We have Q3 results from 447 S&P 500 members, or 89.4% of the index’s total:

·        - Total earnings (aggregate net income) for the 447 companies are down -7.3% y/y on -1.9% lower revenues

·        - 85.2% beat EPS estimates

·        - 76.3% beat revenue estimates

For Tech, we have Q3 results from 87.1% of the sector’s market cap in the S&P 500:
 

·        - Total earnings are up +11.6% y/y on +8.6% higher revenues

·        - 96.6% beat EPS estimates

·        - 93.1% beat revenue estimates

In sum, Tech stocks are still the place to be long.

Next are Reuters’ five world market themes, reordered for equity traders—

(1) Now Is it Time to Rotate in Value Stocks and Leave Growth Stocks? Nope.

For a while now, sell-side analysts have pitched an idea: it’s time to rotate towards value stocks. This cheaper market segment, comprising bank and energy shares, has lagged growth-linked sectors such as tech by 40% in the past year.

Expectations of increased U.S. stimulus finally lifted value stocks in the days before the election. Many in the sell-side even doubled down on the value pitch. Ultimately, investors who didn’t heed that advice proved lucky.

A tight U.S. election outcome and signs of a Republican-led Senate have abruptly halted the reflation trade. The Nasdaq stars and IT champions have rallied as markets wait for clarity on the big-spending plan.

Value shares will have their day. But perhaps not yet.

(2) What Happens to Bond Rates and the USD, after the U.S. Election?

Election week was not kind to the dollar. It flirted with yearly lows following a closer-than-anticipated contest that scuppers plans for a spending splurge and ushers in more predictable trade policies.

The world’s reserve currency might well catch a bid from safety-seekers if a protracted election crisis ends up in the courts. Further out, there are headwinds.

Inflation-adjusted ‘real’ yields on 10-year Treasuries are negative and that won’t change anytime soon — in September, analysts predicted nominal yields at 0.93% in 12 months, or about half the expected average inflation rate.

The question is whether negative real returns deter foreign buyers who own around 40% of U.S. government debt. Upcoming inflation data is expected to show consumer prices rose 0.2% in October for an annual 1.4% rate.

Ten-year yields are currently below 0.8%.

(3) What About the Value of the Chinese Yuan?

No need for official confirmation to declare China’s yuan one of the election winners. It has soared to 28-month highs on the view that a Democrat White House will bring calmer relations between the world’s two biggest economies.

Or, as the editor of China’s Global Times approvingly quoted a “smart netizen” as saying: “Beijing is For-Biden city.”

The Biden factor adds to upward yuan momentum: Beijing’s containment of the pandemic and an almost 250-basis point gap in 10-year U.S. and Chinese government yields is a recipe for more investment flows -- joining the FTSE WGBI index alone is expected to lure $140 billion into Chinese bonds.

(4) More Negative Yielding Government Debt Is On the Way.

Southern Europe may be about to join the $17 trillion global pool of negative-yielding debt.

As U.S. election uncertainty and expectations of more ECB stimulus drive U.S. and German borrowing costs lower, more investors are heading for Italy or Spain where they can still pick up some yield.

Perhaps not for much longer. Italian five-year yields have just turned negative; 10-year Portuguese and Spanish bonds pay less than 10 bps. Upcoming data, including Germany’s ZEW sentiment indicator, could be a catalyst to push borrowing costs for these countries — not too long ago mired in debt crises — below 0%.

(5) Yawn! Brexit. It’s a Dumb Idea!

Britain and the European Union have until Nov. 15 to try, yet again, to hammer out a Brexit trade deal. Such deadlines have come and gone before but this one matters because the transition period — under which Britain has remained in the EU customs union and single market — ends on Dec. 31.

Both sides say a deal can be done. But the EU’s chief negotiator has warned of “very serious divergences,” so trade disruptions may be just eight weeks away.

It is a reminder of the uncertainty the UK economy is facing; indeed, the Bank of England just delivered a larger-than-expected stimulus increase to limit the fallout from new coronavirus lockdowns and Brexit.

As talks head into extra time, markets also get insight into the economic outlook — UK Q3 GDP data comes on Thursday, alongside industrial production numbers.

Top Zacks #1 Rank (STRONG BUY) Stocks

(1) Mohawk Industries: This is $122 a share, making for a $8.6B market cap. I see a Zacks Value score of A, a Zacks Growth score of B, and a Zacks Momentum score of C. The stock lit up after its latest EPS blowout. After the run-up, it still looks attractive.

(2) Electrolux: This European household appliance maker shares trade at $49 each, making for a $7.4B market cap. I see a Zacks Value score of B, a Zacks Growth score of B, and a Zacks Momentum score of C. Do traders ever get excited about European stocks?

(3) Jabil: This is the big electronics manufacturing services stock. It trades at $36 a share, making for a $5.3B market cap. I see a Zacks Value score of A, a Zacks Growth score of A, and a Zacks Momentum score of F. A tech stock with solid Value and Growth scores, at this stage of the stock market’s bull run, is hard to find.

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