Top Stock Reports for Microsoft, Home Depot & Verizon

Monday, June 18, 2018

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), Home Depot (HD) and Verizon (VZ). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Microsoft’s shares have outperformed the Zacks Technology sector over the last year (up +41.3% versus +19.7%) Microsoft’s solid Azure growth and strong adoption of Office 365 is a key catalyst in the near future. The company’s unique position as a hybrid cloud solution provider is expected to drive server products and cloud services revenues.

The company’s strategic growth investments in cloud business and AI as well as stable PC market are positives. The Zacks analyst thinks Microsoft’s strategic initiatives to enter the AR and VR market will be positives. Further, LinkedIn’s acquisition should help Microsoft to explore opportunities in its business software market and also strengthen its position in professional social media market.

However, Google’s increasing foothold with its Android OS emerging and increasing customer addition for drives poses a serious threat to Microsoft. Also, Alphabet's lower-priced Chromebook and its dominant position in the Education Tech market add to its woes.

(You can read the full research report on Microsoft here >>>).

Shares of Home Depot have gained +26.2% over the last year, outperforming the Zacks Retail Building Products industry’s +22.3% increase. The Zacks analyst thinks that this performance is attributed to its five-year long trend of beating earnings estimates, which continued in first-quarter fiscal 2018. Both the top and bottom line improved year over year in the first quarter.

Results gained from strength in core business as well as relentless focus on affording innovative products, boosting interconnected customer experience and driving productivity. Steady housing market recovery and strong customer demand also remain tailwinds.

Going into the fiscal second quarter, the company continues to witness strength in all lines of business in the first few weeks of May. Consequently, it provided an optimistic view for fiscal 2018.

However, top line lagged estimates mainly due to colder-than-normal weather that led to softness in the spring season categories, particularly garden. This softness also resulted in a decline in comparable transactions.

(You can read the full research report on Home Depot here >>>).

Verizon’s shares have declined -0.6% over the last three months, outperforming the Zacks Wireless National industry’s loss of -3.8% during the same period. The Zacks analyst thinks Verizon’s unlimited data plans have heated up the wireless industry and helped it gain additional postpaid customers.

The company’s plan to launch 5G wireless broadband services in selected U.S. cities in 2018, in order to boost its market presence, remains well on track. Verizon expects growth in 2018 on the back of the expected savings from tax reform. However, Verizon continues to struggle in a highly competitive and saturated wireless market.

Losses in wireline access lines, higher marketing costs of promotional plans and competitive video market remain major impediments. Verizon’s wireline division is struggling with persistent losses in access lines owing to competitive pressure from VoIP service providers and aggressive triple-play offerings by cable companies. All these are likely to weigh on the company’s revenues and margins.

(You can read the full research report on Verizon here >>>).

Other noteworthy reports we are featuring today include Adobe (ADBE), Devon Energy (DVN) and PPG Industries (PPG).

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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>>>

Today's Must Read

Adoption of Azure & Office 365 Strength Aids Microsoft (MSFT)

Home Depot's (HD) Interconnected Strategy to Boost Sales

5G Roll-Out & Solid Customer Base Aids Verizon (VZ), Wireline Ails

Featured Reports

Adobe's (ADBE) Creative Business Drives Growth, Risks Remain

With Adobe delivering strong Q2 results, the Zacks is positive about the company's strong creative cloud business. However, lower end-market demand and exposure to Europe remain overhangs.

Strong Balance Sheet, Premium Growth Aid RenaissanceRe (RNR)

Per the Zacks analyst RenaissanceRe revenue is driven by premium growth in both its Casualty and Specialty plus Property segments. Strong capital position enables business investment.

Expansion Aids Advance Auto Parts (AAP), High Expenses a Woe

Per the Zacks analyst, widening its footprint by opening new stores and rollout of e-commerce engine for professional customers aid Advance Auto Parts. But huge capital expenditure is a headwind.

AutoZone (AZO) Rides on Store Openings, Expenses Worrying

Per Zacks analyst, AutoZone is raising sales through increased focus on core businesses and store openings.

Sturdy Comps to Fuel Dollar Tree (DLTR), SG&A Costs a Woe

Per the Zacks analyst, Dollar Tree has long been recording positive comps, which is likely to grow low-single-digit in fiscal 2018.

Soft Margins a Woe for Campbell (CPB), Savings Plan to Help

Per the Zacks analyst, cost inflation, increased promotions and supply chain hurdles will continue to weigh on Campbell's margins.

Cloud Strength Steers Box's (BOX) Growth Amid Rising Competition

Per the Zacks analyst, Box's increasing number of paid customers continues to aid its adoption rate and top-line growth.

New Upgrades

Domestic Oil Production, Investments Aid Devon Energy (DVN)

Per the Zacks analyst increased domestic oil production will continue to boost Devon Energy's growth. Also, ongoing investments in higher-margin U.S. oil production regions will boost its results.

Apache (APA) Continues to Ride on Alpine High Discovery

Per the Zacks analyst, Apache's sharp focus on Alpine High Play along with its ambitious plans to enrich the region's midstream prowess are expected to generate top-tier returns for the company.

Lamar (LAMR) to Grow on Portfolio Upgradation and Expansion

Per the Zacks analyst, Lamar's efforts to upgrade its portfolio will raise display occupancy and advertising rates. Strategic buyouts will also aid the company's long-term growth.

New Downgrades

Interest Rate Hike, Adverse Weather Hit Aqua America (WTR)

Per the Zacks analyst, recent interest rate hikes may hinder Aqua America's ability to raise funds at a favorable rate. Also, severe weather conditions have increased its operating expenses lately.

Higher Raw Material Costs Weigh On PPG Industries (PPG)

The Zacks analyst is worried about PPG Industries' exposure to raw materials cost pressure. Raw material inflation is expected to continue through Q2, which may affect its margins.

Soft Margin, High Debt Level Weigh on Energizer (ENR)

Per the Zacks analyst, Energizer has been grappling with waning margins since the last few quarters. The trimmed fiscal 2018 gross margin guidance add to its woes.

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Verizon Communications Inc. (VZ) : Free Stock Analysis Report
 
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
The Home Depot, Inc. (HD) : Free Stock Analysis Report
 
Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
 
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