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Top Analyst Reports for Caterpillar, Intel & Monsanto

Mark Vickery

Wednesday, June 21, 2017

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 Caterpillar (CAT), Intel (INTC) and Monsanto (MON). 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 >>>

Strong Buy rated Caterpillar's shares have gained +15.4% year-to-date, underperforming the Zacks Manufacturing - Construction and Mining industry which has increased +14.1% over the same period. Caterpillar’s May sales rose 8%, an improvement from 1% growth witnessed in the last two months thanks to continual improvement in Asia Pacific.

Caterpillar guides revenues in the range of $38–$41 billion and earnings of $3.75 per share for 2017, a 2% and 10% year–over-year growth, respectively. Recently, it announced a 1.3% hike in quarterly dividend, a move that reflects its balance sheet strength which has once again enabled it to deliver incremental returns to shareholders.

In construction, Asia Pacific is showing promise while leading indicators of U.S. non-residential construction signal robust conditions ahead. The Zacks analyst stresses that Caterpillar continues to cut down costs to counter weak demand and will gain immensely from Trump’s $1 trillion infrastructure spend plan.

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

Shares of Intel have gained only +0.4% since election results were announced on Nov 8, lagging the broader Tech sector (up +15.8%) as well as the red-hot semiconductors space (up +24%). Top-PC makers like HP, Lenovo, and Asus are set to launch PCs based on Qualcomm’s ARM-based Snapdragon processor, which intensifies competition for Intel.

Additionally, increasing competition from AMD is also a headwind. Moreover, PC shipments are expected to remain sluggish due to increasing DRAM and NAND prices, which will hurt Intel’s top-line growth going ahead in 2017. Nevertheless, the Zacks analyst thinks IBM’s upcoming launch of Skylake will drive data center results in the second half.

The company revised its 2017 revenue and EPS outlook upward based on improving average selling price (ASP). Further, anticipated improvement in cost structure and lower spending, primarily due to improving operational efficiency will aid in expansion of margins going forward. Additionally, aggressive share buyback will boost the bottom line in 2017. 

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

Monsanto’s shares have outperformed the Zacks Agricultural/Products industry over the last three months, gaining +3.9% vs. +2.9%. The company reported better-than-expected fiscal second-quarter 2017 results. The Zacks analyst thinks increasing demand for crop-yield enhancing products, stronger innovation and success of Bayer’s buyout deal will bolster Monsanto’s top- and bottom-line performance in the quarters ahead.

However, stiff rivalry within the seeds, traits and agricultural chemical industry exposes the company to risks of market share loss. Moreover, a stronger U.S. dollar or weaker pricing conditions might weigh over the company’s near-term results. Over the last 30 days, estimates have remained unchanged for fiscal 2017 but moved north for fiscal 2018.

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

Other noteworthy reports we are featuring today include General Electric (GE), General Motors (GM) and Raytheon (RTN).

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Mark Vickery

Senior Editor

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

Caterpillar (CAT) Sales To Gain From Strong Asia Markets

Intel Corp (INTC) Hurt By Increasing ARM-based Competition

Monsanto (MON) Eyes Growth on Bayer's Pact Amid Pricing Risk

Featured Reports

Strong Cash Flow Aids Raytheon (RTN), Fixed-Price Deals Worrying

Per the Zacks analyst, Raytheon's strong cash reserve facilitates notable cash deployment decisions.

Canadian Wine Assets Sale to Hurt Constellation Brands (STZ)

Per the Zacks analyst, the Canadian wine business sale is likely to hurt fiscal 2018 results to some extent. This will lower sales and operating margins of the wine and spirits segment.

Waste Management (WM) Pricing Discipline to Ease Margin Woes

Per the covering analyst, Waste Management is executing well on its initiatives to refocus on the core business activities and instill price and cost discipline to achieve better margins.

Humana (HUM) Grows on Medicare; Rising Operating Costs Hurt

Per the Zacks analyst, although Humana continues to grow on solid revenue generation driven by Medicare expansion, rising expenses and weakness in Individual Commercial Business hurts margin.

NVR Inc.'s (NVR) Backlog Impresses, Construction Costs Hurt

NVR's solid backlog position of $3.19 billion is expected to boost revenues further. However, higher construction related costs are threatening margins, per the covering analyst.

Regulatory Approval of VERIGENE Assay Drives Luminex (LMNX)

The Zacks analyst is bullish on the reimbursement approval of VERIGENE assay in Japan and the FDA clearance of Bordetella Assay.

TOP Strategy Aids Citizens Financial (CFG), Legal Cost a Woe

Per the Zacks Analyst, Citizens Financial's "Tapping Our Potential" (TOP) initiatives are expected to boost earnings performance in 2017.

New Upgrades

Novo Nordisk's (NVO) Victoza Drives Growth, Pipeline Strong

Novo Nordisk has a strong presence in the Diabetes Care market including Victoza and boasts of a strong pipeline, with focus on therapeutic proteins within insulin market, believes Zacks Analyst.

Loan Growth, Rising Rates Support KeyCorp's (KEY) Revenues

Per the covering analyst, impressive loan and deposit growth, higher interest rates, improving economy, potential lesser regulations and First Niagara deal synergies should support KeyCorp's revenues.

General Motors' (GM) Emerging Market Launches to Drive Sales

Per the Zacks analyst, General Motors is raising investment in emerging markets to pop global sales. It is looking to take advantage of emerging markets growth via product launches and joint ventures.

New Downgrades

Rising Long-Term Debt, Negative Cashflow to Hurt Hess (HES)

The Zacks analyst believes that it will be difficult for Hess to raise capital in favorable terms for funding future projects given the escalating debt load.

GE (GE) Plagued by High Order Backlogs and Foreign Currency Woes

Per the Zacks analyst significant order backlog, high operating risks related to the Brexit referendum, volatility in oil prices and foreign currency volatility remain headwinds for General Electric.

Qorvo (QRVO) Battered by Lower China Demand, Higher Expenses

According to the Zacks analyst, weak near-term demand in China and increasing higher research & development expense related to custom product development for largest customers hurts Qorvo. n

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