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Top Analyst Reports for Caterpillar, Microsoft & General Dynamics

Mark Vickery
Top Analyst Reports for Caterpillar, Microsoft & General Dynamics

Thursday, January 24, 2019

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), Microsoft (MSFT) and General Dynamics (GD). 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 >>>

Buy-ranked Caterpillar’s shares have outperformed the Zacks Construction and Mining in the past three months (+17.3% vs. +16.2%). Backed by strong order rates, favorable commodity prices and increasing backlog, Caterpillar guides adjusted earnings per share at $11.00-$12.00 for 2018, reflecting year-over-year growth of 67% at the mid-point. The estimates for the fourth quarter and fiscal 2018 for the company have gone up, ahead of earnings release.

Notably, Caterpillar has a positive record of earnings surprises in the last few quarters. Improving demand across most of the end-markets and cost cutting efforts will aid results. In Construction Industries segment, continued improvement in residential and non-residential construction, and revival in infrastructure demand are likely to drive revenues.

Miners are resuming capital spending which bodes well for the Resource Industries segment. Focus on expanded offerings and services and investment in digital initiatives like e-commerce will also boost growth.

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

Shares of Buy-ranked Microsoft have gained +15.6% in the past year, outperforming the Zacks Computer Software industry’s gain of 11.1% during the same period. Microsoft is benefiting from growing user base of its different applications like Office 365 commercial, Dynamics, Outlook mobile and Teams. Moreover, Azure’s expanding customer base is a key catalyst.

Microsoft’s gaming segment is performing well, primarily driven by a combination of Xbox Live, Game Pass subscriptions and Mixer, which are driving user engagement. Further, acquisitions like PlayFab and GitHub expand Microsoft’s total addressable market (TAM) and penetration. Additionally, expanding partner base is notable.

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

General Dynamics’s shares have lost -1% in the past three months, outperforming the Zacks Aerospace & Defense industry's decrease of -3%. General Dynamics enjoys solid demand for its varied defense products leading to organic growth, while a notable acquisition strategy adds to its inorganic growth. It continues to proceed toward an anticipated FAA type certification for its G600 aircraft later this year, which is expected to enter service in 2019.

General Dynamics, being one of the only two contractors in the world equipped to build nuclear-powered submarines, as well as one of the prime U.S. shipbuilders, should certainly benefit from this increased budget proposal. The company also operates in a highly competitive market with some competitors having extensive or specialized business segments, superior to General Dynamics.

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

Other noteworthy reports we are featuring today include Estée Lauder (EL), IBM (IBM) and Deere & Company (DE).

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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) Banks on Favorable Markets & Cost Cuts

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

Rising Demand Aids General Dynamics (GD), Competition Hurts

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Diamond's (DO) Rig Contract for Ocean Apex to Drive Growth

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H&R Block (HRB) to Benefit From Growth of the Tax Industry

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Las Vegas Sands' (LVS) Robust Macao Business to Drive Growth

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Myriad (MYGN) GeneSight Volume to Grow, Long-term Goal Solid

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Focus on Cost-Savings to Drive Smucker's (SJM) Bottom Line

Smucker achieved cost savings of $100 million in fiscal 2018. Per the Zacks analyst, the company's solid cost reduction will drive its bottom line.

New Upgrades

Deere (DE) Buoyed by Wirtgen Buyout & Advanced Technologies

Per the Zacks Analyst, Deere will benefit from upbeat agriculture and construction equipment markets.

Investments, Growing Renewable Assets Aids DTE Energy (DTE)

Per the Zacks Analyst, regular investments in infrastructure projects could drive DTE Energy's future performance. Also, DTE Energy is investing steadily to enhance its renewable generation assets.

Travel Retail & Online Channels to Drive Estee Lauder (EL)

Per the Zacks analyst, Estee Lauder has been gaining from rising traffic in its online sales channel. Further, the company's top-line is set to gain from efforts to strengthen travel retail.

New Downgrades

Ongoing Business Transition to Cloud & High Debt Hurts IBM

Per the Zacks analyst, IBM is having a tough time, given the ongoing time-consuming business model transition to cloud. Also, stiff competition from peers & high indebtedness is a concern.

Pending Regulations, High Debt Bothers Total System (TSS)

Per the Zacks analyst, pending Financial protection bureau rules on prepaid accounts, will dent the company's revenue; its high debt raises financial risk.

Focus on Lower Margin Business to Affect CBRE Group

Per the Zacks Analyst, with a shift towards a lower margin outsourcing business, CBRE Group's performance is likely to be affected.

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