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Top Analyst Reports for Costco, PayPal & NextEra

Mark Vickery

Wednesday, August 28, 2019

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including Costco (COST), PayPal (PYPL) and NextEra (NEE). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

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

Costco’s shares have outperformed the Zacks Discount Retail industry over the past year, gaining +27% versus the industry's +14.8% increase. The Zacks analyst thinks Costco continues to be one of the dominant retail wholesalers based on the breadth and quality of merchandise offered. The stock has been gaining from sturdy comps and decent results.

The company posted a positive earnings surprise in the third quarter of fiscal 2019 but revenues fell short of expectations. Notably, the top and the bottom line continued to rise year over year. Certainly, Costco seems somewhat unfazed by tough retail scenario.

Growth strategies, increase in membership fees and sturdy e-commerce sales bode well. The company’s efforts have been driving traffic across online and brick-and-mortar platforms. However, any incremental investments or aggressive pricing strategy may hurt margins. Moreover, rising SG&A expenses and stiff competition also pose concerns.

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

Shares of PayPal have underperformed the Zacks Internet Software industry year to date (+27.8% vs. +30.9%). The Zacks analyst thinks PayPal’s portfolio strength remains its key catalyst. Venmo’s improving monetization efforts and rising adoption rate across various platforms are aiding the company’s total active accounts.

Further, robust mobile checkout services of One Touch are contributing to the company’s total payment volume growth. Also, growing momentum of PayPal’s core peer to peer is aiding in acceleration of payment volume.

Additionally, the company is riding on the benefits from its investment in MercadoLibre and increasing customer engagements on its platform. However, weak eBay performance remains a headwind. Further, negative impacts of sale of the U.S. consumer credit receivables portfolio to Synchrony pose a threat to the company’s top line.

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

NextEra’s shares have outperformed the Zacks Electric Power industry in the past year, gaining +31.4% vs +11.9%. The Zacks analyst thinks NextEra’s investments in driving renewable operations through the “30 by 30” plan will help meet its goal to make its generation portfolio cleaner. Investments worth $39.1 billion in different projects over the 2019-2023 period will modernize and strengthen its infrastructure.

Focus on expanding operations in natural gas pipelines and further widening of business via acquisitions and organic growth will enable the company to achieve its long-term earnings growth target. However, its nature of business is subject to complex and comprehensive federal, state and other regulations.

That said, if planned nuclear plant outages last longer than expected or there is an unplanned outage, the company’s normal operations and profitability might be hindered.   

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

Other noteworthy reports we are featuring today include Alexion Pharmaceuticals (ALXN), Southern Copper Corporation (SCCO) and Loews (L).

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Note: Our Director of Research 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

Decent Comparable Sales Run to Fuel Costco's (COST) Top Line

PayPal (PYPL) Benefits From Increasing Total Payment Volume

Investment in Infrastructure and Renewables Aid NextEra (NEE)

Featured Reports

Label Expansion of Soliris, Ultomiris Boost Alexion (ALXN)

Per the Zacks analyst, Alexion's blockbuster drug, Soliris is driving growth and the label expansion of the drug should fuel sales. The approval of Ultomiris has strengthened the company's portfolio.

Solid Results at CNA Financial, Loews Hotels Aid Loews (L)

Per the Zacks analyst, Loews is set to grow on strength of its hotel business, CNA Financial, Boardwalk unit, manufacturing locations and balance sheet.

Strength in Radixact Aids Accuray (ARAY), Dull Guidance Ails

Accuray has been gaining from solid prospects of its flagship Radixact platform. The Zacks analyst is however apprehensive about a dull guidance for fiscal 2020.

Adhesive Dispensing Drives Nordson (NDSN), High Debt Hurts

Per the Zacks analyst, impressive traction of Nordson's Adhesive Dispensing Systems segment, fueled by solid organic growth should continue to drive its revenues.

PBF Energy (PBF) Rides on Complex Refining Assets, Debt High

Per the Zacks analyst, sophisticated complex refineries will enable PBF Energy to generate lighter and better grades of refined products.

Steady Long-Term Investments to Aid UGI Corporation (UGI)

Per the Zacks analyst, UGI Corporation is poised to benefit from long-term investment plans, which are aimed at strengthening existing businesses and expanding presence in the global markets.

Paramount & MTV Turnaround, Cost Savings Aids Viacom (VIAB)

Per the Zacks analyst, the ongoing turnaround at Paramount and MTV along with cost savings is benefiting Viacom.

New Upgrades

Returns-Focused Growth Plan Bodes Well for KB Home (KBH)

With the Returns-Focused Growth plan and strong housing fundamental, KB Home's revenues and operating margin are expected to significantly improve in 2019 and beyond, per the Zacks analyst.

Emerging Market Exposure & Buyouts Aids Colfax's (CFX) Sales

Per a Zacks analyst, Colfax is gaining from expansion in emerging markets, including China, India, Brazil and others. Also, buyouts, like DJO Global, have been favoring it.

Solid E-commerce Momentum to Bolster Hibbett's (HIBB) Sales

Per the Zacks analyst, Hibbett is gaining from its e-commerce business, which has been driving the top line. Digital sales grew 25% in second-quarter fiscal 2019, due to higher traffic and conversion.

New Downgrades

High Debt, Lower Copper Prices Ail Southern Copper (SCCO)

Per the Zacks analyst, lower copper prices, suspension of the Tia Maria copper mine project and high debt levels will weigh on Southern Copper's results.

Use of NKTR-214's Sub-optimal Lots Setback for Nektar (NKTR)

Per the Zacks analyst, Nektar's shares have declined significantly following the announcement of use sub-optimal lots of NKTR-214 (bempegaldesleukin) in clinical studies leading to reduced response ra

Asset Sales, Store Closures Remain Hurdles for Vornado (VNO)

Vornado Realty's aggressive asset sales will likely have dilutive impact on near-term earnings. Further, lost rent from tenant closures at its retail properties will dampen the company's FFO growth.

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Southern Copper Corporation (SCCO) : Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Loews Corporation (L) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report
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