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Top Analyst Reports for Microsoft, Johnson & Johnson & ExxonMobil

Mark Vickery
Aon (AON) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Thursday, December 14, 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 Microsoft (MSFT), Johnson & Johnson (JNJ) and ExxonMobil (XOM). 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 in the year to date period (up +37.3% versus +27%) The Zacks analyst expects rapid adoption of Azure and Office 365 to remain the key catalysts for Microsoft in the near future. This, along with lower spending will drive operating margin expansion in fiscal 2018. Further, collaborations with the likes of Amazon, Red Hat, Symantec, Cray and PAREXEL are positive for the company's growth prospects.

Microsoft’s strategic initiatives to enter the augmented reality and virtual reality market with the acquisition of Altspace VR and launch of mixed reality headsets will be other positives. Additionally, its recent blockchain deals with Hapoalim and Accenture and its Coco framework are tailwinds. However, intense competition from Sony’s PS4 is a major headwind. Additionally, declining PC shipments doesn't bode well for the company.

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

Shares of Johnson & Johnson have gained +24.1% in the year-to-date period, outperforming the +17.7% gain of the Zacks Large Cap Pharmaceuticals industry. Sales in J&J’s domestic Pharma segment decelerated in the first half of 2017 as a number of key growth drivers like Remicade and Concerta are facing competition.  However, sales growth accelerated in Q3 and the positive trend is expected to continue in Q4.

The Zacks analyst thinks new products in all segments, label expansion of drugs like Imbruvica and Darzalex and contribution from recent acquisitions -- mainly Actelion -- can support top-line growth. Meanwhile, share buybacks and the restructuring initiative should provide bottom-line support. J&J is also making rapid progress with its pipeline and line extensions.

However, headwinds like generics, pricing pressure and soft global market conditions remain. Sluggish growth in the Consumer segment is also a concern.

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

ExxonMobil’s shares have underperformed the Zacks Integrated Oil industry (-7.9% vs. +5.2%) as well as peer Chevron (+1.9%) in the year to date period. However, ExxonMobil has a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix and geographical footprint. With a stable cash position, the company’s balance sheet is one of the best in the industry, reflecting declining debt load over the first nine months of 2017.

The Zacks analyst likes ExxonMobil’s plans to combine its refining & marketing businesses as this will allow the company to take better decisions and boost performance. ExxonMobil will generate more cashflow from downstream activities, also helping it counter the volatility in its upstream business. However, dependence on costly offshore drilling might dent ExxonMobil’s cashflow.

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

Other noteworthy reports we are featuring today include American Airlines (AAL), BHP Billiton (BHP) and Honda (HMC).

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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

Microsoft (MSFT) Benefits from Azure, Office 365 Strength

New Products, Acquisitions to Support J&J's (JNJ) Top-Line

Exxon's (XOM) Solid Downstream Margin Offsets Drilling Costs

Featured Reports

Magellan's (MMP) Distribution Coverage Healthy, Debt a Woe

While appreciating Magellan Midstream's healthy distribution coverage and consistently growing payouts, the Zacks analyst remains concerned over the partnership's high debt-to-equity ratio.

Surge in Online Sales, HSN's Buyout to Boost Liberty (QVCA)

Per the Zacks analyst, Liberty Interactive should benefit from the surge in online sales, HSN's buyout and its increasing presence in developed international markets.

TRASM Growth Aids American Airlines (AAL), Labor Costs Ail

The Zacks analyst likes the company's performance with respect to total revenue per available seat miles (TRASM). Increased labor costs, however, are hurting the bottom-line.

Ride Performance Unit Aids Tenneco (TEN), OEM Pressure Ails

Per the Zacks analyst, strong performance by the ride performance segment will enable Tenneco to improve revenues.

Nordson's (NDSN) Advanced Technology View Solid, Risks Stay

Per the Zacks analyst, Nordson will gain from solid product demand in the electronics and medical end markets of the Advanced Technology segment.

TransFirst, NetSpend Acquisitions Aid Total System (TSS)

The Zacks analyst views favorably the acquisitions of NetSpend and TransFirst which have aided top line growth and enhanced its reach in the U.S. prepaid card industry.

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.

New Upgrades

Darden (DRI) Rides on Sales-Building, Cost-Cutting Efforts

The Zacks analyst notes that Darden Restaurants' sales boosting initiatives, like developing a core menu, coupled with efforts to overheads costs via aggressive cost control are driving growth.

First Solar (FSLR) Thrives on U.S. Solar Market Expansion

Per the Zacks analyst, the projected expansion in solar consumption in the United States has been driving growth prospects for solar module developers like First Solar.

Honda (HMC) Grows on Vision 2030 Plan, Vehicle Launches

Per the Zacks analyst, Honda's Vision 2030 strategy will enable it to focus on electric and self-driving vehicles.

New Downgrades

Falling Iron Ore Prices Continue to Hurt BHP Billiton (BHP)

Per the Zacks analyst, falling iron ore prices might prove detrimental to BHP Billiton's financials. Over the last three months, price of this major steel-making component dipped nearly 5.9%.

Falling Client Retention Ratio Hurts FactSet (FDS)

Declining client retention ratio is a major concern for FactSet. Per the Zacks analyst, failiure to retain old clients will negatively impact the company's near-term top-line growth.

Acuity (AYI) Hit Hard By Softness in the Lighting Industry

Lack of skilled labor, uncertainty over tax regulations and pricing pressure in certain end markets are leading to softness in the Lighting industry, limiting Acuity's upside potential.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Honda Motor Company, Ltd. (HMC) : Free Stock Analysis Report
BHP Billiton Limited (BHP) : Free Stock Analysis Report
American Airlines Group, Inc. (AAL) : Free Stock Analysis Report
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