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Top Analyst Reports for Microsoft, UnitedHealth & Costco

Mark Vickery
Top Analyst Reports for Microsoft, UnitedHealth & Costco

Friday, July 12, 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 Microsoft (MSFT), UnitedHealth (UNH) and Costco (COST). 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 gained +31.3% in the past year, outperforming the S&P 500’s’ gain of +5.6% during the same period. The Zacks analyst 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.

However, projections of moderating growth in commercial cloud gross margin, and OEM Pro and Windows commercial businesses is a headwind. Stiff competition from the likes of Google, Apple, Sony and Nintendo remains a headwind.

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

Shares of UnitedHealth have gained +13.5% in the past three months, outperforming the Zacks Medical Insurance industry, which has increased +12.3% over the same period. The Zacks analyst thinks UnitedHealth's strong operating performance, favorable business profile and disciplined enterprise risk management are commendable.

The company stands apart in the industry by virtue of healthcare services, technology and innovations offered by its unit Optum. Numerous acquisitions made by the company, have broadened its business profile and provide the benefits of diversification. Its solid balance sheet and consistent cash flow generation has enabled reinvestment in business which will drive long term growth.

Also, prudent capital management through dividend payments and share buybacks is another positive. However, slowdown of growth in international operations and underperformance in Medicaid business are concerns. An increase in leverage and interest burden raises financial risk.

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

Costco’s shares have outperformed the Zacks Discount Retail industry over the past year, gaining +27.6% versus the industry's +23.3% increase. The Zacks analyst thinks Costco continues to be a 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 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 the 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 >>>).

Other noteworthy reports we are featuring today include Uber (UBER), Public Storage (PSA) and Microchip Technology (MCHP).

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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

Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)

Strong Service and Benefit Business Aids UnitedHealth (UNH)

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

Featured Reports

Uber (UBER) Banks on Ride-Sharing Revenues Amid High Costs

The Zacks analyst is impressed with Uber Technologies' solid ride-sharing revenues. However, escalated costs due to higher driver incentives are hurting its bottom line.

Public Storage (PSA) Gains From Buyouts, Supply Woes Linger

Per the Zacks analyst, Public Storage is poised to gain from its high-brand value, favorable demographic changes and strategic acquisitions. However, rising supply is a concern.

Technology Aids Interactive Brokers (IBKR) Amid Higher Costs

Per the Zacks analyst, Interactive Brokers' focus on developing of proprietary software will continue to support its financials. However, rising expenses and high dependence on IBG LLC are concerns.

Robust Cash Flow to Boost Magellan (MMP) Amid Debt Burden

The Zacks analyst believes that Magellan Midstream's growing distributable cash flow should help it to hike payouts but is concerned about the huge debt load of around $4.3 billion.

BlackBerry (BB) Rides on Solid Product Line & Cylance Buyout

Per the Zacks analyst, BlackBerry should benefit from strong software business driven by new secure communication products and services. The acquisition of cybersecurity firm, Cylance, is a tailwind.

Unit Revenue Growth Buoys Spirit (SAVE) Amid High Costs

The Zacks analyst likes the company's performance with respect to unit revenues. However, high non-fuel unit costs are limiting bottom-line growth.

Strong VIT Arm Aids AngioDynamics (ANGO), Competition Ails

The Zacks analyst is apprehensive about stiff competition in the Vascular Access devices market.

New Upgrades

Robust Product Pipeline & Acquisitions Aid Microchip (MCHP)

Per the Zacks analyst, Microchip's top line is expected to benefit from robust adoption of expanding microcontroller portfolio. Moreover, accretive buyouts including Microsemi and Atmel hold promise.

Rising Jet Demand, Air Traffic Growth Aid Embraer (ERJ)

Per the Zacks analyst, Embraer continues to witness rising demand for its E-jets worldwide. Further, rising air traffic growth will enable Embraer to achieve significant top-line growth going ahead.

Advanced Markets' Strength Benefits MKS Instruments (MKSI)

Per the zacks analyst, MKS Instruments is benefiting from continued strength in materials and electronic component processing in advanced markets along with a lean cost structure.

New Downgrades

Assets Outflows, Higher Costs Hurt Ameriprise's (AMP) Growth

Per the Zacks analyst, continued outflows in the Asset Management segment (one of the major sources of revenues) will likely hurt Ameriprise's performance. Elevated costs are likely to reduce profits.

Rising Costs & Lower Irrigation Demand to Hurt Lindsay (LNN)

Per the Zacks analyst, Lindsay's results will be hurt by weak irrigation equipment demand, soft Road Zipper system sales and higher costs due to the Foundation for Growth performance initiative.

Retail Pharmacy Business Hinders Rite Aid's (RAD) Growth

Per the Zacks analyst, persistent weakness in the Retail Pharmacy segment due to prescription reimbursement rate pressures is hurting Rite Aid's performance.

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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
Uber Technologies, Inc. (UBER) : Free Stock Analysis Report
Public Storage (PSA) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
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