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Top Analyst Reports for Starbucks, NIKE & Manulife

Mark Vickery
Top Analyst Reports for Starbucks, NIKE & Manulife

Monday, November 27, 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 Starbucks (SBUX), NIKE (NKE) and Manulife (MFC). 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 >>>

Starbucks’ shares are up +2.3% year to date, underperforming the Zacks Food & Restaurants industry, which is up +10.9% over the same period. Starbucks reported third-quarter fiscal 2017 results, wherein it met analysts’ expectations on earnings but missed on revenues amid persistent decline in U.S. restaurant sales.

However, its bottom line grew 10% with top line remaining the same year over year. Its global comps grew 2% (softer than 4% in the prior quarter), comprising 1% increase in average ticket with 2% growth in traffic. Again, higher investments in its store partner led to a decline of 90 basis points in operating margin.

As expected, Starbucks reduced its long-term EPS growth target to 12% (vs 15-20% expected earlier), which assumes 3-5% comps growth (vs mid-single-digits) and high-single-digit revenue growth (vs 10%). However, the Zacks analyst likes its best-in-class loyalty program, digital offerings to counter tepid sales growth, and increased strategic investments in China, while trimming down non-performing U.S. units.

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

Shares of NIKE have outperformed the Zacks Shoes and Retail Apparel industry over the one year (+16.3% vs. +15.2%), driven by strength in international business and the global NIKE Direct business. Also, NIKE has been focused on its Consumer Direct Offense plan.

Driven by its Triple Double strategy, this restructuring plan focuses on using digital methods for rapid innovation and product development, along with strengthening consumer relations by operating through core regions. It also has a positive record of earnings surprises in recent quarters.

However, lackluster sales trend in the company’s key North American market remains a headwind. Notably, sales in the region dipped 3% in first-quarter fiscal 2018, wherein the gross margin was hurt by currency woes and a higher mix of off-price sales.

The company anticipates near-term results to be hurt by the tough retail environment, which led to a bleak second quarter view. Second quarter estimates have been stable ahead of the earnings release.

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

Manulife’s shares have underperformed the Zacks Life Insurance industry in the year to date period, gaining +19.1% vs. +26.8%. However, Manulife continues to witness new business volumes, particularly in Asia, and positive net flows in its wealth and asset management businesses. A deep reach into Asian markets and a growing asset management business would drive long-term earnings growth.

The company remains on track to achieve more than $100 million in expense synergies. However, declining group benefit sales in Canada segment will weigh on results, volatile global equity markets coupled with low bond yields has largely affected the company’s capital position.

Manulife’s third-quarter 2017 core earnings increased year over year. The quarter witnessed new business value growth in Asia. While insurance sales increased, Wealth sales remained flat year over year. This also marks the 31st straight quarter of positive net flows in global Wealth and Asset Management.

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

Other noteworthy reports we are featuring today include Lam Research (LRCX), Intuit (INTU) and Vertex (VRTX).

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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

Starbucks' (SBUX) Digital Plans Impress Amid Soft US Market

Consumer Direct Offense Plan to Aid Growth at Nike (NKE)

Manulife (MFC) Gains from New Business Volumes in Asia

Featured Reports

Vertex's (VRTX) Cystic Fibrosis Sales Solid, Pipeline Strong

The Zacks analyst says that sales of Vertex's two cystic fibrosis (CF) drugs ??? Kalydeco & Orkambi ??? are strong.

Lam Research (LRCX) Rides on Strong Memory, Foundry & Logic

The Zacks analyst believes that Lam's exposure to memory manufacturers (a segment with multi-year growth prospects), and opportunity in logic and foundry segments will continue to drive revenues.

Noble (NBL) Gains From Global Asset Base, Divestiture Helps

The Zacks analyst believes improving production from Noble Energy's well spread asset base and divestiture of non-core U.S. assets will help it to further strengthen its core operations.

Rockwell Collins (COL) Gains on Buyout Deal with United Tech

Per the Zacks analyst, shareholders of Rockwell Collins will gain from its proposed acquisition by United Technologies.

Kimco (KIM) Rides on 2020 Vision, E-Commerce Boom a Concern

Kimco's progress on its 2020 Vision bodes well. Yet, the Zacks analyst thinks online sales boom will likely hinder growth.

Buyouts to Drive Coty (COTY), Consumer Beauty Unit a Worry

Per the Zacks analyst, Coty is likely to keep gaining from its ghd, Younique and P&G beauty buyouts, which fuelled sales in first quarter.

Mohawk (MHK) Gains from Acquisitions; Competition Rife

Per the Zacks analyst, Mohawk Industries' continued strategic acquisitions, product innovation and prudent capital allocations help the company have a competitive edge in the housing market.

New Upgrades

Orbital's (OA) Backlog on the Rise, Acquisition on Course

The Zacks analyst believes Orbital's new and improved products are resulting in fresh orders boosting its backlog. Orbital will be acquired by Northrop and the deal will close next year.

D.R. Horton's (DHI) Solid Backlog Position to Spur Growth

D.R. Horton is poised to perform well in fiscal 2018 on the back of its robust backlog position and well-stocked inventory of land, lots and homes, per the Zacks analyst.

Burlington Stores' (BURL) Sturdy Comps Run to Propel Top-Line

Per the Zacks analyst, Burlington Stores' strategies helped achieve 19th straight quarter of comps growth in the third quarter. The company now envisions comps growth of 2-3% for the final quarter.

New Downgrades

FedEx's (FDX) Q2 Likely to be Hurt by High Costs

The Zacks analyst is concerned about the increased costs, particularly at its Ground unit. TNT Express integration expenses are also expected to limit bottom-line growth at FedEx in Q2.

Depleting Comps & Gross Margin to Hurt Signet Jewelers (SIG)

The covering analyst remains concerned about Signet's waning comparable sales and depleting margins. Management now expects fourth-quarter comps to decline in the range of low to mid-single digits.

Escalating Expenses to Hurt Intuit's (INTU) Profitability

Per the Zacks analyst, rising costs and expenses owing to higher investments in engineering and marketing is anticipated to hurt Intuit's near-term profitability.

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Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
Nike, Inc. (NKE) : Free Stock Analysis Report
Manulife Financial Corp (MFC) : Free Stock Analysis Report
Lam Research Corporation (LRCX) : Free Stock Analysis Report
Intuit Inc. (INTU) : Free Stock Analysis Report
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