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Top Research Reports for Today: CAT, T, LMT and DD

Mark Vickery

Thursday April 27, 2017

Today's Research Daily features new research reports on 17 major stocks, including Caterpillar  (CAT), AT&T (T), Lockheed Martin (LMT) and DuPont (DD).

Strong Buy rated Caterpillar shares have gained +12.9% year-to-date, underperforming the Zacks Manufacturing - Construction and Mining industry which has increased +11.9% over the same period. In the first quarter, Caterpillar reported year-over-year improvement in both its top and bottom line for the first time in 10 quarters and beat expectations on both counts.

Also, Caterpillar hiked 2017 revenue guidance to the range of $38–$41 billion. In construction, Asia Pacific is showing promise while leading indicators of U.S. non-residential construction signal robust conditions ahead.

The Zacks analyst stresses that Caterpillar continues to cut down costs to counter weak demand and will gain immensely from Trump’s $1 trillion infrastructure spend plan. (You can read the full research report on Caterpillar here.)

Shares of AT&T shares have lost -3.7% over the three months, but have still fared better than the Zacks Wireless industry and competitor Verizon, which have declined -3.9% and -4.5% over the same period. AT&T posted mixed first quarter 2017 financial results where the top line lagged expectations while the bottom line came in line.

Additionally, AT&T added 2.7 million of net wireless subscribers. AT&T has decided to acquire Straight Path Communications to accumulate millimeter wave wireless spectrums for 5G wireless network. Also, AT&T plans to launch 5G Services in 2018 while its unlimited data plans have heated up the wireless industry. 

The AT&T-Time Warner deal gained European Union’s approval but still awaits U.S. Justice Department’s nod. However, saturated wireless market, losses in access lines, operating expenses, regulatory norms and union issues are other near-term risks for AT&T. (You can read the full research report on AT&T here.)

Lockheed Martin shares have gained +16.1% over the past year, underperforming the aerospace/defense sector, which has gained +22.2% over the same period. Lockheed Martin’s earnings comfortably surpassed expectations while revenues fell short, even though they improved year over year. The defense major also raised its top-line guidance for 2017.  

Driving this momentum is Lockheed Martin’s status as a bellwether for the defense space and the company's impressive cash flow generation abilities which it generously shares with its shareholders. The Zacks analyst likes the company's solid outlook, impressive revenue growth and potential share buybacks.

Further, increased budget for the Department of Defense is expected to boost defense giants like Lockheed Martin. However, tough competition remains a major dampener for the stock. (You can read the full research report on Lockheed Martin here.)

Shares of DuPont have gained +22.9% over the one year vs. +16.8% gain for the Zacks Diversified Chemicals industry. DuPont’s adjusted earnings for first-quarter 2017 topped expectations, aided by its cost management actions and healthy demand for new products. Revenues also rose year over year and exceeded estimates.

DuPont is moving forward with its planned mega-merger with Dow Chemical, which is expected to create significant synergies. However, DuPont continues to face challenges in the agriculture business. Additionally, the company is exposed to currency headwinds and volatility in energy and raw material costs. (You can read the full research report on DuPont here.)

Other noteworthy reports we are featuring today include PayPal (PYPL), Illumina (ILMN) and United Continental (UAL).

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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) Earnings Up Y/Y As Cost Cuts Bear Fruit

AT&T (T) Q1 Earnings In Line with Estimates, Revenues Miss

Lockheed Martin (LMT) Tops Q1 Earnings, Misses on Sales

DuPont's (DD) Q1 Earnings Top on Cost Cuts, Healthy Demand

Featured Reports

CIT Group's (CIT) Q1 Results Benefitted From Lower Expenses

Though CIT Group witnessed a decline in expenses in Q1, the Zacks analyst thinks overall expenses will rise in the future due to continued investments in franchise.

United Continental (UAL) Beats on Q1 Earnings & Revenues

The covering analyst is pleased by the company's outperformance in Q1. The earnings beat brought some relief to the company, which was facing severe criticism for the passenger fiasco on flight 3411.

Tractor Supply (TSCO) Top Line Continues to Gain Strength

Tractor Supply posted in-line earnings, while revenues came marginally ahead of the estimate. Per Zacks analyst, expansion of store base and technological advancements continues to drive the top line.

Seagate Technology (STX) Tops Q3 Earnings, Revenues Up Y/Y

According to the Zacks analyst, Seagate remains focused on launching innovative products, which will aid it to win enterprise customers on continuous basis.

ServiceNow (NOW) Gains Despite Wider-than-Expected Loss in Q1

The covering analyst thinks ServiceNow is benefiting from growing adoption of its platform and tools in the Global 2000 (G2K) companies. Its non-G2K customer base is also growing fast.

Illumina (ILMN) Meets Q1 Earnings, Tops Sales Amid Headwinds

The Zacks analyst thinks Illumina's Q1 earnings got affected by poor margins while new product launches led to solid sales and pulled up share price.

Edwards Lifesciences (EW) Tops Q1 Earnings, Sales; Woes Stay

The covering analyst is bullish about Edwards' Q1 results on high THVT sales and strong gross margin which pulled up its share price.

New Upgrades

Cost Actions Help Arconic (ARNC) Top Earnings in Q1

The Zacks analyst is impressed with Arconic's Q1 results and thinks it is well placed to gain from cost-cutting & productivity actions and healthy demand trends in aerospace and automotive markets.

Hasbro (HAS) Tops Q1 Earnings & Sales, Poised for Growth

Solid performance across most of its brand portfolio backed Hasbro's strong Q1 results, per the covering analyst. This year's rich content slate and diverse new initiatives should drive growth ahead.

Centene's (CNC) Q1 Earnings, Revenues Beat Estimates; Up Y/Y

The Zacks analyst thinks Centene's outstanding performance in the first quarter, reflected by both its top and bottom line, has been substantially boosted by its HealthNet acquisition started in 2016.

New Downgrades

Baker Hughes' (BHI) Weak Q1 Revenues Raise Concern

The Zacks analyst remains concerned about Baker Hughes' weak Q1 revenues despite the narrower loss. Significant decline in Gulf of Mexico activities led to the underperformance on the top-line front.

Cimpress (CMPR) Reports Wider Q3 Loss on Higher Costs

Cimpress reported lackluster third-quarter fiscal 2017 results with a wider GAAP loss. Higher operating costs and restructuring charges have contracted margins & lowered profitability of the company.

PayPal (PYPL) Q1 Earnings and Revenues Beats Estimates

Besides the decent Q1 results, the covering analyst is positive on Paypal's partnerships and mobile centrism. However, exposure to foreign exchange and interest rate risks is a concern.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
United Continental Holdings, Inc. (UAL): Free Stock Analysis Report
AT&T Inc. (T): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
Illumina, Inc. (ILMN): Free Stock Analysis Report
E.I. du Pont de Nemours and Company (DD): Free Stock Analysis Report
Caterpillar, Inc. (CAT): Free Stock Analysis Report
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