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Top Research Reports for Today: MSFT, TSLA, PNC

Mark Vickery

Monday, April 3, 2017

Today's Research Daily features new research reports on 16 major stocks, including Microsoft (MSFT), Tesla (TSLA) and PNC Financial (PNC).

Microsoft shares lagged the Zacks Tech sector through the fall, but have led the way over the last six months (up +15.3% versus +8.9%) on greater appreciation for the company's reorganization and repositioning. The Zacks analyst points to the company's continuing enterprise strength, benefits from the Office 365 subscription model, strong growth prospects of Azure and promising new products. The recent announcement of Xbox Game Pass, a subscription-based gaming service, will help Microsoft to win market share from the likes of GameStop.

All in all, the company has emerged as a leader in the cloud space that promises momentum on a number of fronts. Estimates have been stable lately ahead of the company’s fiscal Q3 earnings release. However, a strong U.S. dollar and stiff competition remain major concerns. (You can read the full research report on Microsoft here.)

Shares of Tesla have been standout performers lately, with the stock up +22.6% over the past three months vs. +0.3% gain for the Zacks Automotive - Domestic industry. The company is focused on geographical expansions and acquisitions for growth. Tesla also remains on track with its Model 3 production. Tesla reported record deliveries in the first quarter of 2017.

The company continues to generate a lot of passion among investors; it has an avid fan base, but also plenty of detractors. The detractors simply don't see any justification for the stock's lofty valuation given the niche nature of the product and the well-known operational and strategic headwinds facing the company. (You can read the full research report on Tesla here.)

PNC Financial outperformed the Zacks Regional Banks industry, over the last six months gaining +32.9% vs. +30.2%. The Zacks analyst likes the company’s efforts to generate positive operating leverage through its cost-saving initiatives. Also, management projects revenues to rise at a mid-single digit rate in 2017, aided by loan growth. Further, its deal to acquire the commercial and vendor finance business of ECN Capital is expected to be marginally accretive to earnings in 2017.

Further, given its strong balance sheet, the company’s capital deployment activities are impressive. Though the company increased its prime lending rate to 4.00% following the latest Fed rate hike, margin pressure is not expected to ease drastically in the upcoming quarters. Also, stringent regulatory requirements will likely hurt the company’s profitability and business flexibility in the near term. (You can read the full research report on PNC Financial here.)

Other noteworthy reports we are featuring today include Caterpillar (CAT), Praxair (PX) and NextEra Energy (NEE).

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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's (MSFT) Cloud Growth Remains Strong Amid Hurdles

Tesla (TSLA) Reports Record Quarterly Vehicle Deliveries in Q1

PNC Financial (PNC) Depicts Growth; Regulatory Woes Linger

Featured Reports

Caterpillar (CAT) To Close Aurora Plant Due to Weak Demand

The Zacks analyst appreciates Caterpillar's efforts to reduce production capacity and cut down costs in the wake of low demand.

Regulation Woes, volatile commodity price can hurt NextEra (NEE)

The Zacks analyst thinks renewable energy investment and improvement in economic conditions in its service territories are positives, but volatile commodity price and regulatory pressures are concerns

Sun Life (SLF) Penetrates in Asia; Eyes Global Expansion

Sun Life is focused on the emerging economies of Asia which will provide higher return and growth than the North American markets.

Paychex (PAYX) Q3 Earnings & Revenues Grow Y/Y, View Same

Investments in product development, sales force, buyouts and JVs aided Paychex third-quarter fiscal 2017 results. The Zacks analyst thinks that despite the risks, these factors will drive growth.

Exelixis (EXEL) Focused on Label Expansion of Cabozantinib

The covering analyst thinks Exelixis efforts on the label expansion of cabozantinib should boost growth prospects.

Spirit Airlines (SAVE) Trims Q1 Unit Revenue View

Though the Zacks analyst is disappointed with Spirit Airlines' bearish view on first-quarter unit revenues, the carrier's efforts to expand its operations is impressive.

Jack in the Box (JACK) Strong on Initiatives, Risks Remain

The covering analyst opines that sales-boosting initiatives like menu innovation along with focus on catering and delivery bode well.

New Upgrades

Hill-Rom's (HRC) 2Q Guidance Strong on Innovations & Buyouts

The Zacks analyst thinks Hill-Rom is riding high on its buyout of Mortara Instrument and is likely to remain on a solid growth trail with its product launch plan. Its 2Q guidance also buoys optimism.

Helmerich & Payne (HP) Buoyed by Strong FlexRig Demand

Helmerich & Payne's technologically-advanced FlexRigs and the improving U.S. land market outlook has made the covering analyst turn bullish on the contract driller.

Eastman (EMN) Well Placed on Cost & Debt Cuts, Acquisitions

The Zacks analyst is impressed with Eastman Chemical's efforts to cut costs and reduce debt. The company should also gain from its strategic acquisitions and capacity expansion actions.

New Downgrades

Praxair (PX) Down to Sell on Lingering Macro & Micro Risks

Praxair has been downgraded to Sell due to its exposure to risks from higher costs, competition, forex woes and high debts. Also, its shares have underperformed the Chemicals Diversified industry.

McCormick (MKC) Posts Dismal Q1; Cost Pressure to Continue

McCormick's first quarter results were mixed as acquisition gains were offset by currency pressure and higher costs. The covering analyst stresses that the second quarter will also witness weakness.

Cerner (CERN) Hurt by Tough Competition in HCIT Market Space

The Zacks analyst believes that tough competition in the Healthcare & Information Technology (HCIT) market exerts considerable pressure on both pricing and margins.

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Tesla Inc. (TSLA): Free Stock Analysis Report
Praxair, Inc. (PX): Free Stock Analysis Report
PNC Financial Services Group, Inc. (The) (PNC): Free Stock Analysis Report
NextEra Energy, Inc. (NEE): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Caterpillar, Inc. (CAT): Free Stock Analysis Report
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