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Top Research Reports for Today: VZ, KO, SBUX

Mark Vickery

Friday April 21, 2017

Today's Research Daily features new research reports on 16 major stocks, including Verizon (VZ), Coca Cola (KO) and Starbucks (SBUX).

Verizon shares have been laggards over the past year - the stock is down -5.2% over the past 12 months vs. AT&T's +5.6% gain and the +16.7% gain for the S&P 500 index. Verizon posted weak first quarter 2017 financial results with the loss of 0.307 million postpaid and 0.017 million prepaid customers. Despite losses, Verizon gained 35,000 FiOS Internet subscribers.

Meanwhile, Verizon is likely to venture into online TV streaming service. Verizon has started conducting 5G wireless network trials in 11 U.S. cities and plans to deploy its fixed wireless version in 2018. The company’s decision to launch FiOS Prepaid plan, FiOS Internet service and to zero-rate its data on FiOS Mobile App should help it gain subscribers while unlimited data plans have heated up the wireless industry.

The Verizon-Yahoo deal underwent a discount revision of $350 million. But it will likely take a while before these actions bear fruit. In the updated research report issued today, the Zacks analyst discusses the pros & cons of investing in Verizon shares at this stage. (You can read the full research report on Verizon here.)

Buy rated Coca Cola shares have gained +3.7% in the year-to-date period compared to the roughly flat showing for the Zacks Consumer Staples sector as a whole. Coca-Cola’s increased marketing investments are driving volume growth in stable markets like North America.

Moreover, the company is on track to achieve total annualized productivity of approximately $3.6 billion by 2019 from the initiatives implemented under this program since its beginning.  Also, Coca-Cola’s new revenue platforms should drive growth over the long term. However, the top line needs to show sustained improvement. Coca-Cola’s sales are getting affected by declining demand in certain emerging and developing markets and shift in consumer preference.

Also, severe macroeconomic challenges in certain international markets and the stronger U.S. dollar have impacted results for the cola giant, which generates about half of its sales abroad. (You can read the full research report on Coca Cola here.)

Shares of Starbucks are up +8.5% year to date, outperforming the Zacks Retail-Food & Restaurants (up +4.5%) and the S&P 500 (up +5.1%). Starbucks is strengthening its portfolio with significant innovation around beverages and core food offerings. The Zacks analyst likes Starbucks’s strong operating fundamentals – solid global retail footprint, successful innovations, best-in-class loyalty program and digital offerings.

Again, digital initiatives like mobile order/pay, delivery services and third-party loyalty partnerships can stimulate stronger sales trends in the Americas. CPG growth across the world as well as China/Asia expansion will also enhance value creation.

However, economic, geopolitical and consumer headwinds continue to impact Starbucks’ results. Starbucks has also lowered its full-year revenue growth guidance from double-digit growth to the 8–10% range. (You can read the full research report on Starbucks here.)

Other noteworthy reports we are featuring today include Yahoo (YHOO), Danaher (DHR) and Express Scripts (ESRX).

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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

Verizon (VZ) Misses Earnings and Revenue Estimates in Q1

Coca-Cola's (KO) Marketing, Cost Saving Plans to Spur Growth

Starbucks (SBUX) Initiatives Impress, Macro Woes Stay

Featured Reports

KeyCorp (KEY) Q1 Results Indicate Persistent Organic Growth

The Zacks analyst, KeyCorp's Q1 earnings show that it remains well positioned to benefit from organic growth strategy.

Chubb (CB) Well Poised to Grow on Core Strengths, Costs Woe

The covering analyst thinks Chubb is better positioned to capitalize on growth opportunities banking on diversifies product mix, strategic acquisitions and capital position.

Core Laboratories (CLB) Tops Earnings and Revenues in Q1

While the covering analyst likes Core Labs' unique business model and technological expertise, the lack of new deepwater drilling orders limits upside from current levels.

Danaher (DHR) Beats on Q1 Earnings, Operating Margins Shrink

Danaher beats Q1 earnings on DBS strength and decent top-line growth. However, currency fluctuations and high costs associated with new product developments proved to be a drag on operating margins.

Progressive (PGR) Q1 Earnings Miss, Revenues Improve Y/Y

Progressive's first-quarter 2017 earnings missed our expectations, but improved year over year on higher operating revenues, improved premiums and increased investment income.

SEI Investments (SEIC) Sees Continued Revenue Growth in Q1

The Zacks analyst thinks SEI Investments remains well poised for organic growth, supported by a continuous rise in revenues and assets under management.

Express Scripts' (ESRX) Generic Utilization to Drive Growth

The covering analyst thinks Express Scripts' increased generic utilization, and focus on mail orders to drive growth.

New Upgrades

GATX Corp's (GATX) Q1 Earnings & Sales Top Estimates

The Zacks analyst is pleased by the company's outperformance in Q1. Improvement in the Rail International unit's profit is also encouraging. Moreover, efforts to reward shareholders raise optimism.

Yahoo (YHOO) Q1 Earnings Up Y/Y, Verizon Deal to Close Soon

The covering analyst notes that Yahoo's first-quarter revenue and earnings growth was driven by continuous strong performance in Mavens. The Verizon deal is expected to be completed in June.

Comerica (CMA) Results Depict Cost Control & Organic Growth

The Zacks analyst thinks Comerica's efforts to drive operational efficiency remain encouraging. It also continues to benefit from a strong capital position and easing margin pressure.

New Downgrades

Grainger (GWW) Lags Q1 Earnings, Cuts View on Pricing Impact

The Zacks analyst believes Grainger's results will be hit by acceleration of pricing actions, unstable oil prices and gross margin pressure. Also, the underperforming Canada segment remains a concern.

Genuine Parts (GPC) Beats Q1 Estimates; Pressure on Margins

Genuine Parts' earnings and revenues beat the Zacks Consensus Estimate. Per the Zacks analyst, the company continues to face a high inventory challenge.

Omnicom (OMC) Beats Q1 Earnings Despite High Operating Risks

Although Omnicom reported solid first-quarter results with healthy year-over-year increase in earnings and revenues, it remains susceptible to high operating risks with operations across the globe.

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Yahoo! Inc. (YHOO): Free Stock Analysis Report
Verizon Communications Inc. (VZ): Free Stock Analysis Report
Starbucks Corporation (SBUX): Free Stock Analysis Report
Coca-Cola Company (The) (KO): Free Stock Analysis Report
Express Scripts Holding Company (ESRX): Free Stock Analysis Report
Danaher Corporation (DHR): Free Stock Analysis Report
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