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Top Research Reports for VMware, Schwab & HCA Healthcare

Mark Vickery

Wednesday, July 3, 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 VMware (VMW), Schwab (SCHW) and HCA Healthcare (HCA). 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 >>>

VMware’s shares have gained +21.9% year to date, underperforming the Zacks Software industry which is up +32.5% over the same period. The Zacks analyst thinks VMware is benefiting from robust demand for NSX, VeloCloud and vSAN product lines.

The company’s dominance in the software-defined data center (SDDC) domain and an expanding customer base in cloud, driven by partnerships with the likes of IBM and AWS, are positives. Microsoft and VMware are also exploring initiatives to boost integration between VMware infrastructure and Azure. These partnerships are major growth drivers for the company in the long haul.

Nevertheless, growth in license bookings has been muted for the last few quarters, owing to customer delays and macro-economic weakness in some key regions. Moreover, VMware’s margins are expected to remain under pressure due to heavy spending. Intensifying competition is also a concern.

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

Shares of Schwab have underperformed the Zacks Investment Brokers industry over the past six months, declining -5.3% vs. +4.4%. The company's earnings have surpassed expectations in each of the trailing four quarters.

The Zacks analyst thinks the company remains well positioned to gain from higher interest rates, strong balance sheet and efforts to strengthen trading business. Moreover, the company’s initiatives to improve operating efficiency will go a long way to support profitability.

Its steady capital deployment actions are commendable and will enhance shareholder value. However, continuously rising operating expenses (mainly related to compensation costs and regulatory charges) are likely to hurt bottom-line growth to some extent. Further, the company’s dependence on fee-based revenues remains a major concern, and this might hamper financials going forward.

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

HCA Healthcare’s shares have outperformed the Zacks Hospital industry in the past year, gaining +30.1% vs. +14.4%. Moreover, it has witnessed its 2020 earnings estimates move north over the past 30 days. Its top line has been growing over the last several quarters on the back of higher admissions, same facility emergency room growth and surgical growth, etc.

The Zacks analyst thinks multiple acquisitions have helped the company gain a strong foothold in the industry, fueling its inorganic growth. A strong balance sheet and free cash flow are other positives for the company. Bullish 2019 guidance should instill investor’s confidence in the stock.

However, high operating expenses due to salaries and benefits and other costs are persistently weighing on margins. It is expected to witness a rise in costs due to constant growth-related investments. High leverage is another concern for the company.

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

Other noteworthy reports we are featuring today include Constellation Brands (STZ), Cognizant (CTSH) and Hilton (HLT).

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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

Portfolio Strength, Expanding Partner Base Aids VMware (VMW)

Focus on Trading Revenues Aids Schwab (SCHW), Costs a Woe

Rising Top-line, Inorganic Growth Aid HCA Healthcare (HCA)

Featured Reports

Constellation Brands' (STZ) Solid Beer Segment to Lift Sales

Per the Zacks analyst, Constellation Brands' strength in beer business due to higher shipment volumes and depletions is driving the company's top line.

Hilton (HLT) Rides on Unit Expansion Amid Stiff Competition

Per the Zacks analyst, Hilton's relentless expansion strategy via year-over-year net unit growth is a major topline driver. However, a competitive industry remains a potential headwind.

Loan Growth Aids Huntington (HBAN), Concentration Risk a Woe

The Zacks analyst thinks an improving economy has helped Huntington witness growth in loan and deposits. However, significant concentration of commercial loans in the total portfolio is a worry.

New Product Uptake, Favorable Market Trend Aid STERIS (STE)

Per the Zacks analyst, STERIS should continue to exhibit organic growth on favorable underlying market trends along with new product and service offerings. Strategic global expansion is another plus.

Rise in Assets Aid Cohen & Steers (CNS), Higher Costs a Woe

The Zacks analyst believes that improving assets under management will continue to drive revenue growth for Cohen & Steers.

Actuant (ATU) Gains from Industrial Tools, Faces Costs Woes

Per the Zacks analyst, Actuant gains from strengthening Industrial Tools & Services segment.

Strong Backlog & Acquisitions Aid Apogee (APOG), Costs Ail

Per the Zacks analyst, Apogee is poised to benefit from solid bidding and order activity, acquisitions and capital expansion plans despite inflated costs.

New Upgrades

Domain Expertise, Accretive Buyouts Steer Cognizant (CTSH)

Per the Zacks analyst, Cognizant is benefiting from domain expertise as well as its ability to harness the ongoing digital transition. Acquisitions are strengthening its digital capabilities.

Cummins (CMI) Rides on Improved Demand & Innovative Products

Per the Zacks analyst, Cummins gains from increased engine and component demand for heavy and medium-duty trucks in North America. Also, its innovative products and partnerships ensure high returns.

New Mines & Higher Gold Prices Power Royal Gold (RGLD)

Per the Zacks analyst, Royal Gold is benefiting from the ramping up of new mines, focus on acquisitions, strong balance sheet and higher gold prices.

New Downgrades

Rate Cuts, Dismal Capital Markets to Hurt State Street (STT)

Per the Zacks analyst, the Federal Reserve's dovish stance on interest rates and disappointing capital markets performance owing to low volatility will hamper State Street's financials to some extent.

Upstream Spending Slowdown to Weigh on Halliburton (HAL)

The Zacks analyst is concerned that the conservative approach on capital expenditure from North American E&P operators will result in declining demand for Halliburton's services.

US-China Trade War to Hurt MGM Resorts (MGM)

Per the Zacks analysts, trade war between Beijing and Washington and flagging China property prices, which have adversely impacted the high-end VIP segment, are major concerns for MGM Resorts.

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VMware, Inc. (VMW) : Free Stock Analysis Report
Constellation Brands Inc (STZ) : Free Stock Analysis Report
The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report
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