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Top Stock Analyst Reports for Microsoft, Facebook & Novartis

Sheraz Mian

Friday, January 31, 2020

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 Microsoft (MSFT), Facebook (FB) and Novartis (NVS). 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 >>>

Microsoft’s shares have outperformed the S&P 500 over the past year (+68.1% vs. +20.4%) and the Zacks analyst expects the momentum continuing on the back of the company's robust Commercial business and Azure’s expanding customer base.

The company is gaining from growing user base of its different applications like Office 365, Dynamics, Outlook mobile and Teams. Further, acquisitions like PlayFab and GitHub expand Microsoft’s total addressable market (TAM) and penetration. Additionally, latest contract wins from the Department of Defense remain notable.

However, declining console sales are likely to weigh on gaming revenues. Moreover, increasing expenditure on product development amid stiff competition from the likes of Google, Apple, and Sony is likely to limit margin expansion. 

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

Shares of Facebook have lagged the broader market and the peer group over the last six months, with regulatory uncertainty and incresaed expenses to comply with new regulations clouding the outlook. On the positive side, company has benefited from solid growth in Instagram Stories and Feed, and Facebook News Feed. Moreover, strong sales of Oculus Quest drove payment revenues.

Facebook’s fourth-quarter 2019 results were driven by continued user growth across all regions. Asia-Pacific remained its fastest growing region, driven by growth in India, Indonesia and the Philippines.Moreover, strong sales of Oculus Quest drove payment revenues.

However, Facebook expects top-line growth to slow down due to increasing limitations in tracking user activity amid growing privacy-related regulations, changes made in mobile operating systems and browser platforms by Apple and Google and its own tools like the Off Facebook Activity controls. Moreover, a persistent mix shift toward Stories is anticipated to hurt ARPU. Also, rising regulatory headwinds are concerning.

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

Novartis’ shares have gained +9.5% over the past three months against the Zacks Large-Cap Pharmaceuticals industry's rise of +7.3%. The Zacks analyst believes that sales were up year over year, driven by the solid performance of key drugs like Cosentyx and Entresto, and contribution from gene therapy, Zolgensma.

The guidance for 2020 was encouraging as well. New launches like Piqray and Beovu should further boost the company’s performance. However, price erosion in the United States has adversely impacted the generic business. Recently, Novartis has restructured its business and spun off the eye-care unit, Alcon, to become a core drug-focused company. However, pipeline setbacks and generic competition for key drugs are concerning.

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

Other noteworthy reports we are featuring today include Tesla (TSLA), ServiceNow (NOW) and Raytheon (RTN).

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Sheraz Mian

Director of Research

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

Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)

Expanding User Base, Instagram Strength Aids Facebook (FB)

New Drugs Drive Novartis (NVS) Amid Pipeline Setbacks

Featured Reports

Tesla's (TSLA) Model 3 Aids Sales Amid Weak Model S/X Demand

While record deliveries of Model 3 are aiding Tesla's top line, ebbing production and margins for Model S/X are limiting the firm's profitability, per the Zacks analyst.

Growing Customer Base & Partnerships Aid ServiceNow (NOW)

Per the Zacks analyst, ServiceNow benefits from rising adoption of its workflows from companies undergoing digital transformation.

Patriot Missiles to Aid Raytheon (RTN), Merger Costs A Risk

Per the Zacks Analyst, Raytheon's revenues benefit from its varied missile systems, Patriot being one of them.

Rising Demand Aids General Dynamics (GD), Competition Hurts

Per the Zacks Analyst, a strong rise in demand for the company's varied defense products leads to organic growth.

Workday (WDAY) Banks on HCM Capabilities & Cloud Platforms

Per the Zacks analyst, Workday's revenue growth continues to be driven by high demand for its cloud-based HCM and financial management solutions.

Cost Cuts & Growth Projects Aid Dow (DOW) Amid Demand Woes

While Dow faces a weak demand environment across certain markets, it should gain from its cost reduction initiatives and investment in higher-return growth projects, per the Zacks analyst.

Andeavor Buy Boosts Marathon (MPC), Turnaround Cost Hurts

While the successful integration of Andeavor's operations bode well for Marathon Petroleum, the Zacks analyst is worried over the projected plant turnaround costs in 2020.

New Upgrades

NVR (NVR) Rides On Solid Housing Market & Business Model

Per the Zacks analyst, NVR's performance banks on its business model which focuses on maximizing liquidity and minimizing risk. Also, a solid housing market favors the company's homebuilding revenues.

United Rentals (URI) Gains From Strong End-Market Demand

Per the Zacks analyst, United Rentals gains from improved demand in construction end-markets served and accretive acquisitions.

RPC's (RES) Cost-Control Efforts to Boost Profit Levels

Per the Zacks analyst, RPC's effective cost-containment efforts will likely improve Support Services' profit levels.

New Downgrades

Higher Costs & Weak Agricultural Markets Hurt Deere (DE)

Per the Zacks Analyst, Deere's results will be impacted by higher raw material costs owing to implementation of tariffs, lingering uncertainties in the U.S agriculture market and low commodity prices.

Elevated Costs, Taxes a Worry for McCormick's (MKC) Earnings

Per the Zacks analyst, high costs and taxes are a worry for McCormick. Management expects mid-single-digit cost inflation and high effective tax rate in fiscal 2020, which is likely to dent earnings.

Weak Demand, Soft Steel Prices to Weigh on Nucor (NUE)

Per the Zacks analyst, weakening U.S. steel prices is likely to affect Nucor's margins as prices will remain under pressure amid production increase. A sluggish steel demand is another concern.

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Tesla, Inc. (TSLA) : Free Stock Analysis Report
Raytheon Company (RTN) : Free Stock Analysis Report
Novartis AG (NVS) : Free Stock Analysis Report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
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