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Top Stock Reports for Alibaba, Honeywell & Caterpillar

Sheraz Mian
·6 min read

Wednesday, November 4, 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 Alibaba Group (BABA), Honeywell International (HON) and Caterpillar (CAT). 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 >>>

Alibaba shares have underperformed the Zacks Internet Commerce industry in the year-to-date period (+34.6% vs. +55.3%), likely reflecting a 'China discount'. That said, the stock has been a strong perfomer, a trend that the Zacks analyst believes will continue on the back of steady improvement in core commerce and strong cloud business. 

Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining momentum. This is aiding growth in Tmall Import, Hema fresh food grocery business and Intime Department Stores.

However, higher costs associated with new initiatives remain a major concern. Also, COVID-19 related economic uncertainties and macro headwinds in China are major concerns. In addition, rising competition from e-commerce players poses a risk. 

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

Shares of Honeywell have lost -0.9% over the past year against the Zacks Diversified Operations industry’s rise of +5.4%. The Zacks analyst believes that strength in defense and space businesses as well as solid demand for warehouse automation products are likely to boost the company’s revenues in the quarters ahead.

Solid demand for personal protective equipment, along with a strong backlog conversion rate, will act as tailwinds. It is committed to rewarding shareholders handsomely. However, the company believes that the coronavirus outbreak-led market downturn and weak commercial aerospace will adversely impact its near-term results.

Given its extensive geographic presence, its business is subject to political, economic and geopolitical issues. Rise in debt levels can increase its financial obligations.

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

Caterpillar shares have gained +44.3% over the past six months against the Zacks Construction and Mining industry’s rise of +54.2%. The Zacks analyst believes that a recovering manufacturing sector, resumption of spending at miners, improved North American residential construction and strong construction demand in China hold promise for the company.

Caterpillar’s third-quarter 2020 adjusted earnings per share and revenues beat the respective Zacks Consensus Estimate. However, both the metrics declined year over year as overall demand remained weak amid the COVID-19 pandemic. For the fourth quarter the company anticipates demand to remain weak but at improved levels than the third quarter.

A weak backlog, lowering of inventory by dealers and weakness in non-residential construction will impact results in 2020. Its ongoing cost reduction efforts will sustain margins in this scenario. Further, strong liquidity position, investments in expanded offerings and services and digital initiatives will fuel growth.

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

Other noteworthy reports we are featuring today include Exxon Mobil (XOM), CSX Corporation (CSX) and Norfolk Southern (NSC).

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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

Alibaba (BABA) Drives On Cloud Growth; Investments Hurt

Intelligrated Unit Drives Honeywell (HON), Soft Demand Hurts

Cost Control to Buoy Caterpillar (CAT) Amid Weak Demand

Featured Reports

ExxonMobil (XOM) Banks on Guyana Discoveries, Refining Weak

ExxonMobil estimates gross recoverable resources of nearly 9 billion oil-equivalent barrels from offshore Guyana discoveries. However, a weak refining business concerns the Zacks analyst.

Low Costs Aid CSX Amid Coronavirus-Led Volume Softness

Per the Zacks analyst, a substantial reduction in costs mainly due to low fuel prices and increased operational efficiency is keeping CSX afloat amid coronavirus-led weakness in volumes.

Cost Cuts Amid Tepid Volumes Aid Norfolk Southern (NSC)

The Zacks analyst lauds the company's efforts to rein in costs. Contracting overall volumes (down 15% in the first nine months of 2020) are, however, ailing.

Decline in Expenses to Aid American Express' (AXP) Margins

Per the Zacks analyst, the decline in marketing, cost of card member services, and card member rewards are likely to aid margins.

Colgate's (CL) Robust Pricing & Productivity Aid Margins

Per the Zacks analyst, Colgate has been witnessing pricing and productivity gains across all businesses on the back of revenue growth management initiatives.

Loan Growth Supports U.S. Bancorp (USB), Higher Costs a Woe

The Zacks analyst believes that a solid business model and initiatives to expand market share have helped U.S. Bancorp witness growth in loans and deposits.

Lam Research (LRCX) Benefits From Strengthening NAND Demand

Per the Zacks analyst, increasing the NAND requirement in accelerating 5G migration, video, and new game consoles is driving the top-line growth of Lam Research.

New Upgrades

Horizon Therapeutics' (HZNP) Tepezza Launch Boosts Sales

Per the Zacks analyst, the launch of Tepezza has been strong. The company now expects Tepezza's 2020 net sales to be more than $800 million which is more than the previous guidance.

On-Network Strength, Growing Customer Base Aid Cogent (CCOI)

Per the Zacks analyst, accretive customer connections and cost-effective operations on the back of solid traction in the On-Network segment are likely to bolster Cogent's performance in the long run.

Universal Display (OLED) Banks on Product Portfolio Strength

Per the Zacks analyst, the increasing adoption of OLED technology by premium handset makers like Apple, Oppo, and Vivo, is aiding growth. Also, increasing shipments of UniversalPHOLED hold promise.

New Downgrades

Crude Collapse, Downstream Woes to Weigh on Chevron (CVX)

The Zacks analyst believes the sub-$40 oil price has weakened Chevron's profile considerably, impacting its overall production. The continued drop in downstream segment earnings is also a concern.

Growing Topline Aids Ensign Group (ENSG), High Costs Hurt

Per the Zacks analyst, its rising revenues driven by Transitional & Skilled Services has led to significant growth. However, escalating costs remain a concern for the company.

High Debt & Sluggishness in Bookings Ail Blackbaud (BLKB)

Per the Zacks analyst, Blackbaud is bearing the brunt of lower bookings owing to coronavirus crisis led softness across small and medium businesses. Also, a leveraged balance sheet is a major 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
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Norfolk Southern Corporation (NSC) : Free Stock Analysis Report
Honeywell International Inc. (HON) : Free Stock Analysis Report
CSX Corporation (CSX) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
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