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Top Stock Reports for Apple, IBM & Elevance Health

Friday, December 2, 2022

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 Apple Inc. (AAPL), International Business Machines Corporation (IBM) and Elevance Health Inc. (ELV). 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 >>>

Apple shares held up better than the Zacks Tech sector  this year (down -17.5% vs. -30%), but have modestly lagged the S&P 500 index's -15.6% decline). The discretionary aspect of the iPhone handset purchase decision in a weakening macroeconomic landscape notwithstanding, the big uncertainty in the Apple story has been China and its zero-Covid policy.

Mac revenues are expected to be negatively impacted by forex. Apple expects Mac revenues to decline substantially year-over-year during the December quarter. Services revenue growth is expected to be negatively impacted by challenging macroeconomic conditions, unfavorable forex, as well as weakness in digital advertising and gaming.

However, Apple’s fourth-quarter fiscal 2022 results benefited from strong iPhone and Mac revenues. Although Services business grew at a slower pace, subscriber base continued to expand in the reported quarter.

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

Shares of IBM have outperformed the Zacks Computer - Integrated Systems industry over the past year (+27.6% vs. +7.6%). The company reported solid third-quarter 2022 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate. Synergies from the Red Hat buyout are bolstering its competitive position in the hybrid cloud market.

IBM’s growth is expected to be driven primarily by analytics, cloud computing, and security in the long haul. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely drive profitability in the forthcoming quarters.

However, IBM is facing stiff competition in the cloud computing market from the likes of Amazon Web Services and Microsoft Azure. Higher debt levels amid extensive restructuring activities pose a concern for the company. High integration risk from continuous acquisition spree is another headwind.

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

Shares of Elevance Health have outperformed the Zacks Medical Services industry over the past year (+31.4% vs. -27.3%). The company’s improving top-line can be attributed to premium rate increases and higher memberships. Acquisitions and collaborations have enabled the company to strengthen its business portfolio. Please note that Elevance is the new name of Anthem.

Its well-performing Medicare and Medicaid businesses, coupled with several contract wins, are expected to drive its membership going ahead. Adjusted net income is anticipated to be more than $28.95 per share, higher than the prior outlook of greater than $28.70.

However, the company's escalating costs continue to put pressure on margins. Declining cash flows are also concerning. Its balance sheet with a massive debt of more than $21 billion can affect financial flexibility. As such, the stock warrants a cautious stance.

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

Other noteworthy reports we are featuring today include Intercontinental Exchange, Inc. (ICE), Charter Communications, Inc. (CHTR), and Archer-Daniels-Midland Company (ADM).

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

Apple (AAPL) Banks on Services to Counter Weak iPhone Demand

IBM Rides on Solid Demand Trends for Hybrid Cloud and AI

Elevance's (ELV) Strategic Buyouts & Product Expansion Aid

Featured Reports

Intercontinental (ICE) Banks on Buyouts Amid High Costs
Per the Zacks analyst, Intercontinental Exchange is set to grow on a number of acquisitions and cost synergies. However, rising expenses weigh on margin expansion.

Mobile & Internet Subscriber Gain Benefits Charter (CHTR)
Per the Zacks analyst, higher subscriber strength in residential and commercial internet services along with broadening Spectrum Mobile user base is driving Charter's top line.

Hershey (HSY) Benefits From Prudent Buyouts & Solid Pricing
Per the Zacks analyst, Hershey's contributions from buyouts and higher prices are driving growth. In the third quarter, net sales included a 4.1-point benefit from the Pretzels and Dot's buyouts.

Diversified Product Mix Aids Itau (ITUB) Amid Cost Woes
Per Zacks analyst, Itau's (ITUB) diversified portfoli, expansion strategy and solid liquidity position might support its growth. Yet rising costs and any stress in the Brazilian economy are concerning

Pure Storage (PSTG) To Benefit from Strong Product Portfolio
Per the Zacks analyst, Pure Storage is gaining from robust demand for the company's diversified product portfolio. Global weak macro conditions and supply chain woes are major concerns.

Programs Aid Hexcel Corporation (HXL), Inflation Impacts Woe
Per the Zacks analyst, impressive set of programs tend to boost Hexcel's long-term growth prospects. Yet supply chains, and inflationary pressures still remain a challenge for the stock

Allscripts (MDRX) Continues to Gain From its Business Model
The Zacks analyst is upbeat about Allscripts' product offerings, including some of the comprehensive solutions presently available in the industry, despite its operation in a highly competitive space.

New Upgrades

Solid Customer Demand Drives Archer Daniel's (ADM) Growth
Per the Zacks analyst, Archer Daniel's is gaining from robust demand and solid product portfolio which has been driving growth in all segments. It expects to conclude 2022 on a solid note.

Halliburton (HAL) to Benefit from North American Exposure
The Zacks analyst believes that Halliburton can take advantage of the tight fundamentals of the North American land drilling space through its market-leading pressure pumping operations.

U.S. Federal clients, Design Services Aids Tetra Tech (TTEK)
Per the Zacks analyst, strong momentum across U.S. Federal clients, driven by new funding for water & environment and Tetra Tech's design and engineering services will lend momentum to the company.

New Downgrades

Elevated Expenses and Stiff Competition Hurt Moody's (MCO)
Per the Zacks analyst, Moody's efforts to grow inorganically are likely to keep costs high, thus hurting bottom line growth. Also, stiff competition across the credit rating industry remains a woe.

KB Home (KBH) Ails From Housing Slowness, Intense Inflation
Per the Zacks analyst, KB Home is experiencing moderate housing demand due to significant inflation, supply chain woes and rising affordability issues.

Allegiant (ALGT) Continues to Grapple With Rising Expenses
The Zacks Analyst is worried about the escalating fuel prices as they are likely to keep the bottom line under pressure.

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

Apple Inc. (AAPL) : Free Stock Analysis Report

Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report

International Business Machines Corporation (IBM) : Free Stock Analysis Report

Archer Daniels Midland Company (ADM) : Free Stock Analysis Report

Charter Communications, Inc. (CHTR) : Free Stock Analysis Report

Elevance Health, Inc. (ELV) : Free Stock Analysis Report

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Zacks Investment Research