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Top Stock Reports for Mastercard, Walt Disney & Costco

Tuesday, March 15, 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 Mastercard Inc. (MA), The Walt Disney Co. (DIS) and Costco Wholesale Corp. (COST). 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 >>>

Shares of Mastercard have outperformed the Zacks Financial Transaction Services industry over the past two-year period (+39.5% vs. -8.9%). The Zacks analyst believes that the company’s profit levels are rising thanks to increasing consumer spending. This enabled the company to report strong fourth-quarter results. Numerous acquisitions are helping it to grow addressable markets and drive new revenue streams.

The COVID-19 crisis accelerated the use of electronic payments with much greater adoption of digital and contactless solutions. The situation provides an opportunity for Mastercard's business to expedite its shift to the digital mode.

The company is well-poised to gain from steady cash-generating abilities. A strong capital position enables the company to pursue acquisitions and deploy capital. However, steep operating expenses might stress margins. High rebates and incentives may weigh on net revenues.

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

Shares of Walt Disney have underperformed the Zacks Media Conglomerates industry over the year-to-date period (-16.7% vs. -12.4%). The Zacks analyst believes that Disney+’s profitability was negatively impacted by higher programming and production, as well as marketing and technology costs in first-quarter fiscal 2022.

Higher sports programming costs have affected ESPN+’s profitability. Disney expects continued investments in content, which will drive up programming and production costs that is expected to hurt operating income by more than $200 million on a year-over-year basis. Disney’s leveraged balance sheet remains a concern.

However, Disney continues to benefit from the growing popularity of Disney+, owing to a strong content portfolio and a cheaper bundle offering. Availability in the Nordics, Latin America and other Asian territories will help in further expanding user base. Revival in Parks, Experiences and Products businesses also hold promise.

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

Shares of Costco have outperformed the Zacks Retail - Discount Stores industry over the past six-month period (+13.6% vs. -1.1%). The Zacks analyst believes that the company’s growth strategies, better price management, decent membership trend and increasing penetration of e-commerce business reinforce its position.

The strategy to sell products at discounted prices has helped draw customers seeking both value and convenience. These factors have been aiding in registering impressive sales and earnings numbers.

Costco put up a decent performance in fiscal Q2 2022, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Also, Costco has been witnessing stellar comps sales run. While aforementioned factors raise optimism, supply chain bottlenecks and higher labor and freight costs remain concerns. Any deleverage in SG&A rate may hurt margins.

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

Other noteworthy reports we are featuring today include S&P Global Inc. (SPGI), PayPal Holdings, Inc. (PYPL) and The Southern Company (SO).

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

Accretive Buyouts, Strong Balance Sheet Aid Mastercard (MA)

Disney (DIS) Banks on Disney+ Growth & Reopening of Parks

Decent Comparable Sales Run to Fuel Costco's (COST) Top Line

Featured Reports

Investments Aid OGE Energy (OGE), Supply Chain Issue Woes
Per the Zacks analyst, OGE Energy's aggressive investment strategy will help upgrade its infrastructure. Yet COVID led supply chain challenges might disrupt its ability to deliver electricity.

S&P Global (SPGI) Rides on Acquisitions Amid Rising Expenses
The Zacks analyst likes S&P Global's buyout strategy to innovate, increase differentiated content and develop new products. Growth initiatives, higher compensations and incentives raise costs.

PayPal (PYPL) Benefits From Increasing Total Payment Volume
Per the Zacks analyst, PayPal's total payment volume is rising owing to solid adoption of Venmo and merchant services. Further, growing momentum across PayPal Checkout experiences is positive.

Revenue Mix, Acquisitions Aid Moody's (MCO) Amid High Costs
Per the Zacks analyst, Moody's diverse revenue mix, low-risk product portfolio and acquisition initiatives will aid growth. Yet, inorganic growth efforts are likely to keep expenses elevated.

Solid Gaming Portfolio Aids Activision's (ATVI) Prospects
Per the Zacks analyst, Activision's top line is expected to benefit from a burgeoning user base on the back of a sturdy gaming portfolio and e-sports endeavors.

Southern Company (SO) Buoyed by Regulated Customer Growth
The Zacks analyst believes that an increase in Southern's regulated business customer base will support its revenue growth but is concerned over timing and cost overrun of the Vogtle project.

Strong Pipeline Candidates and Progress Aids Nektar (NKTR)
Per the Zacks analyst, Nektar's strong pipeline candidates have helped it to attract funds through collaborations with large pharma companies.

New Upgrades

EOG Resources (EOG) Banks on Eagle Ford & Delaware Basin
The Zacks analyst believes that EOG Resources' production outlook is bright since the leading upstream energy player has a strong footprint in the oil-rich Eagle Ford & Delaware Basin.

High Iron Prices & Solid Demand to Drive Vale (VALE)
Per the Zacks analyst, high iron ore prices and demand, lower debt levels and focus on improving productivity and lowering costs will drive growth for Vale.

Knowles (KN) to Gain From Increasing Demand for Microphones
Per the Zacks analyst, Knowles is likely to benefit from the increasing demand for its micro-electro-mechanical system microphones along with differentiated solutions for a diverse set of end markets.

New Downgrades

Supply-Chain Issues Hurt Leggett's (LEG) Volume
Per the Zacks analyst, Leggett has been witnessing supply chain disruptions, especially in chemicals, semiconductors, labor and transportation, which are constraining volume growth.

Forex Headwinds, Rising Costs Irk Align Technology (ALGN)
The Zacks analyst is concerned about Align Technology's mounting operating expenses which build pressure on its bottom line. Unfavorable foreign currency translation continues to hamper financials.

Incyte (INCY) Dependence on Jakafi, Pipeline Setbacks A Woe
Per the Zacks analyst, Incyte is highly dependent on Jakafi for a major chunk of its revenues and a slowdown in sales due to competition will be a 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
Southern Company The (SO) : Free Stock Analysis Report
Mastercard Incorporated (MA) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
S&P Global Inc. (SPGI) : Free Stock Analysis Report
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