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Top Stock Reports for Microsoft, Royal Dutch Shell & IBM

Mark Vickery

Wednesday, October 9, 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 Microsoft (MSFT), Royal Dutch Shell (RDS.A) and IBM (IBM). 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 year to date (33.6% vs. 15.3%). The Zacks analyst believes that Microsoft is benefiting from growing user base of its different applications like Office 365 commercial, Dynamics, Outlook mobile and Teams.

Moreover, Azure’s expanding customer base is a key catalyst. Microsoft’s gaming segment is performing well, primarily driven by a combination of Xbox Live, Game Pass subscriptions and Mixer, which are driving user engagement. Further, acquisitions like PlayFab and GitHub expand Microsoft’s total addressable market and penetration. Additionally, an expanding partner base is notable.

However, projections of a moderating growth rate in commercial cloud gross margin, and OEM Pro and Windows commercial businesses is a headwind. Moreover, competition from the likes of Google, Apple, Sony and Nintendo is intense.

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

Shares of Royal Dutch Shell have lost 13.2% in the past six months, outperforming the Zacks International Integrated Oil industry’s fall of 16.7%. The Zacks analyst states that company’s cash flow continues to increase, allowing it to cut debt while covering the share buybacks and cash dividend.

As it is, the Anglo-Dutch company's position as a key supplier of liquefied natural gas should drive long-term cash flow growth on attractive opportunities. However, there are worries over a drop in its downstream segment earnings while the company’s poor reserve replacement ratio raises concerns about future production.

Shell's operations in violence-prone regions of Nigeria pose additional risk. Hence, investors are advised to wait for a better entry point.

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

IBM’s shares have lost 1.5% over the past three months compared with the S&P 500’s decline of 2.9%. The Zacks analyst believes that IBM is benefiting from operating efficiency, cost cutting and lower share count.

Moreover, the company’s improving position in the hosted cloud, security and analytics holds promise. The company is also witnessing growth in industry verticals like health as well as key areas of analytics and security. Solid adoption of Watson Health and broad-based growth in Payer, Provider, Imaging and Life Sciences domains, is also noteworthy.

The RedHat acquisition aimed at improving hybrid cloud platform is likely to enhance IBM's prospects. Notably, the company has a positive record of earnings surprises in recent quarters.

However, softness in cognitive solutions and technology & cloud platforms remains a concern. Competition for the Storage hardware segment is stiff. A highly leveraged balance sheet adds to the woes.

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

Other noteworthy reports we are featuring today include Exxon Mobil (XOM), Thermo Fisher Scientific (TMO) and American Tower (AMT).

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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

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

Royal Dutch Shell (RDS.A) to Gain from Growing LNG Demand

Adoption of Cloud, Security & Analytics Solutions Aids IBM

Featured Reports

End-Market Growth, Brammer Bio Buy Aid Thermo Fisher (TMO)

The Zacks analyst is bullish about Thermo Fisher's firm growth in end markets categorized by customer type. The Brammer Bio buyout should fortify its position in Gene and Cell Therapy space.

Tower Buyouts Amid 5G Hype to Support American Tower (AMT)

Per the Zacks Analyst, American Tower's efforts to expand its telecom-tower portfolio amid favorable trends in mobile-data usage and rising investments in 5G technology are a strategic fit.

Yum! Brands (YUM) Grows on Digital Innovation & Franchising

The Zacks analyst expects Yum! Brands' digital initiatives to drive growth.

Regular Investments Aids PSEG (PEG), Operational Risks Hurt

Per the Zacks Analyst, PSEG's regular investments in infra projects bolsters its growth prospects.

Acquisitions Aids TransDigm (TDG), Rising Debt Levels Hurt

Per the Zacks Analyst, TransDigm strengthens its position in proprietary aerospace components' niche markets, through strategic acquisitions.

Altice (ATUS) to Benefit From Network Build-Out Strategy

Per the Zacks analyst, Altice's strategy of building next-generation fiber network to meet the demand for increasing data speed and support evolving technologies augurs well for future revenue growth.

Acquisition Strategy, Strong Financials Aids HEICO (HEI)

Per the Zacks Analyst, disciplined acquisition strategy has been a pivotal element for the company's overall growth. It also continues to exhibit strong balance sheet and cash flow generation capacity.

New Upgrades

Debt Cuts, Growth Projects to Aid Newmont Goldcorp (NEM)

The Zacks analyst is impressed with Newmont Goldcorp's efforts to reduce debt and improve efficiency. The company should also benefit from progress in its key growth projects.

Newell (NWL) to Benefit From Its Transformational Efforts

Per the Zacks analyst, Newell is smoothly progressing with the execution of its Accelerated Transformation Plan. These efforts will help improve operational performance and enhance shareholder value.

Jazz's (JAZZ) Sunosi Launch to Boost Sleep Franchise Sales

Per the Zacks analyst, the launch of newly approved for Sunosi in July is likely to boost Jazz's sleep franchise which continues to perform well on the back of strong demand for Xyrem.

New Downgrades

Weak Upstream & Downstream Businesses Hurt ExxonMobil (XOM)

ExxonMobil warns that weak upstream operations will hurt third-quarter earnings. Scheduled maintenance activities, affecting the firm's downstream unit, intensify the Zacks analyst's concerns.

Rising Costs Hurt TD Ameritrade's (AMTD) Bottom-line Growth

Per the Zacks analyst, TD Ameritrade's bottom-line remains under pressure due to continued rise in operating expenses due to the company's investments in technology and advice and guidance offerings.

Weakness in Express Segment Affects FedEx's (FDX) Growth

The Zacks analyst is pessimistic about the slowdown in global economy, which is hurting the Express unit's performance. High TNT Express integration expenses are an added concern.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
American Tower Corporation (REIT) (AMT) : Free Stock Analysis Report
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