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Top Stock Reports for Verizon, Costco & Morgan Stanley

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Sheraz Mian
·6 min read
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Tuesday, January 12, 2021

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 Verizon Communications (VZ), Costco Wholesale (COST) and Morgan Stanley (MS). 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 >>>

Verizon shares have underperformed the Zacks Wireless National industry over the past year (-3.8% vs. -0.1%), but the Zacks analyst believes that the company is well positioned to gain from a disciplined network strategy, including accelerated 5G deployment, despite uncertainties stemming from the COVID-19 crisis.

The company has been building its 5G Ultra-Wideband network to enable innovations that will support the evolving customer behavior. It expects to witness solid 5G momentum as it heads into the fourth quarter of 2020 backed by customer-centric business model and diligent execution of operational plans.

However, Verizon is facing significant headwinds within the media business due to weak advertising trends. It operates in an intensely competitive U.S. wireless market that strains margins. Adoption of unlimited data plans has resulted in reduction of wireless service revenues. 

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

Shares of Costco have gained +12.5% in the last six months against the Zacks Discount Retail industry’s gain of +29.2%. 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.

Cumulatively, these factors have been aiding in registering impressive sales and earnings numbers. Costco put up a stellar performance in first-quarter fiscal 2021, wherein both the top and the bottom line surpassed the Zacks Consensus Estimate and grew year over year.

It has been also maintaining impressive comparable sales performance. However, margins still remain an area to watch. Any deleverage in SG&A rate as well incremental wages and sanitation costs owing to the ongoing pandemic cannot be ignored.

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

Morgan Stanley shares have gained +51.3% over the past three months against the Zacks Investment Banking industry’s rise of +45.7%. The Zacks analyst believes that focus on corporate lending and a strong balance sheet will likely aid the company’s growth.

Besides, the planned acquisition of Eaton Vance and the buyout of E*Trade Financial are in sync with the company’s efforts to change revenue mix and focus more on less capital markets driven sources.

However, the financial impact from the same will be seen after some time and thus, the company's current significant dependence on capital-markets driven revenues makes us apprehensive. Further, steadily increasing expenses remain a major near-term concern. Also, lower rates are likely to hamper interest income growth.

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

Other noteworthy reports we are featuring today include Anheuser-Busch InBev (BUD), Starbucks (SBUX) and Advanced Micro Devices (AMD).

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

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See the pot stocks we're targeting >>

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

Verizon (VZ) Rides on Healthy Traction from 5G Deployment

Decent Comps to Fuel Costco's (COST) Sales, Cost a Concern

Strategic Buyouts Support Morgan Stanley (MS) Amid Low Rates

Featured Reports

Recovery in Volume Trends Drive AB InBev (BUD) in Q3

Per the Zacks analyst, improving volume trends coupled with AB InBev's (BUD) fundamental strength and resilience in the global beer category aided Q3 performance.

Digitalization Aid Starbucks (SBUX), Comps Woes Linger

Per the Zacks analyst, enhanced customer experience and digitalization bode well for Starbucks.

AMD Rides on Robust 7 nm Product Portfolio & Partnerships

Per the Zacks analyst, Advanced Micro Devices is benefiting from strong adoption of the latest 7 nm-based EYPC and Ryzen processors.

Restructuring & Solid Liquidity to Aid General Electric (GE)

Per the Zacks analyst, General Electric's business portfolio-restructuring program continues to lend momentum to it. Its efforts to deleverage balance sheet and solid liquidity position will also aid.

Pre-Salt Reserves Boosts Petrobras (PBR), Debt Pile Hurts

Petrobras' stakes in Brazil's attractive pre-salt oil reservoirs should boost its earnings outlook. However, the Zacks analyst is concerned over the company's huge debt load of $66.2 billion.

Inflows Aid Blackstone's (BX) Asset Growth, High Costs a Woe

Per the Zacks analyst, net inflows, diversified products, and revenue mix will likely drive Blackstone's assets under management growth.

Solid Health Care Products Unit Aid Fresenius Medical (FMS)

Per the Zacks analyst, Fresenius Medical continues to gain from solid prospects in the Health Care Products segment.

New Upgrades

Solid Customer Demand Drives Dollar Tree's (DLTR) Top Line

Per the Zacks analyst, Dollar Tree is gaining from favorable customer response which led to robust sales and enterprise same-store sales growth in Q3. Also, initial trends in Q4 have been favorable.

Growing Electronic Warfare Systems Demand Aid Mercury (MRCY)

Per the Zacks analyst, high demand for electronic warfare, increased upgrades on electronic subsystems and the continued flow of deals are aiding Mercury Systems' growth.

Cost Cuts, Defense Business Benefit Allegheny (ATI)

Per the Zacks analyst, Allegheny will gain from strength in its defense business and its efforts to improve cost structure through cost-reduction initiatives.

New Downgrades

Escalating Operating Expenses Continue to Hurt Humana (HUM)

Per the Zacks analyst, the company's operating expenses, which have been increasing over the past several years, continue to weigh down the margins.

Project Delays, Rising Interest Costs Hurt Ormat (ORA)

Per the Zacks analyst, due to the pandemic Ormat has been experiencing project delay and backlog decline which mar its revenue growth prospects. Its rising interest expenses may hurt earnings.

Increasing Expenses & Competition Hurt InterDigital (IDCC)

Per the Zacks analyst, apart from intense competition, InterDigital is struggling with escalating research and development costs to come up with innovative technology solutions in the wireless market.

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
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
Morgan Stanley (MS) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
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