The Zacks Analyst Blog Highlights Apple, McKesson, Emerson Electric and Bae Systems
For Immediate Release
Chicago, IL – October 31, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Apple AAPL, McKesson MCK, Emerson Electric EMR and Bae Systems BAESY.
Here are highlights from Monday’s Analyst Blog:
Apple, Bitcoin and the FOMC: Global Week Ahead
Across the Global Week Ahead, central bankers keep stock traders on alert:
· The Bank of Japan (BoJ) reports Tuesday
· The U.S. Federal Reserve reports Wednesday, and
· The Bank of England (BoE) reports Thursday
Out AMC on Thursday, Apple tops the bill for earnings, on both sides of the Atlantic.
On Friday at 8:30 am ET, we get the OCT U.S. nonfarm jobs report.
Next are Reuters' five world market themes, reordered for equity traders—
(1) This week will be a core S&P500 earnings season week.
Apple headlines another busy week of U.S. corporate earnings, with the iPhone maker reporting AMC on Thursday.
Shares of Apple, the world's largest company by market value, have helped drive equity indexes higher this year, along with shares of other mega-cap U.S. tech and growth companies. But the stock has pulled back sharply since late July, when the S&P500 hit its high for 2023.
Results already in from mega-caps have prompted a mixed reaction, with shares of Alphabet and Tesla slumping after their respective reports.
Consumers' spending habits will also be on display.
Other companies set to report include:
· Caterpillar and Pfizer on Tuesday
· Mondelez on Wednesday, and
· Starbucks and Eli Lilly on Thursday
(2) Bitcoin prices are rising, rising... and then?
Bitcoin has had a stellar ride recently, with traders getting excited about the possibility that the U.S. Securities and Exchange Commission (SEC) could approve an application for a spot bitcoin ETF.
Earlier this month, bitcoin jumped sharply on a false report that BlackRock's ETF application had been approved.
Last week, a listing of BlackRock's planned ETF on a clearing house website sent speculators into a frenzy — even after the clearing house said this was just standard practice for pending applications rather than a sign of any regulatory approval.
Still, the cryptocurrency is trading at around half the $69,000 peak it reached in November 2021.
Meanwhile, the fraud trial of Sam Bankman-Fried, whose crypto firm FTX collapsed a year ago, is captivating crypto watchers around the globe.
(3) On Wednesday, a two-day U.S. Federal Reserve meeting breaks up.
A bruised U.S. stock market will turn its attention to the Fed monetary policy meeting on Wednesday, with investors eager to hear policymakers' views on the state of the economy and the outlook for interest rates.
Futures tied to the main policy rate show most traders don't expect the Fed to raise borrowing costs, though some believe a rate increase could come when the central bank meets again in December.
Signs that policymakers still intend to keep rates around current levels through next year could bolster bets on further upside in U.S. Treasury yields, whose climb to their highest levels in more 15 years has contributed to a sharp sell-off in the S&P500.
The index has fallen more than -10% since hitting a year-high in late-July, though is still up nearly +8% on the year.
(4) On Tuesday, what does the Bank of Japan (BoJ) do to yields?
It's no secret that the Bank of Japan has a penchant for surprises, making Halloween Tuesday a fitting day for its policy announcement.
October's global bond market ructions have made the meeting very much a live one, as soaring U.S. Treasury yields helped push Japan's benchmark to decade highs every day for over a week.
While the peak of 0.885% is still below the BOJ's 1% policy ceiling, that's partly because the central bank has been leaping into the market with emergency operations about twice a week on average. Overnight index swaps offer a cleaner view of where markets put 10-year yields without BOJ interference, popping as high as 1.0863% in recent days.
Governor Kazuo Ueda has insisted the bank will take a patient approach to removing stimulus, but markets will remember his comments from late July about maintaining accommodative policy — just days before the last surprise tweak.
(5) On Thursday, the Bank of England steps up to the plate.
How many policymakers does it take to set interest rates when inflation is high and the economy is flat-lining? The answer in the Bank of England's case is nine, and they will gather in committee on Nov. 2nd for their penultimate meeting of 2023.
Ahead of the Monetary Policy Committee (MPC's) first meeting of 2023, inflation was running at 10.1%, GDP showed 1% year-on-year growth and interest rates were at 3.5%.
Fast forward to now, and year-on-year growth has halved, rates are at 5.25% and inflation is still high at 6.7% — well above 4.3% in the Eurozone and 3.7% in the United States.
The BoE, like other central banks, will want to ram home the message that rates won't fall anytime soon.
Right now, markets are pretty sure of at least one, if not two, cuts next year.
It could take some tough talk to shift that.
Zacks #1 Rank (STRONG BUY) Stocks
(1) McKesson: This is a $451 a share stock in the Medical-Dental Supplies industry. The market cap is $61.1B. I see a Zacks Value score of A, a Zack Growth score of C and a Zacks Momentum score of F.
San Francisco, CA-based McKesson Corp. is a health care services and information technology company.
McKesson operates through two segments:
· The Distribution Solutions segment distributes branded and generic pharmaceutical drugs along with other healthcare-related products on a global basis worldwide. The segment also provides practice management, technology, clinical support and business solutions to community-based oncology and other specialty practices. In addition, the segment provides specialty pharmaceutical solutions for pharmaceutical manufacturers including offering multiple distribution channels and study access to oncology physicians. The segment also provides medical-surgical supply distribution, equipment, logistics and other services to healthcare providers within the U.S.
· The Technology Solutions segment provides enterprise-wide clinical, patient care, financial, supply chain and strategic management software solutions.
In the fourth quarter of fiscal 2022, per segment realignment, McKesson reported revenues through four segments: U.S. Pharmaceutical and Specialty Solutions, International, Medical-Surgical Solutions and Prescription Technology Solutions.
Notably, McKesson's role in the COVID-19 response was reflected in the collaboration with the U.S. government's COVID-19 vaccine distribution effort, wherein McKesson was selected as the centralized distributor of refrigerated and frozen COVID-19 vaccines and the ancillary kits used to administer those vaccines.
FY23 at a Glance
Revenues in fiscal 2023 grossed $276.71 billion, up 5% from the year-ago period. U.S. Pharmaceutical and Specialty Solutions (87% of net revenues), International (7.4%), Medical-Surgical Solutions (4%) and Prescription Technology Solutions (1.6%).
(2) Emerson Electric: This is a $89 a share stock in the Manufacturing-Electronics industry. The market cap is $51B. I see a Zacks Value score of C, a Zack Growth score of F and a Zacks Momentum score of A.
Headquartered in St. Louis, MO, Emerson Electric Co. is a diversified global engineering and technology company, with presence in Europe, the Americas, and Asia, Middle East & Africa.
It offers a wide range of products and services to customers in consumer, commercial and industrial markets.
In May 2022, Emerson merged its industrial software businesses — OSI Inc. and its Geological Simulation Software — with Aspen Technology to create "AspenTech."
Post this merger, the company has been reporting under the following three segments:
· Automation Solutions (59.9% of total revenues in fiscal 2022): The segment provides measurement and analytical instrumentation, valves, actuators and regulators, industrial solutions, and process control systems and solutions. Notably, the segment sells its products globally through various distribution channels like network of sales representatives, direct sales force and independent distributors. In the United States, half of the products are sold through a direct sales force, while the rest mainly through independent sales representatives and distributors. In Europe and Asia, the segment primarily employs a direct sales force.
· Commercial and Residential Solutions (36.8%): The segment provides products and services used in commercial air conditioning, residential cooling and heating, industrial and commercial refrigeration, and cold chain management. Also, the segment offers professional tools and appliance solutions. In June 2023, the company completed the divestiture of Climate Technologies to Blackstone. This segment employs a direct sales channel in an effort to distribute its products and solutions to end users and original equipment manufacturers. It also uses online retailers and independent distributor networks to market its products in various countries.
· AspenTech (3.3%): The segment offers asset optimization software that enables industrial manufacturers to design, operate, and maintain their operations for optimum performance. The software also creates value through improved operational efficiency and productivity, reduces downtime and safety risks, and decreases energy consumption and emissions.
(3) Bae Systems: This is a $54 a share stock in the Aerospace-Defense Equipment industry. The market cap is $4.9B. I see a Zacks Value score of B, a Zack Growth score of B and a Zacks Momentum score of F.
BAE Systems is a global company engaged in the development, delivery and support of advanced defense and aerospace systems in the air, on land and at sea.
BAE Systems Inc. is the U.S. subsidiary of BAE Systems plc.
Headquartered in Rockville, MD, BAE Systems Inc. consists of three Operating Groups that provide:
· Support and service solutions for current and future defense, intelligence and civilian systems
· Design, develop and manufacture a wide range of electronic systems and subsystems for both military and commercial applications; and
· Design, develop, produce, and provide service support of armored combat vehicles, artillery systems and intelligent munitions
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Apple Inc. (AAPL) : Free Stock Analysis Report
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