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The Zacks Analyst Blog Highlights: GameStop, AstraZeneca, Rocket Companies, Skyworks Solutions and Ubiquiti

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·8 min read
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For Immediate Release

Chicago, IL – March 23, 2021 – 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: GameStop Corp. GME, AstraZeneca PLC AZN, Rocket Companies, Inc. RKT, Skyworks Solutions, Inc. SWKS and Ubiquiti Inc. UI.

Here are highlights from Monday’s Analyst Blog:

Diverging Scenarios: Global Week Ahead

Writing about global markets — while sitting inside the United States — is becoming more nuanced.

The U.S. economy is clearly rising.

That is not necessarily the case in most of the rest of the world.

Here is how Scotiabank's FX economists summarized the Global Situation—

"Global markets will continue to price an inflection point in the world economy that is bringing with it less synchronous policy developments and greater scope for differentiation across market outcomes.

  • - Evidence of this development takes the form of diverging central bank actions. Which is not terribly unusual to see, during the nascent stages of emerging from a global crisis.

  • - The Fed, for example, has clearly telegraphed it supports steeper sovereign bond yield curves. And has been both passively enabling higher yields and actively encouraging this, with upbeat forecasts, and through ending the Supplementary Leverage Ratio's exclusion of Treasuries and reserves from the definition of assets against which capital must be held.

"The coming week will further this evolution of divergent policy and macro risks.

  • - We'll see that in growth signals provided by economic indicators. Like a wave of global purchasing managers' indices. In the sample of PMIs that arrive in the week ahead, it will probably remain the case. Only the U.S. and Australia are registering economic growth during the first quarter of the year. And in that order by way of magnitudes.

  • - We'll also probably continue to see central banks adopt altered policy stances suited to their domestic conditions. This includes the possibility of further tightening guidance across EM central banks. They are dealing with capital outflows and resetting prices on those flows as U.S. Treasury yields rise."

Next are Reuters' five world market themes, reordered for equity traders—

(1) On Tuesday, GameStop Reports Q4 Earnings

Reddit investors' darling GameStop reports fourth-quarter and full-year earnings on Tuesday and stakes are pretty high given the parabolic 1,200% gain since their December earnings report.

Estimates show the U.S. video game retailer is set to report a loss for the fiscal year, the first one in a really long time.

Will that discourage the Reddit crowd?

The buying frenzy is still on, despite analysts predicting losses for months and none of those covering the stock rating it "buy."

At $200, the stock is trading more than six times the most bullish price target on Wall Street, and no analyst thinks the planned e-commerce offering would justify such high valuations.

(2) The European Vaccine Program Needs a Reboot

The euro-area March flash purchasing managers index on Wednesday could give markets a fresh steer on the economic outlook.

Europe, off to a slow start in the COVID-19 vaccination race, faces new hurdles that risk further slowing the post-pandemic recovery.

Brussels is at loggerheads with AstraZeneca over supplies; a number of countries suspended its vaccine on reports of unusual blood disorders.

Germany, France and others will now resume its use, but the stop-and-start are a blow to a faltering inoculation campaign while many countries are fighting a third COVID wave.

(3) What's Going to Happen to the U.S. Dollar?

Following a rather muted response to rising Treasury yields so far, the dollar could be woken from its slumber if yields close in further on the 2.0% threshold.

The U.S. currency is up around 2.0% year-to-date, while yields on the benchmark 10-year have risen from around 0.90% at the start of the year to 1.75% in recent days. Higher yields typically make the dollar more attractive to income-seeking investors.

A series of upcoming Treasury auctions will provide important clues on how much further the recent surge in yields can run. The Treasury will auction $60 billion of two-year notes and $61 billion of five-year notes. A $62 billion offering of seven-year notes on March 25th follows last month's disappointing auction in that maturity, which helped fuel the bond selloff.

(4) Watch the Swiss National Bank

It's tough being the Swiss National Bank: After months of battling safe-haven inflows, markets want to know what the SNB will do with its 914 billion-Swiss franc ($984 billion) foreign exchange pile at its March 25th meeting.

With the franc depreciating 5% and 2.5% versus the dollar and the euro, respectively, year-to-date, there is no pressure to stem inflows. The pace of interventions has already fallen sharply.

Some of the franc weakness can be traced to recovery bets, but it comes at a time when Swiss bond yields are trading unusually above their German peers, global conditions are still uncertain and vaccine rollouts bumpy. Signaling a reduction in its balance-sheet size could trigger a rise in the franc, something policymakers would be careful to avoid.

The SNB is expected to keep rates unchanged -0.75%, the lowest in the world, and maintain its interventionist stance.

(5) On Thursday, a Few More Central Bank Meetings Happen

After emerging-market central banks in Brazil, Turkey and Russia delivered surprise cumulative rate increases of 300 basis points, focus shifts to policy makers in South Africa and Mexico meeting on Thursday.

Both central banks are seen on hold while grappling with sluggish growth, rising inflation pressures and climbing global yields. Mexico is poised to enjoy some benefit from the U.S. stimulus package.

Meanwhile, Monday should see China confirm that its banks will leave its lending benchmark, the one-year-loan prime rate (LPR), unchanged at 3.85% for an 11th month as higher producer prices, leftover deflation in consumer prices and rising bond yields in late 2020 preclude the need for policy tightening.

Top Zacks #1 Rank (STRONG BUY) Stocks

Let's look into leading stocks with strong Zacks Growth scores. The first one is an overlooked home mortgage company. The other two stocks are tech players in chips and wireless equipment.

(1) Rocket Companies: This is a tech services company whose shares price at $23, giving a market cap of $45.8B. I see a Zacks Value score of B, and Zacks Growth score of B and a Zacks Momentum score of B.

Rocket Companies Inc. is a holding company consisting of personal finance and consumer service brands including Rocket Mortgage, Rocket Homes, Rocket Loans, Rocket Auto, Rock Central, Amrock, Core Digital Media, Rock Connections, Lendesk and Edison Financial.

Rocket Companies Inc. is based in Detroit, Michigan.

(2) Skyworks Solutions: This is a radio frequency chip company, whose shares price at $176, giving a market cap of $28.9B. I see a Zacks Value score of D, a Zacks Growth score of A and a Zacks Momentum score of F.

Headquartered in Irvine, CA, Skyworks Solutions Inc. designs, manufactures, and markets a broad range of high-performance analog and mixed signal semiconductors that enable wireless connectivity.

The company's products include power amplifiers (PAs), front-end modules (FEMs), radio frequency (RF) sub-systems, and cellular systems.

(3) Ubiquiti: This is a wireless equipment supplier, whose shares price at $343, giving a market cap of $21.6B. I see a Zacks Value score of F, a Zacks Growth score of A and a Zacks Momentum score of F.

Headquartered in New York, Ubiquiti Inc., along with its subsidiaries, offers a comprehensive portfolio of networking products and solutions for service providers and enterprises.

Its service-provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing; while enterprise product platforms provide wireless local area network (WLAN) infrastructure, video surveillance products and machine-to-machine communication components.

The Momentum scores of the 2 tech stocks (both F) should concern you. That is the rising 10-yr Treasury effect.

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