Wednesday, August 12, 2020
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 PayPal Holdings (PYPL), Netflix (NFLX) and U.S. Bancorp (USB). 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 >>>
PayPal shares have outperformed the Zacks Internet Software industry year to date (+74.7% vs. +51.6%) on the back of accelerating transaction revenues that appear to sustainable. However, increasing credit loss reserves owing to macroeconomic projections on account of coronavirus is a risk.
PayPal reported impressive second quarter results wherein both earnings and revenues surpassed the estimates and improved year over year. Robust growth in total payments volume (TPV) owing to increasing net new active accounts drove the top line.
Moreover, strengthening customer engagement on the company’s platform and Honey buyout benefits were positive. Further, strong performance by Venmo and merchant services contributed well to the TPV growth. Additionally, growing momentum of the company’s core peer to peer and PayPal Checkout experiences was a tailwind.
(You can read the full research report on PayPal here >>>)
Shares of Netflix have gained +22.4% over the past six months against the Zacks Broadcast Radio and Television industry’s rise of +1.4%. The Zacks analyst believes that the company is dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint.
Notably, shares have outperformed the industry on a year-to-date basis. However, Netflix expects subscriber growth to decline in the second half of 2020 due to less demand. Moreover, absence of new seasons of popular shows like Money Heist and Stranger Things is expected to affect subscriber growth.
Additionally, rising competition from Apple TV+, Amazon prime video, HBO Max, Disney+, TikTok is a major headwind. Netflix’s leveraged balance sheet and higher streaming obligation is a concern.
(You can read the full research report on Netflix here >>>)
U.S. Bancorp shares have gained +31.5% over the past three months against the Zacks Major Banks industry’s rise of +25.1%. The Zacks analyst believes that diversified product mix and rise in revenues will support U.S. Bancorp’s growth opportunities. Also, rising loan and deposit balances are slated to benefit from the economic recovery.
Second-quarter results reflect higher fee income, rise in provisions and strong capital position. Solid business model, core franchise and diverse revenue streams are likely to support its performance. Also, rising loans and deposit balance keep the bank well-poised to undertake strategic initiatives.
Further, following the 2020 stress test results, U.S. Bancorp decided to maintain the dividend amount. Yet, consistently rising expenses due to the ongoing investments in technology remains concerning. Also, pressure on net interest margin due to a decline in interest rates might deter top-line expansion.
(You can read the full research report on U.S. Bancorp here >>>)
Other noteworthy reports we are featuring today include Citigroup (C), American Express (AXP) and Mitsubishi UFJ Financial Group (MUFG).
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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
PayPal (PYPL) Benefits From Increasing Total Payment Volume
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Loan Growth Supports U.S. Bancorp (USB), Higher Costs a Woe
Cost Control Aids Citigroup (C), Low Consumer Banking A Woe
Per the Zacks analyst, downtrend in operating costs will aid Citigroup's bottom-line expansion. However, low rates and subdued consumer banking business amid coronavirus-induced slowdown are concerns.
Decline in Expenses to Aid American Express' (AXP) Margins
Per the Zacks analyst, halt in advertising, slow down of launch of new products, will lower marketing expenses and aid margins.
Strategic Moves Aid Mitsubishi UFJ (MUFG), High Costs A Woe
Per Zacks analyst, Mitsubishi UFJ is growing through global expansion and remains focused on Medium-term Business Plan.
Biogen (BIIB) Focusses on Alzheimer's Drug Aducanumab
The Zacks analyst believes that the approvability of Biogen's (BIIB) controversial Alzheimer's drug, aducanumab, has improved after FDA granted priority tag to its regulatory filing.
Rising Demand Aids General Dynamics (GD), Competition Hurts
Per the Zacks Analyst, a strong rise in demand for the company's varied defense products leads to organic growth.
Automation Solutions Drives Emerson (EMR), High Debt Hurts
Per the Zacks analyst, solid traction of Emerson's Automation Solutions segment, fueled by robust backlog level and healthy project bookings, will drive its sales. High debt level remains concerning.
Prudential (PRU) Gains on Solid Retirement Unit, Debts High
Per the Zacks analyst, the company's solid retirement business has generated substantial premiums, which in turn drove the top line. However, high debt levels remain a concern.
TreeHouse Foods (THS) Gains From Coronavirus Led Demand
Coronavirus-led stockpiling and high at-home consumption have been aiding TreeHouse Foods' top-line, as seen in second-quarter 2020. The Zacks analyst expects such trends to persist in the near term.
Cost Management to Aid Prestige Consumer's (PBH) Earnings
Per the Zacks analyst, Prestige Consumer's bottom line is likely to continue gaining on solid cost management. The company saw lower A&P and G&A costs in the first quarter, which fueled earnings.
Solid Cash Collection, Inorganic Growth Aid PRA Group (PRAA)
Per the Zacks analyst, its rising cash collection owing to volume of purchases, collector base and productivity contributes to its growth. A series of buyouts also poise it well for long-term haul.
Intense Competition & Higher Expenses Hurt Wix.com (WIX)
Per Zacks analyst, Wix.com is bearing the brunt of stiff competition from Shopify and BigCommerce, which offer e-commerce software.
TripAdvisor (TRIP) Hurt By Sluggish demand in Hotel Segment
Per the Zacks analyst, TripAdvisor is suffering from sluggish demand due to COVID-19-induced travel bans. Also, weak demand in Hotel Media & Platform segment and higher expenses are concerns.
Strained Margins Trend Concerns Nordstrom's (JWN) Investors
Per the Zacks analyst, Nordstrom witnesses strained margins due to higher COVID-19 related costs, increased promotions to reduce inventory, higher SG&A expenses and soft sales volume.
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U.S. Bancorp (USB) : Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report
Citigroup Inc. (C) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
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