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Thursday, October 20, 2022

The Zacks Research Daily presents the best research output of our analyst team. Today’s Research Daily features new research reports on 12 major stocks, including Intuit Inc. (INTU), Diageo plc (DEO) and Sony Group Corp. (SONY). 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 >>>

Intuit shares have underperformed against the Zacks Computer – Software industry over the year-to-date period (-37.3% vs. -32.2%). The company is facing macroeconomic and geopolitical headwinds which might significantly hurt small businesses operations, thereby posing risks for Intuit’s top-line growth. Additionally, higher costs and expenses due to increased investments in marketing and engineering teams are likely to continue impacting bottom-line results in the near term.

However, Intuit is benefiting from strong momentum in online ecosystem revenues and solid professional tax revenues. The TurboTax Live offering is also driving growth in the Consumer tax business. Solid momentum in the company’s lending product, QuickBooks Capital, remains a positive.

Moreover, the company’s strategy of shifting its business to cloud-based subscription model will help generate stable revenues over the long run. We expect Intuit’s revenues to grow at a CAGR of 14.66% through fiscal 2023-2025.

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

Diageo’s shares have underperformed against the Zacks Beverages – Alcohol industry over the past year (-17.8% vs. -7.1%). Continued inflationary pressures and currency headwinds are concerning for the company. Nevertheless, recovery in the on-trade channel, strong consumer demand in the off-trade and market share gains aided Diageo’s fiscal 2022 results.

It witnessed sales, operating margin and earnings growth in driven by organic sales growth across all regions. Price/mix gained from a positive mix due to the robust growth in super-premium-plus brands, particularly scotch, tequila and Chinese white spirits.

DEO’s margin trends were favorable in fiscal 2022, thanks to the its premiumization efforts, recovery in markets, pricing actions and supply productivity savings, which mostly offset the cost inflation. It provided a decent view for fiscal 2023, with net sales growth expected across North America, Europe and Asia-Pacific.

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

Sony’s shares have declined -41.7% over the past year against the Zacks Audio Video Production industry’s decline of -42.3%. Due to weak macro-economic conditions, the company trimmed its operating income guidance for fiscal 2022.

Operating income is now projected to decline 8% against earlier projected decline of 3.5%. The company expects operating margin to be likely affected by decline in Game & Network Services unit operating income. Stiff rivalry and high cost-of-goods-sold pose concerns.

However, Sony’s performance is gaining from continued strength in Music and Pictures’ segments. The company remains focused on the premium segment of the branded products market to maximize growth.

For fiscal 2022, the company now expects sales to improve 16% due to higher Music, Pictures and E&TS segment sales. Strategic acquisitions and joint ventures bode well in the long haul. The company continues to expect 18-million-unit sales for its PlayStation 5

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

Other noteworthy reports we are featuring today include ServiceNow, Inc. (NOW), The Southern Co. (SO), and Boston Scientific Corp. (BSX).

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

Intuit (INTU) Rides on Product Refresh, Higher Subscriptions

Diageo’s (DEO) Focus on Premium Brands to Boost Growth

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Higher Music & Pictures Sales Benefit SONY Amid Rising Costs

Featured Reports

Growing Customer Base & Partnerships Aid ServiceNow (NOW)
Per the Zacks analyst, ServiceNow benefits from rising adoption of its workflows from companies undergoing digital transformation. Also, strategic alliances with the likes of Microsoft are a tailwind.

New Buyouts Aid Boston Scientific (BSX), Core CRM Grows
Per the Zacks analyst, Boston Scientific is gaining from its strategic buyouts of Preventice, Farapulse and Lumenis Surgical. In core Cardiac Rhythm Management (CRM), stronger S-ICD sales aid growth.

Arthur J. Gallagher (AJG) Buyouts Aid, Cost Woes Linger
Per the Zacks analyst, a number of acquisitions have helped Arthur J. Gallagher to enhance its capabilities and drive growth. However, elevated expenses remain an overhang.

Fastenal (FAST) Gains From E-Commerce, Inflation Hurts
Per the Zacks analyst, continued enhancement of daily sales through e-commerce will drive Fastenal’s growth. However, inflationary pressures, tight supply chains and labor shortages are risks.

Steady Investment & Renewable Focus Aid Eversource (ES)
Per the Zacks analyst, Eversource’s investment of $18.1 billion within 2022-2026 time period will boost clean electricity generation, fortify its infrastructure and increase reliability of its service

Customer Retention Aid Rollins (ROL), Rising Costs Ail
Per the Zacks analyst, Rollins’ organic revenue growth rate is healthy driven by strong technician and customer retention. Rising expenses remain a concern.

Intra-Cellular (ICPT) Thrives on Caplyta, Overdependence a Concern
Per the Zacks analyst, Intra-Cellular’s CNS disorder drug Caplyta is witnessing higher sales and a strong uptake since approval. However, sole dependence on Caplyta for revenues remains a headwind.

New Upgrades

Southern Company (SO) Buoyed by Regulated Customer Growth
The Zacks analyst believes that steady increase in Southern Company’s regulated business customer base should support its revenue growth.n

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Tapestry’s (TPR) Strong Digital Endeavors to Boost Sales
Per the Zacks analyst, Tapestry has been directing resources toward expanding digital and data analytics capabilities. During the fourth quarter global digital sales increased in high-single digits.

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Higher Rates, Loan Demand Support Washington Federal (WAFD)
Per the Zacks analyst, higher interest rates, steady growth in loan demand and a robust balance sheet and liquidity position will likely continue aiding Washington Federal’s top line growth.

New Downgrades

SM Energy (SM) to Incur Potential Losses Through Hedging
Despite a strong hedging position, SM Energy is likely to incur massive hedging losses due to high commodity prices. This can affect its future cash flow generation, concerning the Zacks analyst.

Higher Costs, Weaker Demand Ail ArcelorMittal (MT)
Per the Zacks analyst, higher iron ore, coal and energy costs will weigh on the company’s margins. The slowdown in steel demand globally in also a concern.

Supply Chain Constraints Hurt Philips’ (PHG) Prospects
Per the Zacks analyst, global supply chain challenges, rising inflation and the Russia-Ukraine war have hurt Philip’ high margin business segments, impacting growth prospects negatively.

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
 
Southern Company The (SO) : Free Stock Analysis Report
 
Boston Scientific Corporation (BSX) : Free Stock Analysis Report
 
Intuit Inc. (INTU) : Free Stock Analysis Report
 
Diageo plc (DEO) : Free Stock Analysis Report
 
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
 
Sony Corporation (SONY) : Free Stock Analysis Report
 
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