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Top Analyst Reports for Microsoft, Apple & Alphabet

Wednesday, June 12, 2024

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 Microsoft Corp. (MSFT), Apple Inc. (AAPL) and Alphabet Inc. (GOOGL), as well as a micro-cap stock CompX International Inc. (CIX). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

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 >>>

Microsoft’s shares have outperformed the Zacks Computer - Software industry over the past year (+31.8% vs. +23.7%). The company is riding on strong growth from Intelligent Cloud and Productivity and Business Processes. Intelligent Cloud revenues are driven by growth in Azure and other cloud services.

Productivity and Business Processes revenues continue to rise due to the strong adoption of Office 365 Commercial solutions. Microsoft 365 Consumer subscribers grew to 80.8 million in the third quarter. Continued momentum in the small and medium businesses and frontline worker offerings, as well as a rise in revenue per user, drove top-line growth.

However, the office's declining commercial licensing has been a headwind due to the continued customer shift to cloud offerings. Higher operating expenses and spending on Azure enhancements amid stiff competition in the cloud space remain a concern.

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

Shares of Apple have outperformed the Zacks Computer - Mini computers industry over the past year (+17.4% vs. +13.5%). The company is benefiting from increasing customer engagement in the services segment. The expanding content portfolio of Apple TV+ and Apple Arcade helped in driving subscriber growth. Apple’s top-line benefits from strong growth in emerging markets and growing adoption of its devices among enterprises.

However, Apple’s near-term prospects remain foggy due to sluggish China sales amid stiff competition. It expects the June quarter’s (third-quarter fiscal 2024) revenues to grow low-single-digit year over year. Unfavorable forex is expected to hurt revenues by 2.5%.

Apple has been playing catch-up in the AI space compared with Alphabet, Microsoft and Amazon, its peers in the “magnificent seven” group. Following the launch of Apple Intelligence, its competitive position is expected to improve.

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

Alphabet’s shares have outperformed the Zacks Internet - Services industry over the year-to-date period (+28.4% vs. +22.2%). The company’s robust cloud division is aiding substantial revenue growth. Expanding data centers, cloud regions and availability zones will continue to bolster its presence in the cloud space.

Major search updates and removal of bad ads to enhance the search results continue to boost traffic on the company’s search engine. Growing momentum across Google’s mobile search is contributing further. Strengthening generative AI capabilities should aid business growth in the long term. Deepening focus on wearables category remains a tailwind. Expanding presence in the autonomous driving space is a plus.

However, sluggish Network advertisement business is a negative. Increasing litigation issues and expenses remain concerns. Rising cloud competition from Microsoft and Amazon is a concern.

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

Shares of CompX International have outperformed the Zacks Office Supplies industry over the past six months (+18.2% vs. +10.8%). This microcap company with market capitalization of $292.45 million have a strong cash and marketable securities balance of $75.6 million as of Mar 31, 2024, ensures robust liquidity for operations and growth.

CompX International also consistently pays dividends, with a recent 20% increase. The Security Products segment saw a 9% year-over-year sales increase in the first quarter of 2024, indicating strong demand. Efficient cost management in the Marine Components segment and aligning inventory with market conditions reflect operational efficiency.

However, CompX faces a challenging 2024 outlook, particularly in the Marine Components segment, due to reduced demand and OEM customers cutting production. Security Products’ sales are expected to be lower, as a significant government project from 2023 is not anticipated to recur. Also, intense competition and dependency on key customers pose additional risks.

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

Other noteworthy reports we are featuring today include NVIDIA Corp. (NVDA), Merck & Co., Inc. (MRK) and The Home Depot, Inc. (HD).

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

Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)

Robust Portfolio, Services Strength to Benefit Apple (AAPL)


Solid Momentum in Cloud Business Benefits Alphabet (GOOGL)

Featured Reports

Keytruda to Remain Merck's (MRK) Key Top-Line Driver
The Zacks analyst expects Keytruda to drive Merck's (MRK) sales and see strong growth for the next 2-3 years despite concerns of how it will grow its business once Keytruda loses patent exclusivity.

Home Depot's (HD) Interconnected Strategy to Boost Sales
Per the Zacks analyst, Home Depot has been benefiting from the execution of the "One Home Depot" plan focused on expanding supply chain facilities technology investments and enhancing digital business

Uber (UBER) Benefits From Delivery Business Amid High Debt
The Zacks Analyst likes Uber's efforts to expand its Delivery operations in response to the surge in business. However, high debt does not bode well for its bottom line.

Mondelez (MDLZ) Gains on Solid Chocolate & Biscuit Categories
Per the Zacks analyst, Mondelez gains on core chocolate and biscuit categories, as they show resilience amid challenges. The company aims to derive most of its revenues from these categories by 2030.

Steady Demand Buoy American Tower (AMT), Debt Woes Linger
Per the Zacks Analyst, American Tower is witnessing steady demand at its towers owing to a surge in wireless services usage. Yet, a substantially leveraged balance sheet may hurt cash-flow generation.

Cadence (CDNS) to Benefit from Robust Portfolio & Buyouts
Per the Zacks analyst, Cadence's performance is powered by uptrend demand for the company's differentiated product portfolio. New products and synergies from acquisitions are expected to foster steady

TC Energy's (TRP) C$34B Growth Projects to Boost Earnings
The Zacks analyst believes that TC Energy's C$34 billion of growth projects should support its earnings and dividend payouts but is worried over the massive debt of C$50.6 billion.

New Upgrades

NVIDIA (NVDA) Rides on Strong Adoption of GPUs, Partnerships
Per the Zacks analyst, rapid adoption of NVIDIA's GPUs in the datacenter and automotive markets is a key growth driver. Partnership with companies like Arrow, Baidu, Daimler and Bosch is a tailwind.

Solid Underwriting, Capital Deployment Aid RLI Corp (RLI)
Per the Zacks analyst, RLI's solid portfolio, business expansion, rate rise, expanded distribution and operational strength drives profitability, in turn supports dividend hikes, special dividends.

Strong Enrollments Growth Aids Strategic Education (STRA)
Per the Zacks analyst, Strategic Education benefits from strong enrollment growth in USHE and ANZ segments. Also, focus on digital learning platforms and competency-based learning models bode well.

New Downgrades

Intense competition, Strict Regulations Ail NRG Energy (NRG)
Per the Zacks analyst, NRG Energy's operations are subject to extensive regulations at both federal and state levels. Strong competition in the wholesale power markets impede the company's growth.

High Leverage & Capital Requirement to Ail Asbury (ABG)
The Zacks analyst is worried about Asbury's long-term debt-to-capital ratio, which is higher than the industry's. Also, rising capital expenditure could adversely impact its near-term cash flows.

Healthcare Industry Regulations Ail AMN Healthcare (AMN)
The Zacks analyst is worried about AMN Healthcare being subjected to extensive federal laws and regulations. A tough competitive space is an added concern.

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Apple Inc. (AAPL) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Merck & Co., Inc. (MRK) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

The Home Depot, Inc. (HD) : Free Stock Analysis Report

CompX International Inc. (CIX) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

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Zacks Investment Research