Top Analyst Reports for Salesforce, UPS, Devon Energy & Others

Monday, October 24, 2022

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 Salesforce, Inc. (CRM), UPS (UPS) and Devon Energy Corporation (DVN). 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 >>>

Salesforce shares have underperformed the Zacks Computer - Software industry over the past year (-45.5% vs. -28.2%). This reflects fears in the market about enterprise spending slowdown in response to the uncertain macroeconomic backdrop. Other headwinds include stiff competition, unfavorable currency fluctuations along with increasing investments in international expansions and data centers.

However, Salesforce is benefiting from a robust demand environment as customers are undergoing a major digital transformation. The rapid adoption of its cloud-based solutions is driving demand for its products. Its sustained focus on introducing more aligned products as per customer needs is driving its top-line. Continued deal wins in the international market is another growth driver.

The acquisition of Slack would position the company to be a leader in enterprise team collaboration solution space and better compete with Microsoft’s Teams product. The Zacks analyst expect CRM revenues to grow at a CAGR of 15.7% through fiscal 2023-2025.

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

UPS shares have held up notably better than rival FedEx over the past year (down -17.5% vs. down -34.3%) and the broader market (the S&P 500 index is down -18.8% over the past year).

The Zacks analyst points out that operating expenses will continue to remain a near-term headwind for UPS and we will see that in Tuesday's Q3 quarterly release. But what sets UPS apart from FedEx and others is a track record of operating excellence and ability to generate strong cash flows. The ability to pass on higher costs to customers through increased shipping rates should help profitability to some extent. Longer term, UPS remains well positioned to capitalize on the favorable outlook for ecommerce growth.

In first-half 2022, UPS generated free cash flows of $6,895 million compared with $6,804 million in first-half 2021. UPS paid out dividends worth $3,437 million in 2021, up 1.9% year over year. UPS aims to reward its shareholders with $8.2 billion in 2022, through dividends ($5.2 billion) and share buybacks ($3 billion).

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

Devon Energy’s shares have outperformed the Zacks Oil and Gas - Exploration and Production - United States industry over the past year (+82.7% vs. +36.4%). The company is gaining from strong production from its high-quality domestic assets and recovery in commodity prices. WPX Energy and RimRock acquisitions expanded Devon Energy’s presence in the Delaware and Williston Basins, respectively.

The divestiture of the Canadian and Barnett Shale gas assets will allow DVN Energy to focus on the oil-rich U.S. assets. Devon Energy’s stable free cash flow allows it to buy back shares and distribute dividends. Devon Energy has ample liquidity to meet near-term debt obligations.

However, Devon Energy operates in a competitive industry, wherein a few operators are in a secure position due to stronger financial capabilities. Limited control over some joint venture properties and regulations is a headwind

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

Other noteworthy reports we are featuring today include The Travelers Companies, Inc. (TRV), Enphase Energy, Inc. (ENPH) and Albemarle Corporation (ALB).

Sheraz Mian
 
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

Digital Transformation and Acquisitions Aid Salesforce (CRM)

Dividends & Buyback Aid United Parcel (UPS), Expenses Ail

High Margin Assets & Cost Management Aid Devon Energy (DVN)

Featured Reports

Travelers' (TRV) Auto & Homeowners Aids, Cat Loss Ails
Per the Zacks analyst, Travelers is set to grow on the continued progress and growth at the profitable agency auto and homeowners business. However, exposure to cat loss induces earnings volatility.

Expanding Solar Market to Boost Enphase Energy (ENPH) Growth
Per the Zacks analyst, the expanding solar market that has set the stage for the solar microinverter market's boom tends to benefit Enphase as it remains a leading U.S. manufacturer of microinverters.

Communications Business Aids MasTec (MTZ), Inflation Hurts
Per the Zacks analyst, MasTec's presence in the telecommunications market, exposure in the clean energy market and expansion into heavy infrastructure bode well. Inflationary pressures are risks.

Badger Meter (BMI) Benefits From Strong Product Portfolio
Per the Zacks analyst, Badger Meter's performance is benefiting from strong revenue growth across all business segments. However, stiff competition and increasing input costs are concerns.

Acquisitions & Solid Pricing Benefits TopBuild, Inflation Ail
Per the Zacks analyst, solid pricing move and accretive acquisitions bode well for TopBuild. However, supply woes, higher material costs and labor constraints are risks.

New Upgrades

Capacity Expansion, Cost Reduction to Aid Albemarle (ALB)
According to the Zacks analyst, Albemarle should gain from its actions to boost its global lithium derivative capacity. Its cost-saving actions will also support margins.

Sprouts Farmers' (SFM) Omnichannel Offering to Propel Sales
Per the Zacks analyst, Sprouts Farmers' assortment of better-for-you products, focus on providing hassle-free shopping through omnichannel offering and a network of fresh distribution center bode well

New Downgrades

Philip Morris' (PM) Gross Margin Troubled by Escalated Costs
Per the Zacks analyst, cost inflation is a concern for Philip Morris. In 2022, management expects soft gross margin due to initial IQOS ILUMA costs, logistic costs and raw material costs among others.

Growing Geopolitical Tensions Hurt Applied Materials (AMAT)
Per the Zacks analyst, Applied Materials is facing the negative impacts of the ongoing geopolitical tensions as the U.S. announced new export regulations to cripple Chinese tech companies.

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Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
Salesforce Inc. (CRM) : Free Stock Analysis Report
 
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
 
Albemarle Corporation (ALB) : Free Stock Analysis Report
 
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
 
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