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Top Research Reports for Adobe, Southern Company & Northrop Grumman

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·6-min read
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Wednesday, June 22, 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 Adobe Inc. (ADBE), The Southern Company (SO), and Northrop Grumman Corporation (NOC). 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 >>>

Adobe shares have declined -37.0% over the past year against Zacks Computer - Software industry’s decline of -12.9%, reflecting the company's significant European exposure on the back of the ongoing Ukraine-centric uncertainty. That said, the company’s Creative Cloud, Document Cloud and Adobe Experience Cloud products drove the top-line growth. Further, rising subscription revenues and solid momentum across the mobile apps remained major positives.

Growth in emerging markets, robust online video creation demand and solid adoption of Acrobat are tailwinds. Also, continued key customer wins of the company are contributing well. We remain optimistic about Adobe’s market position, compelling product lines, continued innovation, strategic acquisitions and solid adoption of cloud applications.

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

Southern Company shares have outperformed the Zacks Utility - Electric Power industry over the past year (+14.5% vs. +3.1%). This reflects the company's ability to steadily grow its customer base on the back of healthy population and job growth in its operating region. With good rate base growth and constructive regulation, the power supplier is expected to generate steady earnings and dividend growth in the coming years.

However, its elevated leverage, along with continued timing and cost overrun issues over its Vogtle project, are major overhangs. While the electric utility holding company’s debt-to-capitalization of 60.8% restricts financial flexibility, its $25-billion Vogtle nuclear plant has already exceeded budget and is years behind schedule. Therefore, the company warrants a cautious stance from the investors.

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

Northrop Grumman shares have outperformed the Zacks Aerospace - Defense industry over the past year (+25.5% vs. -41.6%). The company continues to witness strong demand for its products, driven by programs like F-35, Triton and SABR radar Global Hawk and E-2D program. Solid U.S. budgetary provisions make us confident about a solid inflow of contracts from Pentagon for Northrop. The company also holds a strong solvency position, at least in the short term. Northrop’s management remains confident about the company generating steady organic growth in 2022 and beyond.

However, a comparative analysis of the stock’s trailing 12-month EV/Sales ratio reflects a relatively gloomy picture that might be a cause of concern. The company fears that the continued spread of COVID-19 might cause extended disruption in its supply chain. Rising inflation across the United States may also hurt the stock.

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

Other noteworthy reports we are featuring today include Boston Scientific Corporation (BSX), Marathon Petroleum Corporation (MPC) and Archer-Daniels-Midland Company (ADM).

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

Adobe (ADBE) Rides on Growing Adoption of Cloud Applications

Southern Company (SO) Buoyed by Regulated Customer Growth

Solid Demand Aids Northrop (NOC), Supply Chain Turmoil Woes

Featured Reports

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.

Nutrition Segment to Drive Archer Daniel's (ADM) Growth
Per the Zacks analyst, Archer Daniels gains from strength in the Nutrition unit on growth in human and animal nutrition businesses. It raised operating profit growth view to 20% in 2022 for this unit.

Solid Investments Aid DTE Energy (DTE), Weak Solvency Woes
Per the Zacks analyst, DTE Energy's investment in infrastructure and expansion projects tend to boost its long-term growth prospects. However, its weak solvency position remains a bottleneck.

Synchrony Financial (SYF) Gains on Buyouts, Balance Sheet
Per the Zacks Analyst, buyouts have enhanced the company's capabilities and diversified the business, which, in turn, has offered it a competitive edge. A healthy balance sheet enables investments.

Western Digital (WDC) Gains from Higher Demand for Storage
Per the Zacks analyst, Western Digital's performance is being driven by higher demand from cloud customers especially for nearline products. Supply chain woes and higher costs remain headwinds

Acquisitions, Capital-Recycling to Aid Host Hotels (HST)
Per the Zacks Analyst, Host Hotels is set to gain from its strategic acquisitions and capital-recycling efforts. Yet, slower recovery in business transient and group travel demand is a concern.

Meritage Homes' (MTH) Focus on Entry-Level Buyers Bodes Well
The Zacks analyst stresses, Meritage Homes' strategic shift to a pure-play entry-level and first-move-up builder is expected to yield higher absorptions.

New Upgrades

Marathon (MPC) Gains from Sale of Speedway Retail Unit
The Zacks analyst likes Marathon's sale of Speedway business, which provided a much-needed cash infusion and came with a supply agreement ensuring a steady revenue stream.

Antero Resources (AR) Banks on Gas-Rich Appalachian Basin
Per the Zacks analyst, Antero Resources' production outlook looks bright as the leading natural gas producer has a strong presence in the prolific Appalachian Basin.

Lithia (LAD) Rides on Driveway Program & Buyout Binge
The Zacks analyst is appreciative of Lithia's spree of buyouts so far in 2022, which is expected to add $1.2 billion in annualized sales. Its Driveway e-commerce program is further boosting prospects.

New Downgrades

Kohl's (KSS) Gross Margin Hurt by Escalated Freight Costs
Per the Zacks analyst, Kohl's gross margin remains troubled by freight cost headwinds. Gross margin is likely to decline 100-125 basis points in 2022 owing to freight and product cost inflation.

Supply-Chain Constraints & High Debt Hurt Flowserve (FLS)
Per the Zacks analyst, Flowserve has been facing raw-material inflation, high freight and labor costs, which might affect its margins and profitability. Also, its high debt level remains concerning.

Supply Constraints to Hurt Hewlett Packard's (HPE) Prospects
Per the Zacks analyst, despite strong demand for its technology solutions, Hewlett Packard Enterprise might not be able to fully capitalize on opportunity due to supply-chain constraints.


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