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Top Analyst Reports for IBM, Enbridge & ADP

Top Analyst Reports for IBM, Enbridge & ADP

Thursday, April 12, 2018

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 IBM (IBM), Enbridge (ENB) and ADP (ADP). 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 >>>

IBM’s shares have underperformed the broader market on a year-to-date basis, losing -8.4% vs. the S&P 500’s +13.7% gain. IBM provides advanced information technology solutions, including computer systems, software, storage systems and microelectronics. Strength in cloud, security and analytics as well as cost savings bodes well for company’s top-line and bottom-line.

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The company has been gaining a lot of traction in emerging markets. Accretive acquisitions have expanded company’s product portfolio into higher-growth segments, such as Cloud computing and Big Data. Further, expanding footprint in the rapidly growing blockchain market is a positive. Estimates have been stable lately ahead of the company’s Q1 earnings release.

Nevertheless, IBM is having a tough time, given the ongoing and heavily time-consuming business model transition to cloud. Modest IT spending growth along with foreign exchange volatility is a concern. Intensifying competition in most of the markets is a major headwind.

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

Shares of Enbridge have declined -24.5% over the last year, underperforming the Zacks Oil Pipeline industry’s loss of -17.5% during the same period. Enbridge has the longest and most sophisticated crude and liquids pipeline system in the world that spreads over 17,511 miles.

The Zacks analyst likes the merger with Spectra Energy as it has made Enbridge the largest energy infrastructure company in North America in terms of enterprise value. The company’s huge backlog of growth projects that stands at roughly C$22 billion along with the C$12 billion worth midstream projects that are online will help it drive dividends by 10% annually through 2020.

However, the company’s substantial debt load is a matter of concern. During 2017, long-term debt rose more than 70% while cash balance declined almost 73%, reflecting weak financials.

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

Buy-ranked ADP's shares have gained +14.2% over the last year, underperforming the Zacks Outsourcing industry, which has gained +18.2% over the same period. ADP has been focused on streamlining its business to strengthen core-operations in the long run. To this end, the company has divested a number of its divisions in the past few years.

Further, the Zacks analyst stresses that ADP holds a dominant position in the payroll processing and HCM market, primarily due to its robust product portfolio. Acquisitions have also been a key growth catalyst for ADP. The company’s strong balance sheet enables it to continue with its shareholder friendly activities alongside strategic buyouts and investments on product development.

However, investments in new initiatives may continue to weigh on its bottom-line results. Moreover, rising unemployment levels will negatively impact the company. Increasing competition is another major headwind.

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

Other noteworthy reports we are featuring today include Marathon Petroleum (MPC), Motorola Solutions (MSI) and United Continental (UAL).

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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

Robust Adoption of Cloud & Analytics Solutions Benefits IBM

Enbridge's (ENB) C$22B Project Backlog to Offset Debt Load

ADP Rides on Strategic Business Moves, Strong Balance Sheet

Featured Reports

Bed Bath & Beyond's (BBBY) Transformation Plan to Boost Sales

Per the Zacks analyst, Bed Bath & Beyond's transformation plan is focused on improving assortments, services and customer experience.

Sequel Systems Aid Pacific (PACB) Amid Tough Competition

Pacific Biosciences gains significant consumable revenue from Sequel-Systems. The Zacks analyst feels that rivalry in niche space may hurt the company.

Operational Efficiency & Strategic Buyouts Aid Motorola (MSI)

Per the Zacks analyst, strong customer base coupled with successful homogeneous acquisitions will enhance Motorola's margins.

Network Expansion & Foreign Acquisitions Aid Copart (CPRT)

Per the Zacks analyst, Copart is expanding its network facilities to manage the inflating volumes.

Marathon (MPC) Buoyed by Fuel Margins Amid Merchandise Woes

Though strong refining margins and the accretive dropdown to MPLX bode well for Marathon Petroleum, the Zacks analyst is worried over lower merchandise margin in its Speedway unit.

Cost Cuts, Margin Improvement Drives NRG Energy (NRG)

The Zacks analyst believes NRG Energy will continue to gain from its transformation plan, which is aimed to save more than $1 billion through recurring cost cuts and margin improvement.

Unit Revenues Aid United Continental (UAL) Amid Cost Woes

The Zacks analyst likes the company's performance with respect to unit revenues. Efforts to modernize its are also encouraging.

New Upgrades

Stable Liquidity, Regulated Assets aid PG&E Corp (PCG)

Per the Zacks analyst, PG&E Corp.'s stable liquidity position buoyed by solid cash generating capacity offers long-term growth potential. It also gains from its portfolio of regulated utility assets.

Strong Pricing, Solid Renewal Aid American Financial (AFG)

The Zacks analyst believes American Financial is poised for growth banking on better industry fundamentals, strong pricing, higher renewal ratio, impressive inorganic growth and restructuring efforts.

Brand Strength & Favorable Currency to Aid PVH Corp. (PVH)

Per the Zacks analyst, PVH Corp.'s performance is expected to soar higher backed by robust brand strength and improvement in foreign currency rates, amid a volatile macro and geopolitical environment.

New Downgrades

Duties on Softwood Lumber, Tax Reforms Hurt Leucadia (LUK)

Per the Zacks analyst, Leucadia remains vulnerable to the tariffs imposed on imported softwood lumber. Also, it expects to book significant charges due to recent tax reforms, hurting its margins.

Debt Woes, High Labor & Fuel Costs Hurt Allegiant (ALGT)

The Zacks analyst is concerned about the company's high debt levels. Increased labor and fuel costs also raise concerns. Capacity-related issues are also discouraging.

Falling Production & Rising Costs to Weigh on Barrick (ABX)

The Zacks analyst is concerned about Barrick's declining production. The company also faces headwinds from higher expected costs in 2018, which is likely to hurt its margins.


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
 
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
 
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
 
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
 
International Business Machines Corporation (IBM) : Free Stock Analysis Report
 
Enbridge Inc (ENB) : Free Stock Analysis Report
 
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
 
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