Top Stock Reports for Alphabet, Alibaba & Costco Wholesale
Monday, April 10, 2023
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 Alphabet Inc. (GOOGL), Alibaba Group Holding Limited (BABA) and Costco Wholesale Corporation (COST). 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 >>>
Shares of Alphabet have gained +22.8% this year vs. +19.8% for the Zacks Tech sector and +7.5% for the S&P 500 index, reflecting the favorable outlook for the company’s strong cloud division. Expanding data center network and rising number of infrastructure regions will continue to bolster its presence in the cloud space. For first-quarter 2023, we expect Google Cloud revenue to grow 9.7% year over year.
Also, strong focus on innovation of AI techniques, and growing interest in home automation space should aid business growth in the long term. Further, its deepening focus on wearables category remains a tailwind. Also, Alphabet’s expanding presence in the autonomous driving space is contributing well. Its growing efforts to gain foothold in the healthcare industry are other positives.
However, sluggishness in the company’s advertisement business remains a major headwind. Additionally, its growing litigation issues and increasing expenses are concerns.
(You can read the full research report on Alphabet here >>>)
Alibaba shares have outperformed the Zacks Internet - Commerce industry over the past year (+1.2% vs. -24.6%) on the back of the company's leverage to the Chinese economy whose outlook has risen following the country's post-Covid reopening. The company is witnessing solid momentum across the international commerce retail businesses is driving its top-line growth. The Zacks analyst expect the business to be up 9.1% in fiscal 2023 on a year-over-year basis. Additionally, solid momentum across financial services, education and automobile industries is driving the company’s cloud business.
According to our estimates, cloud revenues are expected to witness a 3.3% rise in fiscal 2023 from fiscal 2022. This apart, strength across the local consumer services and Cainiao logistics services, Alibaba Health and Freshippo is contributing well.
However, uncertainties associated with coronavirus pandemic remain major concerns, especially for Alibaba’s domestic businesses. Also, rising expenses associated with new initiatives are overhangs. Additionally, softness in digital media business is a headwind.
(You can read the full research report on Alibaba here >>>)
Shares of Costco Wholesale have gained +3.3% over the past six months against the Zacks Retail - Discount Stores industry’s gain of +8.0%. The company being a consumer defensive stock, has been surviving the market turmoil pretty well. The discount retailer’s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping it register impressive sales and earnings numbers.
The Zacks analyst expect the company to register a 6.5% adjusted earnings per share improvement in fiscal 2023 on 6.5% revenue growth. This outlook accounts for the businesses’ ability to navigate the ongoing inflationary environment and supply chain bottlenecks on several fronts.
A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming. While trading at a premium to its peers, its long-term growth prospects should help the stock see a solid upside.
(You can read the full research report on Costco Wholesale here >>>)
Other noteworthy reports we are featuring today include BlackRock, Inc. (BLK), The Estée Lauder Companies Inc. (EL) and Canadian National Railway Company (CNI).
Director of Research
Sheraz Mian
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
Solid Momentum in Cloud Business Benefits Alphabet (GOOGL)
Retail & Cloud Businesses Momentum Benefits Alibaba (BABA)
Decent Comparable Sales Run to Fuel Costco's (COST) Top Line
Featured Reports
Buyouts, Active Equity Focus Aid BlackRock (BLK), Costs Ail
Per the Zacks analyst, BlackRock's acquisition efforts and initiatives to restructure the active equity business will aid the top line. These efforts might lead to higher costs, thus hurting profits.
Online Sales Aid The Estee Lauder Companies (EL), Costs a Woe
Per the Zacks analyst, The Estee Lauder Companies (EL) is set to keep gaining from robust efforts to boost online sales. However, increased inflationary pressure is likely to persist.
Canadian National's (CNI) Dividends Support, Fuel Costs Hurt
The Zacks analyst welcomes Canadian National's efforts to add shareholder value. However, high operating expenses, mainly due to escalated fuel costs, are worrisome.
EOG Resources (EOG) Banks On Oil-Rich Delaware Basin Assets
The Zacks analyst expects EOG Resources' 6,620 net undrilled premium locations in the Delaware basin to drive oil production growth. However, rising lease and well expenses are concerning.
Illumina's (ILMN) NextSeq Shipment Grows amid Stiff Rivalry
The Zacks analyst is impressed with Illumina's record NextSeq 1K, 2K shipments led by accelerated adoption of multiomics particularly in cancer research and cellular. Stiff rivalry remains a concern.
Carnival (CCL) Banks on Booking Improvements, High Costs Ail
Per the Zacks analyst, Carnival benefits from improved booking trends courtesy of strong demand, bundled package offerings and advertising activities. However, inflationary pressures are a concern.
Prothena (PRTA) Candidates Promising, Competition a Concern
Per the Zacks analyst, Prothena's pipeline candidates promise potential and the pipeline progress has been encouraging. However, competition from bigwigs in targeted markets is stiff.
New Upgrades
Airbnb (ABNB) Banks on Strong Nights & Experiences Bookings
Per the Zacks analyst, strengthening gross nights booked in high-density urban areas, and recovery in both long-distance and cross-border travel are benefiting Airbnb's Nights & Experience bookings.
Cadence (CDNS) Benefits from Product Portfolio & Acquisitions
Per the Zacks analyst, Cadence's performance is gaining from robust demand for the company's diversified product portfolio. Synergies from recent acquisitions also bode well.
CNO Financial (CNO) Gains From Cost Cuts & Strategic Buyouts
The Zacks analyst believes that CNO Financial's cost reduction efforts will continue expanding margins. Also, its strategic acquisitions will boost enrollment capabilities.
New Downgrades
Limited Users, Regulations Ail NextEra Energy Partners (NEP)
Per the Zacks analyst NextEra Energy Partners (NEP) dependence on a limited group of customers for revenues and to adherence of stringent laws and regulations could adversely impact its operations.
Chip Crunch and Cost Woes to Ail American Axle (AXL)
Semiconductor shortage that led to lost revenue for American Axle last year, is likely to persist this year as well. High costs of raw materials, labor and utility also concerns Zacks analyst.
Rising Expenses, High Debt Level Hurt Synovus (SNV)
Per the Zacks analyst, elevated operating expenses on investments in talent, technology and improving customer experiences will hurt Synovus' profitability. High debt level is another major headwind.
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BlackRock, Inc. (BLK) : Free Stock Analysis Report
Canadian National Railway Company (CNI) : Free Stock Analysis Report
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
