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Top Analyst Reports for Netflix, Lockheed Martin & Zoetis

Zacks.com logo Zacks.com 10/23/2020

Friday, October 23, 2020

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Netflix (NFLX), Lockheed Martin (LMT) and Zoetis (ZTS). 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 >>>

Netflix shares have outperformed the Zacks Broadcast Radio and Television industry in the year to date period (+51.1% vs. +13.7%). The Zacks analyst believes that the company is dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content and an expanding international footprint.

Netflix, in third-quarter 2020, witnessed decline in paid-user addition rate, reflecting lower demand for content. Additionally, rising competition from Apple, Amazon, HBO Max, Disney+, Peacock and TikTok is a major headwind.

The company’s leveraged balance sheet and higher streaming obligation is also a concern. Third-quarter results reflected that Netflix’s low-priced mobile plans in India, Indonesia, Malaysia, Philippines and Thailand is helping it win users in Asia-Pacific, which is a positive for its prospects.

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

Shares of Lockheed Martin have lost -1.5% over the past year against the Zacks Aerospace Defense industry’s fall of -32.8%. The Zacks analyst believes that expansionary budgetary provisions made by the U.S. administration will immensely boost this defense prime’s business. It continues to be a strong cash generator.

Lockheed Martin ended its third-quarter 2020 on an impressive note, with both revenues and earnings surpassing the respective Zacks Consensus Estimate. The company enjoys strong demand for its high-end military equipment in domestic and international markets, being the world's largest defense contractor.

However, forced cost reduction initiatives for F-35 program might hamper its operating results. America and Turkey's tiff on the latter accepting Russian products may hurt Lockheed's component supply from Turkey. It is facing performance issues in relation to some of its products, which in turn may hurt it results.

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

Zoetis’ shares have gained +31.4% over the past six months against the Zacks Drugs industry’s rise of +7.3%. The Zacks analyst believes that Zoetis’ diversified product portfolio, global footprint and productive R&D should help drive both top-and bottom-line growth.

The company’s companion animal portfolio maintains momentum on strong growth of key dermatology products, such as Apoquel and Cytopoint brands, as well as the Simparica franchise, including encouraging initial uptake of Simparica Trio.

The recent acquisitions have also strengthened the companion animal portfolio. However, the cattle market is witnessing challenges for beef and dairy customers. The livestock business is expected to be challenging. Estimates are stable ahead of Q3 results.

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

Other noteworthy reports we are featuring today include Atlassian (TEAM), Itaú Unibanco (ITUB) and Moderna (MRNA).

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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

Robust Content Aids Netflix (NFLX) Amid Stiff Competition

Order Growth Boosts Lockheed (LMT), Tiff With Turkey Ails

New Products, Acquisition Fuel Zoetis (ZTS) Amid Slowdown

Featured Reports

Coronavirus-Led Remote Working Wave Aids Atlassian (TEAM)

Per the Zacks analyst, Atlassian is benefiting from the pandemic-led work-from-home wave, which is spurring demand for offsite-working software and hardware tools.

Global Expansion to Aid Itau Unibanco (ITUB), High Cost Ails

Per the Zacks analyst, Itau Unibanco's aim to globalize and focus on less risky products support growth.

Despite No Approved Products Moderns (MRNA) Looks Promising

Per the Zacks analyst, Moderna has no sales and depends on collaborations and grants for its revenues. However, Moderna's rapid progress with its coronavirus vaccine is boosting the company's prospect

High Card Sales Aid Discover Financial (DFS), Expenses Hurt

Per the Zacks analyst, increasing card sales volume, backed by alliances and partnerships has driven its performance.

Weak Wholesale Unit Hurt Steven Madden (SHOO), Digital Sales Aid

Per the Zacks analyst, Steven Madden's wholesale business has been dismal due to a decline in footwear sales. However, prudent digital marketing investments have boosted e-commerce revenues.

New Upgrades

Cost Reduction, Acquisitions to Aid PPG Industries (PPG)

According to the Zacks analyst, cost savings through restructuring actions should lend support to PPG Industries' margins. Acquisitions will also contribute to its top line in 2020.

Rising Deliveries & Parts Revenue to Drive PACCAR (PCAR)

PACCAR's rising truck deliveries amid gradual economic recovery and continued growth in the less-cyclical aftermarket parts are likely to aid the firm's top line going forward, per the Zacks analyst.

New Downgrades

Sluggishness in Licensed Software Unit Ails Cerner (CERN)

The Zacks analyst is apprehensive about Cerner's Licensed Software revenue segment that has been witnessing sluggishness. Management expects low bookings in the segment in the coming quarters.

Exposure to Cat Loss, Costs Hurt Selective Insurance (SIGI)

Per the Zacks analyst, Selective Insurance's exposure to catastrophe loss induces earnings volatility. Moreover, high costs exerting pressure on operating margin expansion concerns.

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