Tuesday, February 7 2017

We feature the best research output of our analyst team in the Zacks Research Daily. In today’s write-up, we are featuring analyst reports on 16 major stocks, including reports on Apple (AAPL), Visa (V) and AbbVie (ABBV). These stock research reports have been hand-picked from the 70 or so reports published by our analyst team today. You can see all of today’s research reports here >>

In addition to these stock research reports, we are also giving you a real-time scorecard of the ongoing Q4 earnings season. We take pride in closely monitoring each and every earnings release and presenting our analysis of emerging trends in the weekly Earnings Trends and Earnings Preview reports. Our latest Earnings Preview report is: All-Time Record Earnings in Q4

Q4 Earnings Scorecard (as of Tuesday, February 7th)

We now have Q4 results from 302 S&P 500 members, or 60.3% of the index's total membership. Total earnings for the 302 index members that have reported results already are up +6.6% on +4.7% higher revenues, with 68.5% beating EPS estimates and 55% beating revenue estimates.

This is better earnings and revenue growth performance than we have seen from this group of 302 S&P 500 members in other recent periods, even after adjusting for the strong growth from the Finance sector (earnings growth would be +5.2% excluding the Finance sector on +4.7% higher revenues). The proportion of companies beating EPS and revenue estimates, however, is tracking below other recent periods. Only 41.1% of the index members are able to beat both EPS and revenue estimates, which compares to 50% in the preceding quarter for the same sample of 302 S&P 500 members (the 4-quarter average is 47.4% & the 12-quarter average is 45.7%).

Looking at Q4 as a whole, combining the actual results from the 302 index members with estimates from the still-to-come 198 companies, total earnings are expected to be up +7.1% from the same period last year on +3.9% higher revenues. This is the best earnings and revenue growth pace in two years. Importantly, the strong Q4 growth is not a function of easy comparisons, but rather a result of actual gains. The fact is total earnings for the S&P 500 index are on track to reach an all-time quarterly record, surpassing the level achieved in 2014 Q4.

The chart below shows the expected Q4 earnings tally for the index contrasted with what was actually earned in the preceding 8 quarters and what is expected to come in the following 4.

Estimates for the current period (2017 Q1) are holding up fairly well; they are coming down, but not at the pace as would typically expected. Total earnings for the index are currently expected to be up +8% in Q1, which is down from +10.3% on January 4th.

Today's Featured Research Reports

Apple shares have gained +20.2% over the last six months and have outperformed the broader market with the S&P 500 gaining +4.7% over the same period. Apple reported impressive first-quarter fiscal 2017 results with both earnings and revenues exceeding expectations while registering decent year-over-year growth. The increase in iPhone demand caused by the launch of iPhone 7 and 7 Plus was the primary factor for such strong numbers. Also, “Services” revenues, which include App store, Apple Music and Apple Pay were impressive with App store sales in December alone topping $3 billion. The buzz surrounding iPhone 8, which is already labeled a super cycle, should allay investors fear about iPhone sales trajectory. However, macroeconomic headwinds in some key regions, most importantly in China along with increasing competition remain a concern. (You can read the full research report on Apple here >>)

Buy rated Visa’s shares have outperformed the Zacks Financial Transaction Services industry over the past six months, gaining +7.4% vs a +6.2%. The company’s first-quarter fiscal 2017 earnings easily outpaced expectations. Results were aided by the acquisition of Visa Europe and solid growth in payments volume as well as processed transactions. The analyst likes the company’s strategic acquisitions and alliances, technology upgrades and effective marketing efforts. (You can read the full research report on Visa here >>)

AbbVie shares have gained +14.7% over the last one year, outperforming the large cap pharma industry, which has gained +5% over the same period. AbbVie delivered mixed fourth-quarter results with earnings meeting estimates but sales missing the same. The analyst likes its key drug Humira’s performance. Sales should continue to be driven by growing awareness, favorable clinical data, additional indications and expansion into new markets. Moreover, products like Viekira and Imbruvica have diversified AbbVie’s revenue base. AbbVie has a deep and promising pipeline and is also working on expanding its portfolio though additional deals. On the flip side, the Zacks analyst points out that Viekira faces intense pricing pressure and competition in the HCV market. Additionally, quite a few companies are working on bringing Humira biosimilars to the market. (You can read the full research report on AbbVie here >>)

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?

Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold.  Be among the very first to see them >>
 
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 >>>