Best analyst reports for Microsoft, Alphabet and Eli Lilly

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Thursday, October 13, 2022

Zacks Research Daily features top research results from our team of analysts. Today’s Research Daily features new research reports on 16 major stocks, including Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL) and Eli Lilly and Company (LLY). These research reports have been handpicked from the approximately 70 reports published today by our team of analysts.

You can see all research reports from today here >>>

Microsoft stocks have held up relatively better relative to the software space (down -23.2% over the past year compared to the -31.6% drop in the computer industry from Zacks Computer – Software) and slightly worse than the -20.4% drop in the broader market.

Beyond some slowing in demand for the company’s services in the near to medium term due to rising interest rates in response to inflationary pressures, Microsoft’s business is as strong today as ever. they were last year.

The company’s growing spending on Azure enhancements amid stiff competition in Amazon’s cloud space is likely to squeeze margins. However, Microsoft’s performance benefits from the strength of its Azure cloud platform amid accelerated global digital transformation.

Teams user growth is benefiting from continued remote working and widespread adoption of the hybrid/flexible working model. The recovery in advertising and the job market boosted LinkedIn and search revenue. Solid adoption of new Xbox consoles is contributing to the performance of the gaming segment.

The company is witnessing a growth in the user base of its various applications, including the Microsoft 365 suite, Dynamics and Power Platform. Microsoft expects Surface revenue to grow in the mid-teens, driven by strong demand for high-end devices.

(You can read the full Microsoft research report here >>>)

Alphabet stocks have lost -32.3% of their value since the start of the year against a decline of -35.7% for the Internet services industry Zacks and a decline of -25.5% for the S&P index 500. A relatively subdued ad spend outlook given macroeconomic headwinds is the biggest worry in Alphabet’s history. But that’s only a short- to medium-term issue, as the long-term outlook for all of Alphabet’s businesses, including digital advertising, remains favourable.

Zacks analysts estimate that for 2022, Google Cloud’s revenue will increase by 24.7% compared to 2021. In addition, major updates in its search segment improve search results. Additionally, Google’s mobile search is gaining momentum. For 2022, we forecast an 11% increase in Google search revenue over last year.

Additionally, the focus on innovation in AI techniques and the home automation space is expected to continue driving Alphabet’s business growth in the days ahead. Its growing focus on the wearables category remains a tailwind. Plus, Alphabet’s growing presence in the self-driving space helps a lot. Considering the above factors, we expect total revenue in 2022 to increase by 10.3% compared to 2021.

(You can read the full Alphabet research report here >>>)

Eli Lily shares have outperformed industry Zacks Large Cap Pharmaceuticals over the past year (+37.2% vs. +6.5%). The company’s revenue growth is driven by increased demand for drugs such as Trulicity, Taltz and others. It regularly adds promising new pipeline assets through business development agreements.

Lilly plans to launch five new drugs by the end of 2023, including Mounjaro for type II diabetes (already launched) and donanemab for early Alzheimer’s disease. Both drugs have multi-billion dollar sales potential.

However, generic competition for several drugs, increasing price pressure in the United States, mainly on the key drug, Trulicity, and price reductions in some international markets such as China, Japan and Europe are headwinds. Estimates fell slightly ahead of third-quarter results. Lilly has a negative track record of earnings surprises in recent quarters.

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

Other noteworthy reports we feature today include Visa Inc. (V), Morgan Stanley (MS) and TotalEnergies SE (TTE).

Sheraz Mian

Director of Research

Note: Sheraz Mian leads the equity research department at Zacks and is a well-known expert on overall earnings. He is frequently quoted in the written and electronic press and publishes the weekly Earnings Trends and Revenue overview reports. If you would like to receive an email notification whenever Sheraz publishes a new article, please click here>>>

To read today

Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)

Alphabet (GOOGL) benefits from cloud and search initiatives

Lilly (LLY) Potential new products essential for growth

Featured Reports

Visa (V) rides on improving top line and strong balance sheet
According to the Zacks analyst, the company’s rising revenue, driven by new and renewed deals, and accretive buyouts has led to significant growth. A strong cash position also bodes well.

Takeovers support Morgan Stanley (MS), capital markets are a misfortune
According to the Zacks analyst, acquisitions with the goal of being less dependent on capital markets, higher rates and a strong balance sheet are helping Morgan Stanley. Yet ambiguity in capital markets and rising costs are woes.

Extension of aid to TotalEnergies (TTE) LNG and clean energy assets
According to the Zacks analyst, TotalEnergies’ presence across the LNG value chain and expanding clean energy generation through joint ventures and acquisitions will drive its performance.

New customers will propel TELUS (TU) into a high leverage environment
According to the Zacks analyst, Telus’ growing customer base is increasing its fiber footprint, thereby increasing its revenue. However, the company’s fierce competition and high leverage remain a concern.

PerkinElmer’s (PKI) product line expansion offsets headwinds
Zacks analyst says expansion of PerkinElmers’ product portfolio along with accretive acquisitions provide opportunity for growth amid unfavorable currency and weak European macro environment

RPM rolls on strategic initiatives and takeovers, costs are high
According to the Zacks analyst, cost-cutting initiatives and acquisitions bode well for RPM. However, rising commodity costs, currency headwinds and inclement weather are causing concerns.

Helmerich & Payne (HP) will benefit from proprietary FlexRigs
The Zacks analyst believes Helmerich & Payne’s technologically advanced FlexRigs are helping it shore up activity levels and maintain strong drilling margins.

New upgrades

Help from Mettler-Toledo (MTD) Industrial and Laboratory Segments
According to the Zacks analyst, Mettler-Toledo is underpinned by robust industrial and laboratory segments, driven by strong core industrial activity and solid demand in the pharmaceutical and life sciences markets.

Ulta Beauty (ULTA) wins on robust omnichannel operations
According to the Zacks analyst, Ulta Beauty has gained on its strong omnichannel initiatives. Its online purchase with in-store pickup was a key driver, contributing 25% to e-commerce sales in the second quarter.

Xerox (XRX) Strong Business Model Assistance and Transformation Program
The Zacks analyst is positive about Xerox’s strategic transformation program to achieve productivity and cost reduction. Additionally, its strong aftermarket-focused business model is a tailwind.

New downgrades

Higher costs and weak demand are hurting PPG Industries (PPG)
The Zacks analyst fears weaker demand in Europe and China could hurt PPG’s sales volumes. Higher raw material and logistics costs could also impact its results.

Higher entry costs, low automobile production Ail Celanese (CE)
According to the Zacks analyst, rising raw material costs will hurt the company’s margins. Weaker auto production due to semiconductor shortages will also affect its auto order patterns.

Increase in net outflows and expenses harms artisan partners (APAM)
According to the Zacks analyst, any increase in net outflows will hurt the growth of Artisan Partners’ assets under management. In addition, rising costs due to technology investments could keep profitability under pressure.

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

Morgan Stanley (MS): Free Stock Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

Visa Inc. (V): Free Inventory Analysis Report

Eli Lilly and Company (LLY): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis Report

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