Top Analyst Reports for Microsoft, Alphabet & Eli Lilly

Thursday, October 13, 2022

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 Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL) and Eli Lilly and Company (LLY). 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 >>>

Microsoft shares have held up relatively better compared to the software space (down -23.2% over the past year against the Zacks Computer - Software industry’s decline of -31.6%) and modestly worst than the broader market's -20.4% decline.

Beyond some softening demand for the company's services over the near to medium-term as a result of rising interest rates in response to inflationary pressures, Microsoft's business is as rock solid today as it was last year.

The company’s increasing spend on Azure enhancements amid stiff competition in the cloud space from Amazon is likely to dent margins. However, Microsoft’s performance is benefiting from strength in its Azure cloud platform amid accelerated global digital transformation.

Teams’ user growth is gaining from continuation of remote work and mainstream adoption of hybrid/flexible work model. Recovery in advertising and job market boosted LinkedIn and Search revenues. Solid uptake of new Xbox consoles is aiding the gaming segment performance.

The company is witnessing growth in user base of its different applications including Microsoft 365 suite, Dynamics and Power Platform. Microsoft expects Surface revenues to grow in the mid-teens range, driven by strong demand for premium devices.

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

Alphabet shares have lost -32.3% of thier value in the year-to-date period vs. -35.7% decline for the Zacks Internet Services industry and -25.5% decline for the S&P 500 index. A relatively subdued ad spending outlook given the macroeconomic headwinds is the biggest worry in the Alphabet story. But this is no more than a short to medium-term issue, as the long-term outlook for all of Alphabet's businesses, including digital advertizing, remians favorable.

The Zacks analysts believes for 2022, Google Cloud revenue to grow 24.7% from 2021. Further, major updates in its search segment are enhancing the search results. Moreover, Google’s mobile search is gaining solid momentum. For 2022, we anticipate Google Search revenue to be up 11% from the last year.

Also, strong focus on innovation of AI techniques and the home automation space should continue aiding Alphabet’s business growth in the days ahead. Its deepening focus on wearables category remains a tailwind. Also, Alphabet’s expanding presence in the autonomous driving space is contributing well. Considering the aforesaid factors, we expect 2022 total revenue to grow 10.3% from 2021.

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

Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+37.2% vs. +6.5%). The company’s revenue growth is being driven by higher demand for drugs like Trulicity, Taltz, and others. It is regularly adding promising new pipeline assets through business development deals.

Lilly expects to launch five new medicines by 2023 end including Mounjaro for type II diabetes (already launched) and donanemab for early Alzheimer's disease. Both drugs have multibillion dollar sales potential.

However, generic competition for several drugs, rising pricing pressure in the United States mainly on key drug, Trulicity, and price cuts in some international markets like China, Japan and Europe are some top-line headwinds. Estimates have gone down slightly ahead of Q3 results. Lilly has a negative record of earnings surprises in the recent quarters.

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

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

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>>>

Today's Must Read

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

Alphabet (GOOGL) Benefits From Cloud & Search Initiatives

Lilly (LLY) Potential New Products Key to Growth

Featured Reports

Visa (V) Rides on Improving Top Line & Solid Balance Sheet
Per the Zacks analyst, the company's rising revenues driven by new and renewed deals, and accretive buyouts has led to significant growth. A strong cash position also bodes well.

Buyouts Support Morgan Stanley (MS), Capital Markets A Woe
Per the Zacks analyst, acquisitions with an aim to be less capital-markets dependent, higher rates and solid balance sheet aid Morgan Stanley. Yet, capital markets ambiguity and rising costs are woes.

Expanding LNG & Clean Energy Assets Aid TotalEnergies (TTE)
Per the Zacks analyst TotalEnergies's presence in entire LNG value chain and expansion of clean energy generation through joint venture and acquisition will boost its performance.

New Customers to Drive TELUS (TU) Amid High Leverage
Per the Zacks analyst, Telus' rising customer base is augmenting its fiber footprint, thereby boosting its top line. However, stiff competition and the firm's high leverage remain concerns .

PerkinElmer's (PKI) Expanding Product Range Offsets Headwinds
Per the Zacks analyst, PerkinElmers expanding product portfolio along with accretive acquisitions provide growth opportunity amid unfavorable foreign exchange and a sluggish European macro environment

RPM Rides on Strategic Initiatives & Buyouts, Costs High
Per the Zacks analyst, cost-saving initiatives and acquisitions bode well for RPM. However, increased raw material costs, currency headwinds and inclement weather raise concerns.

Helmerich & Payne (HP) to Gain from Proprietary FlexRigs
The Zacks analyst believes that Helmerich & Payne's technologically-advanced FlexRigs help it to consolidate activity levels and maintain strong rig margins.

New Upgrades

Industrial and Laboratory Segments Aid Mettler-Toledo (MTD)
Per the Zacks analyst, Mettler-Toledo is riding on robust industrial and laboratory segments driven by strong core industrial business and solid demand across pharmaceutical and life science markets.

Ulta Beauty (ULTA) Gains on Robust Omnichannel Operations
Per the Zacks analyst, Ulta Beauty has been gaining on its robust omnichannel initiatives. Its buy online pickup in-store has been a key driver, contributing 25% to second-quarter e-commerce sales.

Transformation Program & Solid Business Model Aid Xerox (XRX)
The Zacks analyst is positive about Xerox's strategic transformation program to achieve productivity and cost reduction. Also, its solid post-sale-driven business model is a tailwind.

New Downgrades

Higher Costs & Weak Demand Hurt PPG Industries (PPG)
The Zacks analyst is concerned that weaker demand in Europe and China could hurt PPG's sales volumes. Higher raw material and logistics costs might also impact its results.

Higher Input Costs, Weak Auto Production Ail Celanese (CE)
Per the Zacks analyst, higher raw material costs will hurt the company's margins. Weaker automotive production due to the semiconductor shortage will also affect its automotive order patterns.

Rising Net Outflows, Expenses Hurt Artisan Partners (APAM)
Per the Zacks analyst, any rise in net outflows will hurt Artisan Partners' assets under management growth. Also, rising costs due to technology investments might keep the bottom line under pressure.

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Morgan Stanley (MS) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Visa Inc. (V) : Free Stock 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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