Morningstar's Quarter-End Stock Analyst Updates
Our analysts share their outlooks and insights on the top companies from each sector.
No one can predict the future--and that most certainly rings true for the stock market. However, investors can use quarterly earnings reports as a glimpse into how well a company could perform and align with their long-term expectations.
When there is a price drop, plunge in sales, or other unfavorable update on a company's quarterly earnings report, investors do not need to sound the alarms and flee. One misstep does not mean the long-term picture is completely askew--it is just one of the many blips every company encounters along the way.
Our stock analyst updates can provide investors with some short-term guidance as they plot the trajectory of their investments. Find out how these stocks are shaping up based on this quarter's earnings reports:
Adobe Delivers Picture-Perfect Quarter; FVE up to $400
Wide-moat Adobe ADBE reported strong third-quarter results, and provided quarterly guidance that was generally in line with Street expectations. Given results, we are raising our fair value estimate to $400 per share, from $350.
Salesforce Brings Home Epic Quarter; FVE Up to $253
Based on strong results and guidance we are substantially raising our fair value estimate to $253 per share, from $202 for wide-moat Salesforce. That said, like many software stocks, shares of Salesforce have run and we view them as approximately fairly valued.
Nvidia's Boosted Q2 Results Lift FVE to $250
We are raising our Nvidia fair value estimate to $250 per share from $200, as we incorporate a stronger near-term outlook.
Global Spending Weakness Hampers Cisco's Q4; FVE Stands
Narrow-moat Cisco Systems' 10% year-over-year revenue decline in the fourth quarter was slightly ahead of CapIQ consensus estimates, and the company performed well on the bottom line.
Uber's Delivery Demand Stays Strong, Mobility Suffers
We are maintaining our fair value estimate for the narrow-moat company and view shares as attractive.
Intel's Impressive Q2 Overshadowed by 7-Nanometer Delay
We are maintaining our $70 fair value estimate, as stronger near-term results and lower capital expenditure assumptions for 2020 are offset by lower long-term PC and data center CPU estimates.
Microsoft's Forward-Looking Metrics Positive; Raise FVE
While SMB generally remains weak, Azure remains strong, and gaming revenues surged as the global lockdowns continued throughout the quarter. Importantly, commercial bookings and RPO, two forward-looking metrics, both grew in excess of revenues for the quarter. We raise our fair value estimate to $228 from $196 per share.
Watch: Q2 Saw Tech Turbulence as Workers Sheltered at Home
Similar to the broader market, technology stocks have been on a wild ride over the past six months.
Unrealized Investment Gains Lift Berkshire's Q2 Results
We expect to leave our $342,500 ($228) per Class A (B) share fair value estimate in place.
Goldman Sachs’ Financials Restated for 1MDB Charge
We don’t anticipate a change to our $218 fair value estimate.
Effects of Coronavirus Easing on Mastercard
The pandemic has led to major declines for payment networks, but we maintain our fair value estimate and wide moat rating for this company.
Strong Flows and Market Gains Lift T. Rowe Price's AUM
The firm closed out the June quarter with a record $1.22 trillion in managed assets.
Visa Hit Hard by Coronavirus in Fiscal Q3
We remain comfortable with our full-year projections for Visa and will maintain our $166 fair value estimate and wide moat rating.
E-Trade's Revenue Boost Replaces Lost Interest Revenue
We don't anticipate making a material change to our $49.50 fair value estimate for the narrow-moat company.
TD Ameritrade's Transaction Revenue Is a Highlight
TD Ameritrade reported strong fiscal third-quarter results, as high trading volumes are offsetting a decline in interest-rate-related revenue.
BlackRock Closes June With Near-Record Number of Assets
We expect to increase our fair value estimate for the wide-moat firm.
Schwab's Acquisitions Are Creating Long-Term Value
We think the shares are undervalued.
Bank of America Books a Second Provisioning Charge
After incorporating these results into our forecast, and after incorporating a 50% probability of Joe Biden being elected and instituting his proposed tax hike, we are lowering our fair value estimate to $28 from $30.
Citigroup Remains Profitable in a Tough Second Quarter
While results aren't pretty, they remain better than some peers', and most importantly, Citi's capital levels are holding up as the common equity Tier 1 ratio improved to 11.5%.
In Q2, JPMorgan Again One of the Highest Quality Banks
As we've long pointed out, JPMorgan remains arguably one of the strongest and highest quality franchises under our coverage, and this showed in second-quarter results.
Pain Continues for Wells Fargo in Q2
The pain continued for Wells Fargo in the second quarter, as the bank reported a net loss of $2.4 billion, or $0.66 per share.
GE Will Take Longer to Get Out of a Hole; Lower FVE
Narrow-moat-rated General Electric had a difficult second quarter. We cut our fair value estimate by about 6.5% to $9.90 (from $10.60 previously).
Boeing Raises and Conserves Cash in Second Quarter
We lower our fair value estimate for the company as it awaits its MAX re-entry and a better environment.
3M Had Sluggish Q2; We Lower FVE Slightly
After reviewing wide-moat-rated 3M's latest second-quarter 2020 results, we slightly lower our fair value estimate by about 2% to $166 per share (from $170 previously).
Pandemic Causes Southwest's Passenger Traffic to Dry Up
The no-moat firm was ravaged by the coronavirus in the second quarter.
American's Revenue Strategy Risky, but no Other Option
We are reducing our fair value estimate to $14.50 per share from $15, and we remind investors we think that American Airlines' considerable financial leverage widens the dispersion of potential equity values relative to peer airlines.
United Has Long Path to Recovery From COVID-19 Pandemic
We maintain United's no-moat rating and fair value estimate despite second-quarter performance.
Delta Reports Difficult Q2 but Able to Cut Costs
No-moat-rated Delta reported a difficult second quarter, and our fair value estimate for the stock is $42.50 per share.
Stellar Q2 Sales For Target; Shares Rich Target’s balanced online and in-store growth in the quarter (with the latter seeing 11% comparable expansion despite the pandemic and rising e-commerce penetration) reinforces our faith in its use of stores as omnichannel fulfillment centers, but the shares’ trading price leaves no room for error despite accelerating retail digitization that creates cost and price pressure. So, we suggest long-term investors await a more attractive entry point.
Strong U.S. Marks Propel Walmart’s Second Quarter
We expect to raise our $111 per share valuation for wide-moat Walmart by a mid-single-digit percentage.
P&G Continues to Clean Up in Q2; Valuation No Bargain
We think the company has the wherewithal to withstand impending pressures.
Kraft Heinz Sees Solid Q2; Shares Still Offer Upside
We see little in the results to warrant a material change to our $48 fair value estimate for this no-moat company.
Anheuser-Busch Does Well in Q2 Despite Headwinds
After a respectable second quarter, we maintain our wide economic moat rating fair value estimate for the firm.
Tobacco Trends Improve; Altria Still Undervalued
We are modestly raising our forecasts for this year, but retain our $54 fair value estimate and wide moat rating.
Long-Term Opportunity in Coca-Cola Despite Uncertainty
No one expected a stellar second quarter, but the beverage giant can overcome short-term weakness.
Pepsi's Snack Business Helps It Navigate Marketplace
Sales came in at $15.9 billion for the quarter, a 3% year-over-year decline, for the wide-moat company.
Watch: Pandemic-Focused Buyers Shaped Consumer Defensive's Quarter
Consumer defensive lagged the broader market's impressive rebound this quarter, generating a nearly 12% return compared with the market's more than 20% gain through June 23, but we think the space has become more heated.
Cost-Cutting Helped Macy's Limit Pain from Shutdowns
The no-moat company's operating loss was not as bad as we feared. We view shares as undervalued.
Home Depot Benefits From Robust Sales Growth
We plan to raise our $184 fair value estimate for wide-moat Home Depot by a high-single-digit rate after the second quarter.
Ford's Q2 Better Than Guided, Improvement Expected 2021
Ford reported second-quarter results ravaged by the coronavirus that forced shutdowns, including six weeks of idle time in North America.
Amazon's New Opportunities in Coronavirus; FVE to $3500
Following a paradigm-shifting update from Amazon, we raise our five-year average annual revenue outlook to 22% from 19% and our five-year operating margin target to 10% from 8%. We increase our fair value estimate to $3,500 per share
Starbucks Poised for Post-COVID-19 Growth Acceleration
We see several ways that the company is positioned to take market share.
Drive-Thrus Offer McDonald's Advantages
Despite industry uncertainty, we are maintaining our fair value estimate for the wide-moat company.
Tesla Posts a Profit, Which May Lead to S&P 500 Inclusion
Tesla reported profitable second-quarter GAAP results, and adjusted diluted EPS of $2.18 rose significantly from the prior year's quarterly loss of $1.12.
Coronavirus Slams Wide-Moat Nike's Q4 Results
We do not think the pandemic will have any impact on the power of the brand, the source of our wide moat rating, and think it highlights its e-commerce, which jumped 75% in the quarter.
Abbott's New Antigen Test is Big Step Forward for U.S.
We think Abbott's new antigen test will increase diagnostic testing capacity in the U.S. We are raising our fair value estimate for the narrow-moat company.
J&J Strengthens Pipeline With Momenta Acquisition
This acquisition reinforces the intangible assets supporting J&J's wide moat, and we plan to raise our fair value estimate for Momenta.
Favorable Tax Developments Boost CVS Outlook
We continue to view shares as undervalued for the narrow-moat company.
Maintaining our $85 FVE for Gilead Following Steady Q2
Management raised its product sales guidance for 2020 by a range of $1.2-$2.8 billion after incorporating coronavirus headwinds and highly uncertain sales assumptions for remdesivir. This guidance fits with our assumption of $2 billion in remdesivir sales in 2020, and we're maintaining our $85 per share fair value estimate for the firm.
Pfizer Posts Slightly Better-Than-Expected Q2
We don't expect any significant fair value estimate changes for this wide-moat company based on the minor outperformance.
Wide-Moat J&J Posts Better-Than-Expected Q2
The company's drug group helps offset COVID-19 pressure on device sales.
UnitedHealth Reports Strong Second Quarter
We are not making any changes to our 2020 outlook and fair value estimate for the narrow-moat company.
Watch: 3 Reasons Healthcare Is Showing Fit Performance
The sector has had some nice performance over the trailing 12 months.
Disney Posts Mixed Q3 due to Coronavirus
Despite a COVID-19-related revenue drop, the long-term outlook is positive as Disney continues to expand its direct relationships with consumers around the world. We maintain our wide moat and our $127 fair value estimate.
Alphabet's Q2 Beats Expectations; FVE to $1,690
Cloud partially offsets ad revenue decline.
Facebook Beats Expectations; Raising FVE to $265
Due to the strong second-quarter numbers, we have increased our projections for Facebook for this year and 2021 which resulted in a $265 fair value estimate, up from $245.
Verizon Shows Stability During Second Quarter
Overall, Verizon is performing broadly in line with our expectations, and we don't plan to change our $59 fair value estimate or narrow moat rating.
AT&T Sees Wireless Stability, Stock Remains Attractive
We don't expect to make a change to our fair value estimate for the narrow-moat company.
Netflix Gains as Viewers Stay In; Sarandos Now Co-CEO
We are raising our FVE to $200 from $160 to account for the revenue impact of the larger subscriber base and slightly faster margin expansion than previously expected.
Exxon Reports Q2 Loss, but Dividend Looks Safe
We don't expect to change our fair value estimate or narrow-moat rating.
Enterprise Resilient in a Brutal Environment
Diversity of operations cushions results.
Chevron Acquires Noble Energy, but Fit Is Questionable
Chevron announces acquisition of Noble Energy, but this won't change its fair value estimate or moat rating.
Watch: Energy Sees Boost in Second Quarter
But first-quarter wallop still stings.
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