Rising Earnings Estimates and Analyst Reports for JPMorgan, Exxon Mobil & Adobe

Thursday, March 4, 2021

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily provides an update on the Q4 earnings season, in addition to featuring new research reports on 16 major stocks, including JPMorgan Chase (JPM), Exxon Mobil (XOM) and Adobe (ADBE). 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 >>>

Earnings Season Update

We saw a significant increase in aggregate 2021 Q1 earnings estimates as the 2020 Q4 earnings season unfolded, which is now close to the end point (only 7 S&P 500 members are still to report Q4 results).

As we have all along been pointing out, the Q4 earnings season turned out to be better than expected, with positive earnings and revenue growth resuming ahead of schedule and favorable management commentary helping estimates for 2021 Q1 and beyond to steadily go up.

Total S&P 500 earnings for 2021 Q1 are now expected to be up +18.5% from the same period year. This is up from +11.7% in mid-December 2020 and +12.6% in early January 2021.

Estimates for full-year 2021 have similarly been going up as well, with full-year 2021 earnings for the index now expected to be up +28.6% on +9% higher revenues. This works out to an index 'EPS' of $167.55 for 2021, up from $130.33 in 2020 and $156.62 in pre-pandemic 2019. For a detailed look at the Q4 earnings season and evolving expectations for the coming periods, please check out our weekly Earnings Trends report >>>>An All-Around Improving Earnings Picture

JPMorgan shares have outperformed the Zacks Major Banks industry over the past year (+34.2% vs. +25.4%), as the stock has responded to the steepening yield curve. The Zacks analyst believes that JPMorgan is better posittioned to comptialize on the improving interest rate backdrop given branch openings in new regions, inorganic expansion strategy and strong mortgage banking business.

Gradual economic recovery amid vaccine breakthroughs will aid. The company’s impressive capital deployments reflect earnings strength and solid balance sheet. These capital deployment actions are likely to enhance shareholder value.

However, the Fed's accommodative policy and near-zero rates are expected to hurt interest income and margins. Additionally, coronavirus-induced economic downturn has hampered business activities, thereby hurting loan demand.

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

Shares of Exxon Mobil have gained +44.6% in the last six months against the Zacks Integrated International Oil industry’s gain of +33.5%. The Zacks analyst, however, believes that lower refining margin, owing to the coronavirus pandemic, has been hurting the firm’s downstream unit.

Also, owing to huge counter-cyclical capital spending program, which has been affecting its cash flow generation capabilities, the company may need to compromise on its balance sheet strength.

Meanwhile, the company estimates gross recoverable resource of nearly 9 billion oil-equivalent barrels from offshore Guyana discoveries. Moreover, compared to 2019, this energy firm projects annual structural expense savings of $6 billion by 2023, which will aid its bottom line.

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

Adobe shares have lost -8.9% over the past three months against the Zacks Software industry’s gain of +3.4%. The Zacks analyst believes that Adobe is benefiting from strong demand for its creative products.

The company’s Creative Cloud, Document Cloud and Adobe Experience Cloud products are driving the top-line growth. Further, rising subscription revenues and solid momentum across the mobile apps are major positives.

Additionally, growth in emerging markets, robust online video creation demand and improving average revenue per user are tailwinds. However, lower end-market demand and exposure to Europe remain overhangs. High acquisition expenses do not bode well for its margin expansion. 

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

Other noteworthy reports we are featuring today include Advanced Micro Devices (AMD), Petrobras (PBR) and Canadian Pacific Railway (CP).

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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

New Branches and Buyouts Aid JPMorgan (JPM) Amid Low Rates

ExxonMobil (XOM) Banks on Guyana Discoveries, Refining Weak

Adobe (ADBE) Rides on Growing Adoption of Cloud Applications

Featured Reports

AMD Banks on Strength in Product Portfolio Amid Competition

Per the Zacks analyst, Advanced Micro Devices is benefiting from strong uptake of latest Ryzen, EPYC and semi-custom processors.

Pre-Salt Reserves Boosts Petrobras (PBR), Debt Pile Hurts

Petrobras' stakes in Brazil's attractive pre-salt oil reservoirs should boost its earnings outlook. However, the Zacks analyst is concerned over the company's huge debt load of $63.2 billion.

Canadian Pacific (CP) Backed By Dividends Amid Freight Woes

The Zacks analyst is impressed by the company's measures to reward shareholders through dividends and share buybacks.

Store Expansion to Aid Ross Stores (ROST), Soft Traffic Hurts

Per the Zacks analyst, Ross Stores' store expansion plans is likely to increase penetration in existing and new markets.

New Fleet to Aid Carnival (CCL), Cruise Cancellation Hurts

Per the Zacks analyst, addition of its new ship Enchanted Princess, to its global fleet of Princess Cruises to drive growth.

Verisk (VRSK) Benefits From FAST Acquisition, Debt Woes Ail

Per the Zacks analyst, the acquisition of FAST enhanced Verisk's data and analytics solutions in life insurance and annuities market. A debt-laden balance sheet is a concern.

Investment on Infrastructure & Renewable Aid Eversource (ES)

Per the Zacks analyst, Eversource's investment of $17.03 billion through 2021-2025 period to enhance clean electricity generation and strengthen its infrastructure will boost its profitability.

New Upgrades

Inorganic Growth Aid RenaissanceRe (RNR), High Costs Hurt

Per the Zacks analyst, its rising gross premiums written, which has doubled over a span of five years on the back of its segments has led to overall growth.

Iovance's (IOVA) Progress With Lead Candidate Encouraging

Per the Zacks analyst, Iovance is progressing well with its lead pipeline candidate, lifileucel. Multiple regulatory application for its approval in different indications are expected this year.

High Housing Demand to Drive Aimco (AIV) Despite Rent Woes

Per the Zacks analyst, low mortgage rates and strong demand for residential assets will drive Aimco's development business. Yet, amid unfavorable mandates, rent collections remain challenging.

New Downgrades

Weak New Business Growth Hurts Autodesk's (ADSK) Prospects

Per the Zacks analyst, Autodesk's growth will continue to be negatively impacted by the sluggish new business growth. Moreover, ongoing business model transition is likely to hurt growth.

Service Corporation (SC) Hurt by Low Preneed Funeral Revenues

Per the Zacks analyst, increased social distancing amid the pandemic has been hurting Service Corporation's preneed revenues in the funeral segment, and the company's core average revenue per service.

Low Advertising Spend, High Debt Hurt OUTFRONT Media (OUT)

Per the Zacks analyst, customer advertising expenditure has taken a hit amid the pandemic, reducing the demand for OUTFRONT Media's billboard displays. Also, a leveraged balance sheet is worrisome.

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Petroleo Brasileiro S.A. Petrobras (PBR) : Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
 
Adobe Inc. (ADBE) : Free Stock Analysis Report
 
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