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Top Analyst Reports for Procter & Gamble, Applied Materials & Automatic Data Processing

Tuesday, March 7, 2023

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 The Procter & Gamble Company (PG), Applied Materials, Inc. (AMAT) and Automatic Data Processing, Inc. (ADP). 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 >>>

Shares of Procter & Gamble performed in-line with the broader market over the past year (down -4.7% vs. -4.5% for the S&P 500 index), but have lagged this year (-7.8% vs. +5.5%). Driving this performance variance is trends in market sentiment that appears to have moved away from the relatively safer parts of the market as represented by P&G.

The company posted better-than-expected top and bottom lines for the second consecutive quarter. Its organic sales improved, driven by robust pricing and a favorable mix, along with strength across segments.

Improved productivity amid cost headwinds has also aided the results Driven by the company’s progress against its plans, management has raised its sales view for fiscal 2023.

However, Procter & Gamble has been witnessing commodity cost inflation, increase in freight costs, product and packaging investments and other impacts hurt margins. Also, the company retained its drab earnings view for fiscal 2023 due to persistence of inflation, higher freight and currency woes.

(You can read the full research report on Procter & Gamble here >>>)

Applied Materials shares have modestly outperformed the Zacks Semiconductor Equipment - Wafer industry over the past six months (+26.3% vs. +24.4%). The company is witnessing strong momentum across Semiconductor Systems and Applied Global Services remained a positive. Solid demand for semiconductors drove the top line growth. Further, rising multi-year subscription bookings contributed well.

Notably, the demand for foundry logic is expected to remain strong, courtesy of the rising need for specialty nodes in automotive, power, 5G rollout, IoT, communications and image sensor markets. Also, growing demand for semiconductor and wafer fab equipment is a tailwind.

However, the pandemic-led supply-chain constraints and market uncertainties are major headwinds. Sluggishness in the Display segment remains a concern. Per our estimate, the segment is likely to witness a year-over-year fall of 54.7% in fiscal 2023.    

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

Shares of Automatic Data Processing have outperformed the Zacks Outsourcing industry over the past year (+9.8% vs. +4.8%). The company continues to enjoy a dominant position in the human capital management market through strategic buyouts like Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company.

It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. Further, it continues to innovate, improve operations and invest in its ongoing transformation efforts.

However, ADP faces significant competition in each of its product lines. Failure to remain technologically updated might reduce the demand for its solutions and services. Rising expenses due to investment in transformation efforts remains a concern. High debt remains a concern.

(You can read the full research report on Applied Data Processing here >>>)

Other noteworthy reports we are featuring today include Cadence Design Systems, Inc. (CDNS), Microchip Technology Incorporated (MCHP) and Fastenal Company (FAST).

Director of Research

Sheraz Mian

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

High Demand & Productivity Plan Drives P&G's (PG) Growth

Applied Materials (AMAT) Rides on Foundry & Logic Spending

Solid Business Model Boosts ADP, Low Current Ratio Hurt

Featured Reports

Cadence (CDNS) Benefits from Product Portfolio & Acquisitions
Per the Zacks analyst, Cadence's performance is gaining from robust demand for the company's diversified product portfolio. Synergies from recent acquisitions also bode well.

E-commerce Business Benefits Fastenal (FAST), Inflation Hurt
Per the Zacks analyst, Fastenal benefits from robust e-commerce business and cost-control initiatives. However, inflationary pressures and supply chain risks hurt growth prospects.

Digital Transformation and Acquisitions Aid Tyler (TYL)
Per the Zacks analyst, Tyler is benefiting from ongoing digital transformations and adoption of its cloud-based solutions. Moreover, strategic acquisitions like Quatred and Safeground are a positive.

Empaveli, Syfovre Fuel Growth For Apellis (APLS)
Per the Zacks analyst, the encouraging uptake of Empaveli and approval of additional drugs should fuel growth for Apellis. However, Apellis faces stiff competition for its products.

Robust Projects Aid Canadian Solar (CSIQ), High-Cost Woes
Per the Zacks Analyst, strong pipeline of projects and expanding global footprint boost Canadian Solar's long-term growth prospects. Yet, higher logistics and input costs remains a challenge.

New Upgrades

Robust Product Portfolio & Bookings Aids Microchip (MCHP)
Per the Zacks analyst, Microchip's expanding product portfolio, solid demand for microcontrollers and bookings growth across industrial, data center, and automotive end markets are key catalysts

Urban Outfitters' (URBN) FP Movement Initiative Bodes Well
Per the Zacks analyst, Urban Outfitters' strategic efforts remain on track. In fourth-quarter fiscal 2023, the FP Movement brand witnessed an outstanding quarter, generating 38% retail segment growth.

New Downgrades

Callon (CPE) to be Hurt by Aggressive Capital Spending Budget
Per the Zacks analyst, Callon's higher 2023 operational capital budget of $1,000 million can affect its profitability. Also, the company's debt-laden balance sheet is concerning.

Slow Housing Demand, Costs & Supply Woes Hurt KB Home (KBH)
Per the Zacks analyst, softening housing demand, increased material and labor costs, and supply chain disruptions adversely impact KB Home's growth potential.

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

Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report

Procter & Gamble Company (The) (PG) : Free Stock Analysis Report

Fastenal Company (FAST) : Free Stock Analysis Report

Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report

Applied Materials, Inc. (AMAT) : Free Stock Analysis Report

Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report

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Zacks Investment Research