Merrill Lynch Has 5 Stocks to Buy Going Into Earnings Season

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Merrill Lynch has a Buy rating on Cognizant and has a $70 price objective, marginally above the consensus analyst price target of $69.52. The firm sees upside risks to its earnings per share (EPS) estimate of $0.79, in line with consensus and $0.78 to $0.80 guidance.

Cognizant shares were trading $60.44, essentially flat on the day, and within a 52-week range of $51.22 to $69.80.


Merrill Lynch also has a Buy rating on Ecolab Inc. (NYSE: ECL), considering that energy concerns are receding with the oil price rebound. The firm noted that Ecolab’s Energy segment is 27% of revenue.

Merrill Lynch raised the price objective by $6 to $128, based on 24 times expected 2017 earnings of $5.25 per share. Its valuation also reflects Ecolab’s high mix of recurring revenue and somewhat defensive business model.

Ecolab shares traded at $115.05 Thursday morning, up 0.8% and above the consensus target price of $113.35. The 52-week range is $98.62 to $122.48.

First Data

First Data Corp. (NYSE: FDC) shares were said to be down 20% so far in 2016, even as its risk profile improves. Merrill Lynch noted that high leverage, a lack of guidance and negative pricing/mix trends in acquiring merchants made for a rough prior quarter.

The firm does not get the sense that First Data is changing its stance on guidance, but management has said at recent investor conferences that trends remain relatively stable. The company also refinanced $4.6 billion of $6.0 billion in debt maturing in 2018 during the first quarter. Merrill Lynch estimates that free cash flow could cover the remaining $1.3 billion in 2018 debt maturing.

Merrill Lynch has a Buy rating on First Data and a $17 price objective. The stock was trading down fractionally at $12.87 late Thursday morning, versus a consensus target price of $16.00 and a 52-week range of $8.37 to $17.99.


Also rated Buy at Merrill Lynch is Nielsen Holdings PLC (NYSE: NLSN), with the firm having increased its optimism around Watch execution. After two years of fairly flat performance, Nielsen shares were up about 14% so far this year. This call follows recent management meetings, a data factory tour, and a new deal with Dish Network for set-top box data.

Merrill Lynch likes Nielsen’s predictable constant currency revenue growth of 4% to 6% and a low double-digit growth in EPS. It also likes the company’s defensive nature, with 70% recurring revenue.

Nielsen’s price objective was raised by $2 to $60 to reflect increased optimism around execution. Nielsen shares were last seen down three cents at $53.14, with a consensus analyst price target of $56.06 and a 52-week range of $42.76 to $53.53.