Monday, July 29, 2024
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 Goldman Sachs Group, Inc. (GS), RTX Corporation (RTX) and Regeneron Pharmaceuticals, Inc. (REGN), as well as a micro-cap stock Optex Systems Holdings, Inc (OPXS). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.
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 Goldman Sachs have outperformed the Zacks Financial - Investment Bank industry over the past six months (+29.0% vs. +18.4%). The company’s second-quarter results reflected improved capital ratios and lower provisions. Goldman Sachs’ refocus on the core strengths of IB and trading businesses through restructuring initiatives and opportunistic buyouts will boost its presence in overseas markets.
Improvement in global deal-making and underwriting activities and Goldman’s leading position will likely support IB revenue growth. The bank’s decent liquidity position will aid capital distribution moves.
Yet, its global banking & markets division will likely be under pressure due to the volatile nature of capital markets and uncertainty in client volumes. A rise in costs will likely hinder its bottom line. Given the current geopolitical concerns, high dependence on overseas revenues remains a woe.
(You can read the full research report on Goldman Sachs here >>>)
RTX shares have outperformed the Zacks Aerospace - Defense industry over the past year (+29.6% vs. -5.1%). The company’s ended second-quarter 2024 on a solid note, with both its revenues and earnings having surpassed their respective Zacks Consensus Estimate. It continues to receive ample orders for its wide range of combat-proven defense products.
A steadily recovering commercial air traffic has been bolstering commercial OEM as well as commercial aftermarket sales for the company. RTX holds a solid financial position, which enables it to make successful share repurchases.
However, rising crude price tends to put cost pressure on airlines that may affect the operating results of commercial OEM producers like RTX. The company may also be affected if China enforces its announced sanctions against its missile and defense unit. Supply-chain challenges also pose a threat to RTX.
(You can read the full research report on RTX here >>>)
Shares of Regeneron have outperformed the Zacks Medical - Biomedical and Genetics industry over the past year (+45.4% vs. -2.0%). The company’s lead drug Eylea's sales have been under pressure due to competition from Roche’s Vabysmo. To counter the decline in Eylea sales, Regeneron developed a higher dose of the drug.
The initial uptake of Eylea HD is encouraging as Eylea patients transition to the higher dose. However, it may be a while before the higher dose can compensate for the loss incurred in Eylea sales.
Nonetheless, Dupixent maintains momentum, driven by growing demand in the approved indications of atopic dermatitis, asthma, chronic rhinosinusitis with nasal polyposis, eosinophilic esophagitis and prurigo nodularis. The approval of Libtayo has diversified the portfolio. The bottom-line estimate has increased ahead of the second-quarter results.
(You can read the full research report on Regeneron here >>>)
Optex Systems shares have outperformed the Zacks Aerospace - Defense Equipment industry over the year-to-date period (+22.7% vs. +15.9%). This microcap company with market capitalization of $ 54.69 million shows promising investment prospects due to a robust order backlog exceeding $47 million, ensuring a steady revenue stream through mid-2025. Key contracts include laser-protected periscopes and optical assemblies for military applications.
Optex Systems’ commitment to technological innovation, evident in advanced products like Laser Interference Filter assemblies, positions it well in the rapidly evolving defense sector. Financially, Optex has improved, with net income rising to $1.5 million in the first half of 2024, indicating effective cost and resource management. Strategic relationships with defense contractors enhance its market stability and growth potential.
However, potential defense budget cuts, supply chain disruptions, and high customer concentration pose risks. Loss of major clients or reduced defense spending could impact revenues.
(You can read the full research report on Optex Systems here >>>)
Other noteworthy reports we are featuring today include 3M Company (MMM), Aon plc (AON) and Charter Communications, Inc. (CHTR).
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
Strong IB Revenues Benefit Goldman (GS) Amid Rising Costs
Order Growth Continues to Aid RTX, Amid Jet Fuel Price Hike
Dupixent Profits Fuels Regeneron (REGN), Eylea Decline A Woe
Featured Reports
Transportation & Electronics Drives 3M (MMM), High Debt Ails
Per the Zacks analyst, 3M will benefit from robust momentum in the Transportation and Electronics unit, led by strength in the electronics end market. However, high debt obligation remains a concern.
Aon's (AON) New Business Growth & Retention Aid, High Costs Hurt
Per the Zacks analyst, new business generation, strong retention and acquisitions are helping AON enhance its capabilities, which, in turn, is boosting profits. However, high costs remain a concern.
Mobile Service, Internet Sales Growth Benefits Charter (CHTR)
Per the Zacks analyst, growth in residential mobile service, Internet and commercial revenues aids Charter's growth partly offset by lower video revenues.
Major International Gas Projects Aid Baker Hughes (BKR)
Baker Hughes' major gas technology contracts in Algeria, Latin America and the Asia Pacific should aid its revenues. However, increasing total costs and expenses concern the Zacks analyst.
FLEX Rides on Cloud, Data Center Demand Amid Macro Headwinds
Per the Zacks analyst, strength in key end-markets - cloud, data centre power, auto and medical devices are driving its performance. However, it expects macro headwinds to persist throughout 2024.
Global Dental Arm Aids Henry Schein (HSIC) Amid Macro Issues
The Zacks analyst is optimistic about Henry Schein's robust pipeline of product innovations planned across various geographies in 2024. Yet, macroeconomic pressure is worrisome.
Knight-Swift (KNX) Benefits From Dividend Amid Cost Woes
The Zacks analyst likes the shareholder-friendly measures adopted by Knight-Swift. However, a rise in operating expenses and high debt are likely to hurt the bottom line.
New Upgrades
Expanding Clientele, Hybrid-Working Solutions Aids Zoom (ZM)
Per the Zacks analyst, Zoom is benefiting from solid adoption of hybrid-working solutions like Zoom Phone and expanding subscriber base driven by the need for digital transformation among enterprises.
Infrastructure Investments, Clean Assets Aid NiSource (NI)
Per the Zacks analyst, NiSource' investment of around $16.4 billion through 2028, will strengthen its infrastructure, and adding more clean assets in generation portfolio will drive its performance.
Operational Efficiency & Investments Aid Silgan (SLGN)
Per the Zacks analyst, Silgan is gaining from disciplined capital allocation model and strong operational performance. Investments in capacity expansions and acquisitions will also drive results.
New Downgrades
Lower Volumes are a Concern for Lamb Weston's (LW) Top Line
Per the Zacks analyst, soft volumes are a concern for Lamb Weston. In Q1, management expects sales to decline in the mid- to high single digits, with volume anticipated to fall by mid-single digits.
NXP Semiconductors (NXPI) Hurt by Sluggish Automotive Market
Per the Zacks analyst, NXP Semiconductors is suffering from softness in the automotive end-market owing to increased inventory corrections by direct Tier 1 customers.
Reduced Visitation & Weather Woes Hurt Vail Resorts (MTN)
Per the Zacks analyst, Vail Resorts's is likely to be hurt by reduced visitation levels and weather-related operational disruptions. Also, interest rate fluctuations pose concern.
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Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
3M Company (MMM) : Free Stock Analysis Report
Charter Communications, Inc. (CHTR) : Free Stock Analysis Report
Aon plc (AON) : Free Stock Analysis Report
Optex Systems Holdings Inc. (OPXS): Free Stock Analysis Report
RTX Corporation (RTX) : Free Stock Analysis Report
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