Wednesday, July 24, 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 SAP SE (SAP), Abbott Laboratories (ABT) and Citigroup Inc. (C), as well as two micro-cap stocks Team, Inc. (TISI) and Vaso Corporation (VASO). 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 >>>
SAP shares have outperformed the Zacks Computer - Software industry over the year-to-date period (+37.0% vs. +15.0%). The company’s second-quarter performance reflects solid momentum in its cloud business, especially rising demand for the Rise with SAP and Grow with SAP solutions. Strength in its business technology platform and the proliferation of generative AI is a plus.
Amid the volatile software landscape, its Business AI offerings saw steady momentum. Going ahead, it plans to invest heavily in Business AI capabilities to fuel innovation. Management reiterated its guidance for 2024 cloud revenues along with 2025 long-term targets, including cloud and total revenues.
SAP projects cloud revenues in the range of €17-€17.3 billion for 2024 and revenues of more than €21.5 billion for 2025. Continued weakness in the Software license and support business segment and rising costs, mainly due to the ongoing restructuring program, are likely to hurt its margins.
(You can read the full research report on SAP here >>>)
Shares of Abbott Laboratories have underperformed the Zacks Medical - Products industry over the past year (-7.9% vs. -1.8%). The company is witnessing significant runoff of COVID-19 testing-related sales is hurting Abbott’s Diagnostics growth. Tough macro conditions also pose a concern.
Nevertheless, Abbott’s pipeline is generating several new growth prospects, which will help sustain the positive momentum and contribute to the strong growth projection in 2024. Alinity, the company’s next-generation suite of systems, is a key driver in the core lab diagnostics business. EPD's impressive performance stems from the company’s unique business model.
The company is optimistic about its latest progress with biosimilars and expects this to significantly boost EPD sales, beginning 2025. Freestyle Libre CGM device is also on a great trajectory. Within Nutrition, after a period of hiccups, Abbott has finally reestablished itself as the market leader in the infant formula business.
(You can read the full research report on Abbott Laboratories here >>>)
Citigroup shares have outperformed the Zacks Banks - Major Regional industry over the year-to-date period (+25.5% vs. +21.7%). The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters. Second-quarter 2024 results reflect higher loan balances and strength in fee income.
The business transformation initiatives, including its consumer business exits and organizational simplification efforts, will help it in the long run. A decent liquidity position makes capital distribution seem sustainable. Increased cross-border payment activity will likely support its financials.
Yet, high funding cost is putting pressure in net interest income (NII). Also escalating expenses will remain a concern in near term. Compared with the industry, unfavorable return on equity reflects that the company is less efficient in using shareholders’ funds.
(You can read the full research report on Citigroup here >>>)
Shares of Team have outperformed the Zacks Building Products - Maintenance Service industry over the year-to-date period (+55.9% vs. +15.7%). This microcap company with market capitalization of $44.64 million saw improvement in its gross margin by 120 bps year over year to 24.4% in first-quarter 2024 through strategic cost management.
Team is expanding into high-growth markets like aerospace and renewable energy, targeting mid to high-single-digit revenue growth. The 2024 adjusted EBITDA guidance indicates a 48% mid-point improvement from that reported in 2023. Team offers specialized services across diversified industries, enhancing its competitive edge and mitigating sector-specific risks.
However, high debt levels of $307.2 million and decreasing cash reserves pose financial risks. Revenue declined 1.3% year over year in the first quarter of 2024 due to reduced activity in the IHT segment. Additionally, the company is sensitive to oil and gas market conditions, and intense competition could erode market share.
(You can read the full research report on Team here >>>)
Vaso's shares have underperformed the Zacks Medical - Instruments industry over the past year (-18.3% vs. -0.7%). This microcap company with market capitalization of $42.47 million is witnessing rising operating expenses, increased operating losses, dependency on key agreements, competitive pressures and regulatory challenges pose risks. Effective execution and adaptation to market trends are crucial for sustained growth.
Nevertheless, Vaso’s strong cash position and improved year-over-year operating cash flow provide a solid financial foundation, enabling investments in growth and operational efficiency. Despite a 1.6% decline in first-quarter 2024 revenues, consistent revenues from professional sales services ensure stability.
High deferred revenues and a significant IT services backlog signal future income stability. Investments in new programs and IT services align with market trends, particularly in telehealth and remote monitoring. Exclusive representation of GE HealthCare products and a presence in China offer competitive advantages.
(You can read the full research report on Vaso Corporation here >>>)
Other noteworthy reports we are featuring today include Synopsys, Inc. (SNPS), ONEOK, Inc. (OKE) and IQVIA Holdings Inc. (IQV).
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
SAP Rides on Strength in Cloud Business & AI Advancements
Solid Market Expansion, EPD Business Growth Aid Abbott (ABT)
Focus on Core Operations Aid Citigroup (C) Amid Rising Costs
Featured Reports
Synopsys (SNPS) Banks on Strong Product Menu, Contract Wins
Per the Zacks analyst, Synopsys' focus on strengthening its product portfolio is helping it cater to the growing demand in the EDA market. Deal wins at leading semiconductor companies is a tailwind.
IQVIA Gains From Global IT Infrastructure, Competition High
Per the Zacks Analyst, IQVIA's strong healthcare-specific global IT infrastructure places it firmly in the life sciences space. Rising competition from other players is an overhang.
Solid Beer Business to Boost Constellation Brands (STZ) Feat
Per the Zacks analyst, Constellation Brands is gaining from momentum in the beer business, backed by strong portfolio and share gains for the Modelo brand family, as well as improved operating margin.
Brown & Brown (BRO) Gains on Acquisitions, Cost Woes Linger
Per the Zacks analyst, Brown & Brown is set to grow on strategic acquisitions and mergers, which enhance its capabilities. However, escalating expenses drag margin expansion.
W.R. Berkley (WRB) Solid Insurance Business Aid, Cat Loss Ail
Per the Zacks analyst, W.R. Berkley's Insurance business is set to grow on rate increases, and improving premiums from international unit. Yet, exposure to cat loss, increasing expenses drag margins.
Domino's (DPZ) Banks on Solid Comps Growth Amid High Costs
Per the Zacks analyst, Domino's is benefiting from solid global comps growth on the back of its Hungry for MORE strategy and expansion initiatives. However, increased costs and expenses ail.
SpringWorks (SWTX) Banks on Ogsiveo, Overdependence a Concern
Per the Zacks analyst, SpringWorks' newly approved drug, Ogsiveo, for treating desmoid tumors has witnessed a strong start, driven by a robust launch. However, overdependence on Ogsiveo is a concern.
New Upgrades
Midstream Assets & Higher Fee-Based Earnings Aid ONEOK (OKE)
Per the Zacks analyst, ONEOK is set to benefit from fee-based earnings and midstream assets located in productive regions. Investments made to expand pipelines will drive its performance.
Expedia (EXPE) Benefits From Strengthening Gross Bookings
Per the Zacks analyst, Expedia is benefiting from growing gross bookings, owing to solid momentum in the 'booked room nights' metric.
Crocs' (CROX) Brand Strength and Other Efforts Bode Well
Per the Zacks analyst, Crocs has been gaining from solid consumer demand across the Crocs and HEYDUDE brands, aided by effective pricing actions. Also, lower inbound freight costs bolster margins.
New Downgrades
Delek US Holdings (DK) Weighed Down by Massive Debt Burden
The Zacks analyst believes that Delek US Holdings' high debt-to-capitalization ratio of 70.7% is a concern, as it restricts the company's financial freedom to tap into growth opportunities.
Ryanair (RYAAY) Continues to Grapple With Rising Expenses
The Zacks Analyst is worried about the escalating operating expenses due to high fuel costs, staff costs and higher air traffic control fees, which are likely to hurt Ryanair's bottom line.
High R&D Investment And Restructuring Cost Ail Lear (LEA)
Per the Zacks analyst, Lear's rising investments in R&D and technology are likely to dent its near-term margins. High operational restructuring charges also act as a headwind.
Check Out These Stocks Before They Report Earnings (Free Report)
A stock can jump +10-20% in a single day after a positive earnings surprise. What if you could get in early on those stocks? It could be the "holy grail" of stock picking for investors.
Zacks' new special report is designed to do exactly that. It reveals 5 promising stocks experts predict will crush earnings estimates and skyrocket in price.
Download Earnings Season Profit Secrets today, absolutely free.Citigroup Inc. (C) : Free Stock Analysis Report
Abbott Laboratories (ABT) : Free Stock Analysis Report
ONEOK, Inc. (OKE) : Free Stock Analysis Report
SAP SE (SAP) : Free Stock Analysis Report
Synopsys, Inc. (SNPS) : Free Stock Analysis Report
Team, Inc. (TISI) : Free Stock Analysis Report
IQVIA Holdings Inc. (IQV) : Free Stock Analysis Report
Vaso Corporation (VASO): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
