Monday, January 27, 2025
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 ServiceNow, Inc. (NOW), Alibaba Group Holding Limited (BABA) and Union Pacific Corporation (UNP), as well as a micro-cap stock Natural Health Trends Corp. (NHTC). 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 >>>
Ahead of Wall Street
The daily 'Ahead of Wall Street' article is a must-read for all investors who would like to be ready for that day's trading action. The article comes out before the market's open and attempts to make sense of that morning's economic releases and how they will affect that day's market action. You can read this article for free on our home page and can actually sign up there to get an email notification as this article comes out each morning.
You can read today's AWS here >>> Ease-of-Use AI Platform DeepSeek Send U.S. Pre-Markets Reeling
Today's Featured Research Reports
Shares of ServiceNow have outperformed the Zacks Computers - IT Services industry over the past year (+40.8% vs. +15.5%). The company has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation.
ServiceNow had 2020 total customers with more than $1 million in annual contract value (ACV) at the end of third quarter, which represents 14% year-over-year growth in customers. ServiceNow had 15 deals greater than $5 million in net new ACV and six deals of more than $10 million. It closed 96 deals greater than $1 million net new ACV.
ServiceNow had 44 new Now Assist customers spending more than $1 million in ACV, including six with more than $5 million and two with more than $10 million. It is riding on an expanding partner base. However, NOW is suffering from persistent inflation, stiff competition, and a challenging macroeconomic environment.
(You can read the full research report on ServiceNow here >>>)
Alibaba shares have gained +23.7% over the past year against the Zacks Internet - Commerce industry’s gain of +43.8%. The company is benefiting from strong momentum across its international commerce retail business. Solid combined order growth in AIDC’s retail businesses and strength in AliExpress’ Choice are contributing well.
Growing international commerce wholesale business, thanks to strength in cross-border-related value-added services, is a tailwind. Expanding China's wholesale commerce business remains a major positive. Robust local consumer services and Cainiao logistics services are further driving top-line growth.
Strength in Lazada, AliExpress and Trendyol is expected to continue benefiting Alibaba’s international business. However, rising expenses related to new initiatives are a concern. Macroeconomic uncertainties and unfavorable foreign exchange fluctuations remain risks.
(You can read the full research report on Alibaba here >>>)
Shares of Union Pacific have outperformed the Zacks Transportation - Rail industry over the past year (+3.7% vs. -0.6%). The company is looking to cut costs to combat the revenue weakness. In the meantime, the railroad operator continues paying dividends. UNP is also active on the buyback front. UNP repurchased shares worth $1.5 billion in 2024. Considering all these factors, investors are advised to wait for a better entry point.
However, Union Pacific is suffering big time as ecommerce sales have normalized and consumer markets have softened. Geopolitical uncertainty and high inflation continue to hurt consumer sentiment.
Reduced fuel surcharge revenues, too, are a concern. Due to these headwinds, volumes declined 1% year over year in 2023. Operating ratio (operating expenses as a percentage of revenues) deteriorated 220 basis points in 2023, mainly due to revenue woes. Given the soft freight market scenario, the revenue weakness is likely to persist.
(You can read the full research report on Union Pacific here >>>)
Natural Health Trends shares have underperformed the Zacks Consumer Products - Discretionary industry over the past year (-13% vs. +23.4%). This microcap company with market capitalization of $55.61 million is facing rising costs and regulatory hurdles limit growth. Cash flow constraints and intense competition add pressure.
Nevertheless, Natural Health maintains strong liquidity with $46.3 million in cash and marketable securities as of Sept. 30, 2024, and generated $0.5 million in operational cash flow (excluding tax payments) year to date. Operating losses improved from $1.4 million to $0.9 million year to date, supported by robust gross margins of 74.1%.
The company leverages market leadership in Hong Kong and China (78% of revenue) but faces risks from weak consumer spending and overreliance on these regions. Efforts in product expansion, digital initiatives, and market diversification (e.g., Colombia entry) position it for growth, but declining active membership (-10.9% year over year) poses challenges.
(You can read the full research report on Natural Health Trends here >>>)
Other noteworthy reports we are featuring today include Elevance Health, Inc. (ELV), The Travelers Companies, Inc. (TRV) and Diamondback Energy, Inc. (FANG).
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
Growing Customer Base & Partnerships Aid ServiceNow (NOW)
Alibaba (BABA) Gains From International Commerce Businesses
Union Pacific (UNP) Dividends Strong Despite Revenue Crisis
Featured Reports
Higher Premiums Aid Elevance Health (ELV) Amid Cost Woes
Per the Zacks analyst, rising premiums, product revenues and an expanding product portfolio are strengthening Elevance Health's market position. However, high expenses put pressure on margins.
Strong Renewal Rate Change, Retention Aid Travelers (TRV)
Per the Zacks analyst, Travelers is set to gain from continued strong renewal rate change and retention and increase in new business. Underwriting excellence, solid investment income drive earnings.
Diamondback (FANG) to Benefit from Low Breakeven Costs
The Zacks analyst likes Diamondback Energy's extremely low oil price breakeven costs, wherein the company needs the commodity to be at just $40 a barrel to be profitable.
CBRE Group (CBRE) Aided by Outsourcing Business & Buyouts
Per the Zacks Analyst, a resilient business model, healthy outsourcing business, strategic buyouts and technology investments bode well for CBRE Group despite macroeconomic uncertainties.
Sysco (SYY) Gains From Rise in Food-Away-From-Home Channel
Per the Zacks Research Analyst, Sysco is capitalizing on the expanding food-away-from-home channel, positioning itself for continued growth despite broader market challenges.
5G Expansion & Strong Sales Aid Telefonica's (TEF) Prospects
Per the Zacks analyst, Telefonica's robust 5G reach in Spain, Germany, and Brazil is bolstering its market position. Steady mobile handset and retail sales is driving Telefonica Espana's performance.
Menu Innovation Aids Darden's (DRI) Prospects, Costs High
Per the Zacks analyst, Darden is likely to benefit from menu innovation, new restaurant openings and Uber partnership. However, rise in labor costs are a concern.
New Upgrades
Amvuttra & Givlaari Boosts Alnylam (ALNY), Pipeline Holds Promise
Per the Zacks Analyst, Amvuttra and Givlaari sales are expected to continue to boost Alnylam's sales. Its existing collaboration agreements to develop pipeline candidates are also progressing well.
Increasing Defense Orders From Pentagon Aids Leidos (LDOS)
Per the Zacks analyst, Leidos Holdings is likely to benefit from increasing defense order growth from the Pentagon and US allies. The company also boasts a solid solvency position.
Strong SMB clientele Aids BILL Holdings' (BILL) Prospects
Per the Zacks analyst, BILL is benefiting from an expanding small and medium business (SMB) clientele, as well as a diversified business model.
New Downgrades
High Operating Expenses & Rising Debt Levels Ail Toyota (TM)
Per the Zacks analyst, investment in human resources and growth areas is likely to be a big hit on Toyota's operating profits in fiscal 2025. High debt levels are also concerning.
Declining Iron Ore Prices & High Costs Ail BHP Group (BHP)
Per the Zacks analyst, weak demand in China has been weighing on iron ore prices, hurting BHP's top-line results. Additionally, elevated input and labor costs are likely to squeeze margins further.
Mounting Expenses Irk ICON (ICLR) Amid Tough Competition
The Zacks analyst is worried about ICON's escalating expenses that are putting pressure on the company's bottom line. Also, tough competitive clinical research organization market is a worry.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpUnion Pacific Corporation (UNP) : Free Stock Analysis Report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Natural Health Trends Corp. (NHTC): Free Stock Analysis Report
Elevance Health, Inc. (ELV) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
