Monday, October 21, 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 Visa Inc. (V), Netflix, Inc. (NFLX) and Merck & Co., Inc. (MRK), as well as a micro-cap stock Hovnanian Enterprises, Inc. (HOV). 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 Visa have gained +10.9% over the year-to-date period against the Zacks Financial Transaction Services industry’s gain of +16.1%. The company’s strategic acquisitions and alliances are fostering long-term growth and consistently driving its revenues. Visa, fueled by persistent increases in payments, cross-border volumes and sustained investments in technology, is witnessing significant profit growth.
The ongoing shift to digital payments is advantageous for Visa, with strong domestic volumes supporting its overall performance. A robust cash position enables the company to enhance shareholder value. However, elevated operating expenses pose margin challenges.
The Zacks analyst expect adjusted operating expenses to jump more than 10% in fiscal 2024. It is witnessing a volatile cash volume from the Asia Pacific and CEMEA regions. Consumer spending growth is also drying up. Moreover, rising client incentives will affect its adjusted revenues. As such, the stock warrants a cautious stance.
(You can read the full research report on Visa here >>>)
Netflix’s shares have outperformed the Zacks Broadcast Radio and Television industry over the year-to-date period (+74.1% vs. +32.8%). The company’s third-quarter 2024 results benefited from its growing subscriber base, thanks to a robust localized and foreign-language content portfolio and healthy engagement levels with about two hours of viewing per member per day, indicating strong member retention.
The planned launch of an in-house ad tech platform in 2025 signals Netflix's commitment to maximizing this new revenue stream, with ad revenues expected to roughly double year-over-year in 2025. Netflix has raised its guidance for the full year 2024, projecting revenue growth at the high end of its previous 14-15% range.
However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video and Disney+ is a headwind. NFLX’s leveraged balance sheet and a higher streaming obligation are concerns.
(You can read the full research report on Netflix here >>>)
Shares of Merck have gained +0.1% over the year-to-date period against the Zacks Large Cap Pharmaceuticals industry’s gain of +22.7%. The company’s products like Keytruda and Gardasil have been driving sales. With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth. Animal health and vaccine products are core growth drivers.
Merck boasts a strong cancer pipeline, including Keytruda. However, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line.
There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade. Estimates have declined slightly ahead of Q3 results. Merck has a positive record of earnings surprises in recent quarters.
(You can read the full research report on Merck here >>>)
Hovnanian’s shares have outperformed the Zacks Building Products - Home Builders industry over the past year (+175.6% vs. +89.3%). This microcap company with market capitalization of $1.25 billion has shown strong financial performance in fiscal third-quarter 2024, with an 11% revenue increase to $722.7 million, driven by higher home deliveries and sales prices.
The company saw a 38% rise in income before taxes and a 30.8% rise in net income, supported by improved EBITDA of $127.9 million. Key growth drivers include a 24% increase in community count and a 34% rise in lots controlled, setting the stage for future revenue gains. Favorable mortgage rate declines and strong buyer demand, evidenced by a 23% increase in contracts and surging web traffic, support the company’s outlook.
Hovnanian’s strategic focus on high-margin markets and diversified geographic and product mix enhances its resilience and profitability. With upward revisions to 2024 revenue and EBITDA guidance, HOV remains well-poised for continued growth in a strong housing market.
(You can read the full research report on Hovnanian here >>>)
Other noteworthy reports we are featuring today include Abbott Laboratories (ABT), Blackstone Inc. (BX) and Palo Alto Networks, Inc. (PANW).
Mark Vickery
Senior Editor
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
Visa (V) Rides on Improving Top Line & Solid Balance Sheet
Subscriber Addition, Content Strength Drives Netflix (NFLX)
Keytruda to Remain Merck's (MRK) Key Top-Line Driver
Featured Reports
Market Expansion, EPD Business Growth Aid Abbott (ABT)
The Zacks analyst is impressed with Abbott's strong market share gains in core businesses. Within Established Pharmaceuticals, robust performance in key emerging markets is encouraging.
Fund-Raising Ability Aids Blackstone (BX), High Costs Ails
Per the Zacks analyst, Blackstone's solid fund-rising capability and asset inflows will likely aid profitability. Yet, mounting expenses and low capital distribution sustainability are major woes.
Strategic Buyouts Aid Elevance Health (ELV), Cost Woes Stay
Per the Zacks analyst, a number of growth-related initiatives and an expanding product portfolio are strengthening Elevance Health's market position. However, high expenses put pressure on margins.
America Movil (AMX) Gains from Rising Subscriber Engagement
Per the Zacks analyst, America Movil's performance is benefiting from an uptick in broadband client base and wireless subscribers. Healthy growth in service revenue is a key growth driver.
Veeva (VEEV) Benefits on Robust Product Line Amid High OpEx
Per the Zacks analyst, Veeva continues to gain from its robust product portfolio and continued customer adoption. However, high operating expenses and foreign exchange volatility persists.
Investments Aid ETR Corporation (ETR) Amid Poor Solvency
Per the Zacks analyst, ETR Corp. makes disciplined investments to maintain and upgrade the reliability of its electric utility systems. Yet its poor financial ratios indicate a weak solvency position.
NOV Inc. (NOV) to Gain from International Market Strength
The Zacks analyst believes that the surge in NOV's international revenues highlights a strong growth trajectory. However, the slowdown in North American onshore activity is a challenge.
New Upgrades
Palo Alto (PANW) Rides on Product Strength, Marketing Effort
Per the Zacks analyst, Palo Alto Networks is gaining from solid contributions of its growth-oriented products including Prisma and Cortex. Increasing marketing efforts are also positive.
Acquisitions and Strong Liquidity Benefits TransUnion (TRU)
Per the Zacks analyst, TransUnion's acquisition strategy facilitates its expansion into vertical markets and growth of its global footprint. Strong liquidity enhances financial flexibility.
Telephone and Data Systems (TDS) Rides on Strategic Divestiture
Per the Zacks analyst, the sale of U.S. Cellular's spectrum asset will improve liquidity position and drive network advancement. This will likely boost Telephone and Data System's commercial outlook.
New Downgrades
Weakness in Infrastructure Segment Hurts Kennametal (KMT)
Per the Zacks analyst, weak performance in Kennametal's Infrastructure unit due to softness in general engineering and energy end markets are weighing on its results. High costs also remain a concern.
Tyson Foods (TSN) Troubled by Challenges in the Beef Segment
Per the Zacks analyst, Tyson Foods is facing challenges in its Beef segment due to high cattle costs. Management expects fiscal 2024 adjusted operating loss of $400-$300 million for the segment.
Increased Costs & Stiff Competition Hurt MGM Resorts (MGM)
Per the Zacks Analyst, elevated operating expenses have been hurting MGM Resorts. Also, intense market competition, mainly in Las Vegas and Macau, is a potential headwind.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
Abbott Laboratories (ABT) : Free Stock Analysis Report
Blackstone Inc. (BX) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Hovnanian Enterprises Inc (HOV) : Free Stock Analysis Report
Palo Alto Networks, Inc. (PANW) : 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.
