Friday, January 17, 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 The Home Depot, Inc. (HD), RTX Corp. (RTX) and Applied Materials, Inc. (AMAT), as well as two micro-cap stocks Kewaunee Scientific Corp. (KEQU) and AXIL Brands, Inc. (AXIL). 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 >>>
Home Depot’s shares have outperformed the Zacks Retail - Home Furnishings industry over the past six months (+17.8% vs. +12.5%). The company’s recovery in top-line trends is supported by sales from the SRS acquisition. The company delivered better-than-expected sales and EPS in Q3 of fiscal 2024, with year-over-year sales growth fueled by gains in certain seasonal categories due to favorable weather and hurricane-related demand.
Home Depot gains from its “One Home Depot” investment plan focused on expanding supply chain facilities, enhancing technology and improving the digital experience. HD is also advancing efforts to build a robust Pro ecosystem. HD raised its sales and EPS view for fiscal 2024, citing strong third-quarter results and projected hurricane-related demand in Q4.
However, comparable sales and EPS remain impacted by higher interest rates and ongoing macroeconomic uncertainties.
(You can read the full research report on Home Depot here >>>)
Shares of RTX have outperformed the Zacks Aerospace - Defense industry over the past year (+45.4% vs. -1.3%). The company continues to receive ample orders for its wide range of combat-proven defense products from the Pentagon and its foreign allies. It won several notable defense awards during the third quarter.
A steadily improving 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 pressures on airlines and 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’s growth.
(You can read the full research report on RTX here >>>)
Applied Materials’ shares have gained +25.9% over the past year against the Zacks Electronics - Semiconductors industry’s gain of +62.3%. The company is benefiting from strength in the Applied Global Services segment, owing to the growing adoption of the 200-mm system. Solid momentum in the subscription and display businesses is a plus.
Growing Semiconductor Systems revenues owing to rebound in the semiconductor industry is a major positive. The company’s strength in IoT, Communications, Auto, Power and Sensors (ICAPS) is likely to continue aiding its position in the semiconductor industry in the days ahead. Its broad-based diversified portfolio remains its key growth driver.
However, softness in the Corporate & Other segment remains a concern. Weakening momentum across Taiwan and Europe is a major negative. Growing geopolitical tensions between the United States and China are headwinds.
(You can read the full research report on Applied Materials here >>>)
Kewaunee Scientific’s shares have outperformed the Zacks Instruments - Scientific industry over the past year (+126.9% vs. -3.6%). This microcap company with a market capitalization of $174.03 million demonstrates strong demand for its lab solutions, bolstered by global R&D investments. The Nu Aire acquisition expands market leadership, providing new revenue streams and operational synergies.
Diversified revenues across life sciences, healthcare and education mitigate sector-specific risks, while a strengthened balance sheet enhances financial flexibility.
However, risks include declining international sales (down 30.1% year over year in the second quarter of fiscal 2025), rising operating expenses (up 13.9% year over year), raw material cost vulnerabilities and project-based revenue reliance. Additionally, limited shareholder returns and foreign currency risks weigh on long-term attractiveness.
(You can read the full research report on Kewaunee Scientific here >>>)
Shares of AXIL Brands have underperformed the Zacks Consumer Products - Staples industry over the past year (-65.5% vs. +6%). This microcap company with a market capitalization of $27.48 million is facing risks which include declining operating margins, cash flow deficits, heavy vendor reliance, regulatory burdens and concentration risks (42% revenues from top customers). Competitive pressures and inventory challenges further threaten profitability, with net losses widening to $2.1 million in the third quarter of 2024.
Nevertheless, AXIL Brands' robust DTC sales growth highlights its strength in e-commerce, driving higher margins via enhanced digital platforms and customer retention. The company’s proprietary product innovations, like the X-Core series, align with the growing hearing enhancement market (7.8% CAGR through 2028), boosting margins and competitive differentiation.
The gross margin improved 330 bps year over year from supply-chain efficiencies and product mix, while strategic retail partnerships (more than 125 locations in 2024) and international expansion diversified revenues.
(You can read the full research report on AXIL Brands here >>>)
Other noteworthy reports we are featuring today include BP p.l.c. (BP), PG&E Corp. (PCG) and Gartner, Inc. (IT).
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
Home Depot (HD) Benefits From Various Strategic Efforts
RTX Gains From Steady Order Growth, Amid Supply Chain Issues
Applied Materials (AMAT) Rides on Strength in AGS Segment
Featured Reports
BP Boosts Growth with New Projects and Upstream Expansion
Per the Zacks analyst, BP strengthens its upstream portfolio with key projects like Seagull and Coconut, driving production growth to meet rising global energy demands.
Gartner (IT) Thrives on Expertise Despite Rising Talent Cost
Per the Zacks analysts, Gartner's domain expertise is key to providing insights and decision-support solutions for an informed decision-making process. A competitive talent market remains a concern.
Arch Capital (ACGL) Poised to Grow on Solid Premium Growth
Per the Zacks analyst, Arch Capital is set to grow on solid Insurance and Reinsurance business driving improvement in premiums. However, exposure to cat loss inducing underwriting volatility concerns.
Trading, IB to Aid Jefferies (JEF) Revenues, High Costs Ail
Per the Zacks analyst, a solid IB business performance, strategic JVs and partnerships and a strong balance sheet position will aid Jefferies. However, a steady rise in expenses is a concern.
Retail Strategic Plan Boosts Walgreens (WBA) Amid Macro Woes
The Zacks analyst is optimistic about Walgreens' retail pharmacy-led turnaround strategy to drive working capital benefits and improve cash flows. Yet, macroeconomic volatilities can escalate costs.
Aerospace Momentum Aids Woodward (WWD) Amid Industrial Woes
Per the Zacks analyst, healthy sales in Aerospace unit, driven by strong passenger traffic and higher aircraft utilization, is aiding Woodward's prospects. Soft Industrial unit performance hurts.
Expanding Vehicle Portfolio Aids NIO Amid Rising Expenses
Per the Zacks analyst, NIO's expanding vehicle portfolio is supporting its delivery growth. However, it is experiencing operational inefficiency due to rising SG&A expenses.
New Upgrades
PG&E Corp. (PCG) Benefits from Infrastructural Investments
Per the Zacks analyst, PG&E Corp. makes systematic investments to strengthen its infrastructure. It aims to invest $63 billion in infrastructure for the 2024-2028 period.
Solid Portfolio, Higher Output Aid Wheaton Precious (WPM)
Per the Zacks Analyst, Wheaton Precious will gain from its solid portfolio of assets. Higher production from certain mines will boost margins.
Mirum (MIRM) Rides on Robust Livmarli Sales Performance
Per the Zacks analyst, Mirum's lead drug, Livmarli, has been generating steady sales since its launch and driving the top line. The recent acquisition of bile acid products will aid revenue growth.
New Downgrades
GSK's (GSK) Slowing Vaccine Unit Sales Pose a Concern
Though GSK is witnessing increased sales growth in the Specialty Medicines unit, a slowdown in sales in the Vaccines unit concerns the Zacks analyst.
Elevated Medical Utilizations Hurt CVS Health's (CVS) Profit
The Zacks analyst is worried about CVS Health suffering from elevated utilization of medical services, which pressures its Health Care Benefits segment's margins.
Mortgage Rate Pressures & High Costs Hurt KB Home (KBH)
Per the Zacks analyst, KB Home's performance is being hurt by mortgage rate pressures and high costs. Also, potential regulatory shifts pose concern for its growth prospects.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. 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.
BP p.l.c. (BP) : Free Stock Analysis Report
Pacific Gas & Electric Co. (PCG) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
Gartner, Inc. (IT) : Free Stock Analysis Report
Kewaunee Scientific Corporation (KEQU): Free Stock Analysis Report
RTX Corporation (RTX) : Free Stock Analysis Report
AXIL Brands, Inc. (AXIL): 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.
