Tuesday, August 13, 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 Alphabet Inc. (GOOGL), AbbVie Inc. (ABBV) and QUALCOMM Incorporated (QCOM), as well as a micro-cap stock Flanigan's Enterprises, Inc. (BDL). 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 >>>
Alphabet shares have been hit hard in the recent market turmoil, with the stock lagging the Mag 7 group as well as the Zacks Tech sector and the S&P 500 index since mid-July 2024. The immediate catalyst for the sell-off was Alphabet's July 23rd Q2 earnings report when it beat on the top- and bottom-lines but failed to satisfy investors with its ever-rising capex spending levels.
The Zacks analyst sees the market's capex fixation as over-done and strongly argues that Alphabet's aggressive spending plans are essential to its status as leader in the coming AI world.
The company remains leader in the search space and AI investments are critical to it sustaining that lead.
Well-performing Google Cloud remains the key catalyst. Expanding data centers and growing generative AI capabilities remain major positives for cloud business. Also, integration of generative AI into the company’s search engine is expected to sustain its dominance in the search market.
Strong efforts to gain foothold in the healthcare industry are other positives. Deepening focus on wearables category and autonomous driving space, is a plus. However, sluggishness in the company’s Network advertisement business is a concern. Growing litigation issues and increasing expenses are headwinds.
(You can read the full research report on Alphabet here >>>)
Shares of AbbVie have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+22.7% vs. +21.1%). The company has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq.
Skyrizi and Rinvoq are performing extremely well, bolstered by approvals in new indications, which should support top-line growth in the next few years AbbVie has several early/mid-stage candidates that have potential to drive long-term growth. Boosted by its new product launches, AbbVie expects to return to robust revenue growth in 2025.
However, the company faces several near-term headwinds like Humira’s biosimilar erosion, increasing competitive pressure on Imbruvica and slow market growth trend for fillers in the United States and China.
(You can read the full research report on AbbVie here >>>)
QUALCOMM’s shares have outperformed the Zacks Wireless Equipment industry over the past year (+42.8% vs. +40.0%). The company reported strong third-quarter fiscal 2024 results, with the bottom and top lines beating the respective Zacks Consensus Estimate, driven by healthy demand trends in Android handsets and record automotive revenues.
The Snapdragon X Series Platform integrated with Qualcomm AI Hub is witnessing significant market traction among leading global PC manufacturers. The company is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor firm for the intelligent edge and has offered a bullish guidance for the fourth quarter.
However, inventory corrections by clients are impeding sales in the IoT business. Increasing competition in the mobile phone chipset market is likely to strain margin. Rising geopolitical instability and high debt obligation remain concerns.
(You can read the full research report on QUALCOMM here >>>)
Shares of Flanigan's have declined -0.3% over the year-to-date period against the Zacks Retail - Restaurants industry’s decline of -7.2%. This microcap company with market capitalization of $47.73 million maintains a strong revenue growth, effective cost management, positive cash flow and a solid financial position. New store openings and operational improvements, like NetSuite, bode well.
Yet, Flanigan's net income fell 18.6% in first-quarter 2024 despite a 9.7% revenue uptick, highlighting rising costs and potential inefficiencies. Operating expenses rose 10.4%, driven by higher payroll, consultant fees, and food costs, eroding profit margins. High long-term debt poses a financial risk, especially if interest rates rise.
Franchise-related revenues fell 8.5%, indicating possible operational issues. Declining gross profit margins for restaurant and package store sales signal higher costs without matching price increases. Competitive pressures, economic sensitivity and substantial lease obligations also challenge profitability.
(You can read the full research report on Flanigan’s here >>>)
Other noteworthy reports we are featuring today include BlackRock, Inc. (BLK), Enbridge Inc. (ENB) and Honda Motor Co., Ltd. (HMC).
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
Solid Momentum in Cloud Business Benefits Alphabet (GOOGL)
AbbVie's (ABBV) Skyrizi, Rinvoq Key to Top-Line Growth
Qualcomm (QCOM) Rides on Portfolio Strength, Automotive Traction
Featured Reports
Buyouts, Robust AUM Growth Aid BlackRock (BLK), Costs Ail
Per the Zacks analyst, BlackRock's acquisition efforts along with the continued rise in its assets under management balance will aid the top line. Higher administration costs will likely hurt profits.
Enbridge (ENB) to Gain From Natural Gas Utility Acquisitions
Per the Zacks analyst, Enbridge's recent acquisitions of U.S. natural gas utilities, including Questar Gas and Enbridge Gas Ohio, are expected to drive an 8% CAGR in its rate base through 2027.
AIG Benefits From Divestitures and Cost Control Measures
Per the Zacks Analyst, business streamlining by selling low-returning operations & focusing on core operations improves AIG's profitability. Also, cost control measures are aiding its margins.
Cheniere Energy's (LNG) Gas Export Dominance Bodes Well
The Zacks analyst likes Cheniere's competitive advantage of being the first and dominant natural gas exporter in the U.S. market but is concerned over the huge debt load of nearly $22.6 billion.
Robust Live Events Aid Live Nation (LYV), High Costs Ail
Per the Zacks analyst, Live Nation Entertainment is likely to benefit robust global fan demand for live events and increased ticket sales. However, high operating expenses remain a concern.
Regulated Energy Delivery, Investments Aid MDU Resources (MDU)
Per the Zacks analyst, MDU Resources benefits from spinoff of Knife River, allowing it to focus on regulated energy delivery. Its strategic investment plans will improve the reliability of services.
Acquisition of CMY Solutions Aids ICF (ICFI) Amid High Costs
Per the Zacks analyst, the acquisition of CMY Solutions improves ICF's (ICFI) offerings in power and energy advisory services. Rising costs are concerning.
New Upgrades
Honda (HMC) to Ride on Increasing Sale of Hybrids
Honda's goal to sell 1 million hybrids this year, fueled by strong demand for the CR-V and Accord, is set to boost sales and profit, making the Zacks analyst bullish on the stock.
Nubeqa, Kerendia Fuel Bayer (BAYRY) Amid Litigation Woes
Per the Zacks analyst, strong performance of drugs like Nubeqa and Kerendia boost Bayer. The pipeline progress is encouraging. However, ongoing litigations and high debt remain headwinds for Bayer.
Ubiquiti (UI) Rides on Healthy Demand, Product Innovation
Per the Zacks analyst, strong demand for Enterprise Technology products in North America, Europe and Africa combined with advancements in UniFi product suite will likely drive Ubiquiti's top line.
New Downgrades
Lower Orders & High Input Costs to Hurt Manitowoc (MTW)
The Zacks Analyst is concerned that the ongoing supply chain challenges, inflationary costs and skilled labor shortages as well as the recent drop in order levels will hurt Manitowoc's results.
Agricultural Services View a Worry for Archer Daniels (ADM)
Per the Zacks analyst, Archer Daniels is facing sluggishness in the Ag Services & Oilseeds unit. It expects increased crop production in South America to reduce margins across the segment in 2024.
Stiff Regulatory Rules for CONMED (CNMD) Products Worrying
Per the Zacks analyst, substantially all of CONMED's products are classified as class II medical devices subject to strict regulations, which can lead to sudden restrictions thereby hampering sales.
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See Stocks Now >>QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
BlackRock, Inc. (BLK) : Free Stock Analysis Report
Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report
Enbridge Inc (ENB) : Free Stock Analysis Report
AbbVie Inc. (ABBV) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Flanigan's Enterprises, Inc. (BDL): 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.
