Tuesday, January 7, 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 NVIDIA Corporation (NVDA), Meta Platforms, Inc. (META) and Johnson & Johnson (JNJ), as well as two micro-cap stocks Rave Restaurant Group, Inc. (RAVE) and EVI Industries, Inc. (EVI). 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 >>>
NVIDIA shares have outperformed the Zacks Semiconductor - General industry over the past year (+195.9% vs. +135%). The company is benefiting from the strong growth of artificial intelligence (AI), high performance and accelerated computing. The data center end-market business is benefiting from the growing demand for generative AI and large language models using graphic processing units (GPUs) based on NVIDIA Hopper and Ampere architectures.
A surge in hyperscale demand and higher sell-ins to partner across the Gaming and ProViz end markets following the normalization of channel inventory are acting as tailwinds. Collaborations with Mercedes-Benz and Audi are likely to advance its presence in the autonomous vehicles and other automotive electronics space.
The Zacks analyst expect NVIDIA’s revenues to witness a CAGR of 50.5% through fiscal 2025-2027. However, softening IT spending amid macroeconomic headwinds and the U.S.-China tech war remain major concerns.
(You can read the full research report on NVIDIA here >>>)
Shares of Meta Platforms have outperformed the Zacks Internet - Software industry over the past year (+83.9% vs. +40.6%). The company is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its offerings like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.
META has been leveraging AI to improve the potency of its platform offerings. These services currently reach more than 3.2 billion people daily. Meta’s growing footprint among young adults, driven by improving recommendations, boosts its competitive prowess.
AI usage is making it a popular name among advertisers. This is expected to drive top-line growth. Meta now expects to invest significantly more over the next few years in developing more advanced models and the largest AI services in the world. However, monetization of these AI services will take considerable time, which is a concern.
(You can read the full research report on Meta Platforms here >>>)
Johnson & Johnson shares have declined -0.1% over the past six months against the Zacks Large Cap Pharmaceuticals industry’s decline of -15.3%. The company’s innovative Medicine unit is performing at above-market levels. Growth is being driven by existing products like Darzalex, Tremfya and Erleada and continued uptake of new launches, including Spravato, Carvykti and Tecvayli. J&J is making rapid progress with its pipeline and line extensions.
However, sales in the MedTech segment have been lower than expected due to Asia-Pacific headwinds, specifically in China. J&J faces the upcoming patent expiration of the blockbuster drug Stelara in January 2025, which will hurt the drug’s sales.
J&J is incurring huge legal expenses due to pending lawsuits related to its talc products. J&J’s shares have underperformed the industry in the past one year. Estimates have risen slightly ahead of Q4 results. J&J has a positive record of earnings surprises in recent quarters
(You can read the full research report on Johnson & Johnson here >>>)
Shares of Rave Restaurant’s have outperformed the Zacks Retail - Restaurants industry over the past year (+25.1% vs. +8.8%). This microcap company with market capitalization of $40.01 million has achieved 18 consecutive quarters of profitability, with net income rising 36.3% year over year in first-quarter fiscal 2025, reflecting strong financial stability and operational efficiency.
The company holds $8.4 million in liquid assets, supporting strategic initiatives and shareholder returns. A four-unit development agreement expands its 25-site domestic pipeline, aligning with industry growth trends. Menu innovations like the Sandworm Pizzert and digital transformation drive customer engagement, with online sales growing double digits.
However, challenges include declining same-store sales, rising costs, limited scale, and weakening cash reserves. Rave Restaurant’s franchise model supports scalable growth but is vulnerable to franchisee performance and competitive pressures.
(You can read the full research report on Rave Restaurant here >>>)
EVI Industries’ shares have underperformed the Zacks Industrial Services industry over the past year (-12.4% vs. +10.0%). This microcap company with market capitalization of $244.93 million is witnessing declining gross margins, exposure to volatile chemical costs, integration risks, regulatory pressures and macroeconomic sensitivities pose challenges. Intense competition further pressures EVI’s market share.
Nevertheless, EVI Industries leverages a proven buy-and-build strategy, completing 28 acquisitions, including O'Dell Equipment, in 2024 to solidify its position in the fragmented commercial laundry industry. This approach enhances its service portfolio, market reach and growth potential. Strong cash flow supports acquisitions and shareholder returns, exemplified by a 10% dividend increase in 2024.
Positioned to benefit from rising laundry demand, EVI aligns with sustainability trends, emphasizing energy-efficient and eco-friendly solutions to attract customers and meet regulatory standards. Its comprehensive service model fosters customer loyalty across diverse sectors.
(You can read the full research report on EVI Industries here >>>)
Other noteworthy reports we are featuring today include Apollo Global Management, Inc. (APO), EOG Resources, Inc. (EOG) and AutoZone, Inc. (AZO).
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
NVIDIA (NVDA) Rides on Strong Adoption of GPUs, Partnerships
User Growth, Instagram Strength Aids Meta Platforms (META)
J&J's (JNJ) Innovative Medicine Strong, MedTech Slows Down
Featured Reports
Diversified AUM Base Aid Apollo (APO) Amid Rising Expenses
Per the Zacks analyst, Apollo's diversified asset under management (AUM) across various asset classes, client bases, and geographies offers support. Yet, rising expenses remain a concern.
EOG Resources' (EOG) Untapped Shale Drilling Potential Aids
Per the Zacks analyst, EOG excels in shale drilling and free cash flow conversion with untapped opportunities, but rising lease and well expenses could lay pressure on margins amid inflation.
Expansion of Mega Hubs Aids AutoZone (AZO) Amid High Capex
Per the Zacks analyst, AutoZone's focus on expanding mega hubs is set to boost its prospects. However, high capital spending on technology may limit near-term cash flows.
lululemon's (LULU) International Business Well Poised for Growth
Per the Zacks analyst. lululemon witnesses strong business momentum in international markets, including Mainland China and the Rest of the World, as the brand connects well with customers globally.
Omnicom (OMC) Gains From Diversification Amid Low Liquidity
Per the Zacks analyst, Omnicom's presence across diverse markets of the advertising and marketing industry broadens its revenue base. Low liquidity is concerning.
Portfolio Optimization Efforts Aid Starwood Property (STWD)
Per the Zacks Analyst, Starwood Property's effort to optimize its portfolio through acquisitions and divestitures is likely to boost asset quality, improve returns and strengthen its financials.
Solid Spec Strategy Aids Meritage Homes (MTH), Costs Ail
Per the Zacks analyst, Meritage Homes benefit from its efficiency in providing quick-turning and affordable move-in-ready homes. However, increased lot costs are concerns.
New Upgrades
Halozyme's (HALO) ENHANZE Drug Delivery Technology Aid Growth
Per the Zacks Analyst, Halozyme's collaboration deals with large pharma companies related to ENHANZE technology, drives revenue growth. The company's restructuring initiatives are also encouraging.
RingCentral (RNG) Rides on Strong Portfolio, Partner Base
Per the Zacks analyst, RingCentral benefits from solid demand for its Unified Communications as a Service and contact center software-as-a-service solutions.
Growing Fee Revenue, Inorganic Growth aid CNO Financial (CNO)
Per the Zacks analyst, CNO Financial's performance, driven by fee revenues and insurance policy income, has led to significant growth. Inorganic growth and technological investments also bode well.
New Downgrades
Geopolitical Risk, Competition Ail TotalEnergies (TTE)
Per the analyst TotalEnergies (TTE) presence across the globe exposes it to geopolitical risk and rising competition among the international energy majors is also a headwind.
Altice (ATUS) Plagued by Stiff Competition, Soft Demand
Per the Zacks analyst, fierce competition in the fixed wireless broadband market and high programming costs, due to increased contractual rates, are straining Altice's margins.
Weak Solvency Position, Competition Ail QuidelOrtho (QDEL)
Per the Zacks Analyst, a weak solvency position along with operating in a stiff competitive space are likely some major headwinds for QuidelOrtho.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Johnson & Johnson (JNJ) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
AutoZone, Inc. (AZO) : Free Stock Analysis Report
Apollo Global Management Inc. (APO) : Free Stock Analysis Report
Rave Restaurant Group, Inc. (RAVE) : Free Stock Analysis Report
EVI Industries, Inc. (EVI): Free Stock Analysis Report
Meta Platforms, Inc. (META) : 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.
