Friday, September 27, 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 NVIDIA Corp. (NVDA), American Express Co. (AXP) and Wells Fargo & Co. (WFC), as well as two micro-cap stocks Elite Pharmaceuticals, Inc. (ELTP) and PrimeEnergy Resources Corp. (PNRG). 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’s shares have outperformed the Zacks Semiconductor – General industry over the year-to-date period (+150.6% vs. +106.9%). 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 partners 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. However, softening IT spending amid macroeconomic headwinds and the US-China tech war remain major concerns.
(You can read the full research report on NVIDIA here >>>)
Shares of American Express have outperformed the Zacks Financial – Miscellaneous Services industry over the past year (+80.9% vs. +21.8%). The company’s growth initiatives, like launching new products, reaching new agreements and forging alliances, are boosting its revenues. Consumer spending on travel and entertainment, which carries higher margins for AmEx, is advancing well.
American Express’ solid cash-generation abilities enable the pursuit of business investments and prudent deployment of capital via buybacks and dividends.
However, with higher utilization of AXP’s cards, costs in the form of card member services and card member rewards are likely to go up. Rising marketing costs are straining its margins. Its current debt level amid a high-interest rate environment induces a rise in interest expenses. The stock is overvalued at the moment. As such, the stock warrants a cautious stance.
(You can read the full research report on American Express here >>>)
Wells Fargo’s shares have underperformed the Banks – Major Regional industry over the past six months (-1.4% vs. +6.2%). The company’s loan growth is likely to remain limited, as the asset cap remains in place until it complies fully with regulators’ demands regarding operational risk management.
The bank agreed to divest its non-agency third-party servicing segment of the Commercial Mortgage Servicing (CMS) business to Trimont. High mortgage rates and low originations is likely to hurt mortgage banking income in the near term.
Nevertheless, its progress on efficiency initiatives, like branch and footprint reduction, will support cost reduction and drive bottom-line growth. A decent deposit balance is likely to aid its financials, driven by the strength in the Consumer Banking and Lending segment. With a strong capital position and decent liquid profile, the capital distribution seems sustainable.
(You can read the full research report on Wells Fargo here >>>)
Shares of Elite Pharmaceuticals have outperformed the Zacks Medical – Drugs industry over the year-to-date period (+177.9% vs. -0.5%). This microcap company with market capitalization of $415.56 million has seen first-quarter fiscal 2025 revenues surged 109.4%, driven by the success of its Elite label products.
The company’s expanding portfolio includes high-value Abbreviated New Drug Applications (ANDAs) for medications like Methotrexate and controlled substances, positioning it for continued growth. Its recent facility expansion enhances manufacturing capacity, supporting future product launches.
A robust pipeline and favorable generics market dynamics support long-term prospects. Elite Pharmaceuticals boasts positive cash flows, low debt and a solid cash position.
However, risks include customer concentration, pricing pressure from large buyers, intense competition, and regulatory challenges related to controlled substances. Supply chain vulnerabilities and potential overextension in product launches are other concerns.
(You can read the full research report on Elite Pharmaceuticals here >>>)
PrimeEnergy Resources’ shares have outperformed the Zacks Oil and Gas – Exploration and Production – United States industry over the year-to-date period (+30.3% vs. -4.1%). This microcap company with market capitalization of $242.79 million has a strong production growth, evidenced by a 134% increase in oil and a 95% rise in natural gas production in the second quarter of 2024, positions it well for continued revenue and earnings expansion.
PrimeEnergy Resources’ financial health is supported by nearly doubling revenues and tripling net income in the first half of 2024, along with an expanded $115 million credit facility that enhances liquidity for ongoing drilling. Favorable oil prices and strategic acreage in the Permian Basin offer long-term growth potential.
However, risks include exposure to volatile oil and gas prices, rising production costs, heavy capital expenditures and dependency on a limited number of partners. The shift toward renewable energy and potential regulatory changes pose long-term risks to its traditional oil and gas operations.
(You can read the full research report on PrimeEnergy Resources here >>>)
Other noteworthy reports we are featuring today include Sony Group Corp. (SONY), Becton, Dickinson and Co. (BDX) and Lennar Corp. (LEN).
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
NVIDIA (NVDA) Rides on Strong Adoption of GPUs, Partnerships
Improving Volumes Aid American Express (AXP), High Costs Ail
Deposit Growth Aids Wells Fargo (WFC) Amid Low Loan Balances
Featured Reports
Strength in Games & Network, Music Segments Benefits SONY
Per the Zacks analyst, strength in the Game & Network Services and Music units is driving Sony’s performance. It remains wary of FX volatility and the possibility of an economic downturn in the U.S.
Notable Deals Continues to Aid BD (BDX) Amid Forex Volatility
The Zacks analyst is upbeat about BD’s few strategic agreements in recent times despite its business being exposed to foreign exchange volatility.
Lennar’s (LEN) Operating Strategy Strong, Lower ASP Hurt
Per the Zacks analyst, Lennar’s solid operating strategy that focuses on consistent production and sales pace aid. Yet, lower revenues per square foot due to low ASP and community count delays ail.
Gartner (IT) Gains from Deep Domain Expertise, Liquidity Low
Per the Zacks analysts, Gartner’s domain expertise is key to providing insights and decision-support solutions for an informed decision-making process. Low liquidity remains a concern.
Biogen’s (BIIB) New Drugs Skyclarys & Others Can Revive Growth
The Zacks analyst believes Biogen’s new products like Leqembi for Alzheimer’s disease, Skyclarys for Friedreich’s ataxia and Zurzuvae for depression can help revive growth in the long term
High Margin Assets & Cost Management Aid Devon Energy (DVN)
Per the Zacks analyst Devon’s strong production from its high margins assets and efficient cost management will drive performance over the long run.
Kimco Realty (KIM) to Ride on Strong Retail Assets Demand
Per the Zacks Analyst, Kimco is poised to benefit from strong retail assets demand, its focus on grocery-anchored centers and mixed-use assets. However, growing e-commerce adoption is a concern.n
New Upgrades
Buyouts of Dialysis Centers, Strength in IKC Aid DaVita (DVA)
The Zacks analyst is upbeat about DaVita’s business strategy, which includes growth via acquisitions of dialysis centers. Continued strength in Integrated Kidney Care or IKC unit is an added plus.
Solid Demand, Pricing Actions Aid Carpenter Technology (CRS)
Per the Zacks analyst, Carpenter Technology is gaining from strong demand across its end-use markets. Cost-reduction initiatives and efforts to preserve liquidity are also driving growth.
Nordstrom’s (JWN) Digital & Other Efforts Look Promising
Per the Zacks analyst, Nordstrom’s digital momentum continued with sales growth of 6% on increase in the assortment and improvements to search and discovery. Its Rack banner also performs well.
New Downgrades
ProPetro (PUMP) Margins Pressured by Lower Activity
The Zacks analyst believes that declining rig counts and heightened competition has suppressed ProPetro Holding’s margins and profitability by lowering utilization rates.
Soft Unit Volume Hurts B&G Foods’ (BGS) Top Line
Per the Zacks analyst, B&G Foods is battling category-wide challenges. In the second quarter of fiscal 2024, sales fell 5.3% due to soft unit volumes and lower net pricing.
Weak Cutting & Welding Hurts IPG Photonics’ (IPGP) Prospects
Per the Zacks analyst, IPG Photonics is suffering from weakness in cutting and welding applications, particularly in China, amid challenging macroeconomic conditions and stiff competition.
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Wells Fargo & Company (WFC) : Free Stock Analysis Report
Becton, Dickinson and Company (BDX) : Free Stock Analysis Report
American Express Company (AXP) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Lennar Corporation (LEN) : Free Stock Analysis Report
Elite Pharmaceuticals Inc. (ELTP): Free Stock Analysis Report
PrimeEnergy Corporation (PNRG): Free Stock Analysis Report
Sony Corporation (SONY) : Free Stock Analysis Report
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