Thursday, April 13, 2023
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 Microsoft Corp. (MSFT), Berkshire Hathaway Inc. (BRK.B) and NVIDIA Corp. (NVDA). 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 >>>
Microsoft’s shares have gained +2.3% over the past year against the Zacks Computer – Software industry’s gain of +3.4%. The company is benefitting from consistent execution across renewal sales motions, including strong recapture rates and growth in Azure cloud platform amid accelerated global digital transformation.
Slow yet steady performance of Office 365 and Dynamics is aiding user growth thereby driving the top-line. Strength in Marketing Solutions and steady performance in Talent Solutions is driving LinkedIn revenues boosted by recovery in advertising and job market. The Zacks analyst expects fiscal 2023 revenues to grow by 4.7% over fiscal 2022.
However, a slowdown in its cloud business and declining videogame sales were headwinds. Decrease in Xbox content and services and Xbox hardware hurt gaming sales due to a decline in first-party content. Increasing spend on Azure enhancements amid stiff competition in the cloud space from Amazon is likely to dent margins.
(You can read the full research report on Microsoft here >>>)
Shares of Berkshire Hathaway have outperformed the Zacks Insurance – Property and Casualty industry over the past six months (+15.4% vs. +14.2%). The company is one of the largest property and casualty insurance companies measured by premium volume. Berkshire’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position supports earnings-accretive bolt-on buyouts and indicates the financial flexibility.
Continued insurance business growth fuels increase in float, drive earnings and generates maximum return on equity. The non-insurance businesses are delivering improved results with increased revenues over the past few years. A sturdy capital level provides further impetus.
However, exposure to catastrophe loss induces earnings volatility and also affects the property and casualty underwriting results of Berkshire. Huge capital expenditure remains a headwind for the company.
(You can read the full research report on Berkshire Hathaway here >>>)
NVIDIA’s shares have outperformed the Zacks Semiconductor – General industry over the past year (+24.7% vs. +10.4%). The company is gaining from strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues. A surge in Hyperscale demand and a solid uptake of artificial intelligence-based smart cockpit infotainment solutions are acting as tailwinds.
Collaboration with Mercedes-Benz and Audi is likely to advance its presence in autonomous vehicles and other automotive electronics space. The Zacks analyst expects its Automotive segment’s revenue to grow at a CAGR of 29% through fiscal 2023-2025.
However, NVDA’s near-term prospects look gloomy due to weakening demand for chips used in gaming and data center end markets. While macroeconomic headwinds are impacting gaming and data center chip demand, higher channel inventory levels are hurting chip prices.
(You can read the full research report on NVIDIA here >>>)
Other noteworthy reports we are featuring today include AT&T Inc. (T), Northrop Grumman Corporation (NOC) and Monster Beverage Corporation (MNST).
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
Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)
Berkshire Hathaway (BRK.B) Rides on Non-Insurance Business
NVIDIA (NVDA) Benefits From Increasing Automotive Deal Wins
Featured Reports
AT&T (T) Rides on Accelerated 5G Rollout, Fiber Densification
Per the Zacks analyst, AT&T is likely to benefit from an accelerated 5G rollout and fiber densification, driven by a customer-centric business model, lower churn rate and higher-tier unlimited plans.
Solid Demand Aids Northrop (NOC), Supply Chain Turmoil Woes
Per the Zacks analyst, strong global demand for its products like Triton and E-2D Advanced Hawkeyes steadily boosts Northrop. Yet COVID-19 induced supply chain disruption might hurt the stock.
Solid Energy Drinks Unit Aids Monster Beverage’s (MNST) Sales
Per the Zacks analyst, Monster Beverage continues to gain from strong demand for the energy drinks category as well as new product launches and innovation. This led to sales growth of 6.2% in Q4.
Freight Revenues Boost Wabtec (WAB), High Expenses Affect
The Zacks analyst is upbeat about Wabtec’s Freight performance which is boosting the company’s top line. However, escalating expenses are worrisome.
EQT Corp (EQT) Banks On Gas-Rich Marcellus Shale Resources
The Zacks analyst believes EQT Corp’s 1,800 net undeveloped locations have brightened the prospects of future natural gas production. However, the company’s significant exposure to debt is concerning.
Mirati’s (MRTX) Dependence on Krazati Revenues A Woe
Following FDA approval in second-line NSCLC, Krazati is the first approved drug in Mirati’s portfolio. The Zacks Analyst, however is concerned as the drug faces stiff competition from Amgen’s Lumakras
OPKO Health (OPK) Continues to Gain From Solid RAYALDEE Sales
The Zacks analyst is upbeat about OPKO Health’s robust sales of RAYALDEE despite its operation in a highly competitive pharmaceutical, diagnostic and laboratory testing industry.
New Upgrades
Cost Savings & Acquisitions Aid PPG Industries (PPG)
Per the Zacks Analyst, PPG Industries will gain from cost-cutting and restructuring actions as well as its inorganic growth strategies that will result in synergies.
Government Services Group segment Benefits Tetra Tech (TTEK)
Per the Zacks analyst, Tetra Tech is benefitting from its Government Services Group Segment, driven by robust water and environmental programs. A strong backlog level is also beneficial.
Encompass Health (EHC) Rides on Solid Revenue Growth, Buyouts
Per the Zacks Analyst, the company’s top line has been fueled by growing patient volumes. Several acquisitions have strengthened its capabilities and expanded geographic footprint.
New Downgrades
Texas Capital’s Strategic Plan to Aid, Cost Woes Prevail
Per the Zacks analyst, Texas Capital’s strategic plan to expand its product offerings and digitalize operations will likely boost financials. However, escalating operating costs is a headwind.
Elevated Costs, Market Uncertainty Hurt LPL Financial (LPLA)
Per the Zacks analyst, elevated expenses due to a rise in compensation costs will hamper LPL Financial’s profits. Uncertainty about the performance of the capital markets might hurt commission income.
Softening Housing Demand & High Costs Hurt Weyerhaeuser (WY)
Per the Zacks analyst, softness in housing market, resulting in weak demand for wood products, as well as high costs hurt Weyerhaeuser’s growth prospects.
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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
AT&T Inc. (T) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
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