Monday, September 23, 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 The Coca-Cola Co. (KO), Chevron Corp. (CVX) and ServiceNow, Inc. (NOW), as well as two micro-cap stocks Sypris Solutions, Inc. (SYPR) and Mobile Infrastructure Corp. (BEEP). 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 >>>
Coca-Cola’s shares have outperformed the Zacks Beverages – Soft drinks industry over the year-to-date period (+25.2% vs. +13.7%). The company experiences positive business trends, as evidenced by its strong track record of beating expectations. In second-quarter 2024, the company exceeded sales and earnings estimates for the sixth consecutive quarter, with both metrics showing year-over-year improvement.
Strong revenue growth across most operating segments, supported by improved price/mix and unit volume growth aided results. KO is well-poised to benefit from innovations and growing digital investments. It has provided an optimistic view for 2024. The Zacks analyst expect organic revenue growth of 10% for 2024, with an 8.3% positive price/mix and a 1.7% rise in concentrate sales.
However, Coca-Cola faces inflationary cost pressures due to higher commodity and material costs, as well as increased marketing investments.
(You can read the full research report on Coca-Cola here >>>)
Shares of Chevron have underperformed the Zacks Oil and Gas – Integrated – International industry over the past six months (-3.2% vs. -1.6%). The company is grappling with high sensitivity to oil price fluctuations and relatively expensive valuation.
Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.
Nevertheless, Chevron is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin. Further, the planned acquisition of Hess Corporation is expected to significantly strengthen Chevron’s presence in oil-rich Guyana.
(You can read the full research report on Chevron here >>>)
ServiceNow’s shares have outperformed the Zacks Computers – IT Services industry over the year-to-date period (+33.7% vs. +8.6%). The company has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. It had 1,988 total customers with more than $1 million in annual contract value (ACV) at the end of second quarter, which represents 15% year-over-year growth in customers.
ServiceNow had 14 deals greater than $5 million in net new ACV and four deals of more than $10 million. It closed 88 deals greater than $1 million net new ACV. Generative AI deals continued to gain traction with net new ACV for Now Assist and was part of 11 deals worth more than $1 million in the reported quarter.
It is riding on an expanding partner base. However, ServiceNow is suffering from persistent inflation, stiff competition, and a challenging macroeconomic environment.
(You can read the full research report on ServiceNow here >>>)
Shares of Sypris Solutions have underperformed the Zacks Electronics – Miscellaneous Services industry over the past year (-11.7% vs. +10.8%). This microcap company with market capitalization of $37.91 million is facing high operating costs, revenue concentration in Sypris Technologies, increased debt, and supply chain challenges which pose risks. Currency exchange risks could impact profitability.
Nevertheless, Sypris Solutions’ long-term contract extension with a global truck OEM secures a stable revenue stream and solidifies a 25-year relationship. In defense, Sypris Electronics’ new orders under a multi-year contract for the U.S. Navy’s electronic warfare program highlight its role in high-reliability electronics, with the potential for additional orders.
Sypris Solutions benefits from growth in the aerospace and defense electronics markets. Sypris reported a 23% revenue increase in the Sypris Electronics segment, reflecting operational efficiency. Diversification into automotive, off-highway, and oil and gas sectors reduces dependence on the commercial vehicle market.
(You can read the full research report on Sypris Solutions here >>>)
Mobile Infrastructure’s shares have underperformed the Zacks Real Estate – Operations industry over the past year (-19.8% vs. +33.8%). This microcap company with market capitalization of $107.21 million is facing risks which include $93.1 million in near-term debt maturities, interest rate exposure and ongoing preferred stock conversion pressure.
Nevertheless, Mobile Infrastructure’s revenues grew 28.4% year over year in second-quarter 2024, driven by converting leases to management contracts, which enhanced transparency and cost management, resulting in net operating income (NOI) growth of 14% to $5.6 million.
Mobile Infrastructure is well-positioned for long-term growth, especially in markets converting office spaces to residential units, which is expected to boost parking demand by 2025. Its 42-property portfolio, located in stable Midwest and Southwest regions, supports consistent revenue amid low competition. Despite a $2.5 million second-quarter net loss, the undervalued stock has strong Net Asset Value (NAV) support of $7.25 per share.
(You can read the full research report on Mobile Infrastructure here >>>)
Other noteworthy reports we are featuring today include Pfizer Inc. (PFE), The Progressive Corp. (PGR) and Public Service Enterprise Group Inc. (PEG).
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
Coca-Cola’s (KO) Innovation & Other Efforts Seem Encouraging
Chevron (CVX) to Gain Guyana Foothold with Hess Buy
Growing Customer Base & Partnerships Aid ServiceNow (NOW)
Featured Reports
Pfizer’s (PFE) New Products Can Drive Long-Term Sales Growth
Though Pfizer’s (PFE) revenues from COVID products are declining, non-COVID operational revenue growth is improving, driven by its key in-line products, new launches and newly acquired products.
Investments & Renewable Expansion Aid Public Service (PEG)
Per the Zacks analyst, Public Service’s strategic investments of $18-$21 billion through 2028 should help in system modernization. Expanding clean energy portfolio should boost performance.
Growth Projects, Kirkland Buyout Aid Agnico Eagle (AEM)
Per the Zacks analyst, the company will benefit from investment in growth projects to expand output and its acquisition of Kirkland Gold amid headwinds from higher costs.
Corning (GLW) Rides on Solid Demand, Price Adjustments
Per the Zacks analyst, rising adoption of optical connectivity products in AI native data centers will likely drive Corning’s top line. Price Hike in the Display Technologies segment is a positive.
Solid S.E.T Arm Aids Zimmer Biomet (ZBH) Amid Cost Issues
Per Zacks analyst, with focus on quality remediation, product launches and supply recovery efforts, Zimmer Biomet sees consistent growth within S.E.T arm. But, rising costs continue to pose concerns.
Strategic Acquisition to Aid Magna (MGA), High Capex Ails
Per the Zacks analyst, with the acquisition of Veoneer Active Safety business, Magna is on track to save more than $70 million annually by 2025-end. However, high capital spending remains a concern.
Fleet-Upgrade Efforts Aid Copa (CPA) Amid High Expenses
The Zacks analyst is pleased with the company’s efforts to modernize its fleet. High fuel and labor costs, however, represent a headwind.
New Upgrades
Solid Policies in Force, High Retention Aid Progressive (PGR)
Per the Zacks analyst, Progressive is set to grow on, solid policies in force, competitive rates, leadership position and strength in both Vehicle and Property businesses.
NetApp (NTAP) Gains from Solid Demand for Product Portfolio
Per the Zacks analyst, NetApp’s performance gains from solid demand for the all-flash portfolio, Keystone offering and growth in first-party and marketplace cloud storage services.
Solid Capital Position & Premium Growth Aid Assurant (AIZ)
The Zacks analyst is optimistic about solid Global Lifestyle segment of Assurant, which will drive improvement in earned premiums and fees. Solid capital position supports capital deployment.
New Downgrades
Sally Beauty (SBH) Remains Troubled by Higher SG&A Costs
Per the Zacks analyst, Sally Beauty has been seeing higher SG&A expenses for a while. In third-quarter fiscal 2024, SG&A expenses rose $12.6 million due to cost pressures from labor among others.
Weak Utility and Broadband Market hurt WESCO’s (WCC) Prospect
Per the Zacks analyst, WESCO is suffering from weakness in utility and broadband markets that negatively impacted organic sales growth.
Weather Woes & Economic Pressures Hurt Martin Marietta (MLM)
Per the Zacks analyst, Martin Marietta’s performance is being hurt by persistent weather impacts and ongoing economic pressures. Also, increasing operating costs are added concern.
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Chevron Corporation (CVX) : Free Stock Analysis Report
CocaCola Company (The) (KO) : Free Stock Analysis Report
Pfizer Inc. (PFE) : Free Stock Analysis Report
Public Service Enterprise Group Incorporated (PEG) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
Sypris Solutions, Inc. (SYPR) : Free Stock Analysis Report
Mobile Infrastructure Corporation (BEEP): Free Stock Analysis Report
