Monday, September 30, 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 Apple Inc. (AAPL), Tesla, Inc. (TSLA) and T-Mobile US, Inc. (TMUS), as well as a micro-cap stock Tucows Inc. (TCX). 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 >>>
Shares of Apple have gained +18.8% over the year-to-date against the Zacks Computer – Micro Computers industry’s gain of +19.5%. The company is benefiting from strong growth in Services revenues. It now has more than 1 billion paid subscribers across its Services portfolio, more than double what it had four years ago. The expanding content portfolio of Apple TV+ and Apple Arcade helped in driving subscriber growth.
Apple expects the September quarter’s (fourth-quarter fiscal 2024) revenues to grow at the same rate as of June quarter on a year-over-year basis. Unfavorable forex is expected to hurt revenues. For the Services segment, Apple expects a double-digit growth rate similar to the first three quarters of fiscal 2024.
Introduction of Apple Intelligence, an advanced personal intelligence system seamlessly integrated into iOS 18, iPadOS 18 and macOS Sequoia will help Apple shares to push higher. However, weakness in iPhone sales particularly in China is a concern.
(You can read the full research report on Apple here >>>)
Tesla’s shares have outperformed the Zacks Automotive – Domestic industry over the year-to-date period (+4.9% vs. +1.8%). Amid competition intensifying in the EV space the company focus on autonomous driving and artificial intelligence (AI) is expected to be a game changer. It aims to launch affordable vehicles, transition into an AI company and is banking on its robotaxi venture.
The expected rollout of Tesla-supervised Full Self Driving (FSD) software in China and Europe by the end of the year will boost prospects. Additionally, TSLA’s Energy Generation and Storage business is thriving. While near-term challenges persist, long-term prospects appear promising, driven by its big bet on driverless software and AI.
Of late, Tesla has been plagued by shrinking automotive margins amid aggressive price cuts and discounts. The company expects its vehicle volume growth rate for 2024 to be noticeably lower than 2023 amid a cooling electric vehicle (EV) market.
(You can read the full research report on Tesla here >>>)
Shares of T-Mobile US have outperformed the Zacks Wireless National industry over the year-to-date period (+30.0% vs. +29.9%). The company is benefiting from industry-leading postpaid customer growth with a record-low churn rate. In the second quarter, the company added 1.3 million postpaid net customers while postpaid net account additions were 301,000, both metrics being the best in the industry.
TMUS’ 2.5 GHz 5G spectrum delivers superfast speeds and extensive coverage with signals that go through walls and trees. This boosts its competitive edge against the companies that provide 5G networks controlled by the mmWave spectrum.
However, owing to the stock’s premium valuation, we believe investors should remain cautious as macroeconomic factors, market saturation, or economic downturns can significantly impact overvalued stocks like TMUS. The high debt burden is a concern. Stiff competition is straining profitability. We are reiterating our Neutral recommendation.
(You can read the full research report on T-Mobile US here >>>)
Tucows’ shares have gained +8.3% over the past year against the Zacks Internet – Content industry’s gain of +14.7%. This microcap company with market capitalization of $230.64 million continues to see strong subscriber growth, with a 25% year-over-year increase to 48,200 in second-quarter 2024. Revenues rose 17% to $14.6 million, supported by expanding infrastructure.
Ting’s gross margin grew 39% year over year, reflecting cost management and efficiency gains. The company completed a $63-million asset-backed securitization, helping fund its fiber expansion while reducing capital risk.
However, rising debt and liquidity concerns due to declining cash raise risks. Depreciation costs and challenges in customer acquisition add pressure as Ting competes with larger ISPs. Additionally, Tucows Domains saw a 3% decline in transactions, and continued pressure in this stable business could affect the overall performance. Slower fiber network expansion and increasing competition can hinder growth.
(You can read the full research report on Tucows here >>>)
Other noteworthy reports we are featuring today include Novartis AG (NVS), The TJX Companies, Inc. (TJX) and The Bank of New York Mellon Corp. (BK).
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
Robust Portfolio, Services Strength to Benefit Apple (AAPL)
Big Bets on AV and AI to Drive Tesla’s (TSLA) Prospects
T-Mobile (TMUS) Rides on Postpaid Customer Growth, AI Focus
Featured Reports
Kisqali, Pluvicto Drive Novartis (NVS) Amid Competition
Per the Zacks analyst, drugs like Entresto, Kesimpta, Pluvicto, Kisqali and Leqvio continue to fuel Novartis’ growth. However, generic competition and pipeline setbacks remain concerns.
Expansion Efforts Fuel TJX Companies (TJX), High Costs a Woe
Per the Zacks analyst, TJX Companies is on track with store expansion efforts to boost its performance. However, a rise in selling, general and administrative expenses pose a challenge.
Strategic Acquisitions Aid Vulcan (VMC), High Costs Ail
Per the Zacks analyst, Vulcan benefits from strong public infrastructure demand and increased contract flow. Also, strategic buyouts enhance growth prospects. However, increased costs are a concern.
Markel (MKL) Banks on Acquisitions Amid Escalating Costs
Per the Zacks Analyst, strategic buyouts have aided the company to expand its reinsurance product offerings and boost its surety capabilities. However, high costs remain a concern.
Systematic Investments Aid AES, Poor Financial Ratios Woe
Per the Zacks analyst, AES makes systematic investments to boost its renewable generation portfolio. Yet its poor financial ratios indicate weak solvency position.
Solid Group Demand Aid Host Hotels (HST), Leisure Demand Ail
Per the Zacks analyst, Host Hotels’ (HST) improving group business demand and capital-recycling moves bode well for growth. However, moderating domestic leisure transient demand ail.
Strength in HSA Aids HealthEquity (HQY) Amid Macro Concerns
Per the Zacks analyst, unique investment platform along with strength in HSAs continues to boost HeathEquity’s business. However, macro headwinds and data security issues persist.
New Upgrades
Higher Rates, AUM & Expansion Efforts Aid BNY Mellon (BK)
Per the Zacks analyst, BNY Mellon’s strategic buyouts to grow overseas presence, high rates, robust AUM balances will aid its financials. A solid balance sheet keeps capital distributions sustainable.
Strong Demand, Price Hikes Aid Packaging Corporation (PKG)
Per the Zacks analyst, Packaging Corp will gain on robust packaging demand backed by e-commerce and rising requirement for packaging of food, beverages and medicines as well as its pricing actions.
Charles River Associates (CRAI) Gains From Diversification
Per the Zacks analyst, Charles River has a diversified business with service offerings across areas of functional expertise and geographical regions. This contributes significantly to the top line.
New Downgrades
High Crude Prices to Hurt Valero’s (VLO) Refining Margins
Per the Zacks analyst, high crude oil prices may increase Valero’s input costs, negatively impacting its refining margins and overall profitability.
The Estee Lauder Companies (EL) Hurt by Asia-Pacific Hurdles
Per the Zacks analyst, softness in Asia-Pacific region is a concern for The Estee Lauder Companies, due to weaker consumer sentiment, smaller basket sizes, and a shift in consumer spending patterns.
Weakening Consumer Spending to Hurt Micron’s (MU) Sales
Per the Zacks Analyst, weakening consumer spending on personal computers and smartphones is expected to negatively impact demand for Micron’s memory chips in the near term.
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Novartis AG (NVS) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
The Bank of New York Mellon Corporation (BK) : Free Stock Analysis Report
The TJX Companies, Inc. (TJX) : Free Stock Analysis Report
Tucows Inc. (TCX) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report
