The Zacks Analyst Blog UnitedHealth, Merck & Co., Qualcomm, EVI and Optex

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 UnitedHealth Group Inc., Merck & Co., Inc. and Qualcomm Inc., as well as two micro-cap stocks EVI Industries, Inc. and Optex Systems Holdings, Inc. 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 >>>

The daily ‘Ahead of Wall Street’ article is a must-read for all investors who would like to be ready for that day’s trading action. The article comes out before the market opens, attempting to make sense of that morning’s economic releases and how they will affect that day’s market action. You can read this article for free on our home page and can actually sign up there to get an email notification as this article comes out each morning.

You can read today’s AWS here >>> Inflation Numbers Out This Week: CPI, PPI

UnitedHealth’s shares have outperformed the Zacks Medical – HMOs industry over the past year (+2.6% vs. -0.2%). The company has shown steady revenue growth, driven by Optum and UnitedHealthcare. A strong market position and ongoing expansion initiatives, combined with rising healthcare demand, support sustained long-term growth.

UnitedHealth expects total revenues to be over $439 billion in 2026. Optum remains a key driver via pharmacy services, tech integration, and government solutions. Commercial membership also grew for UNH, supporting margins despite headwinds from government programs. Robust cash generation supports shareholder returns and financial flexibility.

However, rising medical costs continue to pressure margins, reflected in an elevated MCR despite recent improvement, while elevated debt and interest expenses strain financial flexibility. It is currently overvalued compared with the industry. The Zacks analyst reiterate our Neutral recommendation on the stock.

(You can read the full research report on UnitedHealth here >>>)

Shares of Merck have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+45.6% vs. +19.9%). The company’s first-quarter earnings and sales beat estimates. Its blockbuster drug, Keytruda, and new products have been driving sales. Animal Health is also contributing to growth. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.

Recent M&A deals have strengthened Merck’s pipeline while its late-stage pipeline and new launches are gaining traction. This progress has increased confidence that Merck can maintain growth even after Keytruda loses exclusivity.

However, it faces several near-term challenges, including persistent challenges for Gardasil in China, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Also, estimates have declined recently due to costs related to its various M&A deals.

(You can read the full research report on Merck here >>>)

Qualcomm’s shares have gained +58% over the past year against the Zacks Electronics – Semiconductors industry’s gain of +107%. The company reported mixed second-quarter fiscal 2026 results, with adjusted earnings beating the Zacks Consensus Estimates while revenue missed the same.

Qualcomm continues to pivot from a handset-centric model toward a broader connected processor portfolio. Solid traction in the automotive business augurs well, with more than 1 million cars operating ADAS and autonomy on Snapdragon Ride processors. Higher content per vehicle on the Snapdragon Digital Chassis, broader edge AI adoption across devices and data center traction are positives.

However, handset demand is tied to uncertain memory supply and pricing, which is keeping chipset shipments below end demand and driving a softer near-term outlook. Management expects China handset revenue to bottom in the fiscal third quarter, but near-term guidance still implies lower revenue and profitability.

(You can read the full research report on Qualcomm here >>>)

Shares of EVI Industries have outperformed the Zacks Industrial Services industry over the past year (+30.4% vs. -0.9%). This microcap company with a market capitalization of $257.89 million delivered solid top-line momentum, with revenues rising 24% in the December quarter and 20% for the first six months of FY26, alongside gross margin expansion to ~31%.

Improved mix, pricing discipline and operating leverage are enhancing earnings quality. Fiscal 2025 acquisitions contributed $40 million in revenues and $2 million in net income year to date. Operating cash flow improved to $5.1 million despite a $12.6 million inventory build, while a growing installed base and $9.7 million in lease receivables provide recurring service visibility.

However, earnings conversion remains pressured: net income dipped to $4.2 million as SG&A rose 26%, outpacing revenue growth. Inventory increased to $78 million, elevating working capital and demand-risk exposure. Debt rose to $58 million under a variable-rate facility, increasing sensitivity to higher rates. Shares trade at 0.73X EV/sales and 14.31X EV/EBITDA.

(You can read the full research report on EVI Industries here >>>)

Optex Systems’ shares have outperformed the Zacks Aerospace – Defense Equipment industry over the past year (+56.5% vs. +27.6%). This microcap company with a market capitalization of $70.76 million is demonstrating strengthening demand momentum, with Q1 FY26 orders rising 31.7% YoY to $7.9 million, driven by a doubling of periscope bookings and sharp growth in optical assemblies.

Recent multi-year contract awards totaling more than $6 million extend production visibility into 2027, supporting revenue durability. Quarterly revenues increased 11.6% to $9.1 million, led by a 55.9% surge in the Richardson segment, which now represents 58% of sales. Liquidity remains solid, with $5.8 million in cash, $21.2 million in working capital and no revolver borrowings.

However, gross margin declined and operating income fell sharply due to mix pressure and higher G&A. Backlog decreased to $37.9 million, with notable softness in periscopes and laser filters. Shares have outperformed over the past year and trade at 1.54X EV/sales and 8.68X EV/EBITDA, discounts to industry.

(You can read the full research report on Optex Systems here >>>)