Tuesday, September 24, 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 Costco Wholesale Corp. (COST), Alibaba Group Holding Ltd. (BABA) and GE Aerospace (GE), as well as two micro-cap stocks Applied Energetics, Inc. (AERG) and NeurAxis, Inc. (NRXS). 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 >>>
Costco Wholesale’s shares have outperformed the Zacks Retail – Discount Stores industry over the year-to-date period (+39.6% vs. +23.5%). The company being a consumer defensive stock, has been surviving the market turmoil pretty well. The discount retailer’s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping it register decent sales and earnings numbers.
The Zacks analyst expects the company to register 8.6% adjusted earnings per share improvement in fiscal 2024 on 4.8% revenue growth. This outlook reflects Costco’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates.
A favorable product mix, steady store traffic, pricing power, and strong liquidity position should help Costco keep outperforming. While trading at a premium to its peers, its long-term growth prospects should help the stock see a solid upside.
(You can read the full research report on Costco Wholesale here >>>)
Shares of Alibaba have outperformed the Zacks Internet – Commerce industry over the year-to-date period (+26.7% vs. +23.8%). The company is benefiting from strong momentum in its international commerce retail business, driven by strength in AliExpress’ Choice. Growing international commerce wholesale business, thanks to strength in cross-border-related value-added services, is a tailwind.
Expanding China’s wholesale commerce business is a positive. Robust local consumer services and Cainiao logistics services are further driving top-line growth. Strength in Lazada, AliExpress and Trendyol is expected to continue benefiting Alibaba’s international business. Solid adoption of public cloud products remains a plus.
However, rising expenses related to new initiatives, and sluggish China commerce retail business are a concern. Macroeconomic uncertainties and unfavorable foreign exchange fluctuations are risks.
(You can read the full research report on Alibaba here >>>)
Shares of GE Aerospace have outperformed the Zacks Transportation – Airline industry over the past six months (+36.8% vs. +17.3%). The company has been witnessing strength in its businesses, driven by robust demand for commercial engines, propulsion and additive technologies. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel augur well for the company.
GE Aerospace remains committed to making investments to boost growth and provide better services to its customers. Its portfolio-reshaping actions are likely to unlock values for its shareholders. Its shareholder-friendly policies are encouraging.
For 2024, it expects organic revenues to grow in the high-single-digit range from the year-ago level. However, it has been dealing with high costs and expenses related to projects and restructuring activities.
(You can read the full research report on GE Aerospace here >>>)
Applied Energetics’ shares have underperformed the Zacks Lasers Systems and Components industry over the past year (-58.0% vs. -17.5%). This microcap company with market capitalization of $196.66 million is facing high operating losses, reliance on government contracts, legal risks and limited commercial revenue are significant risks. Despite raising $4.17 million in the first half of 2024, ongoing cash burn and competition from established defense contractors present challenges to achieving profitability.
Nevertheless, Applied Energetics is positioned as a leader in the directed energy market, with its USPL offering a powerful solution for countering ISR threats. The company’s USPL technology, backed by 25 issued patents, is ideal for military applications like counter-UAS systems.
Multiple contracts with the key U.S. military branches, scalable and efficient designs, and the potential for commercial market expansion (advanced manufacturing, biomedical imaging) create growth opportunities for the company.
(You can read the full research report on Applied Energetics here >>>)
Shares of NeurAxis have underperformed the Zacks Medical Info Systems industry over the past year (-23.3% vs. +6.8%). This microcap company with market capitalization of $19.84 million is facing operational losses and a high cash burn rate. Risks include dependency on insurance adoption, regulatory approval timelines and competitive pressures in the MedTech space.
Nevertheless, NeurAxis has expanded insurance coverage for its IB-Stim device from 4.5 million lives in May 2023 to 22.5 million in June 2024, with expectations to exceed 50 million by the year-end. This expansion addresses a key revenue barrier, with accelerated growth anticipated as more insurers adopt coverage.
Supported by clinical data and 16 peer-reviewed publications and endorsements from the North American Society for Pediatric Gastroenterology, Hepatology, and Nutrition (NASPGHAN), NeurAxis aims to achieve profitability by early 2025, fueled by rising unit sales and a robust pipeline,
(You can read the full research report on NeurAxis here >>>)
Other noteworthy reports we are featuring today include Vertex Pharmaceuticals Inc. (VRTX), American Tower Corp. (AMT) and General Dynamics Corp. (GD).
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
Decent Comparable Sales Run to Fuel Costco’s (COST) Top Line
Strength in International Business Benefits Alibaba (BABA)
Commercial Engines & Services Unit Drives GE Aerospace (GE)
Featured Reports
Vertex (VRTX) Cystic Fibrosis Sales Up; New Drugs On the Way
The Zacks analyst says Vertex cystic franchise sales are rising due to higher sales of Trikafta. It has additional near-term launches -suzetrigine in acute pain and vanza triple in CF- planned.
Steady Tower Demand & Investments Aid American Tower (AMT)
Per the Zacks analyst, American Tower is expected to gain from the network investments by wireless carriers amid steady growth in wireless data consumption. However, customer concentration ail.
Contract Wins Aid General Dynamics (GD), Labor Shortage Woes
Per the Zacks analyst, a steady flow of contracts as well as a strong global presence are boosting General Dynamics’ growth. Yet shortage of skilled labor remains a concern for the stock.
Strategic Efforts Aid MetLife (MET), Pressure on EMEA Unit Ail
Per the Zacks analyst, several acquisitions and partnerships will continue to bolster the capabilities and global presence of MetLife. Pressure on the EMEA segment is a concern.
GE HealthCare (GEHC) To Gain from Rising Product Demand
Per the Zacks analyst, GE HealthCare’s (GEHC) topline is likely to driven by rising demand for its products as it cater to growing markets. However, choppy macro environment to weigh on the stock.
Veeva (VEEV) Gains from its Product Portfolio Amid High Opex
Per the Zacks Analyst, Veeva continues to benefit from its robust product portfolio and strategic deals. However, rising operational expenses are a matter of concern.
DICK’S Sporting (DKS) Store-Related & Other Efforts Good
Per the Zacks analyst, DICK’S Sporting’s store-growth plans are on track. Also, the company is focused on enriching the omnichannel athlete experience to drive solid athlete engagement.
New Upgrades
Wabtec (WAB) Benefits From Segmental Strength & Dividends
Per the Zacks Analyst, Wabtec’s top line is benefitting from higher sales across its Freight and Transit segments. Shareholder-friendly initiatives boost positively impact the company’s bottom line.
Strong Booking Trends & Fleet Expansion Aids Carnival (CCL)
Per the Zacks analyst, Carnival benefits from increased booking volumes at significantly higher prices. Also, the focus on fleet expansion initiatives and marketing campaigns bode well.
Robust Momentum in DGM & SSE Segment & ACV Growth Aid Aspen
Per the Zacks analyst, Aspen’s performance is driven by strength across the DGM & SSE business with healthy Annual Contract Value (ACV) growth trends.
New Downgrades
Escalating Costs and Oil Price Volatility Ail Matador (MTDR)
Per the Zacks analyst, rising operational expenses and exposure to extreme volatility in oil and natural gas prices may have a detrimental effect on Matador’s overall profitability.
Engineered Solutions Segment Hurt Applied Industrial (AIT)
Per the Zacks analyst, Applied Industrial is struggling with the poor performance of the Engineered Solutions unit, due to weakness in the OEM channel. Forex woes are an added concern.
Knight-Swift (KNX) Grapples With Rising Operating Expenses
Per the Zacks Analyst, high costs related to driver wages, equipment, maintenance, fuel and other expenses are increasing Knight-Swift’s operating expenses. This is likely to weigh on the bottom line.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
GE Aerospace (GE) : Free Stock Analysis Report
General Dynamics Corporation (GD) : Free Stock Analysis Report
American Tower Corporation (AMT) : Free Stock Analysis Report
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Applied Energetics Inc. (AERG): Free Stock Analysis Report
Neuraxis, Inc. (NRXS): Free Stock Analysis Report
