Thursday, October 17, 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 AbbVie Inc. (ABBV), Automatic Data Processing, Inc. (ADP) and Analog Devices, Inc. (ADI), as well as two micro-cap stocks Taylor Devices, Inc. (TAYD) and Village Super Market, Inc. (VLGEA). 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 >>>
AbbVie’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+27.4% vs. +22.8%). The company has successfully navigated Humira’s loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq. Skyrizi and Rinvoq are performing extremely well, bolstered by approvals in new indications, which should support top-line growth in the next few years.
AbbVie has several early/mid-stage candidates that have the potential to drive long-term growth. Boosted by its new product launches, AbbVie expects to return to robust revenue growth in 2025. AbbVie has been on an acquisition spree lately in its core space of immunology.
However, the company faces several near-term headwinds like Humira’s biosimilar erosion, increasing competitive pressure on Imbruvica and slow market growth trend for fillers in the U.S. and China. Estimate movements have been mixed ahead of Q3 results.
(You can read the full research report on AbbVie here >>>)
Shares of ADP have outperformed the Zacks Outsourcing industry over the year-to-date period (+26.8% vs. +24.4%). The company continues to enjoy a dominant position in the human capital management market through strategic buyouts like Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company.
ADP is focused on delivering a complete suite of cloud-based HCM and HR Outsourcing solutions. Further, it continues to innovate, improve operations and invest in its transformation efforts.
On the flip side, ADP faces significant competition in each of its product lines. The company’s failure to remain technologically updated might reduce the demand for its solutions and services. Rising expenses due to investment in transformation efforts remain concerning.
(You can read the full research report on ADP here >>>)
Analog Devices’ shares have outperformed the Zacks Semiconductor – Analog and Mixed industry over the year-to-date period (+16.1% vs. +6.6%). The company is benefiting from strong momentum across the automotive end market. Strong momentum across electric vehicle space on the back of its robust Battery Management System solutions remains a tailwind.
Strong investments in technology and business innovation are contributing well. Increasing power design wins is another positive. The solid momentum of the HEV platform across cabin electronics ecosystem is positive.
Nonetheless, Analog Devices is suffering from softness in the consumer market. The weak demand environment remains a major concern. The sluggish communications market, due to the broad-based inventory corrections, is a major negative. The ongoing inventory correction is expected to be a headwind for the company in the near term. Broad-based weakness in the industrial end-market remains a headwind.
(You can read the full research report on Analog Devices here >>>)
Shares of Taylor Devices have outperformed the Zacks Manufacturing – General Industrial industry over the year-to-date period (+123.9% vs. +11.9%). This microcap company with market capitalization of $154.53 million posted robust first-quarter fiscal 2025 results, with revenues rising 17% to $11.6 million and gross margins expanding from 44% to 47%, driven by improved pricing and efficiencies. Net income surged 44% to $2.7 million, reflecting scale benefits and disciplined expense control despite an 8% rise in SG&A from compensation costs.
Aerospace and defense, accounting for 59% of sales, grew 20%, supported by legacy contracts and new programs, providing resilience in uncertain markets. Geographic diversification, with Asian sales up 38%, and a $28.4 million backlog, offers revenue visibility. Strong liquidity, including $2.2 million in cash and $25 million in short-term investments, ensures growth capacity.
However, working capital constraints are emerging. Structural segment sales dropped from 35% to 29%, reflecting slowing infrastructure demand. Persistently rising SG&A costs could pressure margins.
(You can read the full research report on Taylor Devices here >>>)
Village Super Market’s shares have gained +22.1% over the year-to-date period against the Zacks Retail – Supermarkets industry’s gain of +53.5%. This microcap company with market capitalization of $456.67 million have acquired strategic stake of 12.8% in Wakefern Food Corp provides a competitive edge in purchasing, distribution, and technology, benefiting from scale economies usually reserved for larger chains.
The use of recognized brands like ShopRite, Fairway, and Gourmet Garage adds brand equity, while shared marketing through Wakefern helps reduce costs. In fiscal 2024, Village grew sales by 3.2% to $2.24 billion, driven by digital growth. A $75 million capital plan aims to expand its 34 supermarkets and three specialty markets, enhancing its market presence.
Village Super Market is also advancing its e-commerce capabilities to capture rising demand for online grocery shopping. Despite its strong liquidity position, Village faces competitive pressure from larger chains and online platforms, rising labor costs, and operational risks tied to its regional concentration. Rising lease obligations adds financial strain.
(You can read the full research report on Village Super Market here >>>)
Other noteworthy reports we are featuring today include The Southern Co. (SO), The Cigna Group (CI) and Chipotle Mexican Grill, Inc. (CMG).
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
AbbVie’s (ABBV) Skyrizi, Rinvoq Key to Top-Line Growth
Transformation Initiatives Aid ADP, Escalating Expenses Hurt
BMS Solutions & Solid Radio Systems Aid Analog Devices (ADI)
Featured Reports
Southern Company (SO) Buoyed by Regulated Customer Growth
The Zacks analyst believes that the growth in Southern’s regulated business customer base will drive revenue growth. But the company’s high leverage restricts its financial flexibility.
Cigna (CI) Gains from Solid Evernorth Unit, High Costs Hurt
Per the Zacks analyst, Cigna gains from significant client wins in Evernorth Health Services and premium rate hikes and business mix in Cigna Healthcare. However, rising costs are a concern.
Digital Sales & Expansion Boosts Chipotle’s (CMG) Prospects
Per the Zacks analyst, Chipotle is poised to benefit from strong digital sales, menu innovation and marketing initiatives. This and focus on new restaurant openings including a Chipotlane bode well.
Growth Projects, Newcrest Buyout Aid Newmont (NEM)
Per the Zacks analyst, Newmont will gain from the progress of its key growth projects and significant synergies of the Newcrest acquisition amid headwinds from higher production costs.
Ventas (VTR) to Benefit From Strong Senior Housing Demand
Per the Zacks Analyst, Ventas is likely to gain from the solid demand for senior housing assets backed by an expected rise in senior citizens’ population. Yet, dependence on few tenants remains a woe.
Assurant (AIZ) Gains on Solid Premiums Amid Escalating Costs
Per the Zacks analyst, Assurant is set to grow on solid Global Lifestyle and Global Lifestyle segments, which will drive improvement in earned premiums and fees. However, high costs remain a concern.
Uptake of WIX Studio & AI Products Aiding WIX’s Performance
Per the Zacks Analyst, robust adoption of WIX Studio and various AI products are driving WIX’s performance. However, stiff competition and rising accumulated deficit remain headwinds.
New Upgrades
Investments Aid DTE Energy (DTE) Amid Poor Financial Ratios
Per the Zacks analyst, DTE Energy makes disciplined investments to upgrade the reliability of its electric utility systems. Yet its poor financial ratios indicate a weak solvency position.
Investments, Clean Generation Focus Aid PPL Corporation (PPL)
Per the Zacks analyst, PPL’s strategic investment of $14.3 billion during 2024-2027 should strengthen its infrastructure. Focus on renewables projects should further boost margins.
Flowserve Pump Division Segment to Benefit Flowserve (FLS)
Per the Zacks analyst, Flowserve will gain from strength in the Flowserve Pump Division segment, driven by robust aftermarket and original equipment businesses. Its shareholders add to its appeal.
New Downgrades
Soft Pet Segment Likely to Hurt Central Garden’s (CENT) Sales
Per the Zacks analyst, a challenging operating environment and softness in Pet segment have made things tough for Central Garden & Pet Company. Organic net sales for the Pet segment fell 2.2% in Q3.
WESCO (WCC) Suffers from Weak Broadband & Utility Markets
Per the Zacks analyst, WESCO’s prospects are suffering from sluggish broadband and utility end-markets and slowing 5G build-outs.
DSA Arm Headwinds, Margin Pressures Ail Charles River (CRL)
Per the Zacks analyst, softer demand trends due to rising biopharma spending pressures are affecting Charles River’s DSA businesses. Also, macroeconomic volatilities can further escalate its costs.
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Southern Company (The) (SO) : Free Stock Analysis Report
Analog Devices, Inc. (ADI) : Free Stock Analysis Report
Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
Cigna Group (CI) : Free Stock Analysis Report
AbbVie Inc. (ABBV) : Free Stock Analysis Report
Village Super Market, Inc. (VLGEA): Free Stock Analysis Report
Taylor Devices, Inc. (TAYD): Free Stock Analysis Report
