Tuesday, December 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 Tesla, Inc. (TSLA), Broadcom Inc. (AVGO) and Bank of America Corporation (BAC), as well as a micro-cap stock Flanigan's Enterprises, Inc. (BDL). 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 >>>

Tesla shares have outperformed the Zacks Automotive - Domestic industry over the year-to-date period (+106.4% vs. +56.9%), with the stock getting boost from Donald Trump's election victory. Despite potential rebate cuts under a Trump presidency, Tesla is well-positioned to thrive without subsidies, thanks to its cost efficiency and unmatched scale.

Tesla’s long-term growth prospects remain strong, driven by its thriving Energy Generation & Storage segment, expansive Supercharger network and AI advancements. Energy deployments are expected to double this year, thanks to the strong reception of its Megapack and Powerwall products.

Tesla’s robust balance sheet, with a high liquidity buffer, supports continued innovation and expansion. Progress in the autonomous vehicle domain, including plans to launch robotaxi services in 2025, position the company well for sustained growth. As such, we are bullish on the stock.

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

Shares of Broadcom have outperformed the Zacks Electronics - Semiconductors industry over the year-to-date period (+213.3% vs. +73.1%). The company reported strong fiscal fourth-quarter results, with revenues and earnings increasing year over year. The company benefited from strong demand for Broadcom’s custom AI accelerators (XPUs) and networking.

Broadcom experienced four times growth in AI connectivity revenues, driven by global shipments of its Tomahawk and Jericho solutions. The acquisition of VMware has benefited Infrastructure software solutions. AVGO’s strong partner base, including Arista Networks, Dell Technologies, Juniper and Supermicro, served as a key catalyst.

However, non-AI semiconductor revenues declined, reflecting a cyclical downturn that acted as a headwind. High cash interest expenses, a higher tax burden, and ongoing restructuring costs related to the VMware acquisition affected overall profitability.

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

Bank of America’s shares have gained +13.5% over the past six months against the Zacks Financial - Investment Bank industry’s gain of +23.5%. Though the company’s investment banking (IB) business shows signs of a solid resurgence, the challenging macroeconomic backdrop will likely weigh on it. Hence, fee income growth will likely be muted.

The Zacks analyst project non-interest income to rise 9.8% in 2024 and only 1.8% in 2025. Due to continued investments in the franchise, expenses will remain high. We expect total non-interest expenses to rise 1.1% in 2024. While high funding costs are a concern, the company’s net interest income (NII) will be positively impacted by interest rate cuts. We project NII to witness a CAGR of 3.1% by 2026.

The company plans to open financial centers in new and existing markets and improve digital capabilities. These will support the top line. We project total revenues to grow 3.2% in 2024.

(You can read the full research report on Bank of America here >>>)

Shares of Flanigan's have underperformed the Zacks Retail - Restaurants industry over the past year (-4.9% vs. +9.0%). This microcap company with market capitalization of $45.35 million is witnessing declining net income, increasing operational costs, and pressures on margins due to external economic factors pose challenges, particularly given the company’s regional market concentration and increased debt levels.

Nevertheless, Flanigan's reported resilient revenue growth, with an 8.6% year-over-year increase to $142.3 million for the 39 weeks ended June 29, 2024, driven by higher sales across its restaurant and package store segments.

Despite rising costs, the company maintained solid operating performance, with $5.8 million in income from operations, reflecting effective cost management. Strategic property investments (which rose to $82.2 million) and a strong liquidity position of $22.1 million support long-term growth.

(You can read the full research report on Flanigan's here >>>)

Other noteworthy reports we are featuring today include Stryker Corporation (SYK), Micron Technology, Inc. (MU) and CME Group Inc. (CME).

Director of Research

Sheraz Mian

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

Tesla (TSLA) Set to Benefit from Trump's Win and AV Strides

Strong Demand for Networking Products Aids Broadcom (AVGO)

Branch Openings, Lower Rates Aid BofA (BAC), Fee Income Ails

Featured Reports

Diversified Product Portfolio Drives Stryker's (SYK) Prospects
Per the Zacks analyst, Stryker's diversified product portfolio, which include the robust Mako total knee platform, should support the growth of its global business.

Supply Stabilization, Higher AI Spending Aid Micron (MU)
Per the Zacks analyst, Micron is benefiting from the boom in AI spending, which is fueling the demand for its memory chips. Also, supply normalization is driving prices for memory chips.

Improving Clearing and Transaction Fees Aid CME Group (CME)
Per the Zacks analyst, CME is set to grow on higher clearing and transaction fees as market position, diverse derivative product lines and global reach drive volumes. However, escalating expense ails.

Hess (HES) Banks on Offshore Guyana, Debts Remain High
The Zacks analyst likes Hess due to its higher development activities in offshore Guyana. However, the high debt load remains a concern.

Demand for Rental Units Aid AvalonBay (AVB) Amid High Supply
Per the Zacks Analyst, AvalonBay is likely to gain from the healthy demand for residential units amid high home ownership costs, though new deliveries remain a concern.

Southwest Airlines (LUV) Benefits From Air Travel Demand
Per the Zacks Analyst, strong air-travel demand, cost-cutting initiatives, fleet-modernization techniques and shareholder-friendly moves bode well for Southwest Airlines.

Growth Strategies Aid Prestige Consumer (PBH) Amid Cost Woes
Per Zacks analyst, Prestige Consumer is focused on core strategies, that are designed to enhance growth and long-term profitability across its core brands. But, rising costs continue to pose concerns.

New Upgrades

Keysight (KEYS) Rides on Healthy Demand & Portfolio Strength
Per the Zacks analyst, growing demand for Keysight's testing solutions in aerospace, defense, semiconductor, AI data center, and communication end markets will likely drive its top line.

Curtiss-Wright (CW) Gains on Expanding Global Nuclear Market
As per the Zacks analyst, Curtiss-Wright is likely to benefit from the expanding global nuclear market. Ultra Energy acquisition when completed will further boost its operations in the nuclear market.

Solid Bookings & Fleet Expansion to Aid Norwegian Cruise (NCLH)
Per the Zacks analyst, Norwegian Cruise is likely to benefit from robust booking trends, fleet expansion and strategic partnerships. Also, strength in consumer onboard spending bodes well.

New Downgrades

Ironwood's (IRWD) Overdependence on Linzess Poses Concern
Per the Zacks analyst, Ironwood's heavy dependence on its sole marketed drug Linzess for growth is a woe. Also, competition for Linzess in the target market is intensifying, which is an overhang.

Challenges in Europe, High Capital Spending Ail Adient (ADNT)
Per the Zacks analyst, Adient's performance is expected to get hurt amid an anticipated drop in light vehicle production in Europe in fiscal 2025. The rising capex requirement is also concerning.

Soft Consumer Demand Hurts TreeHouse Foods (THS) Sales
Per the Zacks analyst, TreeHouse Foods is battling with slower consumer consumption trends in key categories. In the third quarter of 2024, sales of the company fell 2.8% year over year.

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

Bank of America Corporation (BAC) : Free Stock Analysis Report

CME Group Inc. (CME) : Free Stock Analysis Report

Stryker Corporation (SYK) : Free Stock Analysis Report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

Tesla, Inc. (TSLA) : Free Stock Analysis Report

Flanigan's Enterprises, Inc. (BDL): Free Stock Analysis Report

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