Thursday, February 6, 2025

Today's Research Daily features a real-time scorecard of the ongoing Q4 earnings season, in addition to the usual updated analyst reports on 16 major stocks, including Walmart Inc. (WMT), Visa Inc. (V) and AbbVie Inc. (ABBV), as well as a micro-cap stock AstroNova, Inc. (ALOT). 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 >>>

Ahead of Wall Street

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's open and attempts 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 >>> Pre-Markets Higher on Easy Jobless Claims, Q4 Earnings

Q4 Earnings Season Scorecard

Including this morning's reports from the likes of Eli Lilly, Ralph Lauren and others, we now have Q4 results from 293 S&P 500 members or 58.6% of the index's total membership.

Total earnings for these companies are up +11.8% from the same period last year on +5.6% higher revenues, with 77.5% beating EPS estimates and 65.2% beating revenue estimates. The Q4 earnings and revenue growth rates we are seeing from these 293 index members represents a notable acceleration relative to what we had seen from this same group in other recent periods.

With respect to the EPS and revenue beats percentages, the Q4 beats percentages for this group of 293 companies is tracking below the average for this group over the preceding 20-quarter period (last 5 years).

Looking at Q4 as a whole, combining the actual results from these 293 index members with estimates from the still-to-come companies, total earnings are expected to be up +12.3% on +5.4% higher revenues.

The Q4 earnings growth rate improves to +15% once the Energy sector's drag is removed from the aggregate numbers, but the growth rate drops to +7% when the Tech sector's substantial contribution is excluded.

For more details about the Q4 earnings season and evolving expectations for the coming periods, please check out our weekly Earnings Trends report here >>>>Mag 7 Members Report Strong Earnings, Double Down on CapEx

Today's Featured Research Reports

Walmart shares have outperformed the Zacks Retail - Supermarkets industry over the past year (+83.6% vs. +80.9%). The company is benefiting from its diverse business model that spans multiple segments, channels and formats. The company's strong omnichannel strategy has boosted traffic across physical stores and digital platforms.

Walmart’s emphasis on improving delivery services has been successful, contributing to steady grocery market share gains. Upsides like these, along with growth in the advertising business, fueled third-quarter fiscal 2025 results, wherein the top and bottom lines grew year over year, and e-commerce sales surged.

However, Walmart is experiencing adverse currency movements and margin pressures from shifts in product mix. While raising its fiscal 2025 guidance, the company’s implied fourth-quarter view for revenues and operating income reflects a slowdown from the reported third-quarter figures.

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

Shares of Visa have outperformed the Zacks Financial Transaction Services industry over the past year (+26.1% vs. +20.4%). The company’s fiscal first-quarter earnings beat estimates by 3.4%. Its strategic acquisitions and alliances are fostering long-term growth and consistently driving revenues. It expects net revenues to grow in low double-digits in fiscal 2025.

V is fueled by persistent increases in payments, cross-border volumes and sustained investments in technology, is witnessing significant profit growth. The ongoing shift to digital payments is advantageous for Visa, with strong domestic volumes supporting its overall performance. A robust cash position enables the company to enhance shareholder value.

However, elevated operating expenses pose margin challenges. It is witnessing a volatile cash volume from the Asia Pacific and U.S. regions. Moreover, rising client incentives will affect its adjusted revenues.

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

AbbVie shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+13.3% vs. -0.6%). The company beats Q4 estimates for both earnings and sales.  AbbVie has successfully navigated Humira's loss of exclusivity (LOE) by launching two other successful new immunology medicines, Skyrizi and Rinvoq, which are performing extremely well, bolstered by approvals in new indications and 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. It expects to return to robust revenue growth in 2025 following the Humira LOE.

However, the company faces several near-term headwinds like Humira’s biosimilar erosion, increasing competitive pressure on Imbruvica and slow market growth trend for Juvederm fillers in the United States and China.

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

Shares of AstroNova have underperformed the Zacks Technology Services industry over the past year (-33.9% vs. +80.9%). This microcap company with market capitalization of $85.38 million is facing challenges which includes margin compression, liquidity pressures and delayed revenue realization from postponed shipments. Competitive pressures in digital printing, along with geopolitical risks, further weigh on performance.

Nevertheless, AstroNova's aerospace segment continues strong growth, with T&M revenues up 22.3% YoY, driven by robust demand for flight deck printers. Proprietary ToughWriter adoption is set to reach 89% of unit volume by FY27, reducing manufacturing complexity and royalties and enhancing long-term margins.

In the PI segment, the MTEX acquisition strengthens inkjet capabilities, supporting innovation and retrofitting initiatives. Recurring revenues, comprising 70% of total sales, ensure stability and cash flow consistency. Macro tailwinds in digital printing, coupled with operational excellence programs, position AstroNova for sustained expansion.

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

Other noteworthy reports we are featuring today include Accenture plc (ACN), Morgan Stanley (MS) and Chipotle Mexican Grill, Inc. (CMG).

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

Walmart (WMT) Benefits from Impressive E-Commerce Operations

Visa (V) Rides on Increasing Payments Volume Amid High Expenses

AbbVie's (ABBV) Skyrizi, Rinvoq Key to Top-Line Growth

Featured Reports

Acquisition Strategy Aid Accenture (ACN), Talent Costs Ail
Per the Zacks analyst, Accenture's buyout strategy helps in channeling its business in high-growth areas, deepening industry and functional expertise. A competitive talent market remains a concern.

Strong Comps Growth Aids Chipotle (CMG), High Costs Ail
Per the Zacks analyst, Chipotle benefits from strong comparable restaurant sales growth, digital initiatives and expansion efforts. However, cost of sales and wage inflation are concerns.

Electronic Arts (EA) Banks on Strong Portfolio, User Addition
Per the Zacks Research analyst, expanding user base driven by strength in popular franchises including FIFA and Madden NFL is aiding Electronic Arts' top-line amid stiff competition.

Solid User Growth & Premium Content Demand Aids Snap (SNAP)
Per the Zacks analyst, Snap benefits from an improving user growth driven by strong adoption of Augmented Reality (AR) Lenses and demand for premium content including Shows.

Restructuring Plan Aids Group 1 (GPI) Amid Sluggish EV Demand
Per the Zacks analyst, Group 1's restructuring plan is likely to help it improve overall operational efficiency and performance in the U.K. market amid sluggish EV adoption.

Ashland (ASH) Gains on Cost Reduction Amid Weak Demand
While soft demand will hurt volumes in Ashland's Life Sciences segment, actions to reduce operating costs should support its margins, per the Zacks analyst.

Expansion Efforts and Stable Solvency Aid Tandem (TNDM)
The Zacks analyst is impressed with Tandem's (TNDM) efforts to undertake innovation and develop products to cater to consumers' and clinical needs globally. Robust solvency is an added advantage.

New Upgrades

IB Business, Strategic Alliances Support Morgan Stanley (MS)
Per the Zacks analyst, relatively high rates, solid IB business, strategic alliances, global footprint and Morgan Stanley's focus on less capital-markets dependent operations will aid its financials.

Annaly's (NLY) High-quality MBS Investments to propel growth
Per the Zacks analyst, Annaly's investment in agency mortgage-backed securities (MBS) will enable it to diversify its investment portfolio and accelerate growth.

Momentum in IoT Division Drives BlackBerry's (BB) Prospects
Continued growth in the IoT unit bodes well for BlackBerry's prospects. Cost-cutting and restructuring measures are driving up margin performance for the company.

New Downgrades

Persistent Supply Chain Issues Hurt General Dynamics (GD)
Per the Zacks analyst, General Dynamics is likely to lose from increasing supply-chain disruptions which may result in increased costs and reduced operational efficiency.

NOV Inc. (NOV) Stung by North American Demand Weakness
The Zacks analyst believes that weak demand for pressure pumping and stimulation equipment in North America could weigh on NOV's Energy Equipment revenues.

Weak End-Market Demand Hurts IPG Photonics' (IPGP) Prospects
Per the Zacks analyst, IPG Photonics is suffering muted demand in its key end-markets, including industrial, general manufacturing and e-mobility, as well as a cautious spending environment.

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

Morgan Stanley (MS) : Free Stock Analysis Report

Accenture PLC (ACN) : Free Stock Analysis Report

Visa Inc. (V) : Free Stock Analysis Report

Walmart Inc. (WMT) : Free Stock Analysis Report

Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report

AstroNova, Inc. (ALOT) : Free Stock Analysis Report

AbbVie Inc. (ABBV) : Free Stock Analysis Report

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