Wednesday, January 22, 2025

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 Eli Lilly and Co. (LLY), Exxon Mobil Corp. (XOM) and Costco Wholesale Corp. (COST), as well 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 >>>

Eli Lilly’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+18.2% vs. -1.7%). Demand for the company’s popular GLP-1 drugs, Mounjaro and Zepbound, remains strong, making them the company’s key top-line drivers. Its new drugs contributed significantly to top-line growth in 2024. Lilly is also making rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s.

However, sales of Mounjaro/Zepbound were disappointing in the second half of 2024 due to slower-than-expected growth, which has raised concerns about moderating demand for the drugs.

Declining sales of Trulicity, rising pricing pressure on some drugs and potential competition in the GLP-1 diabetes/obesity market are some top-line headwinds. Estimates have declined ahead of fourth-quarter results. Lilly has a mixed record of earnings surprises in recent quarters.

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

Shares of Exxon Mobil have outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+19.6% vs. +14.5%). The company’s high-value assets in the Permian Basin and Guyana drive robust production growth, doubling upstream earnings since 2019. The Pioneer acquisition and Guyana ramp-up have enhanced profitability, while a robust structural savings strengthen resilience.

With a lower exposure to debt capital, XOM supports steady cash flows, dividends, buybacks and investments in high-return projects. Expansion in low-carbon tech, including Baytown's hydrogen facility, positions it for future growth.

Yet, refining margins are pressured due to global capacity increases, with refining profits softening. The refining margin pressure intensifies the reliance on upstream operations which is vulnerable to fluctuating oil and gas prices. Commodity price volatility challenges profitability, especially as crude prices dipped in the third quarter.

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

Costco’s shares have outperformed the Zacks Retail - Discount Stores industry over the past year (+43.3% vs. +23.6%). The company being a consumer defensive stock, Costco 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 Costco to register an 11.5% adjusted earnings per share improvement in fiscal 2025 on 6.6% 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 here >>>)

Shares of Flanigan's have underperformed the Zacks Retail - Restaurants industry over the past year (-3.1% vs. +6.3%). This microcap company with market capitalization of $46.45 million is facing risks which include a 16.1% net income decline, inflation-driven margin pressure, flat franchise revenue and geographic concentration. Regulatory challenges, high competition and limited diversification further weigh on prospects.

Nonetheless, the package store segment and steady rental income provide stability. Flanigan's achieved 7.9% revenue growth to $188.3 million in fiscal 2024 from $174.4 million in the prior year, driven by a 6.3% rise in restaurant sales and 15.1% growth in package store sales, showcasing a diversified revenue model.

Geographic expansion opportunities, resilient operations amid cost pressures, and rising dine-in demand position the company for long-term growth. Operational efficiencies help combat rising costs, while digital transformation and menu innovation could enhance customer experience and loyalty.

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

Other noteworthy reports we are featuring today include JPMorgan Chase & Co. (JPM), The Goldman Sachs Group, Inc. (GS) and Infosys Ltd. (INFY).

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

Lilly's (LLY) Mounjaro, Zepbound Key to Sales Growth

ExxonMobil (XOM) Gains From high-value assets in Permian

Decent Comparable Sales Run to Fuel Costco's (COST) Top Line

Featured Reports

Cloud, IoT, IT Security Services Demand Aid Infosys (INFY)
Per the Zacks analyst, Infosys is benefitting from strong demand for its services in the cloud, the Internet of Things (IoT), cyber security, and data and analytics.

Aerospace Unit Aids Parker-Hannifin (PH) Amid Weak Liquidity
Per the Zacks analyst, Parker-Hannifin will benefit from strength in Aerospace Systems segment, led by robust OEM and aftermarket demand. However, weak liquidity position remains concerning.

CNG Vehicles Aid Republic Services (RSG) Amid Low Liquidity
Per the Zacks analyst, Republic Services is focused on increasing its operational efficiency by shifting to compressed natural gas (CNG) collection vehicles. Low liquidity remains a concern.

Solid Budget Aids Curtiss-Wright (CW) Amid Fuel Price Hike
Per the Zacks analyst, increasing U.S. defense budget should boost demand for Curtiss-Wright's nuclear propulsion equipment. Yet rising fuel price might hurt airline industry and in turn the stock

RH Benefits From Innovation Amid Macroeconomic Challenges
The Zacks analyst believes that product innovation, global expansion, experiential retail, and technology will benefit RH. Yet, slow real estate market dampens sales.

Solid Transportation Segment Aids Trimble's (TRMB) Prospects
Per the Zacks analyst, Trimble is benefiting from strong momentum in the transportation segment, driven by organic growth in enterprise and strong demand for map solutions.

Credit Sales, Receivables Growth Drive Bread Financial (BFH)
Per the Zacks analyst, Bread Financial is set to grow on credit sales growth driven by existing partners, as well as new product and brand partner additions. Yet, high expenses weighing on margin ail.

New Upgrades

Buyouts, Rates, Solid IB Business & Loans Aid JPMorgan (JPM)
Per the Zacks analyst, higher rates for longer, decent loan growth, acquisitions, a robust resurgence in the IB business and branch openings will support JPMorgan's financials.

Strong IB Business, Solid Liquidity Profile Aid Goldman (GS)
Per the Zacks analyst, a rebound in global M&A activity will support Goldman's investment banking (IB) business growth. A solid liquidity position is an added advantage.

Telephone and Data Systems (TDS) Rides on Strong Fiber Growth
Per the Zacks analyst, solid growth in residential broadband connections will likely boost Telephone and Data Systems' top line. Strong emphasis on fiber network expansion is a tailwind.

New Downgrades

Weak Demand, Low Steel Margins Ail Commercial Metals (CMC)
Per the Zacks Analyst, Commercial Metals is bearing the brunt of lower steel product margins over scrap costs. Sluggish demand in Europe is also putting pressure on pricing and margins.

Rising Expenses & Net Outflows Hurt Artisan Partners (APAM)
Per the Zacks analyst, rising expenses from higher revenue-based incentive compensation are likely to hurt Artisan Partner's bottom line, while rising net outflows are likely to hurt its AUM growth.

Changing Marketplace Conditions Ail AMN Healthcare (AMN)
The Zacks analyst is worried about AMN Healthcare's ability to adapt to changing marketplace conditions in evolving care delivery settings. A tough competitive space is an added concern.

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

The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report

JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Eli Lilly and Company (LLY) : Free Stock Analysis Report

American Noble Gas Inc. (INFY) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

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

To read this article on Zacks.com click here.

Zacks Investment Research