Thursday, February 13, 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 JPMorgan Chase & Co. (JPM), Costco Wholesale Corp. (COST) and SAP SE (SAP), as well as a micro-cap stock Gencor Industries, Inc. (GENC).  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 opens, 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 Up on PPI Results, More Earnings Reports

Today's Featured Research Reports

JPMorgan’s shares have outperformed the Zacks Financial - Investment Bank industry over the past year (+59.7% vs. +59.1%). The company’s strategic buyouts, branch openings and decent loan demand should aid the company. With interest rates likely to remain high for longer, its net interest income (NII) will get support. The Zacks analyst expects expect NII (managed) to show a CAGR of 3.4% by 2027.

Yet the volatile nature of the capital markets business and high mortgage rates will hurt fee income growth. Our estimate for non-interest income indicates an 11.6% fall in 2025. As it invests heavily in technology and marketing, expenses are expected to remain elevated. Our estimates for non-interest expenses reflect a CAGR of 2.5% by 2025. Weak asset quality is worrisome.

However, a resurgence in deal-making activities and a solid pipeline will drive the investment banking (IB) business. We expect IB fees to grow at a CAGR of 7.6% by 2027.

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

Shares of Costco have outperformed the Zacks Retail - Discount Stores industry over the past year (+48.7% vs. +26.1%). 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 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 >>>)

SAP’s shares have outperformed the Zacks Computer - Software industry over the past year (+65.6% vs. +6.4%). The company’s fourth-quarter performance gained from robust cloud demand, especially solid uptake of its Rise with SAP and Grow with SAP solutions. Its cloud revenues rose 27% year over year to €4.71 billion, powered by 35% growth in the Cloud ERP Suite sales.

Cloud backlog was up 40% to €63 billion at the end of 2024. A strong focus on Business AI and Joule development is poised to boost sales through 2027. The company’s healthy profit and cash flow statements position it for long-term growth.

SAP’s revised 2025 outlook succeeds the previous Ambition 2025 strategy. It now expects cloud and software sales in the €33.1-€33.6 billion band, up from the prior view of €29.83 billion at cc. However, continued softness in the Software license and support business poses a headwind. Rising restructuring costs affect its margins.

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

Shares of Gencor have underperformed the Zacks Manufacturing - Thermal Products industry over the past year (-13.9% vs. +39.5%). This microcap company with a market capitalization of $201.40 million is facing challenges which include an 8.3% third-quarter fiscal 2024 revenue decline due to shipment delays, decreasing gross margins and rising operating expenses.

While Gencor's robust backlog is a positive indicator, over-reliance could expose the company to risks if order fulfillment delays persist. Additionally, increased reliance on non-operating income and marketable securities introduces volatility, posing risks in uncertain economic conditions.

Gencor’s strong backlog grew 67% to $46.6 million as of Jun 30, 2024, signaling strong demand and future revenue potential despite a recent revenue decline. The company's solid financial position, with $116.6 million in cash and no debt, enhances its strategic flexibility. Benefits from the Infrastructure Investment and Jobs Act (IIJA) further support Gencor's market position.

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

Other noteworthy reports we are featuring today include Shell plc (SHEL), Enterprise Products Partners L.P. (EPD) and DuPont de Nemours, Inc. (DD).

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

Buyouts, Rates, Solid IB Business & Loans Aid JPMorgan (JPM)

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

Solid Demand in Cloud & AI Innovations Drive SAP's Prospects

Featured Reports

Shell (SHEL) to Benefit from LNG Demand Growth
The Zacks analyst believes that Shell's position as a major supplier of LNG should benefit its long-term cash flow growth but is worried over the underperformance of its Renewable segment.

Enterprise (EPD) Banks on Fee-Based Revenues, Debts High
Enterprise generates stable fee-based revenues from its vast network of oil and gas pipelines. However, high debt raises concerns for the Zacks analyst.

Productivity Actions, New Products Aid DuPont (DD)
While DuPont faces headwinds from weaker pricing and hefty business separations costs, it should gain from productivity improvement actions and new product launches, per the Zacks analyst.

Investments, Expanding Customer Base Aid Atmos Energy (ATO)
Per the Zacks analyst, Atmos Energy's investment plan will help to increase the safety and reliability of its natural gas pipelines. Increasing customer count will boost demand for its services.

Solid Strategic Execution Aids Labcorp (LH), Cost Woes Worry
The Zacks analyst is impressed with Labcorp's strategic gains through health system partnerships to expand testing capabilities and growth in key markets. Yet, macroeconomic issues can raise costs.

Axsome's (AXSM) Marketed Drugs Drive Growth Amid Competition
Per the Zacks analyst, Axsome's lead drug, Auvelity, approved for treating major depressive disorder is driving sales. The addition of Sunosi bodes well too. However, stiff competition remains a woe.

Operational Efficiency Aids Avis Budget (CAR), Costs High
Per the Zacks analyst, rising operational efficiency has improved profitability and enabled the company to maintain margins despite inflation. However, escalating expenses is worrisome.

New Upgrades

Strategic Initiatives & Balance Sheet Strength Aid Synchrony (SYF)
Per the Zacks Analyst, partnerships have enhanced Synchrony's capabilities and diversified the business, which, in turn, has given it a competitive edge. A healthy balance sheet bodes well.

Higher Advertising Revenues & Affiliate Fees Aids Fox (FOXA)
Per the Zacks analyst, continued growth in advertising revenues driven by strong demand for live programming and higher affiliate fees is benefiting Fox's overall growth.

Rising Revenues Bolster Northern Trust's (NTRS) Financials
Per the Zacks analyst, Northern Trust's rising revenues driven by strength in non-interest income and net interest income reflects strong organic growth. Strong liquidity profile remains a tailwind.

New Downgrades

High Debt, Elevated Expenses Concern Voya Financial (VOYA)
Per the Zacks analyst, Voya Financial has been witnessing increase in financial leverage over the last few years inducing higher interest expenses, weighing on margin expansion.

Rising Costs Will Trim Acadia Healthcare's (ACHC) Margins
Per the Zacks analyst, increasing salaries, wages and benefits will keep pushing Acadia Healthcare's expenses higher, eroding its profits. Also, volumes will likely take a hit from media scrutiny.

Strong Enrollment Aids Strategic Education (STRA), Costs Ail
Per the Zacks analyst, Strategic Education benefits from strong enrollment growth in USHE and ANZ segments. However, high costs and regulatory risks are concerns.

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

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

Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report

DuPont de Nemours, Inc. (DD) : Free Stock Analysis Report

SAP SE (SAP) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

Gencor Industries Inc. (GENC): Free Stock Analysis Report

Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report

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