Monday, April 28, 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 Microsoft Corp. (MSFT), Broadcom Inc. (AVGO) and McDonald's Corp. (MCD), as well as a micro-cap stock Kingsway Financial Services Inc. (KFS). 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 >>>

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You can read today's AWS here >>> Big Week Ahead for the Stock Market

Today's Featured Research Reports

Shares of Microsoft have declined -6.8% over the year-to-date period against the Zacks Computer - Software industry’s decline of -7.1%. The company is benefiting from steady growth in its AI business and Copilot adoption amid decelerating growth in the Azure cloud infrastructure unit. Productivity and Business Processes revenues continue to rise due to strong adoption of Office 365 Commercial solutions.

ARPU growth is driven by E5 as well as M365 Copilot. Intelligent Cloud revenues are gaining from growth in Azure AI services and a rise in AI Copilot business. Non-AI growth trends are experiencing sluggishness due to go-to-market execution challenges.

The Zacks analyst expects fiscal 2025 net sales to grow 12.7% from fiscal 2024. However, Microsoft Office's declining commercial licensing due to the continued customer shift to cloud offerings is an overhand. Higher operating expenses and spending on Azure amid stiff competition in the cloud space from Google Cloud and Amazon Web Services remain concerns.

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

Broadcom’s shares have outperformed the Zacks Electronics - Semiconductors industry over the past year (+45.4% vs. +10.3%). The company is benefiting from strong demand for its networking products and custom AI accelerators (XPUs) as witnessed in first-quarter fiscal 2025. Strong demand for Broadcom’s application-specific integrated chips (ASICs), designed to support AI and machine learning, aids top-line growth.

Broadcom expects second-quarter fiscal 2025 AI revenues to jump 44% year over year to $4.4 billion. The acquisition of VMware has benefited Infrastructure software solutions. As of fiscal first quarter, roughly 70% of Broadcom’s largest 10,000 customers have adopted the VMware Cloud Foundation.

Broadcom’s expanding AI portfolio, along with a rich partner base, reflects solid top-line growth potential. However, gross margin in fiscal second quarter is expected to contract sequentially on unfavorable revenue and product mix. High debt levels are a headwind.

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

McDonald's shares have outperformed the Zacks Retail - Restaurants industry over the year-to-date period (+9.9% vs. -0.5%). The company is benefiting from its in-house initiatives like the Accelerating the Arches strategy, menu innovation, value offerings and global expansion strategies. It plans to open approximately 2,200 restaurants globally in 2025, with opening 50,000 restaurants by 2027.

However, the decline in average checks in the U.S. and negative comparable sales in the U.K. and China are concerning. Also, inflationary pressures are still posing threats to consumer spending increase.

McDonald's expects to witness labor, food, paper and commodity inflation in 2025. Earnings estimates for 2025 have declined in the past 30 days, depicting analysts’ concern about the stock’s growth potential.

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

Shares of Kingsway Financial Services have underperformed the Zacks Insurance - Property and Casualty industry over the past year (-7.6% vs. +28.7%). This microcap company with a market capitalization of $228.01 million has seen its asset-light model and Search Fund strategy underpin scalable growth, but rising net debt ($52 million at year-end from $35.3 million in 2023) and persistent net losses ($8.3 million in 2024 against net income of $24 million) raise caution.

Margin pressure in Extended Warranty, integration risks, macroeconomic risks and equity dilution from preferred issuances pose headwinds to long-term earnings stability.

Nevertheless, Kingsway Financial reported 2024 revenue growth of 5.9% to $109.4 million from $103.2 million in 2023, driven by strength in KSX (up 15.7%) and Extended Warranty gains (up 0.9%). Adjusted EBITDA rose 16.9% to $10.6 million in 2024 from $9.1 million in 2023, reflecting operating efficiency and accretive M&A. Strategic acquisitions like Image Solutions and Bud’s Plumbing expanded recurring-revenue exposure and launched new verticals.

(You can read the full research report on Kingsway Financial Services here >>>)

Other noteworthy reports we are featuring today include Alibaba Group Holding Ltd. (BABA), Thermo Fisher Scientific Inc. (TMO) and Fiserv, Inc. (FI).

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

Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)

Strong Demand for Networking Products Aids Broadcom (AVGO)

McDonald's (MCD) Banks on Sales Initiatives Amid High Costs

Featured Reports

New Product Launches Aid Thermo Fisher, End-market Up
The Zacks analyst is upbeat about Thermo Fisher's new product launches in the first quarter. The 'industrial and applied' end market shows robust growth on strength in electron microscopy business.

Fiserv (FI) Gains From Skytef Buyout, Amid High Competition
Per the Zacks analyst, the Skytef acquisition strengthens Fiserv's distribution network and point-of-sale. High competition from other players is an overhang.

Strategic Acquisitions Aid Synchrony (SYF), High Costs Hurt
Per the Zacks analyst, Synchrony's strategic buyouts and renewed partnerships will boost its digital capabilities & diversify the business. However, escalating expenses remain a concern.

Insmed (INSM) Rides on Upbeat Bronchiectasis Drug Study Data
The Zacks Analyst is encouraged by Insmed's recently reported data from a phase III study on brensocatib in treating bronchiectasis. Based on the results, a commercial launch is planned for mid-2025.

Solid Revenue Growth & Buyouts Aid Encompass Health (EHC)
Per the Zacks Analyst, Encompass Health's top line has been fueled by growing patient volumes. Several acquisitions have strengthened its capabilities and expanded geographic footprint.

Digitization Buoys Lithia (LAD), High Debt A Concern
Per the Zacks analyst, while Lithia's digital platforms' Driveway and GreenCars' boost profitability and market presence, its $6 billion long-term debt (with 55% leverage) raises concern.

TreeHouse Foods (THS) Benefits From Robust Volume Growth
Per the Zacks analyst, TreeHouse Foods is gaining from solid volumes. In Q4, the company saw volume rise of 3.8% driven by robust performance in pretzels, in-store bakery, cookies and broth.

New Upgrades

Alibaba (BABA) Gains From International Commerce Businesses
Per the Zacks analyst, strength across AliExpress' Choice and cross-border-related value-added services is benefiting Alibaba's international commerce retail and wholesale businesses.

Increasing Orders and New MRO Facilities Drive Embraer (ERJ)
Per the Zacks analyst, Embraer is likely to benefit from increasing orders for its commercial aircrafts and its investments in new Maintenance, Repair and Overhaul facilities.

BlackBerry (BB) Gains from Solid QNX Business & Cost Cuts
Per the Zacks analyst, Blackberry is gaining from solid uptake of its QNX platform. Also, cost-cutting and restructuring are driving margin performance.

New Downgrades

Core Lab's (CLB) Revenue Pressured by Sanctions & Tariffs
The Zacks analyst believes that declining revenues and earnings in Core's Reservoir Description segment due to geopolitical conflicts and recent sanctions & tariffs raises concern.

Reliance on Acquisition-Driven Growth to Hurt Sunoco (SUN)
The Zacks analyst is concerned about Sunoco due to its overwhelming dependence on acquisitions to drive growth, rather than focusing on organic expansion.

Records Digitization & High Debt to Hurt Iron Mountain (IRM)
Per the Zacks analyst, digitization of records, a substantial debt burden and competition from industry peers are likely to offer bleak prospects to Iron Mountain.

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Microsoft Corporation (MSFT) : Free Stock Analysis Report

McDonald's Corporation (MCD) : Free Stock Analysis Report

Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

Fiserv, Inc. (FI) : Free Stock Analysis Report

Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report

Kingsway Financial Services, Inc. (KFS) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research