Thursday, October 24, 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 Alphabet Inc. (GOOGL), UnitedHealth Group Inc. (UNH) and Chubb Ltd. (CB), as well as two micro-cap stocks Key Tronic Corp. (KTCC) and Massimo Group (MAMO).  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 >>>

Shares of Alphabet have gained +15.2% over the year-to-date period against the Zacks Internet - Services industry’s gain of +15.8%. The company’s robust cloud division is aiding substantial revenue growth. Expanding data centers, cloud regions and availability zones will continue to bolster its presence in the cloud space.

Major search updates and removal of bad ads to enhance search results continue to boost traffic on the company’s search engine. Growing momentum across Google’s mobile search is contributing further. Strengthening generative AI capabilities should aid business growth in the long term. Deepening focus on its wearables category remains a tailwind. Expanding presence in the autonomous driving space is a plus.

However, sluggish Network advertising is a negative. Increasing litigation issues and expenses remain concerns. Rising cloud competition from Microsoft and Amazon is one, as well.

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

UnitedHealth’s shares have outperformed the Zacks Medical - HMOs industry over the past year (+7.1% vs. +0.9%). The company’s top line remains poised for growth on the back of a strong market position, new deals, renewed agreements and expansion of service offerings. UnitedHealth’s solid health services segment provides diversification benefits.

The Government business remains well-poised for growth in the future. Adjusted net earnings per share are anticipated to be in the $27.5-$27.75 band in 2024. A sturdy balance sheet enables business investments and prudent deployment of capital via share repurchases and dividend payments.

However, membership in its global business continues to be a concern. High operating costs due to rising medical expenses are hurting margins. As such, the stock warrants a cautious stance.

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

Shares of Chubb have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+37.7% vs. +36.6%). The company’s suite of compelling products as well as services, focus on capitalizing on the potential of middle-market businesses and investments in various strategic initiatives pave the way for long-term growth.

Several distribution agreements have expanded its network, boosting its market presence. An impressive inorganic growth story helps to achieve a higher long-term return on equity. Chubb expects adjusted net investment income to be in the range of $1.57 billion to $1.63 billion per quarter in 2024.

Chubb boasts a strong capital position with sufficient cash generation capabilities that ensure steady payouts to investors. Second quarter EPS beat estimates. However, exposure to catastrophe loss induces underwriting volatility. Escalating expenses weigh on margin expansion.

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

Key Tronic’s shares have outperformed the Zacks Electronics - Miscellaneous Products industry over the past year (+54.2% vs. +21.7%). This microcap company with a market capitalization of $63.5 million has seen operational efficiency improvements (notably, workforce reductions in Mexico) and is expected to generate more than $10 million in annual savings, boosting profitability. The company projects first-quarter fiscal 2025 revenues of $140-$150 million, reflecting strong demand.

Program wins in key sectors diversify revenue streams, while vertical integration strengthens cost control. Benefiting from onshoring trends, KTCC's global footprint, especially in the United States and Vietnam, positions it well for growth. Improved inventory management and favorable currency movements enhance the outlook.

Yet, fiscal 2024 revenues declined 4.9% year over year, and rising interest costs and covenant breaches pose financial risks. The dependence on key customers, and labor and currency pressures challenge its profitability, with operational risks from Mexico restructuring adding uncertainty.

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

Shares of Massimo have outperformed the Zacks Leisure and Recreation Products industry over the past year (+34.3% vs. +10.3%). This microcap company with a market capitalization of $157.44 million is aggressively expanding in 2024 through new product launches, automation investments, and strategic partnerships.

Key releases like the GKD 350 Go Kart and T-Boss UTV series target both recreational and utility markets, supported by a 50% production boost from a new assembly robot line and a 90,000 sq. ft. Texas facility expansion. Strategic deals with Tractor Supply and Armlogi enhance retail and operational efficiency.

In the first half of 2024, revenues were driven by demand in the power sports market. Massimo is also entering the EV sector with eco-friendly UTVs and ATVs, aligning with consumer demand for sustainability.

However, the company faces headwinds, including supply chain disruptions due to its reliance on global suppliers, and rising material costs from inflationary pressures. Reliance on a concentrated customer base poses financial risks.

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

Other noteworthy reports we are featuring today include BlackRock, Inc. (BLK), Diageo plc (DEO) and CoStar Group, Inc. (CSGP).

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

Alphabet (GOOGL) Benefits From Cloud & Search Initiatives

Solid Optum Unit Drives UnitedHealth (UNH), High Costs Hurt

Better Rate, Increased Exposure Aid Chubb (CB), Cat Loss Ail

Featured Reports

Diageo (DEO) Productivity & Cost-Saving Efforts Bode Well
Per the Zacks analyst, Diageo is progressing well on its productivity commitment to deliver $2 billion of savings in the next few years. Gains from improved price/mix have also been aiding results.

CoStar Group (CSGP) Rides on Strong Subscription Revenues
Per the Zacks analyst, CoStar Group's resilient and diversified subscription business is expected to drive growth. It benefits from a robust portfolio of marketplaces.

Biogen's (BIIB) New Drugs Skyclarys & Others Can Revive Growth
The Zacks analyst believes Biogen's new products like Leqembi for Alzheimer's disease, Skyclarys for Friedreich's ataxia and Zurzuvae for depression can help revive growth in the long term.

Robust Healthcare Revenue Aids STERIS Amid Macro Woes
The Zacks Analyst is upbeat about STERIS's robust growth in the Healthcare business segment. Yet, macroeconomic woes in the form of escalating operating expenses dent profit.

Solid Budget to Boost Teledyne (TDY), High Fuel Price Ail
Per the Zacks Analyst, increased U.S. defense budget boost growth prospects for Teledyne. However, rising fuel price might lead to lower jet orders thereby adversely impacting the company.

Restructuring Actions, Demand Aid John Bean (JBT), Cost Ail
The Zacks analyst believes that John Bean will benefit from its solid demand environment and its restructuring actions despite the ongoing inflationary cost scenario.

Strength in Cybersecurity and IoT Units Aid BlackBerry (BB)
Per the Zacks analyst, Blackberry's performance is strengthening from steady growth across Cybersecurity and IoT businesses. Cost-cutting and restructuring efforts are driving margin performance.

New Upgrades

Buyouts, AUM, Enhanced Capabilities Support BlackRock (BLK)
Per the Zacks analyst, solid AUM balance, product diversification, expansion through acquisitions, and focus on enhancing private markets capabilities and active equity business will aid BlackRock.

Lyft (LYFT) Continues to Gain from Improving Rideshare Market
The Zacks Analyst is impressed that an uptick in driver supply boosts Lyft's gross bookings. The improved outlook for 2024 free cash flow looks encouraging.

Inter Parfums' (IPAR) Sales Gain on Solid Brand Performance
Per the Zacks analyst, Inter Parfums' sales are benefiting from solid brand growth, which continued in the third quarter of 2024. Net sales of $425 million rose 15% year over year in the quarter.

New Downgrades

Delek US Holdings (DK) Weighed Down by Massive Debt Burden
The Zacks analyst believes that Delek US Holdings' high debt-to-capitalization ratio of 71.5% is a concern, as it restricts the company's financial freedom to tap into growth opportunities.

Rising Expenses and Oil Price Volatility Ail Matador (MTDR)
Per the Zacks analyst, rising lease operating expenses and exposure to extreme volatility in oil and natural gas prices may have a detrimental impact on Matador's overall profitability.

Macro & Weather Risks Hurt Martin Marietta's (MLM) Prospects
Per the Zacks analyst, Martin Marietta's prospects are hurt due to adverse weather impacts and ongoing economic pressures. Such a scenario reflects slower shipment trends.

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

UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

BlackRock, Inc. (BLK) : Free Stock Analysis Report

Chubb Limited (CB) : Free Stock Analysis Report

Diageo plc (DEO) : Free Stock Analysis Report

CoStar Group, Inc. (CSGP) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

Key Tronic Corporation (KTCC) : Free Stock Analysis Report

Massimo Group (MAMO): Free Stock Analysis Report

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