Monday, December 16, 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 JPMorgan Chase & Co. (JPM), UnitedHealth Group Incorporated (UNH) and Verizon Communications Inc. (VZ), as well as two micro-cap stocks Twin Disc, Incorporated (TWIN) and Sypris Solutions, Inc. (SYPR).  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 JPMorgan Chase have outperformed the Zacks Finance sector this year (+41% vs. +21%) as well as the S&P 500 index (+41% vs. +27.8%). Driving the momentum is the company's leverage to the steadily improving macroeconomic backdrop, characterized by optimism about the incoming administration's policy agenda and the ongoing monetary easing program. 

According to the Zacks analyst estimates NII (managed) and total loans imply a CAGR of 1.2% and 5.2%, respectively, by 2026. A resurgence in deal-making activities and the company’s leading position in the investment banking (IB) business are expected to aid related fee income.

Yet, the volatile nature of the capital markets business and high mortgage rates will likely hurt fee income growth. Owing to these challenges, we expect non-interest income (managed) to rise in 2024 but decline next year. Mounting operating expenses will hamper the bottom line. We expect non-interest expenses to rise 5.5% in 2024.

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

UnitedHealth Group shares have modestly outperformed the Zacks Medical - HMOs industry over the past year (+1.3% vs. -3.8%), though the stock has been under pressure lately following the tragic headlines about its senior executive's murder in New York. 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. The company’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 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. A debt-laden balance sheet induces an increase in interest expenses. As such, the stock warrants a cautious stance.

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

Shares of Verizon have gained +20.3% over the past year against the Zacks Wireless National industry’s gain of +40.4%. The company is witnessing significant 5G adoption and fixed wireless broadband momentum. Its 5G mobility service offers a premium experience across various industries such as public safety, health care, retail and more.

Verizon’s mmWave footprint delivers game changing experiences for the densest parts of the network and offers highly predictable signal waves leading to greater efficiency and less interference for customers. The company’s focus on online content delivery, mobile video and online advertising is expected to drive growth.

However, stiff competition from other major players and saturation in the U.S. wireless market is hurting its profits. Heavy spending on promotional activities to attract customers is straining margins. A challenging macroeconomic environment and lower postpaid phone upgrades are major concerns.

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

Twin Disc’s shares have underperformed the Zacks Manufacturing - General Industrial industry over the past year (-12.1% vs. +19.7%). This microcap company with market capitalization of $171.8 million is witnessing rising debt from Katsa's acquisition increases financial leverage, while declining land-based sales reflect sector-specific weaknesses. Currency volatility, geopolitical risks, and competitive pressures in electrification pose additional challenges.

However, Twin Disc's investment thesis centers on strong backlog growth, product diversity, and strategic initiatives in hybrid and electrification technologies. The six-month backlog reached $144.3 million in the first quarter of fiscal 2025 (up 17.8% year over year), reflecting robust demand across marine, industrial, and land-based applications, with Veth propulsion orders up 19%.

Marine & Propulsion Systems sales rose 22.9% year over year, supported by global defense spending and luxury yacht adoption. The Katsa Oy acquisition expanded Twin Disc's European reach. Geographic diversification and a balanced product mix mitigate regional risks.

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

Shares of Sypris Solutions have underperformed the Zacks Electronics - Miscellaneous Services industry over the past year (-18.2% vs. +10.3%). This microcap company with market capitalization of $36.15 million is facing liquidity challenges and elevated debt obligations constrain financial flexibility. Rising costs and reliance on cyclical markets such as heavy vehicles and oil and gas exacerbate margin sensitivity.

Nevertheless, Sypris Solutions benefits from an extended long-term supply agreement with a global OEM, securing stable revenue as a sole-source supplier of Ultra Axle Shafts. The company’s diversified presence across automotive, energy, and industrial markets reduces risk and positions it to capitalize on growth trends in heavy-duty vehicles and energy infrastructure.

Sypris Solutions is also aligned with growth in aerospace and defense electronics, leveraging its capabilities in high-precision components. Global infrastructure initiatives drive demand for its drivetrain products. Expansion into the Asia-Pacific region aligns with high-growth markets, leveraging regional investments in defense and infrastructure.

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

Other noteworthy reports we are featuring today include NVIDIA Corporation (NVDA), Becton, Dickinson and Company (BDX) and Atmos Energy Corporation (ATO).

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

Buyouts, Rates & Loans Aid JPMorgan (JPM), Fee Income Ails

Verizon (VZ) Rides on Solid 5G Traction & Network Upgradation

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

Featured Reports

A Solid Product Portfolio Aid BD (BDX) Amid Stiff Competition
The Zacks analyst is upbeat about BD's plethora of product launches in recent times despite operating in an increasingly complex and challenging medical technology marketplace.

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.

Ciena (CIEN) Rides on Momentum in Cloud and AI Solutions
Per the Zacks analyst, the rise of cloud and AI technologies has increased bandwidth requirements across global networks, thereby boosting demand for Ciena's solutions.

Cabometyx Drives Exelixis (EXEL), High Dependence A Concern
Per the Zacks analyst, growth in lead drug Cabometyx maintains momentum for Exelixis. The pipeline progress is impressive as Exelixis looks to expand its portfolio but dependence on Cabometyx a woe

THOR (THO) to Gain From Electric Push Amid Rising Expenses
Per the Zacks analyst, THOR's electrification strategies are poised to bolster its prospects. However, rising SG&A expenses are likely to hinder margins.

PBF Energy (PBF) Refining Margin Ails From Oil Price Swings
Per the Zacks analyst, PBF Energy is grappling with reduced profitability due to high crude prices and increased input costs. The company's high beta and regulatory costs add to its headwinds.

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.

New Upgrades

NVIDIA (NVDA) Rides on Strong Adoption of GPUs, Partnerships
Per the Zacks analyst, rapid adoption of NVIDIA's GPUs in the datacenter and automotive markets is a key growth driver. Partnership with companies like Arrow, Baidu, Daimler and Bosch is a tailwind.

Northern Trust (NTRS) Rides on Loan Growth & Cost Management
Per the Zacks analyst, Northern Trust's efforts to drive operational efficiency through expense management initiatives are encouraging. Moreover, a rise in loan balance aids its top-line expansion.

Abercrombie (ANF) Sees Strength in Brands & Digital Efforts
Per the Zacks analyst, Abercrombie is experiencing strong sales growth for each of its brands. The company has been working toward rationalizing its store base. Net sales grew 14% year over year.

New Downgrades

Schneider (SNDR) Continues to Grapple With Segmental Weakness
Per the Zacks Analyst, below par performance in the Truckload and Logistics segments is hurting Schneider's top line. Lowered earnings outlook for 2024 looks disappointing.

Decreased Demand Paper Related Products Hurts Xerox (XRX)
According to the Zacks analyst, Xerox is grappling with decreased demand for paper-related systems and products. Rising competition is concerning.

Utilization Pressure, Stiff Rivalry Ails CVS Health (CVS)
The Zacks analyst is worried about CVS Health facing continued elevated utilization in its Health Care Benefits segment and higher acuity in Medicaid. Low-cost pharmacy options heighten competition.

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

UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

Verizon Communications Inc. (VZ) : Free Stock Analysis Report

Becton, Dickinson and Company (BDX) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Atmos Energy Corporation (ATO) : Free Stock Analysis Report

Twin Disc, Incorporated (TWIN) : Free Stock Analysis Report

Sypris Solutions, Inc. (SYPR) : Free Stock Analysis Report

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