Wednesday, February 12, 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 Tesla, Inc. (TSLA), Cisco Systems, Inc. (CSCO) and The Progressive Corp. (PGR), as well as two micro-cap stocks Syntec Optics Holdings, Inc. (OPTX) and SIFCO Industries, Inc. (SIF). 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 >>> CPI Grows Uncomfortably Warm, Pre-Markets Sell-Off

Today's Featured Research Reports

Tesla's shares have outperformed the Zacks Automotive - Domestic industry over the past year (+74.4% vs. +22.8%). The company’s long-term growth story remains strong, fueled by its booming Energy Generation & Storage segment, expansive Supercharger network, and AI advancements. Energy deployments doubled in 2024, driven by strong demand for Megapack and Powerwall, and this momentum is expected to continue.

Tesla is also making strides in autonomous driving, with plans to launch robotaxi services this year. CEO Elon Musk’s leadership in President Trump’s Department of Government Efficiency (DOGE) could help streamline EV regulations, benefiting Tesla’s rollout.

Backed by a strong balance sheet and ample liquidity, Tesla is well-positioned for continued innovation and expansion. We remain bullish on the stock. However, Tesla’s EV business is under pressure from pricing challenges and fierce competition, with 2024 marking its first-ever annual delivery decline.

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

Shares of Cisco have outperformed the Zacks Computer - Networking industry over the past year (+28.8% vs. +27.8%). The company’s business model has evolved with subscription revenues accounting for more than half of its total revenues. Increases in its recurring revenue base bodes well for investors. Its Splunk acquisition enhances this, as well.

The buyout significantly expands Cisco’s portfolio of software-based solutions, contributing more than $4 billion in ARR, making it one of the largest software companies in the world. The launch of AI-powered Hypershield, which combines security and networking, strengthened Cisco’s security portfolio.

However, it has been suffering from sluggish networking sales, primarily due to lackluster demand from telecommunication and cable services providers, as well as stiff competition. Cisco’s prospects are further challenged in the AI-driven networking space due to stiffening competition.

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

Progressive’s shares have outperformed the Zacks Insurance - Property and Casualty industry over the past year (+44.1% vs. +18.5%). The company continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses.

Progressive’s focus on becoming a one-stop insurance destination -- catering to customers opting for a combination of home and auto insurance -- augurs well for the company's growth. Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.

However, exposure to catastrophe losses induces underwriting volatility. Escalating expenses due to higher losses and settlement expenses remain an overhang on the margin. Its high debt level induces higher interest expense concerns.

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

Shares of Syntec Optics’ have gained +62.9% over the past six months against the Zacks Technology Services industry’s gain of +73.6%. This microcap company, with market capitalization of $64.57 million, secured $2.1 million in new space optics orders, benefiting from strong LEO satellite demand. Syntec Optics is restarting high-precision laser guidance optics production in Q1 2025, reinforcing its defense role amid rising global military budgets.

Syntec Optics’ presence in the expanding photonics industry supports growth across healthcare, communications and automation, while government incentives for domestic manufacturing could boost contracts. Strong OEM relationships provide revenue stability, but profitability is declining, with a $0.9 million net loss in the first nine months of 2024 due to rising COGS and G&A expenses.

Operating cash flow turned negative, and cash reserves fell to $0.5 million, raising liquidity concerns. Debt covenant violations led to reduced credit availability and higher interest rates while rising debt and interest costs added financial strain.

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

SIFCO’s shares have gained +4.1% over the past six months against the Zacks Aerospace - Defense Equipment industry’s gain of +21.3%. This microcap company, with market capitalization of $23.14 million, achieved a 20.5% revenue increase in fiscal 2024, reaching $79.6 million from $66.1 million in fiscal 2023, driven by strong demand in aerospace and energy.

Profitability improved, with EBITDA loss narrowing to $0.7 million from $4.4 million, while adjusted EBITDA turned positive at $0.8 million. A $114.4 million backlog supports future growth, especially as demand for defense and maintenance, repair and overhaul (MRO) rises.

However, interest expenses surged 208.9% to $3.1 million, and operating losses persist at $5.2 million despite revenue gains. Margins remain thin at 7.5%, constrained by supply chain disruptions and labor costs. Intense competition, limited innovation in emerging aerospace technologies and cyclical industry exposure pose further risks. Financial flexibility remains a concern, with cash flow challenges.

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

Other noteworthy reports we are featuring today include Fiserv, Inc. (FI), CrowdStrike Holdings, Inc. (CRWD) and BP p.l.c. (BP).
 

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

Big Bets on AV and AI to Drive Tesla's (TSLA) Prospects

Cisco (CSCO) Benefits From Strong Security Products Adoption

Progressive's (PGR) Solid Policies in Force Aid, Cat Loss Ail

Featured Reports

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.

CrowdStrike (CRWD) Rides on Product Strength, Acquisitions
Per the Zacks analyst, CrowdStrike is gaining from solid contributions of its growth-oriented products, primarily Falcon platform. Also, buyouts like Adaptive Shield and Flow Security are positive.

BP Expands LNG and Bioenergy Portfolio for Long-Term Growth
Per the Zacks analyst, BP's LNG and biogas expansions enhance cash flow stability and market positioning, leveraging growing demand for cleaner fuels and securing long-term energy supply advantages.

Omnipod 5 Expansion Aids Insulet (PODD), Macro Woes Worry
The Zacks analyst is impressed that Omnipod 5's clearance for Type 2 Diabetes patients significantly expands Insulet's U.S. addressable market. Yet, rising production costs could strain its profits.

Strong Group Protection Aids Lincoln National (LNC) Amid Cost Woes
Per the Zacks analyst, a resurging group protection business, courtesy of better underwriting, should aid Lincoln National's results. However, higher costs might hamper margins.

Reliable Assets, Customer Increase Aid Southwest Gas (SWX)
Per the Zacks analyst, Southwest Gas' investment in infrastructure is making its assets more reliable. Economic improvement and rising customer base is generating demand and boosting performance.

E-Commerce Expansion to Bolster Spectrum Brands (SPB) Growth
Per the Zacks analyst, Spectrum Brands is poised to gain from the strengthening of e-commerce capabilities. Online sales contributed 30% of HPC's total global sales in Q1.

New Upgrades

Diverse Product Portfolio and Strategic Alliances Aid Keysight (KEYS)
Per the Zacks Analyst, Keysight is likely to benefit from solid growth in the 5G market and the launch of new electronic design and test solutions. Strategic buyouts further aid the company.

RH Gains From Product Transformation & Platform Expansion
The Zacks analyst suggests that RH benefits from its investments in product innovation, global expansion, experiential retail, and technology.

Bill Holdings (BILL) Rides on Strong SMB Business clientele
Per the Zacks analyst, Bill is benefiting from an expanding small and medium business clientele, as well as a diversified business model.

New Downgrades

Dr. Reddy's Faces Pricing Pressure & Rising Competition
Per the Zacks Analyst, RDY's growth prospects in the future are likely to be inhibited by rivalry in the crowded generics market and pricing pressure.

Weakness in Industrial Automation Unit Hurts Honeywell (HON)
Per the Zacks analyst, Honeywell is experiencing softness in the Industrial Automation unit, due to weakness in the warehouse and workflow solutions businesses. Forex woes are an added concern.

High Mortgage Rate & Costs Hurt PulteGroup's (PHM) Prospects
Per the Zacks analyst, PulteGroup is hurting from the ongoing affordability issue in the housing market amidst a still-high mortgage rate. Also, an uptick in costs and expenses adds to the headwinds.

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

BP p.l.c. (BP) : Free Stock Analysis Report

Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

The Progressive Corporation (PGR) : Free Stock Analysis Report

Tesla, Inc. (TSLA) : Free Stock Analysis Report

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

SIFCO Industries, Inc. (SIF): Free Stock Analysis Report

CrowdStrike (CRWD) : Free Stock Analysis Report

Syntec Optics Holdings, Inc. (OPTX): Free Stock Analysis Report

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