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Tuesday, January 14, 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 Broadcom Inc. (AVGO), Mastercard Incorporated (MA) and Netflix, Inc. (NFLX). 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 >>>
Broadcom shares have outperformed the Zacks Electronics – Semiconductors industry over the past year (+99.6% vs. +63%), with the stock jumping back following the blockbuster results on December 12th. The company reported strong fiscal fourth-quarter results, with revenues and earnings increasing year over year. The company benefited from strong demand for Broadcom’s custom AI accelerators (XPUs) and networking.
Broadcom experienced four times growth in AI connectivity revenues, driven by global shipments of its Tomahawk and Jericho solutions. The acquisition of VMware has benefited Infrastructure software solutions. AVGO’s strong partner base, including Arista Networks, Dell Technologies, Juniper and Supermicro, served as a key catalyst.
However, non-AI semiconductor revenues declined, reflecting a cyclical downturn that acted as a headwind. High cash interest expenses, a higher tax burden, and ongoing restructuring costs related to the VMware acquisition affected overall profitability.
(You can read the full research report on Broadcom here >>>)
Shares of Mastercard have gained +14.4% over the past year against the Zacks Financial Transaction Services industry’s gain of +19.1%. The company’s numerous acquisitions have helped it grow its addressable markets and drive new revenue streams. Mastercard expects low-teens net revenue growth in the fourth quarter of 2024.
The accelerated adoption of digital and contactless solutions is providing an opportunity for its business to expedite its shift to the digital mode. MA’s strong cash flow supports its growth initiatives and enables shareholder value-boosting efforts through share repurchases and dividends.
However, steep operating expenses might stress its margins in the future. The Zacks analyst expect total operating expenses to increase 10.9% year over year in 2024. High rebates and incentives may weigh on net revenues. Also, it is overvalued than the industry at current levels. As such, the stock warrants a cautious stance.
(You can read the full research report on Mastercard here >>>)
Netflix shares have outperformed the Zacks Broadcast Radio and Television industry over the past year (+62.8% vs. +46.2%). The company is benefiting from its growing subscriber base, thanks to a robust content portfolio and healthy engagement levels with about two hours of viewing per member per day, indicating strong member retention. NFLX added 5.07 million paid subscribers globally in Q3 2024.
The planned launch of an in-house ad tech platform in 2025 signals Netflix’s commitment to maximizing this new revenue stream, with ad revenues expected to roughly double year-over-year in 2025. NFLX has raised its guidance for the full year 2024, projecting revenue growth at the high end of its previous 14-15% range.
However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video and Disney+ is a headwind. NFLX’s leveraged balance sheet and a higher streaming obligation are concerns.
(You can read the full research report on Netflix here >>>)
Other noteworthy reports we are featuring today include Chubb Limited (CB), Eversource Energy (ES) and RPM International Inc. (RPM).
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
Strong Demand for Networking Products Aids Broadcom (AVGO)
Strong Cross-Border Volumes Aid Mastercard (MA) Amid High Costs
Robust Content Aids Netflix (NFLX) Amid Stiff Competition
Featured Reports
Better Pricing, New Business Growth Drive Chubb Limited (CB)
Per the Zacks analyst, Chubb is set to grow on better pricing, new business growth and high renewal rates. However, exposure to cat loss induces earnings volatility while high costs weigh on margins.
Investments & Renewable Expansion Aid Eversource Energy (ES)
According to the Zacks analyst, Eversource Energy’s investment of $23.7 billion through 2028 should further enhance infrastructure, and expanding renewable operations should boost its performance.
MAP 2025 Initiatives Aid RPM’s Performance, High Costs Ail
Per the Zacks analyst, RPM benefits from efficient execution of the MAP 2025 initiatives. Also, focus on the repair and maintenance business bodes well. However, high costs are a concern.
PVH’s (PVH) Brand Management Drives Long-Term Growth
Per the Zacks analyst, PVH’s strong brand management drives growth through effective marketing strategies, benefiting from continued momentum in its flagship Calvin Klein and Tommy Hilfiger brands.
Summit (SMMT) Rides on Upbeat Lung Cancer Study Data
The Zacks Analyst is encouraged by Summit’s late-stage data which show that treatment with its experimental cancer drug bested Merck’s blockbuster drug Keytruda in certain lung cancer patients.
Strategic Acquisitions Buoy Northern Oil and Gas (NOG)
The Zacks analyst notes that Northern Oil and Gas’ acquisitions in the Permian and Uinta Basins boost growth by expanding assets and production, but oil price volatility remains a key risk.
ABM Industries (ABM) to Gain From ELEVATE, Competition High
Per the Zacks analyst, ABM’s multi-year comprehensive strategic plan, ELEVATE, is expected to accelerate the company’s organic growth and reinforce profitability. Rising competition is an overhang.
New Upgrades
Strong SMB clientele Aids BILL Holdings (BILL) Prospects
Per the Zacks analyst, BILL is benefiting from an expanding small and medium business (SMB) clientele, as well as a diversified business model.
BlackBerry (BB) Gains from Strategic Efforts & Cost Cuts
Per the Zacks analyst, Blackberry’s stands to gain from series of strategic developments. Cost-cutting and restructuring is driving margin performance.
Solid ENT Prospects, International Sales Aid Integra (IART)
The Zacks analyst is upbeat about the growth potential of Integra’s ENT segment, post the Acclarent acquisition. Momentum in the international sales and expanding commercial reach also bodes well.
New Downgrades
Challenges in European Market, High Debt to Ail Adient (ADNT)
Per the Zacks analyst, the projected decline in light vehicle production in the European market is likely to impact Adient’s performance in fiscal 2025. High debt levels are also concerning.
High-Debt Burden, Stiff Rivalry Ails Western Digital (WDC)
Per the Zacks analyst, stiff competition from other major storage players limits the growth prospects of Western Digital. Customer concentration and leveraged balance sheet are added woes.
Rising Expenses & Weak Asset Quality to Hurt WaFd (WAFD)
Per the Zacks analyst, mounting expenses, significant exposure to commercial loans, worsening asset quality on tough operating backdrop, and higher funding costs will likely hurt WaFd’s financials.
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Mastercard Incorporated (MA) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Eversource Energy (ES) : Free Stock Analysis Report
RPM International Inc. (RPM) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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