Wednesday, August 28, 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 Visa Inc. (V), AstraZeneca PLC (AZN) and The Walt Disney Co. (DIS), as well as two micro-cap stocks FitLife Brands, Inc. (FTLF) and Utah Medical Products, Inc. (UTMD). 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 Visa have gained +4.6% over the year-to-date against the Zacks Financial Transaction Services industry’s gain of +7.9%. The company’s strategic acquisitions and alliances are fostering long-term growth and consistently driving its revenues. Visa, fueled by persistent increases in payments, cross-border volumes and sustained investments in technology, is witnessing significant profit growth. 

The ongoing shift to digital payments is advantageous for Visa, with strong domestic volumes supporting its overall performance. A robust cash position enables the company to enhance shareholder value. 

However, elevated operating expenses pose margin challenges. It is witnessing a volatile cash volume from the Asia Pacific and CEMEA regions. Consumer spending growth is also drying up. Moreover, rising client incentives will affect its adjusted revenues. As such, the stock warrants a cautious stance.

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

AstraZeneca’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+32.3% vs. +29.1%). The company has a diverse product portfolio and a global footprint. Its key drugs like Lynparza, Tagrisso, Imfinzi, Fasenra, Ultomiris and Farxiga should keep driving revenues. 

AstraZeneca’s pipeline is strong, with important late as well as mid-stage pipeline data readouts lined up. It has also been engaged in external acquisitions and strategic collaborations to boost its pipeline while investing in geographic areas of high growth like emerging markets. 

Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. By 2030, it expects to generate $80 billion in total revenues. However, AstraZeneca’s diabetes franchise faces stiff competition while pricing pressure hurts sales in the respiratory unit.

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

Shares of Walt Disney have outperformed the Zacks Media Conglomerates industry over the year-to-date period (+0.3% vs. +0.1%). The company’s third-quarter fiscal 2024 results reflect growth in Disney+ subscribers and theme park and resort businesses. 

Recent attractions like the Frozen theme land at Hong Kong Disneyland and Walt Disney Park in Paris, as well as the Zootopia theme land at Shanghai Disney, are expected to boost the prospects of the theme park business. 

At the same time, the company’s declining ad revenues due to fewer impressions have been a headwind for some time now. Disney+’s profitability is expected to be hurt by higher investments in content, which will also increase programming and production costs in the Media and Entertainment Distribution segment. Its leveraged balance sheet remains a concern. Disney+ is facing tough competition from the likes of Netflix and Amazon Prime Video.

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

FitLife Brands’ shares have outperformed the Zacks Medical - Products industry over the year-to-date period (+74.5% vs. +12.7%). This microcap company with market capitalization of $152.62 million have witnessed 14.7% year-over-year revenue increase in second-quarter 2024, driven by a 17.5% rise in wholesale and 13.3% in online sales. 

Strategic acquisitions and a shift to online channels, now two-thirds of revenue, boosted margins to 44.8%. Key acquisitions like Mimi’s Rock and MusclePharm contribute to growth, with MusclePharm revenues up 27.3% sequentially and Mimi’s Rock’s gross margin at 48.2%, though integration risks remain. The company’s low net debt of $11.7 million supports financial flexibility. 

However, challenges include declining legacy brand revenues, a 2.2% drop in the MRC segment, and heavy reliance on online sales, posing risks if e-commerce trends shift. High debt and competition in a saturated market also pose concerns.

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

Shares of Utah Medical Products have underperformed the Medical - Products industry over the past six months (-0.2% vs. +7.0%). This microcap company with market capitalization of $236.34 million is facing challenges from declining revenues, particularly with the Filshie Clip System and significant sales drops to PendoTECH, a key customer. 

Additionally, foreign exchange risks, increased litigation costs and competitive pressures could further impact UTMD’s financial performance, potentially leading to market share erosion. Nevertheless, a strong balance sheet with $89.2 million in cash and no debt as of June 30, 2024, providing flexibility for strategic investments, acquisitions, or shareholder returns. 

The global medical devices market is growing, with UTMD well-positioned to benefit due to its diverse product portfolio in obstetrics, gynecology, neonatal care and blood pressure monitoring. The company’s disciplined cost management reduced COGS and operating expenses, supporting financial stability. UTMD’s focus on niche markets offers strategic advantages, although it.

(You can read the full research report on Utah Medical Products here >>>)

Other noteworthy reports we are featuring today include Sony Group Corp. (SONY), BP p.l.c. (BP) and Canadian National Railway Co. (CNI).

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

Visa (V) Rides On Growing Cross Border Volume, Expenses High

Key Drugs Aid AstraZeneca (AZN) Sales; Pipeline Strong

Disney (DIS) Banks on Disney+, Theme Parks Business Growth

Featured Reports

SONY Rides on Solid Demand From Music & G&NS Businesses
Per the Zacks analyst, momentum in the Game & Network Services and Music segments cushions Sony's performance. It remains wary of FX volatility and the possibility of an economic downturn in the U.S.

Dividends & Buyback Aid Canadian National (CNI), Expenses Ail
The Zacks analyst likes the shareholder-friendly measures adopted by Canadian National. However, rising operating expenses are concerning as they are likely to keep the bottom line under pressure.

Kimberly-Clark (KMB) Benefits From Gross Supply Chain Productivity
Per the Zacks analyst, Kimberly-Clark is taking robust steps to lower costs. Through the first half of 2024, the company has generated approximately $250 million in gross supply chain productivity.

BFS Tool Aids Builders FirstSource (BLDR), Low Margin Ails
Per the Zacks analyst, Builders FirstSource benefits from its new BFS digital Tool and a strong value-added product portfolio. Yet, weakening multi-family housing market is denting margins.

Penumbra (PEN) Rides on Thrombectomy Sales, Global Growth
Penumbra's Thrombectomy growth globally is an upside. Per the Zacks analyst, differentiated technologies of Lightning Flash 2 and Lightning Bolt 7 leading to strong patient outcomes is a key driver.

Rezdiffra Sales Boosts Madrigal (MDGL), Narrow Pipeline a Woe
Per the Zacks Analyst, the approval of Rezdiffra for NASH is a huge boost for Madrigal ensuring a regular revenue stream. However, the lack of a deep pipeline is a woe.

Operational Efficiency Aids Silgan (SLGN) Amid Low Prices
Per the Zacks analyst, Silgan is gaining from a disciplined capital allocation model and a strong operational performance. Lower prices will hurt its top line.

New Upgrades

BP's Robust Upstream Portfolio To Boost Production Capacity
Per the Zacks analyst, BP's portfolio of upstream projects continues to grow with the beginning of major projects like Seagull. However, its significant reliance on debt capital raises concern.

Sprouts Farmers' (SFM) Omnichannel Offering to Propel Sales
Per the Zacks analyst, Sprouts Farmers' ability to deliver a seamless omnichannel experience enhances customer loyalty. E-commerce sales rose 30% in the second quarter, representing 14% of net sales.

SM Energy's (SM) Robust Eagle Ford & Permian Presence Aids
Per the Zacks analyst, SM Energy's strategic expansion in Texas, particularly in the Permian and Eagle Ford regions, signals growth, leveraging its assets to capitalize on crude price uptrends.

New Downgrades

Weak Industrial Segment and Increasing Costs Ail Barnes (B)
Per the Zacks analyst, Barnes is experiencing softness in the Industrial unit due to softness in the motion control solutions and automation businesses. High costs are an added concern.

Elevated Expenses Likely to Mar Atlassian's (TEAM) Margins
Per the Zacks analyst, increased investment toward enhancing sales & marketing capabilities and higher spending on research & development are likely to dampen Atlassian's margins in the near term.

Macerich Hurt by Tenant Bankruptcies & E-Commerce Adoption
Per the Zacks Analyst, MAC's performance is likely to be affected by tenant bankruptcies, growing adoption of online shopping and substantial geographic concentration of assets.n

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

AstraZeneca PLC (AZN) : Free Stock Analysis Report

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

Visa Inc. (V) : Free Stock Analysis Report

Canadian National Railway Company (CNI) : Free Stock Analysis Report

The Walt Disney Company (DIS) : Free Stock Analysis Report

Utah Medical Products, Inc. (UTMD): Free Stock Analysis Report

FitLife Brands Inc. (FTLF) : Free Stock Analysis Report

Sony Corporation (SONY) : Free Stock Analysis Report

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