Thursday, June 23, 2022
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), Broadcom Inc. (AVGO), and Anthem, Inc. (ANTM). 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 >>>
Tesla
shares have bee hit hard in the ongoing marekt turmoil, as have most growth stocks given their exposure to rising interest rates. But the stock has held up better than the peer group, handily outperforming the Zacks Automotive – Domestic industry over the past year (+2.2% vs. -25.7%). The company is riding high on the soaring popularity of its Models 3 and Y. The Zacks analyst expects deliveries to see an annualized growth of around 50% over the next three years. High volumes are also aiding Tesla in achieving production efficiencies, thereby strengthening gross margins. Ex-government credits, Tesla’s gross margins reached 30% in Q1. This indicates that the supply-chain issues hitting the company are being passed along to the consumer.
Additionally, Tesla’s energy generation and storage revenues outlook is promising. While low Q2 deliveries from the Shanghai gigafactory could be a short-term headwind, we expect Tesla to deliver outsized returns in the long run on the back of production ramp-up and introduction of new models.
(You can
read the full research report on Tesla here >>>
)
Broadcom
shares have outperformed the Zacks Electronics – Semiconductors industry over the past year (+9.2% vs. -5.5%) on the back of strength in networking and server storage segments. Networking is riding on the strong adoption of Broadcom’s next-gen merchant switching and routing solutions by hyperscalers, enterprises and service providers. Aggressive adoption of its next-generation server storage solutions by hyperscalers is expected to drive top-line growth.
Broadcom expects fiscal third-quarter networking and server storage revenues to grow more than 25% and 60% on a year-over-year basis, respectively. An upbeat third-quarter fiscal 2022 guidance is encouraging. Recently announced VMware acquisition will aid prospects over the long term. Shares have outperformed the industry year to date. However, increasing competition, along with high debt levels, are persistent overhangs.
(You can
read the full research report on Broadcom here >>>
)
Anthem
shares have outperformed the Zacks Medical – HMOs industry over the past year (+26.4% vs. +19.6%). The company’s improving top-line can be attributed to a premium rate increase and higher memberships. Acquisitions and collaborations have enabled the company to boost its Medicare Advantage growth and strengthen its business portfolio. Its well-performing Medicare and Medicaid businesses, coupled with several contract wins, are expected to drive its membership.
A solid earnings guidance for 2022 bodes well. Its shareholders have approved Anthem’s name change to Elevance Health. Anthem’s consistent dividend payouts and stock repurchases boost shareholder value. However, escalating costs continue to put pressure on Anthem’s bottom line. Its weak balance sheet with massive debts of nearly $20 billion can affect financial flexibility. As such, the stock warrants a cautious stance.
(You can
read the full research report on Anthem here >>>
)
Other noteworthy reports we are featuring today include Oracle Corporation (ORCL), Danaher Corporation (DHR), and Gilead Sciences, Inc. (GILD).
Sheraz Mian
Director of Research
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
Tesla (TSLA) Buoyed by Strong Deliveries & Margins
Strong Demand for Networking Products Aids Broadcom (AVGO)
Strategic Buyouts and Product Expansion Aid Anthem (ANTM)
Featured Reports
Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships
Per the Zacks analyst, Oracle is benefiting from solid adoption of its cloud infrastructure solutions. Also, partnership with Accenture is helping the company rapidly expand its cloud-based clientele.
Life Sciences Business Drives Danaher (DHR), High Costs Ail
Per the Zacks analyst, strength in Danaher’s Life Sciences business, fueled by solid demand for its bioprocessing products should drive its revenues. High operating costs and expenses remain concerns.
Biktarvy, Veklury Fuel Gilead (GILD) Amid Generic Competition
Per the Zacks analyst, strong performance from flagship HIV therapy Biktarvy and contribution from Veklury boost Gilead as some other drugs face generic competition.
FLEETCOR (FLT) Benefits From Buyouts Amid Higher Expense
FLEETCOR’s acquisition strategy to expand its customer base and diversify its service offerings across industries looks impressive. The Zacks analyst is, however, concerned about rising expenses.
Kimberly-Clark (KMB) Benefits From Solid Cost-Saving Efforts
Per the Zacks analyst, Kimberly-Clark is taking robust steps to lower costs. During the first quarter of 2022, it generated savings of $50 million from the Focus on Reducing Costs Everywhere program.
Alcon’s (ALC) Vision Care Arm Grows Amid Supply Chain Issues
The Zacks analyst is encouraged by the robust contact lens and eye drops sales within Alcon’s Vision Care segment. Yet, a decline in contact lens care from supply chain challenges raises concerns.
Fee-based Contracts & Wide Spread Assets Aid ONEOK (OKE)
Per the Zacks analyst ONEOK’s midstream assets in the high-production region and fee-based earnings commitments in its all three segments will drive its performance over the long run.
New Upgrades
Kinder Morgan (KMI) to Benefit From Rising Demand for RNG
The Zacks analyst is upbeat about Kinder Morgan’s huge growth potential in the RNG business, with North America RNG demand expected to significantly rise in the next two decades.
High Steel Prices & Demand to Aid Commercial Metals (CMC)
Per the Zacks analyst, Commercial Metals will gain from robust finished steel demand stemming from growing construction markets in the United States and Europe as well as higher steel prices.
Electrical & Electronic Solutions Strength Aids WESCO (WCC)
Per the Zacks analyst, strong momentum across non-residential construction, original equipment manufacturer, and industrial businesses is benefiting WESCO’s Electrical & Electronic Solutions segment.
New Downgrades
Supply Chain Woes & Stiff Competition to Hurt Woodward (WWD)
Per the Zacks analyst, pandemic induced supply chain troubles continue to be a major headwind for Woodward. Intensifying competition especially in the commercial aerospace market is an added concern.
Rising Rates & Higher Costs Hurt Lennar’s (LEN) Prospects
Per the Zacks analyst, Lennar may witness lower demand given rising interest rates, continued supply chain disruptions that are affecting affordability of the prospective buyers.
Inflationary Pressures Hurt Cracker Barrel’s (CBRL) Prospects
Per the Zacks analyst, Cracker Barrel has been witnessing elevated costs owing to higher inflation in commodity, wage and freight costs. Also, decline in traffic from pre-pandemic levels is a concern.
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