Chicago, IL – March 27, 2025 – Zacks Equity Research shares HCI Group HCI as the Bull of the Day and Boise Cascade Company BCC as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Phibro Animal Health PAHC, Fresenius Medical Care FMS and InMode INMD.
Here is a synopsis of all five stocks.
HCI Group, a Zacks Rank #1 (Strong Buy), engages in diverse business activities including property and casualty insurance, insurance management, real estate, and information technology in the United States. HCI Group is benefitting from underlying momentum in insurance stocks, paving the way for further gains ahead.
The stock is displaying relative strength and has been making a series of 52-week highs. The price movement is a sign of strength as we head further into the new year. Increasing volume has attracted investor attention as buying pressure accumulates in this top-ranked stock.
This year’s market action has witnessed a notable rotation in industry strength. It’s our job to identify that rotation as early as possible and position our portfolios to benefit from it.
HCI Group is part of the Zacks Insurance – Property and Casualty industry group, which currently ranks in the top 18% out of more than 250 industries. Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months, just as it has so far this year.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top industries, we can dramatically improve our stock-picking success.
Tampa, Florida-based HCI Group conducts its business activities through its subsidiaries. The company’s largest subsidiary in Homeowners Choice Property & Casualty Insurance provides residential products such as homeowners, fire, and wind insurance to homeowners, condominium owners, and tenants for properties. In addition, HCI offers reinsurance programs.
Bolstering its presence in the real estate world, the company owns and operates waterfront properties and retail shopping centers, office buildings, and commercial properties for investment purposes.
HCI Group also designs and develops web-based applications and products including SAMS and Harmony, which are policy administration platforms; ClaimColony, an end-to-end claims management platform; and AtlasViewer, a mapping and data visualization platform.
HCI Group has built up an impressive reporting history, surpassing earnings estimates in each of the past ten quarters. The company most recently delivered fourth-quarter earnings back in February of $0.31 per share, which represented a 111.3% surprise over the Zacks Consensus Estimate.
HCI has delivered a trailing four-quarter average surprise of 45.7%. Consistently beating earnings estimates is a recipe for success.
Analysts covering HCI are in agreement and have raised current-quarter EPS estimates by 16.02% in the past 60 days. The Q1 Zacks Consensus Estimate now stands at $4.49/share, reflecting potential growth of 23% relative to the year-ago period. The company is set to report these quarterly results in May.
This market leader has seen its stock advance more than 20% already this year, all while the general market pulled back. Only stocks that are in extremely powerful uptrends are able to experience this type of outperformance. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of higher highs throughout the past year. With both strong fundamental and technical indicators, HCI stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, HCI Group has recently witnessed positive revisions. As long as this trend remains intact (and HCI continues to deliver earnings beats), the stock will likely continue its bullish run.
Backed by a leading industry group and history of earnings beats, it’s not difficult to see why HCI stock is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix.
HCI is ranked favorably by our Zacks Style Scores with a top ‘A’ rating in our Value category and an overall ‘B’ VGM score. The stock is undervalued and trades at just 9.3 times forward earnings, well below the industry average. Promising earnings and sales trends point to continued growth ahead.
Recent positive earnings estimate revisions should also serve to create a ‘floor’ in terms of any sudden or unexpected downside moves. If you haven’t already done so, be sure to put HCI on your shortlist.
Boise Cascade Company engages in the manufacture and sale of engineered wood products and plywood, along with wholesale distribution of building materials in the United States and Canada.
The company manufactures veneer lumber and laminated beams, as well as I-joists for residential and commercial flooring and roofing systems. Boise Cascade also distributes a line of building materials such as siding, composite decking, insulation, and metal products.
Based in Boise, Idaho, the company markets and sells its products to wholesalers, dealers, home improvement centers, and specialty distributors for use in the construction of new residential homes, existing housing, and industrial and commercial buildings.
The wood product manufacturer faces several headwinds. Earnings and revenue trends remain negative as the company struggles to adjust to shrinking demand. Price pressures within engineered wood products are making things more difficult for Boise Cascade. An uptick in raw materials, labor, and manufacturing costs represents another threat to the company’s prospects.
A Zacks Rank #5 (Strong Sell) stock, Boise Cascade (BCC) is a component of the Zacks Building Products - Wood industry group, which currently ranks in the bottom 15% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has over the past year.
Also note that stocks in this group are relatively overvalued and are also projected to experience below-average earnings growth.
Stocks in the bottom tiers of industries can often be intriguing short candidates. While individual stocks have the ability to outperform even when they’re part of a lagging industry, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
Along with many other building product stocks, BCC shares have been underperforming over the past year. The stock is hitting a series of lower lows and represents a compelling short opportunity as we head further into 2025.
Boise Cascade has fallen short of earnings estimates in two of the past three quarters. Just last month, the company reported fourth-quarter earnings of $1.78 per share, missing the Zacks Consensus Estimate by -2.2%.
The building materials distributor has posted an average earnings miss of -1.95% over the last two quarters. Consistently falling short of earnings estimates is a recipe for underperformance, and BCC is no exception.
The company has been on the receiving end of negative earnings estimate revisions as of late. Looking at the current quarter, analysts have slashed estimates by a whopping -36.65% in the past 60 days. The Q1 Zacks Consensus EPS Estimate is now $1.40 per share, reflecting negative growth of -46.36% relative to the year-ago period. Sales are projected to fall -11.63% year-over-year to $1.45 billion.
Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
BCC stock is in a sustained downtrend. Notice how the stock has made a series of lower lows, widely underperforming the major indices.
BCC stock has experienced what is known as a “death cross,” whereby the stock’s 50-day moving average crosses below its 200-day moving average. Shares would have to make an outsized move to the upside and show increasing earnings estimate revisions to warrant taking any long positions. The stock has fallen nearly 15% this year alone.
A deteriorating fundamental and technical backdrop show that this stock is not set to make its way to new highs anytime soon. The fact that BCC is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
Boise Cascade is likely to suffer from uncertainties surrounding the U.S. housing market, which are expected to continue given consumer affordability concerns and lingering inflationary pressures.
Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of BCC until the situation shows major signs of improvement.
The U.S. stock market experienced a strong rebound earlier this week, as the Dow Jones Industrial Average gained 500 points, and the S&P 500 and the Nasdaq Composite rose 1.5% and 1.8%, respectively, on March 24. This rally has, to some extent, rekindled investor interest in equities, which had been under pressure amid concerns about recession and policy-induced trade disruptions.
The latest gains stem from renewed investor optimism following indications that President Trump's upcoming set of tariffs may be less severe than initially anticipated, easing concerns about another round of potential global trade war.
While uncertainties still prevail, this rally highlights how quickly markets can reverse course when policy risks appear more manageable. The MedTech sector, which has lagged the broader market this year, stands to benefit if the rally extends further, particularly as investor sentiment shifts in favor of risk assets. In such a situation, MedTech stocks like Phibro Animal Health, Fresenius Medical Care and InMode are poised to grow.
The MedTech industry is witnessing a transformative 2025, driven by innovation and evolving regulations. The FDA’s final rule reclassifying all laboratory-developed tests as devices takes effect on May 6, 2025. This will trigger a four-year phaseout and stricter compliance measures. While this raises concerns about test availability during health crises, it also aims to enhance safety standards.
The past three months have been challenging for many medical device companies that rely on overseas sourcing. Stringent tariff proposals introduced by President Trump have increased costs, disrupted supply chains and forced some firms to reassess their production strategies. However, optimism surrounding a lenient approach toward the next set of tariff proposals and anticipated Fed rate cuts could drive investment and expansion.
Consumer-driven healthcare is gaining momentum, creating new revenue streams. Advances in CRISPR and next-generation sequencing are propelling hyper-personalized medicine, while AI-driven medical devices are expected to surge under the FDA’s streamlined approval process.
As stated earlier, the MedTech industry has underperformed relative to the broader market so far in 2025, with the S&P Health Care Equipment Select Industry Index declining 5.5% year to date, compared with the S&P 500’s 1.6% dip.
However, if the broader equity rally sustains, fundamentally strong MedTech companies could witness renewed interest, particularly those demonstrating solid innovation and financial strength. After a challenging 2024, the undervalued MedTech stocks could see a strong rebound in the coming months of 2025. Investors should thus focus on companies leveraging cutting-edge technology and personalized healthcare solutions for long-term growth.
Phibro: Its Medicated Feed Additives (MFA) offerings hold the third-largest share in the animal health market. These concentrated medicated products, sold through its MFAs and other segments, are seeing strong uptake in the international regions. The Vaccine product line is one of Phibro’s highest growth segments, delivering a 12% year-over-year increase in the second quarter of fiscal 2025. The momentum is backed by the continued growth of poultry products in Latin America along with rising international demand.
This Zacks Rank #1 (Strong Buy) stock currently boasts an attractive valuation, with a forward price-to-earnings (P/E) of 10.41X, well below the five-year industry average of 21.78X and its median of 13.54X. A discounted PEG multiple of 0.42X, compared with 2.08X of the broader industry, too potentially presents an opportunity for investors. Phibro’s five-year expected earnings growth rate is pegged at an impressive level of 26.2%. In fiscal 2025, the company is expected to report earnings growth of 63%.
Fresenius Medical: The company is gaining from strong organic growth on the back of improving treatment volumes as well as a stabilizing labor environment in the United States. Continued improvement in these two key factors should be beneficial for the company in 2025. Overall pricing momentum also supported growth in the Care Enablement segment. FMS’ newly implemented operating model led to operational improvements. FMS’ continued divestment of its noncore and dilutive assets seems promising.
This Zacks Rank #1 stock has a forward P/E of 11.75X, well below the 5-year industry average of 29.65X and its own median of 14.43X. In 2025, the company is expected to report earnings growth of 25.9%.
InMode: The company develops and markets minimally invasive aesthetic medical products based on its proprietary radio frequency-assisted lipolysis and deep subdermal fractional radiofrequency technologies in the United States, Europe, Asia and internationally. InMode is aggressively entering new international markets in Asia, Latin America and Europe, where demand for aesthetic treatments is rising. The company’s EmpowerRF platform targeting women's health issues is gaining major market acceptance.
This Zacks Rank #2 (Buy) stock has a forward P/E of 9.37X, well below the five-year industry average of 21.61X and its own median of 13.66X. In 2025, the company is expected to report earnings growth of 10.8%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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Fresenius Medical Care AG & Co. KGaA (FMS) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
Boise Cascade, L.L.C. (BCC) : Free Stock Analysis Report
Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
InMode Ltd. (INMD) : Free Stock Analysis Report
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