Chicago, IL – November 20, 2024 – Zacks Equity Research shares Taiwan Semiconductor TSM as the Bull of the Day and CVS Health CVS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tesla TSLA, Alphabet GOOGL and Uber UBER.
Here is a synopsis of all five stocks.
The company’s earnings outlook has shifted positively across the board following its latest set of better-than-expected quarterly results.
In addition to favorable earnings estimate revisions, the stock resides in the Zacks Semiconductor – Circuit Foundry industry, currently ranked in the top 1% of all Zacks industries. Let’s take a closer look at how the company currently stacks up.
TSM shares have been red-hot in 2024 thanks to strong quarterly results, gaining nearly 85% compared to the S&P 500’s 25% gain. Perhaps to the surprise of some, the performance actually beats out a solid chunk of the Mag 7 group in 2024.
Concerning headline figures in its latest quarterly release, TSM posted an 11.5% beat relative to the Zacks Consensus EPS Estimate and reported sales 3.5% ahead of expectations. EPS grew 50% year-over-year, whereas sales of $23.5 billion jumped an impressive 36%.
The company’s top line performance has been excellent over recent years, with the recent AI frenzy providing a big boost.
Wendell Huang, CFO, was upbeat about the results and the upcoming period, stating:
Analysts have revised their sales expectations for the upcoming Q4 print following the release, with the $25.9 billion expected suggesting a 32% jump from the year-ago period. EPS revisions for the period also shot higher, with the now $2.14 Zacks Consensus EPS estimate up nicely from the $1.94 expected in early November.
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Taiwan Semiconductor would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
CVS Health is a pharmacy innovation company. Its offerings include pharmacy benefit management services, mail order, retail and specialty pharmacy, disease management programs, and retail clinics.
Analysts have taken a bearish stance on the company’s outlook, landing the stock into a Zacks Rank #5 (Strong Sell).
In addition, the company is in the Zacks Retail – Pharmacies and Drug Stores industry, which is currently ranked in the bottom 8% of all Zacks industries.
Let’s take a closer look at the company.
CVS shares have struggled to establish any strength in 2024, losing roughly 26% in value compared to an impressive 25% gain from the S&P 500. Quarterly results haven’t delivered sustained positivity for shares, with its recent release causing an initial bullish spike before giving up the post-earnings gains.
Concerning the latest quarterly print, the company beat our consensus EPS and sales expectations by 2% and 2.8%, respectively. Still, a notable profitability crunch has been a driver behind the poor share performance, with EPS declining 50% throughout the period.
Elevated medical costs have been behind the crunch, with the company expecting its current fiscal year results to be negatively affected by the development. The company’s guidance has been consistently lowered following quarterly results in 2024, but a newly-appointed CEO remains vigilant on slashing costs and returning the company to growth.
Guidance cuts stemming from weak quarterly results paint a challenging picture for the company’s shares in the near term.
CVS Health is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Since Donald Trump's victory in the 2024 U.S. presidential election, Tesla has been making waves in the stock market. Yesterday, shares of TSLA rose 5.6%, fueled by reports that the incoming Trump administration plans to push for a federal framework supporting self-driving vehicles. Given CEO Elon Musk's strong relationship with Trump, Tesla's ambitions in both autonomous and electric vehicle (EV) domains seem to be on the verge of a major acceleration.
Musk played a significant role in Trump’s return to the White House, and their rapport is already bearing fruit. Last week, Trump appointed Musk to co-lead the newly established Department of Government Efficiency (DOGE), emphasizing deregulation and cost-cutting. For Tesla, this is more than just political favor. Being buddies with the President surely has its benefits! Being the co-leader of DOGE, Musk secures a pathway to advance Tesla’s innovative goals without excessive regulatory red tape. And Trump’s administration also gains a tech visionary.
And now, Trump’s plans for a streamlined federal framework for autonomous vehicles (AVs) would remove significant hurdles that have hampered Tesla’s rollout of Full Self-Driving (FSD) technology. Musk’s long-standing dream of a fleet of robotaxis, initially unveiled through the "Cybercab" concept, could become a reality soon.
Tesla’s aspirations in the robotaxi space are ambitious.With a Trump-led initiative to simplify AV regulations, Tesla could gain a clearer runway to deploy its autonomous fleet. Tesla’s FSD system is currently available in a supervised capacity but the company expects to transition to unsupervised operation in select states like Texas and California by next year.
Musk has promised ride-hailing robotaxis in Texas and California, and a few other states by next year, pending regulatory approval. And under Trump’s presidency, bureaucratic hurdles could get much smoother.
The Cybercab, a $30,000 two-seater devoid of steering wheels and pedals (expected to be launched in 2026), will be Tesla’s bold entry into the autonomous vehicle market.
Trump’s push for easing the rules on driverless cars strengthens Tesla’s standing against Alphabet’s Waymo, which is currently leading the robotaxi race.
Shares of Uber took a hit yesterday following reports of Trump’s AV regulatory stance. Amid concerns that Tesla’s robotaxi network could disrupt their dominance in the ride-hailing market, shares of UBER fell close to 5% earlier this week.
In the EV market, Tesla stands apart from traditional automakers like Ford and General Motors, which still lean heavily on EV tax credits. In fact, Trump’s push to repeal the $7,500 EV tax credit aligns with Musk’s perspective. Musk himself has advocated for eliminating EV tax credits, arguing that it levels the playing field. Tesla’s early investment in EV technology gives it a distinct advantage over competitors that still rely on federal incentives. Unlike its rivals, Tesla has largely outgrown the need for such incentives, thanks to its massive scale, high brand loyalty, head start in production and a sprawling Supercharger network.
Flourishing Energy Generation & Storage Business: Tesla’s revenues from this business have exploded, growing at a triple-digit compound annual growth rate (CAGR) over the past three years. Though it remains a small segment of Tesla’s business, its robust growth and juicy margins should be a significant catalyst in the long term.
Cybertruck Sales: Tesla CEO Elon Musk revealed that the Cybertruck became the third best-selling EV in the United States in the third quarter (only behind the Tesla Model Y & Model 3). As Tesla becomes more efficient at producing Cybertrucks, deliveries should soar.
Strong Financials: High liquidity and low leverage provide Tesla with the financial flexibility to tap growth opportunities. Tesla exited the third quarter of 2024 with cash/cash equivalents/investments of more than $33 billion. Its long-term debt-to-capitalization of around 7% compares favorably with the industry’s 40%. Tesla’s operating cash flow also hit a peak of $6.3 billion in the last reported quarter.
The Zacks Consensus Estimate for Tesla’s 2024 and 2025 EPS has moved north in the past 30 days. The consensus estimate suggests that Tesla’s earnings will jump by a healthy 29.5% in 2025.
The stock has rallied more than 90% in the past six months, breezing past the industry, sector and the S&P 500.
Given the trend of upward earnings estimate revisions aligning with Musk's optimistic outlook for FY25 (vehicle deliveries to surge 20-30% next year) and, of course, the Trump effect, TSLA stock rally is expected to continue.
Musk played a pretty important role in helping to get Trump elected. And Tesla stock is reflecting the role Musk now plays in the broader political sphere. The Trump-Musk dynamic might just prove to be the catalyst Tesla needs to accelerate its next phase of growth. As Tesla navigates the Trump 2.0 era, the company is uniquely positioned to capitalize on a favorable regulatory and innovation-driven climate to realize its electric and driverless ambitions.
TSLA currently sports a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
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CVS Health Corporation (CVS) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
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