Thursday, May 30, 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 JPMorgan Chase & Co. (JPM), Chevron Corporation (CVX) and Cisco Systems, Inc. (CSCO), as well as two micro-cap stocks Atrion Corporation (ATRI) and The Eastern Company (EML).

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 JPMorgan Chase have outperformed the Zacks Banks - Major Regional industry over the past year (+51.0% vs. +45.1%). High rates for longer time period, strategic buyouts and partnerships, opening new branches and solid loan balance will aid net interest income (NII), though higher funding costs will weigh on it.

While there has been a resurgence in global deal-making activities, a complete revival will still take some time. Thus, the performance of the investment banking (IB) business is not expected to improve much anytime soon. The volatile nature of the capital markets business and high mortgage rates will likely hamper fee income.

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

Chevron shares have gained +9.4% over the past year against the Zacks Oil and Gas - Integrated - International industry’s gain of +16.4%. The company is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin.

Further, the recent acquisition of Hess Corporation is expected to significantly strengthen Chevron's presence in oil-rich Guyana. However, the company is grappling with high sensitivity to oil price fluctuations and relatively expensive valuation.

Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.

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

Shares of Cisco have declined -3.7% over the past year against the Zacks Computer - Networking industry’s decline of -5.6%. The company’s third-quarter fiscal 2024 results suffered from weak networking revenues. However, security and observability revenues grew year over year.

It witnessed product order growth in two of its largest product portfolios, data center switching and campus switching, as well as in security and collaboration. Cisco’s business model has evolved with subscription revenues accounting for more than half of its total revenues. The addition of Splunk further enhances recurring revenue base of the company.

The buyout significantly expands Cisco’s portfolio of software-based solutions, contributing more than $4 billion in annualized recurring revenue and makes it one of the largest software companies in the world. The launch of AI-powered Hypershield, which combines security and networking, strengthened Cisco’s security portfolio.

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

Atrion shares have outperformed the Zacks Medical - Dental Supplies industry over the year-to-date period (+23.2% vs. -1.5%). This microcap company with market capitalization of $810.28 million has a strong cash position and a $25 million credit facility support financial stability and future growth.

The growing global medical devices market presents significant opportunities for Atrion, leveraging trends like chronic diseases and an aging population. Geographic diversification, with robust U.S. revenues and international contributions, mitigates regional risks.

However, COGS increased by 40.4%, resulting in declining gross margins due to higher manufacturing costs and a $2.3 million inventory write-off. High inventory levels, regulatory risks, and competitive pressures from major players could strain profitability.

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

Shares of Eastern Company have outperformed the Zacks Security and Safety Services industry over the year-to-date period (+29.2% vs. +11.1%). This microcap company with market capitalization of $179.46 million have successful customer relationships and a stable order flow, providing a solid foundation for sustained growth.

Operational efficiencies are evident with a $3.5 million inventory reduction and improved gross margin of 24% from 21% in Q1 2023, driven by cost-saving initiatives. Eastern's financial health is strengthened by reducing long-term debt. A robust 83-year history of 334 consecutive quarterly dividends underscores financial stability and shareholder value.

Vertical integration and strategic M&A opportunities aim to boost profitability. However, a 6% sales decline in Q1 2024, supply chain disruptions, cost inflation, competitive pressures, dependence on key customers, and regulatory risks pose challenges.

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

Other noteworthy reports we are featuring today include Intuit Inc. (INTU), International Business Machines Corporation (IBM) and The Sherwin-Williams Company (SHW).

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

Buyouts, Rates & Loans Aid JPMorgan (JPM), Fee Income Ails

Chevron (CVX) to Gain Guyana Foothold with Hess Buy

Cisco (CSCO) Benefits From Strong Security Products Adoption

Featured Reports

Intuit (INTU) Rides on Product Refresh, Higher Subscriptions
Per the Zacks analyst, Intuit is benefiting from frequent product refreshes, which help it to gain customers. Moreover, increase in subscriptions is driving stable revenue growth for the company.

IBM Remains Poised to Benefit from Holistic Growth Model
Per the Zacks analyst, IBM is likely to benefit from healthy demand trends for hybrid cloud and AI solutions with a client-focused portfolio and broad-based growth driven by opportune acquisitions.

Acquisitions and Cost Actions to Aid Sherwin-Williams (SHW)
Per the Zacks analyst, the company's strategic acquisitions and cost-control initiatives will aid its performance despite headwinds from weak demand.

Hyatt (H) Banks on Solid Travel Demand Growth Amid High Costs
Per the Zacks analyst, Hyatt is benefiting from solid leisure and improving business travel demand, globally, along with asset-light business model. Yet, high costs and expenses mar prospects.

Revvity's (RVTY) Expanding Portfolio Offsets Macro Risks
Per the Zacks analyst, an expanding product portfolio provides potential growth opportunity for Revvity and also helps in offsetting sluggish European macro environment

Solid Growth of Digital Platform Aids Western Union (WU)
Per the Zacks Analyst, Western Union's digital platform delivers accelerated money transfer services amid growing demand. Its Consumer Services strength will continue supporting the top line.

Deciphera (DCPH) Set to be Acquired by ONO Pharma for $2.4B
Per the Zacks Analyst, shares of Deciphera are trading high due to the $2.4 billion buyout offer from ONO Pharma. The transaction is expected to close in the third quarter of 2024.

New Upgrades

Digital Transformation and Acquisitions Aid Tyler (TYL)
Per the Zacks analyst, Tyler is benefiting from ongoing digital transformations and the adoption of its cloud-based solutions. Also, strategic acquisitions like ARInspect and ResourceX are positive.

Maximus (MMS) Benefits From Stirling Institute Acquisition
Per the Zacks Analyst, the acquisition of Stirling Institute of Australia, which provides vocational training to Australians, has strengthened Maximus' employment services.

Copa Holdings (CPA) Benefits From Higher Passenger Traffic
Upbeat air-travel demand is driving Copa Holdings' top line. The Zacks analyst also finds the company's initiatives to reward its shareholders very encouraging.

New Downgrades

Escalating US-China Trade Tensions May Hurt Emeren (SOL)
Per the Zacks analyst, the recently increased U.S. tariff rate on import of solar cells from China, might escalate trade tensions between the two nations. This might hurt Emeren

Low Volumes & High Input Costs to Hurt O-I Glass (OI)
Per the Zacks Analyst, the impact of low volumes due to inventory destocking will weigh on O-I Glass' results. Higher input costs also remain a woe.

Medifast (MED) Troubled by Customer Acquisition Challenges
Per the Zacks analyst, Medifast is battling customer acquisition challenges due to the rising popularity of weight loss medications. Consequently, the company expects soft revenues in second quarter.

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

JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report

Chevron Corporation (CVX) : Free Stock Analysis Report

International Business Machines Corporation (IBM) : Free Stock Analysis Report

Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

The Sherwin-Williams Company (SHW) : Free Stock Analysis Report

Intuit Inc. (INTU) : Free Stock Analysis Report

Eastern Company (The) (EML): Free Stock Analysis Report

Atrion Corporation (ATRI): Free Stock Analysis Report

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