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Monday, January 27, 2025
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 ServiceNow, Inc. (NOW), Alibaba Group Holding Limited (BABA) and Union Pacific Corporation (UNP), as well as a micro-cap stock Natural Health Trends Corp. (NHTC). 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 >>>
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Today's Featured Research Reports
Shares of ServiceNow have outperformed the Zacks Computers - IT Services industry over the past year (+40.8% vs. +15.5%). The company has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation.
ServiceNow had 2020 total customers with more than $1 million in annual contract value (ACV) at the end of third quarter, which represents 14% year-over-year growth in customers. ServiceNow had 15 deals greater than $5 million in net new ACV and six deals of more than $10 million. It closed 96 deals greater than $1 million net new ACV.
ServiceNow had 44 new Now Assist customers spending more than $1 million in ACV, including six with more than $5 million and two with more than $10 million. It is riding on an expanding partner base. However, NOW is suffering from persistent inflation, stiff competition, and a challenging macroeconomic environment.
(You can read the full research report on ServiceNow here >>>)
Alibaba shares have gained +23.7% over the past year against the Zacks Internet - Commerce industry’s gain of +43.8%. The company is benefiting from strong momentum across its international commerce retail business. Solid combined order growth in AIDC’s retail businesses and strength in AliExpress’ Choice are contributing well.
Growing international commerce wholesale business, thanks to strength in cross-border-related value-added services, is a tailwind. Expanding China's wholesale commerce business remains a major positive. Robust local consumer services and Cainiao logistics services are further driving top-line growth.
Strength in Lazada, AliExpress and Trendyol is expected to continue benefiting Alibaba’s international business. However, rising expenses related to new initiatives are a concern. Macroeconomic uncertainties and unfavorable foreign exchange fluctuations remain risks.
(You can read the full research report on Alibaba here >>>)
Shares of Union Pacific have outperformed the Zacks Transportation - Rail industry over the past year (+3.7% vs. -0.6%). The company is looking to cut costs to combat the revenue weakness. In the meantime, the railroad operator continues paying dividends. UNP is also active on the buyback front. UNP repurchased shares worth $1.5 billion in 2024. Considering all these factors, investors are advised to wait for a better entry point.
However, Union Pacific is suffering big time as ecommerce sales have normalized and consumer markets have softened. Geopolitical uncertainty and high inflation continue to hurt consumer sentiment.
Reduced fuel surcharge revenues, too, are a concern. Due to these headwinds, volumes declined 1% year over year in 2023. Operating ratio (operating expenses as a percentage of revenues) deteriorated 220 basis points in 2023, mainly due to revenue woes. Given the soft freight market scenario, the revenue weakness is likely to persist.
(You can read the full research report on Union Pacific here >>>)
Natural Health Trends shares have underperformed the Zacks Consumer Products - Discretionary industry over the past year (-13% vs. +23.4%). This microcap company with market capitalization of $55.61 million is facing rising costs and regulatory hurdles limit growth. Cash flow constraints and intense competition add pressure.
Nevertheless, Natural Health maintains strong liquidity with $46.3 million in cash and marketable securities as of Sept. 30, 2024, and generated $0.5 million in operational cash flow (excluding tax payments) year to date. Operating losses improved from $1.4 million to $0.9 million year to date, supported by robust gross margins of 74.1%.
The company leverages market leadership in Hong Kong and China (78% of revenue) but faces risks from weak consumer spending and overreliance on these regions. Efforts in product expansion, digital initiatives, and market diversification (e.g., Colombia entry) position it for growth, but declining active membership (-10.9% year over year) poses challenges.
(You can read the full research report on Natural Health Trends here >>>)
Other noteworthy reports we are featuring today include Elevance Health, Inc. (ELV), The Travelers Companies, Inc. (TRV) and Diamondback Energy, Inc. (FANG).
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>>>