Top Research Reports for Costco, Pfizer & IBM
Friday, October 27, 2023
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 Costco Wholesale Corp. (COST), Pfizer Inc. (PFE) and IBM Corp. (IBM). 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 >>>
Costco’s shares have outperformed the Zacks Retail - Discount Stores industry over the year-to-date period (+20.6% vs. -0.6%). The company being a consumer defensive stock has survived market turmoil pretty well. The discount retailer’s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth.
These factors have been helping it register decent sales and earnings numbers. This outlook reflects Costco’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates.
A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming. While trading at a premium to its peers, its long-term growth prospects should help the stock see a solid upside.
(You can read the full research report on Costco here >>>)
Shares of Pfizer have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-31.6% vs. +15.8%). The company’s top line is declining in 2023 due to steep declines in revenues from its COVID-19 products, Comirnaty vaccine and Paxlovid oral pill, on lower demand.
Nonetheless, Pfizer boasts a diversified portfolio of innovative drugs and vaccines, including Ibrance and Prevnar. Pfizer is witnessing solid pipeline progress and is launching some key non-COVID products in 2023, which can drive long-term sales and profit growth.
Huge profits from its COVID products strengthened its cash position, which is being used to make acquisitions, increase dividends, buy back shares and reduce debt. Estimates are stable ahead of Q3 earnings. Pfizer has a positive record of earnings surprises in the recent quarters.
(You can read the full research report on Pfizer here >>>)
IBM’s shares have outperformed the Zacks Computer - Integrated Systems industry over the year-to-date period (+5.9% vs. +0.9%). The company is poised to benefit from strong demand for hybrid cloud and AI, which should drive growth in Software and Consulting. Strong free cash flow generation indicates financial stability and the capability to pursue new growth opportunities.
IBM’s active initiative to develop next-generation AI-powered technology will likely drive the top line. IBM's enterprise-focused AI and data platform Watsonx is gaining immense traction. Its unified platform allows AI developers to train, fine-tune and deploy AI solutions as per customer-specific requirements.
However, intense competition in various end markets is putting pressure on profits. Low demand for zSystems, distributed Infrastructure and support services is impeding the top line. The strategy of cutting costs to boost profitability beyond a certain threshold may impact product quality.
(You can read the full research report on IBM here >>>)
Other noteworthy reports we are featuring today include NextEra Energy, Inc. (NEE), Zoetis Inc. (ZTS) and HCA Healthcare, Inc. (HCA).
Mark Vickery
Senior Editor
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
Decent Comparable Sales Run to Fuel Costco's (COST) Top Line
Pfizer's (PFE) New Products Can Drive Long Term Sales Growth
IBM Rides on Solid Demand for Hybrid Cloud & AI Solutions
Featured Reports
NextEra (NEE) Gains from Steady Investment, Renewable Focus
Per the Zacks analyst, NextEra's planned long-term investment to enhance clean electricity generation and strengthen its infrastructure will boost its profitability.
Pet-Care Portfolio Boost Zoetis (ZTS), Disease Outbreaks A Woe
Per the Zacks Analyst, the companion animal product sales are expected to boost Zoetis in the quarters ahead. Potential supply challenges and disease outbreaks could, however, hurt prospects.
Improving Top Line, Acquisitions Aid HCA Healthcare (HCA)
Per the Zacks analyst, HCA Healthcare's growing revenues driven by increasing admissions have led to significant growth. Strategic acquisitions have helped it expand and remains a driving factor.
Diamondback (FANG) to Benefit from Low Breakeven Costs
The Zacks analyst likes Diamondback Energy's extremely low oil price breakeven costs, wherein the company needs the commodity to be at just $50 a barrel to be profitable.
Infrastructure Moves Aid United Rentals (URI) Amid Risks
Per the Zacks analyst, United Rentals is well poised for 2024 given tailwinds in infrastructure, manufacturing, and energy and power. However, stiff competition and volatile energy prices hurt.
Quest Diagnostics (DGX) Base sales Gain, Testing Sales Dip
The Zacks analyst is impressed with Quest Diagnostics' base business performance reflecting strength in physician, hospital and consumer channels. Yet, dip in COVID-19 Testing sales concerns.
Demand for Customized Finance Aids Hercules Capital (HTGC)
Per the Zacks analyst, rising demand for customized financing will keep aiding Hercules Capital's top line growth. Yet, elevated expenses and a lack of geographical diversification are key headwinds.
New Upgrades
Wabtec (WAB) Benefits From Freight Revenues & Raised Outlook
The Zacks analyst is impressed by solid growth across Wabtec's Freight segment's revenues, backed by strength across all product lines. Also, raised guidance is a tailwind.
Acquisitions & Strong Cash Flows Drive Select Medical (SEM)
Per the Zacks Analyst, numerous buyouts have resulted in a geographically diversified portfolio and strengthened the U.S. footprint for Select Medical. Strong cash flows enable investment in business.
Solid Demand for Software License Business Aid Itron (ITRI)
Per the Zacks analyst, Itron's performance is benefiting from by higher software license sales driven by Distributed Intelligence offerings. Also, frequent product is a tailwind.
New Downgrades
Danaher (DHR) Hurt by Lower COVID-Related Products Sale
The Zacks analyst is concerned about weakness in the Biotechnology and Diagnostics segments due to lower demand for COVID-19 testing, vaccine and therapeutics.
High Costs & Promotions Ails V.F. Corp's (VFC) Margins
Per the Zacks analyst, V.F. Corp has been witnessing tough operating environment as well as increased promotions and higher product costs. This led to Q1 adjusted gross margin contraction of 130 bps.
Texas Instruments (TXN) Suffers from Weak Industrial Market
Per the Zacks analyst, Texas Instruments suffers from the ongoing correction in the industrial market amid challenging macroeconomic conditions.
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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
Pfizer Inc. (PFE) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
