Tuesday, May 16, 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 Toyota Motor Corporation (TM), NextEra Energy, Inc. (NEE) and HCA Healthcare, Inc. (HCA). 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 Toyota Motor have gained +3.5% over the year-to-date period against the Zacks Automotive - Foreign industry’s gain of +6.2%. Continued demand for vehicles and robust product line-up is set to fuel sales volumes of Toyota. To capitalize on the accelerated global shift to green cars, the auto giant is deepening focus on manufacturing electric and fuel-cell vehicles, which will bolster the company’s product competitiveness.
Toyota Motor’s commitment to return capital to shareholders and upbeat fiscal 2024 view spark confidence. However, commodity cost inflation is expected to weigh on gross margins. Supply-chain disruptions and tough labor market will play spoilsports.
Unfavorable foreign currency translations and high R&D expenses are also likely to limit profits. Also, elevated leverage of the firm may restrict its financial flexibility to tap onto growth opportunities. Thus, investors are advised to wait for a better entry point.
(You can read the full research report on Toyota Motor here >>>)
NextEra Energy shares have outperformed the Zacks Utility - Electric Power industry over the past year (+8.3% vs. -7.3%). The company continues to expand its operations through organic projects and strategic acquisitions. NextEra has many renewable projects in its backlog and their completion will reduce emissions. The merger of Gulf Power and FPL strengthens NextEra’s position in Florida. FPL’s customer base is expanding as Florida’s economy improves and continues to boost demand for its services.
NextEra has ample liquidity to meet its near-term debt obligations and efficient debt management acts as a tailwind. NEE is expanding its operation in water space through acquisition.
However, due to the nature of its business, it is subject to complex regulations. Risk in operating nuclear units, unfavorable weather conditions and an increase in supply costs adversely impact earnings.
(You can read the full research report on NextEra Energy here >>>)
Shares of HCA Healthcare have outperformed the Zacks Medical - Hospital industry over the past year (+30.6% vs. +18.6%). The company’s revenues remain on an uptick on the back of a surge in admissions, outpatient surgeries and other procedures. The Zacks analyst expects the top line to grow 3.9% year over year in 2023.
Multiple buyouts aided it in increasing patient volumes, enabled network expansion, added hospitals to its portfolio and boosted business scale. It has been gaining from its telemedicine business line. HCA resorts to prudent capital deployment via buybacks and dividends. As of Mar 31, 2023, it had $3.7 billion left under its buyback authorization.
However, the company's escalating operating expenses have been weighing on the margins. A high debt level induces rise in interest expenses. As such, the stock warrants a cautious stance.
(You can read the full research report on HCA Healthcare here >>>)
Other noteworthy reports we are featuring today include Canadian Pacific Kansas City Limited (CP), Marathon Petroleum Corporation (MPC) and The PNC Financial Services Group, Inc. (PNC).
Director of Research
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
Continued Demand Aids Toyota Motor (TM), High leverage Ails
NextEra (NEE) Gains from Steady Investment, Renewable Focus
Improving Top Line, Acquisitions Aid HCA Healthcare (HCA)
Canadian Pacific KC's (CP) Dividends Aid, Fuel Costs Ail
The Zacks analyst welcomes the company's efforts to add shareholder value. However, high operating expenses, mainly due to escalated fuel costs, are worrisome.
Marathon (MPC) Gains from Sale of Speedway Retail Unit
The Zacks analyst likes Marathon's sale of Speedway business, which provided a much-needed cash infusion and came with a supply agreement ensuring a steady revenue stream.
Acquisitions Support PNC Financial (PNC), High Costs Ail
Per the Zacks analyst, PNC Financial's solid balance-sheet position allows it to grow through acquisitions. Yet, rising costs due to investment in technology might limit bottom-line growth.
Buyouts Aid United Rentals (URI) Amid Volatile Energy Prices
Per the Zacks analyst, United Rentals benefits from accretive acquisitions and fleet investments. However, stiff competition and volatile energy prices hurt.
Inorganic Growth Efforts Aid Raymond James (RJF), Costs Ail
Per the Zacks analyst, while Raymond James' efforts to expand through acquisitions and its global diversification efforts are expected to result in higher costs, these will likely drive the top line.
Check Point (CHKP) Rides on Product Portfolio Strength
Per the Zacks analyst, Check Point is gaining from solid contributions of its growth-oriented products, primarily CloudGuard, Harmony, Sandblast Zero-day threat prevention and Infinity solutions.
Agios' (AGIO) Dependence on Pyrukynd Revenues A Woe
Following FDA approval in PK deficiency, Pyrukynd is the only approved drug in Agios portfolio. The Zacks Analyst is concerned since Agios is highly dependent on the drugs successful commercialization
AIG Benefits From Divestitures and Cost Control Measures
Per the Zacks Analyst, business streamlining by selling low-returning businesses and focusing on high-growth businesses enhances operational capacities. Cost control measures are aiding margins.
Iridium's (IRDM) Performance Gains from Higher Subscribers
Per the Zacks analyst, Iridium top line is gaining from higher subscribers. The company expects the voice and data business to gain from demand for newer services like Push-to-Talk and Iridium GO!.
InterDigital (IDCC) Rides on Patent Licensing, R&D Focus
Per the Zacks analyst, InterDigital is likely to benefit from extensive wireless technology patents and strong emphasis on research & development that helps it to stay at the forefront of innovation.
Inflation & Adverse Currency Ails Newell's (NWL) Performance
Per the Zacks analyst, Newell has been witnessing reduced consumer discretionary spending stemming from inflation and the impact of a stronger dollar. These headwinds are likely to persist in 2023.
Customer Inventory Reduction Actions Hurt's Marvell (MRVL)
Per the Zacks analyst, customers inventory reduction actions to manage excess chip inventories along with weakening consumer spending are likely to hurt Marvell's near-term growth prospects.
G-III Apparel (GIII) Hurt By Rising SG&A expenses
Per the Zacks analyst, G-III Apparel is grappling with elevated SG&A expenses for a while now. In the fourth quarter fiscal 2023 SG&A expenses increased 22.3% year over year to $216.8 million.
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