Wednesday, May 31, 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 Fomento Económico Mexicano, S.A.B. de C.V. (FMX), NextEra Energy, Inc. (NEE) and Sanofi (SNY). 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 Fomento Económico Mexicano (aka FEMSA) have outperformed the Zacks Beverages - Soft drinks industry over the past year (+33.6% vs. +10.3%). The company is witnessing continued strength at OXXO Mexico, driven by solid traffic, led to a double-digit same-store sales increase. Also, OXXO Gas performed well owing to increased volume recovery and strong operating leverage.
The company’s digital initiatives and business expansion endeavors have also been aiding results. Its efforts to expand in the U.S. specialized distribution segment bodes well.
The company displays strong financial flexibility. However, FEMSA continued to witness gross margin declines due to inflationary pressures.
(You can read the full research report on Formento Economico Mexicano here >>>)
Shares of NextEra Energy have declined -2.4% over the past year against the Zacks Utility - Electric Power industry’s decline of -14.3%. The company’s nature of business is subject to complex regulations. Risks in operating nuclear units, unfavorable weather conditions and an increase in supply costs adversely impact earnings.
Nevertheless, NextEra Energy 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.
(You can read the full research report on NextEra Energy here >>>)
Sanofi’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the past six months (+13.0% vs. +0.5%). The company’s Specialty Care unit is on a strong footing, particularly with the regular label expansion of Dupixent, which has become the key top-line driver for Sanofi.
With outside U.S. revenues accelerating and multiple approvals for new indications, its sales are expected to be higher. Sanofi possesses a leading vaccine portfolio, which has become the primary top-line driver. Its R&D pipeline is strong. Several data readouts are expected in 2023.
The company has also launched several new drugs in the past couple of years and is expanding its pipeline through M&A deals. However, headwinds include the weak performance of diabetes drugs and recent negative pipeline developments.
(You can read the full research report on Sanofi here >>>)
Other noteworthy reports we are featuring today include NVIDIA Corp. (NVDA), Gilead Sciences, Inc. (GILD) and Enbridge Inc. (ENB).
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
Investments in Specialized Distribution to Aid FEMSA (FMX)
NextEra (NEE) Gains from Steady Investment, Renewable Focus
Sanofi (SNY) Relies on Dupixent and Vaccines to Drive Growth
Biktarvy, Oncology Fuel Gilead (GILD) Amid Competition
Per the Zacks analyst, strong performance from flagship HIV therapy Biktarvy and contribution from the oncology franchise boost Gilead as some other drugs face generic competition and slowdown.
Enbridge (ENB) Banks on C$17B of Key Midstream Projects
The Zacks analyst likes Enbridge since the firm expects to put more than C$17 billion in secured midstream projects into service in 2025 and beyond. However, a high debt load is a concern.
Paychex (PAYX) Gains From Segmental Growth, Rising Costs Ail
Per the Zacks analyst, growing service revenue driven by impressive performance from Management Solutions and PEO and Insurance Solutions aids Paychex. Rising expenses remain a concern.
Improving Top line, Solid Cash Flows Aid Allstate (ALL)
Per the Zacks analyst, Allstate benefits from a healthy revenue stream, courtesy of a broad product suite and pricing discipline. A strong cash-generating capacity position enables capital deployment.
Telefonica (TEF) To Benefit From Strong Product Portfolio
Per the Zacks analyst, Telefonica's performance benefitted from strong revenue growth across Telefonica Brasil and Tech business segment. However, stiff competition is a major concern
Grocery-Anchored Assets, Redevelopments to Aid Regency (REG)
Per the Zacks Analyst, healthy demand for Regency's grocery-anchored shopping centers and redevelopment efforts bode well. However, e-commerce adoption and higher interest rates are worrisome.
Franchise Business Aids Choice Hotels (CHH), Inflation Woes Ail
Per the Zacks analyst, Choice Hotels is benefiting from distinct growth strategy and franchising business. However, inflationary pressures remains concern.
NVIDIA (NVDA) Rides on Strong Adoption of GPUs, Partnerships
Per the Zacks analyst, rapid adoption of NVIDIA's GPUs in the datacenter and automotive markets is a key growth driver. Partnership with companies like Arrow, Baidu, Daimler and Bosch is a tailwind.
Solid Defense Budget, Air Travel to Benefit TransDigm (TDG)
Per the Zacks analyst, expansionary defense budgetary policy adopted by the U.S. administration should benefit TransDigm. Also recovering air travel should boost its commercial aftermarket revenues.
Strength in Energy Systems Segment Benefits EnerSys (ENS)
Per the Zacks analyst, EnerSys' Energy Systems segment is driven by robust broadband, data center and telecom businesses. The company's shareholder friendly measures are encouraging.
Nabors (NBR) Overloaded by Massive Debt Burden
The Zacks analyst believes that Nabors Industries' high debt-to-capitalization ratio of 81.4% is a concern as it curbs the company's financial freedom to tap into growth opportunities.
Inflation-Led Drab Demand to Ail Hibbett's (HIBB) Performance
Per the Zacks analyst, Hibbett has been reeling under by inflation, higher interest rates and weak demand, particularly for discretionary products. These factors are likely to hurt FY24 results.
Regulatory Requirements Continue to Ail Catalent (CTLT)
The Zacks analyst is worried about Catalent's operation in a highly regulated healthcare industry. Unfavorable currency movement is an added issue.
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