Wednesday, November 29, 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 McDonald's Corporation (MCD), Amgen Inc. (AMGN) and NextEra Energy, Inc. (NEE). 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 >>>
McDonald's shares have performed roughly in-line with the Zacks Retail - Restaurants industry this year (+6.4% vs. +6.2%). The company’s top and the bottom line increased on a year-over-year basis in the last quarterly report on October 30th. Robust comparable sales, menu price increase and positive guest counts backed the upside.
Also, its emphasis on digital initiatives, campaigns and loyalty programs bodes well. During the quarter, digital sales came in at $9 billion, contributing 40% to the company’s system-wide sales. Given the rise in digital adoption, the company remains optimistic and anticipates the initiatives to drive sales and average checks in the upcoming periods.
Earnings estimates for 2023 have increased in the past 30 days, depicting analysts’ optimism. However, inflationary pressures and stiff competition are primary headwinds.
(You can read the full research report on McDonald’s here >>>)
Shares of Amgen have outperformed the Zacks Medical - Biomedical and Genetics industry over the year-to-date basis (+4.6% vs. -22.9%). The company expects strong sales growth of products like Tezspire, Evenity, Repatha, Prolia and Tavneos to be offset by lower revenues from oncology biosimilars and legacy established products such as Enbrel in the future quarters.
The recently completed acquisition of Horizon Therapeutics is expected to enhance Amgen’s growth prospects. Amgen also has some key pipeline assets in obesity and inflammation, which are indications that can have a large market opportunity. Several data readouts are expected in the next 12 months.
However, increased pricing headwinds and competitive pressure are hurting sales of many of Amgen’s products, including some biosimilars. Weakness in some key brands like Otezla and Lumakras create potential revenue headwinds.
(You can read the full research report on Amgen here >>>)
Shares of NextEra Energy have underperformed the Zacks Utility - Electric Power industry over the year-to-date basis (-28.5% vs. -9.5%). Due to the company’s nature of its business, it is subject to complex regulations. Risks in operating nuclear units, unfavorable weather conditions and increasing supply costs adversely impact earnings.
Nevertheless, NextEra Energy continues to expand its operations through organic projects and acquisitions. The company has many renewable projects in its backlog and continues to enhance its renewable energy generation capacity. NextEra’s subsidiary FPL’s customer base is expanding as Florida’s economy improves.
The company has ample liquidity to meet its near-term debt obligations. It is expanding its operations in the water space through acquisitions. NextEra Energy decided to sell its gas assets in Florida to focus on its core business.
(You can read the full research report on NextEra Energy here >>>)
Other noteworthy reports we are featuring today include The Cigna Group (CI), General Mills, Inc. (GIS) and Take-Two Interactive Software, Inc. (TTWO).
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
Solid Comps Growth Aid McDonald's (MCD) Amid High Costs
Amgen (AMGN) Key Drugs to Drive Sales Amid Biosimilar Woes
NextEra (NEE) Gains from Steady Investment, Renewable Focus
Cigna (CI) Benefits from Growing Revenues, Strong Cash Flows
Per the Zacks analyst, Cigna gains from a healthy revenue stream, driven by buyouts and enhanced products suite. Further, its cash-generating abilities enable investment in the business.
General Mills (GIS) Gains From Focus on Accelerate Strategy
Per the Zacks analyst, General Mills is gaining from its Accelerate strategy, as part of which it is competing efficiently via brand building, investing in saving initiatives and reshaping portfolio.
Portfolio Strength, Digital Revenues Steers Take-Two (TTWO)
Per the Zacks analyst, Take-Two's digital revenues is driven by solid demand for NBA, Red Dead Redemption and Grand Theft Auto portfolio of games.
Solid Portfolio, Capital-Recycling to Aid Host Hotels (HST)
Per the Zacks analyst, Host Hotels' (HST) portfolio of upscale hotels across lucrative markets and capital-recycling moves bode well. Yet, a slower recovery in group and business travel demand ails.
Zillow Group (ZG) Set to Ride on Holistic Growth Strategy
Per the Zacks analyst, Zillow Group is poised to benefit from high visitor rate, frequent product launches and growing Agent business. A holistic growth strategy with key acquisitions is a tailwind.
Patterson-UTI (PTEN) to Gain from NexTier Merger
The Zacks analyst believes that Patterson-UTI Energy's merger with NexTier Oilfield Solutions will be accretive to its earnings but is worried over the recent dip in North American rig count.
Solid Mine Performances Aid B2Gold (BTG) Amid Cost Woes
Per the Zacks analyst, B2Gold's results will benefit from pickup in mine performances. However, elevated costs are likely to put a dent on the margins.
Strong Clientele & Bookings Aids GoDaddy's (GDDY) Prospects
Per the Zacks analyst, GoDaddy benefits from strong bookings primarily driven by strong customer additions and price increases in various domains.
W.R. Berkley (WRB) Set to Grow on Solid Insurance Business
Per the Zacks analyst, W.R. Berkley's Insurance business is set to grow on rate increases, reserving discipline, and improving premiums from international unit supported by the emerging markets.
Solid E-commerce Momentum to Bolster Hibbett's (HIBB) Sales
Per the Zacks analyst, Hibbett has been making progress on e-commerce and selective store expansion. Improved inventory, website traffic and digital customer experience has been yielding results.
Landstar System (LSTR) Reels Under Freight-Driven Woes
The Zacks analyst is worried about below-par volumes due to the weak freight demand scenario. High operating expenses due to escalated fuel costs represent another headwind.
High Expenses & Elevated Leverage to Ail American Axle (AXL)
The Zacks analyst is worried about American Axle's expected high research & development expenses to develop technologically advanced products. A high debt-to-capital ratio of 0.82 is also a concern.
Lower Margins and Stiff Competition Ail Walgreens (WBA)
The Zacks analyst is worried about increased reimbursement pressure and generic drug cost inflation that have been hampering Walgreens' margin on a significant level. Stiff rivalry remains a concern.
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