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Top Analyst Reports for Roche, Wells Fargo & GE Aerospace

Tuesday, June 4, 2024

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 Roche Holding AG (RHHBY), Wells Fargo & Company (WFC) and General Electric Company (GE), as well as a micro-cap stock Key Tronic Corporation (KTCC). 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 >>>

Shares of Roche have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-17.4% vs. +28.9%). The company’s performance has been negatively impacted by lower COVID-19-product-related sales. This, in turn, has significantly affected its top line, even though the diagnostics base business and newer drugs maintain growth.  

The outlook for 2024 is ordinary as well. Competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin also hurt sales, resulting in the stock’s underperformance in the past year.

Nevertheless, Vabysmo, Ocrevus, Hemlibra and Polivy boost growth. Vabysmo has put up a stellar performance against Eylea. The company’s efforts to develop new drugs to combat the decline in legacy drugs are encouraging. However, the approval of a higher dose of Eylea might pose challenges for Vabysmo.

(You can read the full research report on Roche here >>>)

Wells Fargo shares have outperformed the Zacks Banks - Major Regional industry over the past six months (+35.1% vs. +26.9%). The company progress on efficiency initiatives, such as branch footprint reduction, will continue to support expense reduction and drive the bottom-line growth.

However, the company’s loan growth is likely to remain limited, as the asset cap remains in place until it complies fully with regulators’ demands regarding operational risk management.

Likewise, lower originations because of high rates will limit mortgage banking income. But a decent deposit balance will keep supporting its financials, given the strength in the Consumer Banking and Lending segment. With robust capital position and ample liquidity, the company’s capital-distribution activities seem sustainable. The stock has decent upside potential in the near term given its strong fundamentals.

(You can read the full research report on Wells Fargo here >>>)

Shares of GE Aerospace
have outperformed the Zacks Transportation - Airline industry over the past six months (+69.7% vs. +37.5%). The company has been witnessing strength in its Aerospace business, driven by robust demand for commercial engines and services. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel auger well for the company.

It remains committed to making investments to boost growth and provide better services to its customers. Its portfolio reshaping actions are likely to unlock values for its shareholders.

GE Aerospace’s shareholder-friendly policies are encouraging. For 2024, it expects organic revenues to grow by at least low-double-digit range from the year-ago levels. However, it has been dealing with high costs and expenses related to projects and restructuring activities.

(You can read the full research report on GE Aerospace here >>>)

Key Tronic’s shares have gained +2.2% over the past six months against the Zacks Electronics - Miscellaneous Products industry’s gain of +25.2%. This microcap company with market capitalization of $45.09 million has secured new programs across various industries, expanding its customer base and revenue streams. Its global footprint, particularly in Vietnam, supports growth and mitigates risk.

The company's financial position is strong, with increased cash reserves and significant debt reduction. A positive revenue outlook for the fourth quarter of fiscal 2024 enhances its value proposition. Favorable market trends and strategic adjustments position Key Tronic to benefit from on-shoring and near-shoring trends.

However, KTCC faces declining revenues, reduced profitability and covenant breaches, leading to increased interest rates. Despite inventory reductions, high levels and increased DSO strain cash flow. Geographic and operational risks, including restructuring in Mexico, pose challenges to financial stability.

(You can read the full research report on Key Tronic here >>>)

Other noteworthy reports we are featuring today include Dell Technologies Inc. (DELL), Moody's Corporation (MCO) and EOG Resources, Inc. (EOG).

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>>>

Today's Must Read

New Drugs Boost Roche (RHHBY), COVID-19 Treatments Decline

Wells Fargo (WFC) Banks on Deposit Growth & Solid Liquidity

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Strength in Aerospace Business Drives GE Aerospace (GE)

Featured Reports

Diverse Revenue Mix Aids Moody's (MCO), Elevated Costs a Woe
Per the Zacks analyst, Moody's is poised for growth given its diverse revenue mix and low-risk product portfolio. Yet, inorganic growth efforts are likely to keep costs high, thus hurting bottom line.

EOG Resources' (EOG) Permian & Eagle Ford Presence Aids
EOG Resources owns high-quality untapped drilling sites in the Eagle Ford and Permian Basin, boosting its production outlook. However, declining free cash flows concerns the Zacks analyst.

Yum! Brands (YUM) Banks on Digital Efforts, Dismal Comps Ail
Per the Zacks analyst, Yum! Brands is benefitting from the rollout of digital and AI-powered platforms, unit expansion and menu innovation. However, soft comps and Middle East conflict are concerns.

DICK'S Sporting (DKS) Store-Related Efforts Seem Encouraging
Per the Zacks analyst, DICK'S Sporting has been gaining from its store-related initiatives. Continued brand strength and market share gains have also been boosting the company's performance.

Acquisitions & Diverse Customer Base Aid NRG Energy (NRG)
Per the Zacks analyst, NRG Energy's organic and inorganic acquisitions, is likely to boost its results. Its diverse customer base and ability to retain customers enhance its financial performance.

Solid Omnipod 5 Uptake Aids Insulet (PODD), Macro Woes Stay
The Zacks analyst is impressed that Insulet's Omnipod 5 AID system is driving robust new U.S. customer starts, with many switching from multiple daily injections. Yet, rising macro woes pose a risk.

Service Corporation (SCI) Gains on Cemetery Segment Revenues
Per the Zacks analyst, increased Cemetery segment revenues has been working well for Service Corporation. In the first quarter, consolidated Cemetery revenue growth was backed by higher core revenues.

New Upgrades

Solid Demand for AI Servers Aids Dell Technologies (DELL)
Per the Zacks analyst, Dell is benefiting from strong demand for AI servers driven by ongoing digital transformation and heightened interest in generative AI applications.

Sports Betting & Expansion Efforts Aids MGM Resorts (MGM)
Per the Zacks analyst, MGM Resorts benefits from international expansion and sports betting. Also, increased business volume and travel activity in Macao region bodes well.

Charles River Associates (CRAI) Gains From Diversification
Per the Zacks analyst, Charles River has a diversified business with service offerings across areas of functional expertise and geographical regions. This contributes significantly to the top line.

New Downgrades

Declining Volume & High Capex Requirement to Ail CarMax (KMX)
The Zacks analyst is worried about declining retail and wholesale volumes amid high vehicle financing costs. High capital spending also remains a concern.

Low Discretionary Spend Amid Macro Turmoil Ails Sonos (SONO)
Per the Zacks analyst, Sonos' performance affected by soft sales as product categories remain under pressure. Heightened promotional activity amid wider macroeconomic challenges remains concern.

Exposure to Cat Loss, High Expenses Ail W.R. Berkley (WRB)
Per the Zacks analyst, W.R. Berkley's exposure to cat loss induces underwriting volatility while increasing expenses due to higher losses and loss expenses and other operating costs drag margin.

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

Wells Fargo & Company (WFC) : Free Stock Analysis Report

GE Aerospace (GE) : Free Stock Analysis Report

Roche Holding AG (RHHBY) : Free Stock Analysis Report

Moody's Corporation (MCO) : Free Stock Analysis Report

Dell Technologies Inc. (DELL) : Free Stock Analysis Report

EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Key Tronic Corporation (KTCC) : Free Stock Analysis Report

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