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Top Research Reports for JPMorgan, Thermo Fisher & Arista Networks

Monday, September 9, 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 JPMorgan Chase & Co. (JPM), Thermo Fisher Scientific Inc. (TMO) and Arista Networks, Inc. (ANET), as well as two micro-cap stocks United Homes Group, Inc. (UHG) and GSI Technology, Inc. (GSIT).  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 >>>

JPMorgan Chase’s shares have outperformed the Zacks Banks - Major Regional industry over the past year (+50.7% vs. +44.3%). High interest rates, strategic acquisitions, opening branches and solid loan balance will support the net interest income (NII) of the company, however higher funding costs will weigh on it.

According to the Zacks analyst estimates for NII (managed) and loans imply a CAGR of 2% and 5.2%, respectively, by 2026. While there has been a resurgence in deal-making activities, a complete revival will still take some time.

The performance of the IB business is not expected to improve much. The volatile nature of the capital markets business and high mortgage rates will likely hurt fee income growth. Owing to these challenges, we expect non-interest income (managed) to rise in 2024 but decline next year. Mounting operating expenses will hamper the bottom line. We anticipate total non-interest expenses to rise 5.5% in 2024.

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

Shares of Thermo Fisher Scientific have outperformed the Zacks Medical - Instruments industry over the past year (+19.0% vs. +12.9%). The company is braving the ongoing tough economic conditions by utilizing the PPI Business System, resulting in strong financial performance. The company's growth strategy is further bolstered by several new product launches, including Stellar Mass Spectrometer and three new build-for-purpose editions of Orbitrap Ascend Tribrid Mass Spectrometer in the second quarter.

The consistent efforts to expand bioproduction purification resin capacity, which is used in the mRNA manufacturing process, look encouraging. The company’s continuous efforts to prioritize its partnership with customers to drive innovation and improve patient care bode well.

A strong solvency position is an added advantage. The raised 2024 EPS outlook also instills optimism. However, the year-over-year decline in revenues in Life Science Solution is discouraging.

(You can read the full research report on Thermo Fisher Scientific here >>>)

Arista Networks’ shares have outperformed the Zacks Communication - Components industry over the past year (+62.7% vs. +50.5%). The company is likely to benefit from a software-driven, data-centric approach that helps customers build their cloud architecture. Innovative product launches and steady customer additions backed by the company’s best-in-class portfolio strength have ensured steady top-line expansion.

Arista provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance along with programmability that enables seamless integration with third-party applications for network management, automation and orchestration.

However, high concentration risk is a headwind. A rise in headcount, new product introduction costs and higher variable compensation expenditures are straining margins.

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

Shares of United Homes have underperformed the Zacks Real Estate - Development industry over the past year (-16.1% vs. +4.0%). This microcap company with market capitalization of $273.35 million is witnessing margin pressures from rate buy-downs and rising lot costs remain concerns, with second-quarter 2024 gross margins down to 17.9%.

Declining revenues (down 10.4% year over year in second-quarter 2024) and home closings signal challenges, along with economic headwinds. United Homes faces risks from interest rate sensitivity, rising land costs, acquisition integration and regional market concentration.

However, United Homes' capital-efficient lot acquisition strategy, controlling 9,300 lots through options and land banking, enables growth with reduced risk and lower upfront costs while targeting high-growth Southeastern markets. The backlog of 248 homes, valued at $81.2 million, supports revenue visibility despite a decline in net orders. Its focus on affordability through product repositioning and sales incentives has helped offset high mortgage rates.

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

GSI Technology’s shares have underperformed the Computer- Storage Devices industry over the past year (-2.9% vs. +32.5%). This microcap company with market capitalization of $568.38 million is facing challenges arising from a significant drop in core SigmaQuad sales and dependency on major customers like Nokia, introducing revenue volatility. Competitive pressures in the rapidly evolving HPC market necessitate continuous innovation.

Nevertheless, GSI Technology's introduction of Gemini-I APU servers showcases leading compute-in-memory capabilities, positioning the company at the high-performance computing forefront, particularly in AI-driven tasks like facial recognition. Expansion into government contracts through SBIR (Small Business Innovation Research) initiatives diversifies revenue and enhances defense sector credibility.

Fiscal 2025 started strong with a net income of $1.1 million, supported by effective financial strategies and a solid cash position. The company's next development, Gemini-II, aims to enhance data processing efficiency, promising significant market penetration.

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

Other noteworthy reports we are featuring today include KLA Corp. (KLAC), Howmet Aerospace Inc. (HWM) and Targa Resources Corp. (TRGP).

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

Buyouts, Rates & Loans Aid JPMorgan (JPM), Fee Income Ails

Strategic Progress, End Market Gains Aid Thermo Fisher (TMO)

Arista (ANET) Rides on Portfolio Strength, Customer Addition

Featured Reports

KLA (KLAC) Rides on Strong Wafer Inspection Business
Per the Zacks analyst, KLA is benefiting from the higher volume of wafer manufacturing, more complex designs, larger die and chip size driven by strong AI adoption.

Targa (TRGP) to Benefit from Booming Permian Presence
The analyst believes that Targa Resources is set to gain significantly from the growth in America's hottest shale region - the Permian Basin - but is concerned over the high debt levels.

FactSet (FDS) Gains From Idacti Buyout, Competition High
Per the Zacks analyst, the Idacti acquisition supports FactSet's ongoing initiative to digitally revamp its content collection infrastructure. Rising competition from other players is an overhang.

Guidewire (GWRE) Benefits from Momentum in Cloud Platform
Per the Zacks analyst, momentum's Guidewire Cloud platform is likely to drive topline expansion. Weakness in the Services business segment along with rising costs and forex volatility are concerns.

Viking's (VKTX) Progress With Obesity Drug Encouraging
The Zacks Analyst is encouraged by Viking's progress with its obesity drug, which has shown blockbuster potential. The drug has demonstrated superior weight reduction across multiple clinical studies.

Strong Group Protection Aids Lincoln National (LNC) Amid Cost Woes
Per the Zacks analyst, a resurging group protection business, courtesy of better underwriting, should aid Lincoln National's results. However, higher costs might hamper margins.

Improved Occupancies Aid Marriott Vacations (VAC) Prospects
Per the Zacks analyst, Marriott Vacations is likely to benefit from an improvement in occupancy rate, strong rental performance and sales promotions. Also focus on cost-management efforts bode well.

New Upgrades

Strength in Commercial Aerospace Market Aids Howmet (HWM)
Per the Zacks analyst, Howmet's commercial aerospace market is driven by robust orders for engine spares for the F-35 program. The company's shareholder friendly measures are encouraging.

Pilgrim's Pride (PPC) Gains From Strong Foodservice Demand
Per the Zacks analyst, Pilgrim's Pride is benefiting from growth in foodservice business. It saw higher volume and revenues in commercial and non-commercial foodservice distribution subchannels in Q2.

Positive Study Outcomes, Focus on R&D Aid Masimo (MASI)
The Zacks analyst is upbeat about Masimo's solid efforts to improve its research and development (R&D) stature. Favorable study outcomes for its products are an added plus.

New Downgrades

Fuel Costs, 787-Issue May Impact Spirit AeroSystems (SPR)
Per the Zacks analyst, Spirit AeroSystems' commercial business may be impacted by rising jet fuel prices. Also, supply chain issues plaguing the B787 program may hurt the company.

Rising Capital Spending and G&A Expenses to Ail Copart (CPRT)
Per the Zacks analyst, Copart's expansion efforts, which are necessary and advantageous for the long term, may adversely impact its near-term cash flows. Rising G&A expenditure is also concerning.

High Costs, Concentration Risk Hurt Webster Financial (WBS)
Per Zacks analyst, higher employee compensation and service contract expenses keep Webster Financial's costs high. Also, substantial exposure to commercial loans is a concern.

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

JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report

Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report

KLA Corporation (KLAC) : Free Stock Analysis Report

Arista Networks, Inc. (ANET) : Free Stock Analysis Report

Targa Resources, Inc. (TRGP) : Free Stock Analysis Report

GSI Technology, Inc. (GSIT) : Free Stock Analysis Report

Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report

United Homes Group, Inc. (UHG): Free Stock Analysis Report

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Zacks Investment Research