Monday, August 14, 2023
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Meta Platforms, Inc. (META), Costco Wholesale Corporation (COST) and BlackRock, Inc. (BLK). 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 >>>
Meta Platforms shares have outperformed the Zacks Internet - Software industry over the past year (+65.6% vs. +2.8%). This reflects the market's appreciation for management's effective expense-control measures earlier this year and the more signs of stabilization in the digital ad market.
Meta continues to benefit from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its offerings like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.
Meta Platform is leveraging AI to recommend Reels content, which is driving traffic on Instagram and Facebook. The Zacks analyst expects revenues to grow at a CAGR of 12.2% between 2022 and 2025. Advertising revenues are expected to witness a CAGR of 12.5% per our model estimate.
However, challenging macroeconomic conditions remain a headwind for Meta’s advertising revenues, along with targeting and measurement headwinds due to Apple’s iOS changes. Slow monetization of Reels, along with mounting operating losses at Reality Labs, are concerns.
(You can read the full research report on Meta Platforms here >>>)
Shares of Costco Wholesale have outperformed the Zacks Retail - Discount Stores industry over the past year (+4.4% vs. +0.6%) on the back of the company's consumer defensive attributes.
The discount retailer’s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping it register decent sales and earnings numbers. This outlook reflects Costco’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates.
A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming. While trading at a premium to its peers, its long-term growth prospects should help the stock see a solid upside.
(You can read the full research report on Costco Wholesale here >>>)
BlackRock shares have modestly underperformed the Zacks Financial - Investment Management industry over the past six months (-3.1% vs. -1.7%). Increasing expenses (mainly owing to higher administration costs) are expected to hurt profits to an extent. The Zacks analyst expects total non-interest expenses to increase 2.4% this year. The company’s high dependence on overseas revenues makes us apprehensive.
However, BlackRock continues to restructure the equity business, which, along with strategic acquisitions, will likely keep supporting revenue growth, and help expand market share and footprints globally.
A solid AUM balance is expected to further support the top line. We project total revenues to witness a CAGR of 8% over the next three years ended 2025. BLK's capital deployment activities reflect a solid liquidity position.
(You can read the full research report on BlackRock here >>>)
Other noteworthy reports we are featuring today include AT&T Inc. (T), Marathon Petroleum Corporation (MPC) and Enterprise Products Partners L.P. (EPD).
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
User Growth, Instagram Strength Aids Meta Platforms (META)
Decent Comparable Sales Run to Fuel Costco's (COST) Top Line
Buyouts, Robust AUM Growth Aid BlackRock (BLK), Costs Ail
Featured Reports
AT&T (T) Rides on Healthy Wireless Traction, Customer Focus
Per the Zacks analyst, AT&T is likely to benefit from solid growth in its postpaid wireless business, driven by a customer-centric business model, lower churn rate and higher-tier unlimited plans.
Marathon (MPC) Gains from Sale of Speedway Retail Unit
The Zacks analyst believes that the sale of Marathon's Speedway and supply contract will bring in extra money and ensure consistent revenue, but MPC's higher RFS costs are a cause for concern.
Enterprise's (EPD) Long-term Contracts With Shippers Aid
Enterprise is well positioned to generate steady cashflows from long-term pipeline contracts with shippers. Yet, its significant debt exposure concerns the Zacks analyst.
Customer Growth, Investment Aid Pinnacle West Capital (PNW)
Per the Zacks analyst Pinnacle West is gaining from customer additions, which is creating demand. Investment in infrastructure and energy generation is aiding it to serve customers efficiently.
Pro-Investor Steps Boost Triton (TRTN), High Ratio Ails
The Zacks Analyst is impressed by Triton's commitment to reward shareholders through dividend payments. However, a high total debt-total equity ratio is worrisome.
New Upgrades
NVR Benefits From Improving Housing Demand, Strong Liquidity
Per the Zacks analyst, the shortage of existing homes for sale in the housing market has been driving demand for new homes despite rate-hike challenges. A solid liquidity position is added tailwind.
Improved Enrollment Trends Aid Strategic Education (STRA)
Per the Zacks analyst, Strategic Education is benefitting improved enrollment trends in the U.S. Higher Education segment. Also, focus on competency-based learning model bode well.
New Downgrades
Asset Concentration, Lack of Hedging to Hurt Magnolia (MGY)
The Zacks analyst is worried about Magnolia Oil & Gas' lack of geographic dispersal of properties. The absence of any hedge protection also makes it more exposed to commodity price volatility.
Eni (E) to Suffer From Lower Refinery Throughput Volumes
Per the Zacks analyst, Eni's declining refinery throughput volumes despite a strong rebound in demand for refined products is hurting its overall business. Rising exploration costs is also concerning.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand-picked 7 your immediate attention.
AT&T Inc. (T) : Free Stock Analysis Report
BlackRock, Inc. (BLK) : Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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