Tuesday, June 25, 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 Chevron Corporation (CVX), Amgen Inc. (AMGN) and Philip Morris International Inc. (PM), as well as two micro-cap stocks Hurco Companies, Inc. (HURC) and Perma-Pipe International Holdings, Inc. (PPIH). 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 Chevron have gained +3.5% over the past year against the Zacks Oil and Gas - Integrated - International industry’s gain of +8.0%. The company is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin. Further, the recent acquisition of Hess Corporation is expected to significantly strengthen Chevron's presence in oil-rich Guyana.

However, the company is grappling with high sensitivity to oil price fluctuations and relatively expensive valuation. Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.

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

Amgen shares have outperformed the Zacks Medical - Biomedical and Genetics industry over the year-to-date period (+10.5% vs. -4.0%). The company beat first-quarter estimates for earnings and sales. Amgen expects strong sales growth of products like Tezspire, Evenity, Repatha, Prolia and Tavneos to offset declining revenues from oncology biosimilars and legacy established products such as Enbrel in 2024.

The addition of Horizon’s rare disease drugs should further boost revenue growth. Amgen also has some key pipeline assets in obesity and inflammation, which have a large market opportunity. Several key pipeline data readouts are expected in 2024, including from the obesity program, MariTide.

However, increased pricing headwinds and competitive pressure are hurting sales of many 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 Philip Morris have gained +8.3% over the year-to-date period against the Zacks Tobacco industry’s gain of +8.7%. The company is witnessing robust momentum in smoke-free products IQOS and ZYN, along with combustible pricing. Higher pricing variance and solid cost initiatives aided the bottom line amid strong currency headwinds in the first quarter of 2024.

The consistent success of IQOS and the noteworthy economics of ZYN have further solidified the company’s position, keeping it well-positioned to become a majority smoke-free company by 2030. These upsides encouraged management to raise its guidance for 2024, wherein net revenues will increase 7-8.5% on an organic basis.

However, growth-oriented investments may impact profits. Additionally, management expects the increased cost of leaf, wages and certain other inputs to linger into 2024 before easing thereafter.

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

Hurco’s shares have underperformed the Zacks Manufacturing - Tools & Related Products industry over the year-to-date period (-28.8% vs. -11.3%). This microcap company with market capitalization of $100 million faces challenges with decreased demand in key markets, impacting sales and profitability. Sales dropped 20% in Europe and 24% in the Americas, signaling weakening demand.

The company contends with supply-chain issues, rising costs, and increased operating expenses, which erode margins. Global economic pressures and strategic operational changes add to the risks. However, the Computer Numeric Control (CNC) market, where Hurco operates, is expected to witness a modest growth, offering growth opportunities, especially in the Asia Pacific region.

Hurco’s strategic focus on high-growth areas, advanced technologies, and automation positions it to benefit from market trends. Financial stability and strategic management support its potential to overcome short-term challenges and exploit long-term industry growth.

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

Shares of Perma-Pipe have outperformed the Zacks Steel - Pipe and Tube industry over the year-to-date period (+12.5% vs. -3.8%). This microcap company with market capitalization of $71.60 million has seen first-quarter 2024 net sales rose 15.7% year over year to $34.3 million, with gross profit increasing from $6.8 million to $10.5 million, reflecting improved market demand and cost management. Gross profit margin improved from 23% to 31%.

Specializing in pre-insulated piping systems for sectors like district heating, oil and gas, and chemical transport, Perma-Pipe is well-positioned to benefit from growth in petrochemical facilities, water management, and urban infrastructure. The backlog grew to $63.1 million as of Apr 30, 2024, ensuring revenue visibility. As of Apr 30, 2024, cash and cash equivalents increased to $7.7 million, improving liquidity and supporting operations.

However, high reliance on large contracts, debt levels, fluctuating steel prices, compliance costs, and intense competition pose significant risks.

(You can read the full research report on Perma-Pipe >>>)

Other noteworthy reports we are featuring today include GSK plc (GSK), Ecolab Inc. (ECL) and Itaú Unibanco Holding S.A. (ITUB).

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>>>