Tuesday, August 13, 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 Alphabet Inc. (GOOGL), AbbVie Inc. (ABBV) and QUALCOMM Incorporated (QCOM), as well as a micro-cap stock Flanigan's Enterprises, Inc. (BDL). 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 >>>

Alphabet shares have been hit hard in the recent market turmoil, with the stock lagging the Mag 7 group as well as the Zacks Tech sector and the S&P 500 index since mid-July 2024. The immediate catalyst for the sell-off was Alphabet's July 23rd Q2 earnings report when it beat on the top- and bottom-lines but failed to satisfy investors with its ever-rising capex spending levels.

The Zacks analyst sees the market's capex fixation as over-done and strongly argues that Alphabet's aggressive spending plans are essential to its status as leader in the coming AI world.

The company remains leader in the search space and AI investments are critical to it sustaining that lead.

Well-performing Google Cloud remains the key catalyst. Expanding data centers and growing generative AI capabilities remain major positives for cloud business. Also, integration of generative AI into the company’s search engine is expected to sustain its dominance in the search market. 

Strong efforts to gain foothold in the healthcare industry are other positives. Deepening focus on wearables category and autonomous driving space, is a plus. However, sluggishness in the company’s Network advertisement business is a concern. Growing litigation issues and increasing expenses are headwinds.

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

Shares of AbbVie have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+22.7% vs. +21.1%). The company has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq.  

Skyrizi and Rinvoq are performing extremely well, bolstered by approvals in new indications, which should support top-line growth in the next few years AbbVie has several early/mid-stage candidates that have potential to drive long-term growth.  Boosted by its new product launches, AbbVie expects to return to robust revenue growth in 2025. 

However, the company faces several near-term headwinds like Humira’s biosimilar erosion, increasing competitive pressure on Imbruvica and slow market growth trend for fillers in the United States and China.

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

QUALCOMM’s shares have outperformed the Zacks Wireless Equipment industry over the past year (+42.8% vs. +40.0%). The company reported strong third-quarter fiscal 2024 results, with the bottom and top lines beating the respective Zacks Consensus Estimate, driven by healthy demand trends in Android handsets and record automotive revenues. 

The Snapdragon X Series Platform integrated with Qualcomm AI Hub is witnessing significant market traction among leading global PC manufacturers. The company is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor firm for the intelligent edge and has offered a bullish guidance for the fourth quarter. 

However, inventory corrections by clients are impeding sales in the IoT business. Increasing competition in the mobile phone chipset market is likely to strain margin. Rising geopolitical instability and high debt obligation remain concerns.

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

Shares of Flanigan's have declined -0.3% over the year-to-date period against the Zacks Retail - Restaurants industry’s decline of -7.2%. This microcap company with market capitalization of $47.73 million maintains a strong revenue growth, effective cost management, positive cash flow and a solid financial position. New store openings and operational improvements, like NetSuite, bode well. 

Yet, Flanigan's net income fell 18.6% in first-quarter 2024 despite a 9.7% revenue uptick, highlighting rising costs and potential inefficiencies. Operating expenses rose 10.4%, driven by higher payroll, consultant fees, and food costs, eroding profit margins. High long-term debt poses a financial risk, especially if interest rates rise. 

Franchise-related revenues fell 8.5%, indicating possible operational issues. Declining gross profit margins for restaurant and package store sales signal higher costs without matching price increases. Competitive pressures, economic sensitivity and substantial lease obligations also challenge profitability.

(You can read the full research report on Flanigan’s here >>>)

Other noteworthy reports we are featuring today include BlackRock, Inc. (BLK), Enbridge Inc. (ENB) and Honda Motor Co., Ltd. (HMC).

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>>>