Wednesday, August 21, 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 Microsoft Corp. (MSFT), Novo Nordisk A/S (NVO) and Uber Technologies, Inc. (UBER), as well as two micro-cap stocks Spok Holdings, Inc. (SPOK) and Willis Lease Finance Corp. (WLFC). 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 >>>

Microsoft’s shares have outperformed the Zacks Computer - Software industry over the year-to-date period (+13.6% vs. +12.1%). The company’s fiscal fourth-quarter results gained from strong Intelligent Cloud and Productivity and Business Processes revenues. Productivity and Business Processes revenues rose due to a strong adoption of Office 365 Commercial solutions.

Microsoft 365 Consumer subscribers grew to 82.5 million. Continued momentum in the small and medium businesses, frontline worker offerings and a gain in revenue per user drove the top line. Intelligent Cloud revenues were driven by growth in Azure and a rise in AI Copilot business.

However, continued decline in Office commercial licensing has been a headwind due to the continued customer shift to cloud offerings. Higher operating expenses and spending on Azure enhancements amid stiff competition in the cloud space remain a concern.

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

Shares of Novo Nordisk have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+48.0% vs. +29.2%). The company’s second-quarter results missed earnings and revenue estimates despite witnessing strong GLP-1 product sales. Its diabetes drugs Ozempic and Rybelsus and obesity drug Wegovy are performing well, fueled by increasing demand.

Label expansions of the same in cardiovascular and other indications will likely boost sales. NVO has been tackling the supply constraints of Wegovy by making serious investments in increasing its manufacturing capabilities. The drug is now indicated in the United States to also reduce heart risks, which is a huge boost.

However, the CRL for insulin icodec in the United States is a setback for the company. Intense rivalry in the obesity sector also threatens Novo Nordisk’s market share. Patent expiry, pricing pressure across the diabetes market and the pipeline setbacks remain a woe.

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

Uber’s shares have outperformed the Zacks Internet - Services industry over the year-to-date period (+19.0% vs. +17.3%). The company’s delivery business benefits from robust online order volumes. The company’s efforts to expand its delivery operations through successive acquisitions are encouraging. Continued recovery in Mobility operations is also aiding the company.

For third-quarter 2024, Uber expects gross bookings of $40.25 billion-$41.75 billion. Apart from the recovery in Mobility operations and the strong performance of the Delivery unit, Uber's focus on financial discipline is encouraging as well. For third-quarter 2024, adjusted EBITDA is estimated between $1.58 billion and $1.68 billion.

On the flip side, Uber continues to witness high costs and expenses owing to a rise in sales and marketing expenses and cost of revenues. Increased spending on driver incentives is also pushing up costs. High debt levels are bothersome as well.

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

Shares of Spok have gained +21.7% over the past year against the Zacks Wireless National industry’s gain of +40.3%. This microcap company with market capitalization of $298.89 million operates debt-free, providing financial stability and flexibility, bolstered by $23.9 million in cash as of Jun 30, 2024. It benefits from stable, recurring revenue, with 80% of its income derived from wireless and software services used by more than 2,200 hospitals.

Recent software bookings show growth, with second-quarter 2024 bookings up 10.3% from the first quarter. Cost reduction initiatives and a focus on product innovation, like the GenA pager, bolster margins and competitiveness. The company's robust customer relationships highlight its potential.

Challenges include declining wireless revenue, competitive pressures, reliance on the U.S. healthcare sector, prolonged software sales cycles, technological obsolescence and vulnerability to cyberattacks. Also, economic uncertainties and regulatory changes pose risks.

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

Willis Lease Finance’s shares have outperformed the Zacks Transportation - Equipment and Leasing industry over the past year (+152.4% vs. +34.5%). This microcap company with market capitalization of $711.08 million made recent $363.9 million acquisition of up to 15 PW1100G-JM GTF engines, known for lower fuel consumption and compatibility with Sustainable Aviation Fuel, enhances its asset portfolio and positions it to meet the rising demand for greener aviation solutions.

Willis Lease Finance’s strong revenues are evident, with a 36% YoY increase in total revenues for the first half of 2024, driven by high fleet utilization and effective cost management. WLFC's focus on narrow-body aircraft engines positions it well within the growing commercial aircraft leasing market. Financial flexibility is supported by diversified capital sources, allowing WLFC to fund growth.

The initiation of a $1.00 per share dividend in May 2024 signals confidence in its financial health. However, risks include a high $1.95 billion debt load, exposure to lease rate fluctuations and regulatory changes, which could impact financial performance.

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

Other noteworthy reports we are featuring today include Deere & Co. (DE), GSK plc (GSK) and Colgate-Palmolive Co. (CL).

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>>>