Wednesday, February 22, 2023

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 Amazon.com, Inc. (AMZN), Morgan Stanley (MS) and Fortinet, Inc. (FTNT). 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 Amazon.com have underperformed the Zacks Internet - Commerce industry over the past year (-34.7% vs. -27.9%). The company is facing inflationary pressure, supply-chain constraints, geopolitical tensions and foreign currency headwinds, all which remain concerns. Further, softness in online shopping activities remains a negative for its online stores.

Nevertheless, Amazon’s fourth quarter results were driven by Prime and AWS momentum. Strengthening AWS services portfolio and its growing adoption rate contributed well. Ultrafast delivery services and its expanding content portfolio were beneficial. Strengthening relationships with third-party sellers remained a positive for the company. A robust advertising business contributed well.

Improving Alexa skills, along with robust smart home products offerings, were tailwinds. Amazon’s strong global presence and solid momentum among the small and medium businesses look good for the company, as well. Considering the abovementioned facts, the Zacks analyst expect 2022 revenue to be up 5% from 2021.

(You can read the full research report on Amazon.com here >>>)

Morgan Stanley’s shares have outperformed the Zacks Financial - Investment Bank industry over the past year (+4.3% vs. +2.9%). The company is undertaking steps, including strategic buyouts, to become less dependent on capital-market-driven revenue sources. These efforts, along with a focus on corporate lending and higher rates, are expected to aid revenues. Our estimates for total revenues indicate a CAGR of 3.1% by 2025.

However, Morgan Stanley’s fourth-quarter 2022 results reflected weak investment banking (IB) performance. Ambiguity of the performance of the capital markets remains a concern and is expected to affect the Institutional Securities segment. The Zacks analyst expects the segment’s revenues to decline 2% in 2023.

Also, muted investment banking performance is a major headwind. Elevated costs due to investments in franchises and inflation are likely hamper profits, and our estimates show a CAGR of 2% by 2025.

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

Shares of Fortinet have outperformed the Zacks Security industry over the past year (+4.9% vs. +2.9%). The company is benefiting from rising demand for security and networking products amid a growing hybrid working trend. It is also benefiting from robust growth in Fortinet Security Fabric, cloud and Software-defined Wide Area Network (SD-WAN) offerings. Continued deal wins, especially those of high value, are a key driver.

Higher IT spending on cybersecurity is further expected to aid Fortinet to grow faster than the security market. The focus on enhancing its unified threat management (UTM) portfolio through product development and acquisitions is a tailwind for Fortinet. The Zacks analyst estimates suggest Fortinet’s revenues will grow at a CAGR of 22% through 2023-2025.

However, intensifying competition due to increasing consolidation in the security industry poses concerns. Increased hiring and mergers & acquisitions spends remain overhangs on margin.

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

Other noteworthy reports we are featuring today include W.W. Grainger, Inc. (GWW), M&T Bank Corp. (MTB) and Align Technology, Inc. (ALGN).

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>>>