Monday, April 10, 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 Alphabet Inc. (GOOGL), Alibaba Group Holding Limited (BABA) and Costco Wholesale Corporation (COST). 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 Alphabet have gained +22.8% this year vs. +19.8% for the Zacks Tech sector and +7.5% for the S&P 500 index, reflecting the favorable outlook for the company’s strong cloud division. Expanding data center network and rising number of infrastructure regions will continue to bolster its presence in the cloud space. For first-quarter 2023, we expect Google Cloud revenue to grow 9.7% year over year.

Also, strong focus on innovation of AI techniques, and growing interest in home automation space should aid business growth in the long term. Further, its deepening focus on wearables category remains a tailwind. Also, Alphabet’s expanding presence in the autonomous driving space is contributing well. Its growing efforts to gain foothold in the healthcare industry are other positives.

However, sluggishness in the company’s advertisement business remains a major headwind. Additionally, its growing litigation issues and increasing expenses are concerns.

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

Alibaba shares have outperformed the Zacks Internet - Commerce industry over the past year (+1.2% vs. -24.6%) on the back of the company's leverage to the Chinese economy whose outlook has risen following the country's post-Covid reopening. The company is witnessing solid momentum across the international commerce retail businesses is driving its top-line growth. The Zacks analyst expect the business to be up 9.1% in fiscal 2023 on a year-over-year basis. Additionally, solid momentum across financial services, education and automobile industries is driving the company’s cloud business.

According to our estimates, cloud revenues are expected to witness a 3.3% rise in fiscal 2023 from fiscal 2022. This apart, strength across the local consumer services and Cainiao logistics services, Alibaba Health and Freshippo is contributing well.

However, uncertainties associated with coronavirus pandemic remain major concerns, especially for Alibaba’s domestic businesses. Also, rising expenses associated with new initiatives are overhangs. Additionally, softness in digital media business is a headwind.

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

Shares of Costco Wholesale have gained +3.3% over the past six months against the Zacks Retail - Discount Stores industry’s gain of +8.0%. The company being a consumer defensive stock, has been surviving the market turmoil pretty well. 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 impressive sales and earnings numbers.

The Zacks analyst expect the company to register a 6.5% adjusted earnings per share improvement in fiscal 2023 on 6.5% revenue growth. This outlook accounts for the businesses’ ability to navigate the ongoing inflationary environment and supply chain bottlenecks on several fronts.

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 >>>)

Other noteworthy reports we are featuring today include BlackRock, Inc. (BLK), The Estée Lauder Companies Inc. (EL) and Canadian National Railway Company (CNI).

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>>>