Tuesday, April 23, 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 Meta Platforms, Inc. (META), Elevance Health, Inc. (ELV) and Canadian Natural Resources Limited (CNQ). 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 >>>

Meta Platforms shares have outperformed the Zacks Internet - Software industry over the year-to-date period (+36.2% vs. +11.6%). The company is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its offerings like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.

Meta Platforms’ is leveraging AI to recommend Reels content, which is driving traffic on Instagram and Facebook. Its innovative portfolio, which includes Threads, Reels, Llama 2, Ray-Ban Meta smart glass, and mixed reality device Quest 3 is likely to aid prospects. Reels continued to do very well across both Instagram and Facebook driven by growing adoption. People reshared Reels 3.5 billion times every day during the fourth-quarter.

However, challenging macroeconomic conditions remain a headwind for Meta’s advertising revenues. Slow monetization of Reels, along with mounting operating losses at Reality Labs, are concerns.

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

Shares of Elevance Health have outperformed the Zacks Medical Services industry over the past year (+16.4% vs. +2.4%). The company’s revenue growth, fueled by premium rate increases and rising memberships, contributes to its positive trajectory. Strategic acquisitions and partnerships have fortified its business portfolio.

Notably, a robust Medicare Advantage segment, combined with successful contract acquisitions, is poised to drive future memberships. It increased the 2024 earnings guidance to $37.20 per share, compared with previous year’s $33.14 figure. The Carelon business is a key contributor to its success. It utilizes excess capital to boost shareholder value.

However, its rising expenses continue to put pressure on margins. Its high balance sheet debt is reducing financial flexibility. Also, its declining free cash flow is a concern. As such, the stock warrants a cautious stance.

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

Shares of Canadian Natural Resources have outperformed the Zacks Oil and Gas - Exploration and Production - Canadian industry over the past year (+31.5% vs. +17.2%). The company’s balanced and diverse production mix facilitates long-term value and reduces the risk profile. Canadian Natural’s acquisition of Athabasca Oil Sands project in 2017 has added significant value to its asset base and buoyed the production prospects.

Notably, lower capital needs and improving operational efficiencies have enabled the company to generate significant free cash flow. What’s more, the company remains committed to investor friendly moves by the way of dividend payout and stock buybacks.

However, Canadian Natural is set to face debt maturities each year out till 2027. Further, the C$3.25-billion term loan to fund the Devon Energy asset buy has worsened the company’s debt-to-capital ratio and led to higher interest outgo. The interplay of these factors accounts for the cautious stance.

(You can read the full research report on Canadian Natura Resources here >>>)

Other noteworthy reports we are featuring today include The Coca-Cola Company (KO), The Progressive Corporation (PGR) and Hess Corporation (HES).

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>>>