Wednesday, August 14, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 12 major stocks, including Meta Platforms, Inc. (META), Sanofi (SNY) and CME Group Inc. (CME), as well a micro-cap stock The Cato Corporation (CATO). 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 >>>

Meta Platforms shares have outperformed the Zacks Internet - Software industry over the year-to-date period (+49.6% vs. +12.3%). 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 has been leveraging AI to improve the potency of its platform offerings. These services currently reach more than 3.2 billion people daily. User growth remained solid in the United States, with WhatsApp reaching more than 100 million monthly users and Thread approaching 200 million milestone. It witnessed good year-over-year growth across Facebook, Instagram and Threads. 

Meta now expects to invest significantly more over the next few years in developing more advanced models and the largest AI services in the world. However, monetization of these AI services will take considerable time, which is a concern.

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

Shares of Sanofi have gained +11.0% over the year-to-date period against the Zacks Large Cap Pharmaceuticals industry’s gain of +24.8%. The company is witnessing generic erosion of Aubagio in all key markets and lower sales from mature products are hurting sales. Other headwinds include the weak performance of diabetes drugs and regular negative pipeline developments.

Nevertheless, Dupixent has become the key top-line driver for Sanofi as it enjoys strong demand across all approved indications and geographies. Sanofi possesses a leading vaccine portfolio, which has become a key top-line driver. 

Sanofi has also launched several new drugs in the past couple of years. Sanofi has also accelerated its mid- and late-stage pipeline this year. It has also been active on the M&A front.

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

CME Group shares have gained +5.9% over the past year against the Zacks Securities and Exchanges industry’s gain of +18.6%. The company’s escalating expenses due to higher technology costs are likely to put pressure on its margins. Also, its diversified product portfolio is significantly exposed to volatile interest rates, stricter government regulations and limited credit availability in unstable capital and credit markets.

However, CME Group’s strong market position, driven by varied derivative product lines, bodes well. Efforts to expand and cross-sell through strategic alliances, acquisitions, new product initiatives and a stable global presence are encouraging. 

While higher electronic trading volume adds scalability, product innovation and a growing proportion of volume from customers outside the United States have been driving results. Solid liquidity supports wealth distribution to shareholders.

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

Shares of Cato have underperformed the Zacks Retail - Apparel and Shoes industry over the year-to-date period (-29.0% vs. +6.2%). This microcap company with market capitalization of $98.05 million is facing concerns which include declining same-store sales, store closures, inflationary pressures, supply chain disruptions, and low e-commerce sales, which can dampen growth and profitability.

Nevertheless, Cato's first-quarter 2024 highlights robust earnings, effective cost management, and a strong financial foundation. Net income surged 148% to $11 million, driven by operational efficiency and cost control, showcasing resilience. Cost of goods sold and SG&A expenses decreased, boosting margins. 

With $477.2 million in total assets and $39.1 million in cash, Cato's financial stability supports growth. Consistent dividends ($0.17 per share) and share repurchases (431,415 shares) underscore shareholder value commitment. Strategic e-commerce expansion and women's apparel focus align with market trends, positioning Cato for sustained revenue growth.

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

Other noteworthy reports we are featuring today include Xcel Energy Inc. (XEL), Williams-Sonoma, Inc. (WSM) and DICK'S Sporting Goods, Inc. (DKS).

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>>>