Friday, August 30, 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 NVIDIA Corporation (NVDA), AT&T Inc. (T) and Lockheed Martin Corporation (LMT), as well as two micro-cap stocks Steel Partners Holdings L.P. (SPLP) and Natural Resource Partners L.P. (NRP). 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 >>>

NVIDIA shares have lost some ground following the beat-and-raise quarterly release on Wednesday, August 28th, with market participants seemingly shrugging the company's raised guidance. But this lack of stock market follow through for the shares could very well be a reflection of the stock's impressive gains over the past year rather than a comment on underlying busines trends.

The company is benefiting from the strong growth of artificial intelligence (AI), high-performance and accelerated computing. The data center end-market business is benefiting from the growing demand for generative AI and large language models using graphic processing units (GPUs) based on NVIDIA Hopper and Ampere architectures. 

A surge in hyperscale demand and higher sell-ins to partners across the Gaming and ProViz end markets following the normalization of channel inventory are acting as tailwinds. Collaborations with Mercedes-Benz and Audi are likely to advance its presence in the autonomous vehicles and other automotive electronics space. 

However, its near-term prospects are likely to be hurt by softening IT spending amid macroeconomic headwinds. The United States and China’s tit-for-tat trade war is also a major concern.

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

Shares of AT&T have outperformed the Zacks Wireless National industry over the year-to-date period (+23.4% vs. +21.7%). The company is expected to benefit from an integrated fiber expansion strategy that improves broadband connectivity, while steady 5G deployments are likely to boost end-user experience. The deployment of O-RAN architecture is likely to offer more flexibility, lower costs and monetize the network to reduce huge debt burden. 

With a customer-centric business model, AT&T is witnessing healthy momentum in its postpaid wireless business with a lower churn rate and increased adoption of higher-tier unlimited plans. However, lower demand for legacy voice and data services is affecting revenues in the Business Wireline vertical. 

Declining Mobility equipment sales are a concern. Fierce competition in a saturated wireless market will likely strain margins. A muted guidance for 2024 is worrisome while high debt burden remains a perennial problem.

(You can read the full research report on AT&T here >>>)

Lockheed Martin shares have outperformed the Zacks Aerospace - Defense industry over the past year (+29.1% vs. +1.9%). The company’s broad product offerings allow it to secure major defense contracts, which in turn boosts its backlog count. Lockheed remains the largest U.S. defense contractor with a steady order flow from its leveraged presence in the Army, Air Force, Navy and IT programs. 

The solid U.S. defense budgetary provisions should boost its business. Its products also witness a strong international demand from the countries like Germany, Taiwan, Japan and Australia. Meanwhile, the company also holds a strong solvency position. 

However, Lockheed is facing performance issues concerning some of its products that may affect its results. Shortage of skilled labor may adversely impact the company’s operating results. The sanctions imposed by China on Lockheed might also affect its business.

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

Shares of Steel Partners’ have declined -2.5% over the year-to-date period against the Zacks Diversified Operations industry’s decline of -7%. This microcap company with market capitalization of $795.34 million reported strong financial results in second-quarter 2024, with revenues growing 6.4% year over year to $533.2 million and a 113.2% surge in net income to $124.9 million.

Revenues for the six months ended Jun 30, 2024 also increased by 6.7% to $1 billion. This growth reflects the company's effective diversification across its industrial and financial services segments. SPLP's operational efficiency is highlighted by a 15.7% adjusted EBITDA margin, up from 14.7% in second-quarter 2023. 

Steel Partners’ balance sheet is robust, with $256.4 million in cash and a $112-million debt reduction in the first half of 2024, enhancing financial stability. Investments in the Supply Chain segment, which saw 192% in revenues for the six months ended Jun 30, 2024, position SPLP for long-term growth, particularly as global supply chains evolve.

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

Natural Resource Partners’ shares have declined -0.4% over the year-to-date period against the Zacks Coal industry’s decline of -2.4%. This microcap company with market capitalization of $1.13 billion faces significant risks from its heavy reliance on coal royalties, with metallurgical coal accounting for 75% of second-quarter 2024 coal royalty revenues. 

Weakened steel demand, particularly in China and Europe, is pressuring coal prices, potentially reducing NRP's cash flow. The secular decline in U.S. thermal coal demand, driven by environmental regulations and competition from natural gas, further threatens long-term revenues. 

Additionally, a surge in Chinese soda ash production is depressing global prices, impacting NRP's profitability. Inflationary pressures, labor shortages, and high financing costs also pose challenges, while stringent environmental regulations and reliance on lessees increase operational risks. Overall, NRP's exposure to volatile coal markets and regulatory risks positions it in a challenging environment.

(You can read the full research report on Natural Resource Partners here >>>)

Other noteworthy reports we are featuring today include The Boeing Company (BA), The Sherwin-Williams Company (SHW) and MetLife, Inc. (MET).


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>>>