Wednesday, September 4, 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 SAP SE (SAP), Cisco Systems, Inc. (CSCO) and Intuit Inc. (INTU), as well as two micro-cap stocks: Team, Inc. (TISI) and Miller Industries, Inc. (MLR). 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 >>>

SAP’s shares have outperformed the Zacks Computer - Software industry over the year-to-date period (+40.3% vs. +8.5%). The company’s performance is cushioned by robust momentum in its cloud business, especially demand for the "Rise with SAP" and "Grow with SAP" solutions. Strength in its business technology platform and the proliferation of generative AI bodes well. 

Amid the dynamic software landscape, its "Business AI" offerings are seeing steady traction. Going ahead, it plans to spend heavily on Business AI capabilities to fuel innovation. Management reiterated its guidance for 2024 cloud revenues along with 2025 long-term targets, including cloud and total revenues. 

SAP projects cloud revenues in the range of €17-€17.3 billion for 2024 and revenues of more than €21.5 billion for 2025. Weakness in the Software License and Support business segment and rising costs, mainly due to the ongoing restructuring program, are likely to weigh on SAP’s performance.

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

Shares of Cisco have narrowly outperformed the Zacks Computer - Networking industry over the year-to-date period (+1.2% vs. +1.1%). The company’s business model has evolved with subscription revenues accounting for more than half of its total revenues. The Splunk acquisition enhances its recurring revenue base. 

This buyout significantly expands Cisco’s portfolio of software-based solutions, contributing more than $4 billion in ARR, and makes it one of the largest software companies in the world. The launch of AI-powered Hypershield, which combines security and networking, strengthened Cisco’s security portfolio. 

However, it has been suffering from sluggish networking sales, primarily due to lackluster demand from telecommunication and cable services providers, as well as stiff competition. Cisco’s prospects are further challenged in the AI-driven networking space due to stiffening competition, aggravated by Hewlett Packard’s deal to acquire Juniper.

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

Intuit’s shares have gained +0.3% over the past year against the Zacks Computer - Software industry’s gain of +8.4%. The company’s fourth quarter of fiscal 2024 results reflected steady revenues from the Online Ecosystem and Desktop business segments. 

Strong momentum in Online Services revenues driven by strong performances of Mailchimp, QuickBooks Online Payroll and QuickBooks Online payments solutions and QuickBooks Online Accounting revenues were significant growth boosters. The Credit Karma business is benefiting from strength in Credit Karma Money, credit cards, auto insurance and personal loans. 

INTU’s strategy of shifting its business to a cloud-based subscription model will help generate stable revenues over the long run. However, higher costs and expenses due to increased investments in marketing and engineering teams are likely to negatively impact bottom-line results in the near term.

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

Shares of Team have outperformed the Zacks Building Products - Maintenance Service industry over the year-to-date period (+112.9% vs. +18.5%). This microcap company with market capitalization of $60.62 million have witnessed improved its gross margin by 120 bps year over year to 24.4% in first-quarter 2024 through strategic cost management. 

Team is expanding into high-growth markets like aerospace and renewable energy, targeting mid to high-single-digit revenue growth. The 2024 adjusted EBITDA guidance indicates a 48% mid-point improvement from that reported in 2023. Team offers specialized services across diversified industries, enhancing its competitive edge and mitigating sector-specific risks. 

However, high debt levels of $307.2 million and decreasing cash reserves pose financial risks. Revenue declined 1.3% year over year in the first quarter of 2024 due to reduced activity in the IHT segment. Additionally, the company is sensitive to oil and gas market conditions, and intense competition could erode market share.

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

Miller’s shares have outperformed the Zacks Automotive - Original Equipment industry over the year-to-date period (+37.2% vs. -24.8%). This microcap company with market capitalization of $668.10 million has shown strong financial performance with 23.8% YoY revenue growth in the first half of 2024, reaching $721.3 million, driven by increased production and demand. 

As the world’s largest manufacturer of towing and recovery equipment, Miller's market leadership and diversified product portfolio enable it to capitalize ona rising global demand, especially as motorization and commercial vehicle use expand. 

The $25 million share repurchase program reflects a commitment to enhancing shareholder value, while ongoing innovation, such as the Century 12 Series LCG carrier, strengthens its competitive edge. Expansion into international markets offer additional growth avenues. 

However, risks include supply chain disruptions, steel price volatility, declining cash, rising debt, and geopolitical and regulatory challenges that could impact growth and profitability.

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

Other noteworthy reports we are featuring today include Zoetis Inc. (ZTS), Realty Income Corp. (O) and American Electric Power Co., Inc. (AEP).
 

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>>>