Monday, September 9, 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 JPMorgan Chase & Co. (JPM), Thermo Fisher Scientific Inc. (TMO) and Arista Networks, Inc. (ANET), as well as two micro-cap stocks United Homes Group, Inc. (UHG) and GSI Technology, Inc. (GSIT).  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 >>>

JPMorgan Chase’s shares have outperformed the Zacks Banks - Major Regional industry over the past year (+50.7% vs. +44.3%). High interest rates, strategic acquisitions, opening branches and solid loan balance will support the net interest income (NII) of the company, however higher funding costs will weigh on it.

According to the Zacks analyst estimates for NII (managed) and loans imply a CAGR of 2% and 5.2%, respectively, by 2026. While there has been a resurgence in deal-making activities, a complete revival will still take some time.

The performance of the IB business is not expected to improve much. The volatile nature of the capital markets business and high mortgage rates will likely hurt fee income growth. Owing to these challenges, we expect non-interest income (managed) to rise in 2024 but decline next year. Mounting operating expenses will hamper the bottom line. We anticipate total non-interest expenses to rise 5.5% in 2024.

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

Shares of Thermo Fisher Scientific have outperformed the Zacks Medical - Instruments industry over the past year (+19.0% vs. +12.9%). The company is braving the ongoing tough economic conditions by utilizing the PPI Business System, resulting in strong financial performance. The company's growth strategy is further bolstered by several new product launches, including Stellar Mass Spectrometer and three new build-for-purpose editions of Orbitrap Ascend Tribrid Mass Spectrometer in the second quarter.

The consistent efforts to expand bioproduction purification resin capacity, which is used in the mRNA manufacturing process, look encouraging. The company’s continuous efforts to prioritize its partnership with customers to drive innovation and improve patient care bode well.

A strong solvency position is an added advantage. The raised 2024 EPS outlook also instills optimism. However, the year-over-year decline in revenues in Life Science Solution is discouraging.

(You can read the full research report on Thermo Fisher Scientific here >>>)

Arista Networks’ shares have outperformed the Zacks Communication - Components industry over the past year (+62.7% vs. +50.5%). The company is likely to benefit from a software-driven, data-centric approach that helps customers build their cloud architecture. Innovative product launches and steady customer additions backed by the company’s best-in-class portfolio strength have ensured steady top-line expansion.

Arista provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance along with programmability that enables seamless integration with third-party applications for network management, automation and orchestration.

However, high concentration risk is a headwind. A rise in headcount, new product introduction costs and higher variable compensation expenditures are straining margins.

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

Shares of United Homes have underperformed the Zacks Real Estate - Development industry over the past year (-16.1% vs. +4.0%). This microcap company with market capitalization of $273.35 million is witnessing margin pressures from rate buy-downs and rising lot costs remain concerns, with second-quarter 2024 gross margins down to 17.9%.

Declining revenues (down 10.4% year over year in second-quarter 2024) and home closings signal challenges, along with economic headwinds. United Homes faces risks from interest rate sensitivity, rising land costs, acquisition integration and regional market concentration.

However, United Homes' capital-efficient lot acquisition strategy, controlling 9,300 lots through options and land banking, enables growth with reduced risk and lower upfront costs while targeting high-growth Southeastern markets. The backlog of 248 homes, valued at $81.2 million, supports revenue visibility despite a decline in net orders. Its focus on affordability through product repositioning and sales incentives has helped offset high mortgage rates.

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

GSI Technology’s shares have underperformed the Computer- Storage Devices industry over the past year (-2.9% vs. +32.5%). This microcap company with market capitalization of $568.38 million is facing challenges arising from a significant drop in core SigmaQuad sales and dependency on major customers like Nokia, introducing revenue volatility. Competitive pressures in the rapidly evolving HPC market necessitate continuous innovation.

Nevertheless, GSI Technology's introduction of Gemini-I APU servers showcases leading compute-in-memory capabilities, positioning the company at the high-performance computing forefront, particularly in AI-driven tasks like facial recognition. Expansion into government contracts through SBIR (Small Business Innovation Research) initiatives diversifies revenue and enhances defense sector credibility.

Fiscal 2025 started strong with a net income of $1.1 million, supported by effective financial strategies and a solid cash position. The company's next development, Gemini-II, aims to enhance data processing efficiency, promising significant market penetration.

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

Other noteworthy reports we are featuring today include KLA Corp. (KLAC), Howmet Aerospace Inc. (HWM) and Targa Resources Corp. (TRGP).

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>>>