Tuesday, January 7, 2025

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), Meta Platforms, Inc. (META) and Johnson & Johnson (JNJ), as well as two micro-cap stocks Rave Restaurant Group, Inc. (RAVE) and EVI Industries, Inc. (EVI).  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 outperformed the Zacks Semiconductor - General industry over the past year (+195.9% vs. +135%). 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 partner 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.

The Zacks analyst expect NVIDIA’s revenues to witness a CAGR of 50.5% through fiscal 2025-2027. However, softening IT spending amid macroeconomic headwinds and the U.S.-China tech war remain major concerns.

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

Shares of Meta Platforms have outperformed the Zacks Internet - Software industry over the past year (+83.9% vs. +40.6%). 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 has been leveraging AI to improve the potency of its platform offerings. These services currently reach more than 3.2 billion people daily. Meta’s growing footprint among young adults, driven by improving recommendations, boosts its competitive prowess.

AI usage is making it a popular name among advertisers. This is expected to drive top-line growth. 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 Platforms here >>>)

Johnson & Johnson shares have declined -0.1% over the past six months against the Zacks Large Cap Pharmaceuticals industry’s decline of -15.3%. The company’s innovative Medicine unit is performing at above-market levels. Growth is being driven by existing products like Darzalex, Tremfya and Erleada and continued uptake of new launches, including Spravato, Carvykti and Tecvayli. J&J is making rapid progress with its pipeline and line extensions.

However, sales in the MedTech segment have been lower than expected due to Asia-Pacific headwinds, specifically in China. J&J faces the upcoming patent expiration of the blockbuster drug Stelara in January 2025, which will hurt the drug’s sales.

J&J is incurring huge legal expenses due to pending lawsuits related to its talc products. J&J’s shares have underperformed the industry in the past one year. Estimates have risen slightly ahead of Q4 results. J&J has a positive record of earnings surprises in recent quarters

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

Shares of Rave Restaurant’s have outperformed the Zacks Retail - Restaurants industry over the past year (+25.1% vs. +8.8%). This microcap company with market capitalization of $40.01 million has achieved 18 consecutive quarters of profitability, with net income rising 36.3% year over year in first-quarter fiscal 2025, reflecting strong financial stability and operational efficiency.

The company holds $8.4 million in liquid assets, supporting strategic initiatives and shareholder returns. A four-unit development agreement expands its 25-site domestic pipeline, aligning with industry growth trends. Menu innovations like the Sandworm Pizzert and digital transformation drive customer engagement, with online sales growing double digits.

However, challenges include declining same-store sales, rising costs, limited scale, and weakening cash reserves. Rave Restaurant’s franchise model supports scalable growth but is vulnerable to franchisee performance and competitive pressures.

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

EVI Industries’ shares have underperformed the Zacks Industrial Services industry over the past year (-12.4% vs. +10.0%). This microcap company with market capitalization of $244.93 million is witnessing declining gross margins, exposure to volatile chemical costs, integration risks, regulatory pressures and macroeconomic sensitivities pose challenges. Intense competition further pressures EVI’s market share.

Nevertheless, EVI Industries leverages a proven buy-and-build strategy, completing 28 acquisitions, including O'Dell Equipment, in 2024 to solidify its position in the fragmented commercial laundry industry. This approach enhances its service portfolio, market reach and growth potential. Strong cash flow supports acquisitions and shareholder returns, exemplified by a 10% dividend increase in 2024.

Positioned to benefit from rising laundry demand, EVI aligns with sustainability trends, emphasizing energy-efficient and eco-friendly solutions to attract customers and meet regulatory standards. Its comprehensive service model fosters customer loyalty across diverse sectors.

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

Other noteworthy reports we are featuring today include Apollo Global Management, Inc. (APO), EOG Resources, Inc. (EOG) and AutoZone, Inc. (AZO).

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>>>