Wednesday, December 28, 2022

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 Meta Platforms, Inc. (META), Altria Group, Inc. (MO) and Applied Materials, Inc. (AMAT). 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 >>>

Shares of Meta Platforms have been big-time laggards in 2022, with the stock down -65.4% in the year-to-date period vs. the -40.4% decline in Alphabet shares and the broader market's -21% pullback. Driving Meta's underperformance is the company's aggressive spending plans for metaverse that many in the market see as the wrong strategy. On top of that is the cyclical downturn in the digital advertizing space as a result of macroeconomic factors.

Unfavorable forex, targeting and measurement headwinds due to Apple’s iOS changes, normalization of e-commerce after the pandemic peak and higher inflation are some of the other headwinds.

User base in Europe declined in the last reported quarter, with the fourth-quarter guidance reflecting macroeconomic and forex concerns. Weak advertising demand is a headwind. Meta expects Reels to monetize much slower than feed or stories. Shares have underperformed the industry in the past year.

However, Meta is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its products like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.

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

Shares of Altria Group have underperformed the Zacks Tobacco industry over the past year (-1.9% vs. +4.0%), but have held up really well relative to the broader market. The company's revenues in the last reported quarter were hurt by the wine unit’s divestiture and soft shipment volumes in the Smokeable Products unit due to retail share losses and the industry’s rate of decline.

However, Altria Group has been gaining from its strong pricing power, which aided the bottom-line growth in the third quarter of 2022. Also, management remains optimistic about its journey toward a smoke-free future.

To this end, the company’s investment in on! is yielding well. The reported shipment volumes of on! surged roughly 70% in the third quarter. For 2022, management expects adjusted earnings in the band of $4.81-$4.89 per share, which indicates growth of 4.5-6%.

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

Shares of Applied Materials have underperformed the Zacks Semiconductor Equipment - Wafer Fabrication industry over the past year (-41.2% vs. -35.8%). The company is facing sluggishness in its Display and Adjacent Market segment remains a concern. Softness in the segment is expected to continue in the days ahead. Per our estimate, the segment is likely to witness a year-over-year fall of 47.6% in fiscal 2022. Further, mounting expenses and rising competition pose a risk to the company’s market position.

Nevertheless, Applied Materials is benefiting from strong momentum across Semiconductor Systems and Applied Global Services. Further, solid demand for silicon in several applications across various markets remains a tailwind.

Increased customer spending in foundry and logic on the back of rising need for specialty nodes in automotive, power, 5G rollout, IoT, communications and image sensor markets, is a major positive. Strong momentum in conductor etches is benefiting the company’s position in DRAM and NAND.

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

Other noteworthy reports we are featuring today include BCE Inc. (BCE), McCormick & Company, Incorporated (MKC) and Hewlett Packard Enterprise Company (HPE).

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>>>