Friday, October 27, 2023

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 Costco Wholesale Corp. (COST), Pfizer Inc. (PFE) and IBM Corp. (IBM). 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 >>>

Costco’s shares have outperformed the Zacks Retail - Discount Stores industry over the year-to-date period (+20.6% vs. -0.6%). The company being a consumer defensive stock has survived market turmoil pretty well. The discount retailer’s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth.

These factors have been helping it register decent sales and earnings numbers. This outlook reflects Costco’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates.

A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming. While trading at a premium to its peers, its long-term growth prospects should help the stock see a solid upside.

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

Shares of Pfizer have underperformed the Zacks Large Cap Pharmaceuticals industry over the past year (-31.6% vs. +15.8%). The company’s top line is declining in 2023 due to steep declines in revenues from its COVID-19 products, Comirnaty vaccine and Paxlovid oral pill, on lower demand.

Nonetheless, Pfizer boasts a diversified portfolio of innovative drugs and vaccines, including Ibrance and Prevnar. Pfizer is witnessing solid pipeline progress and is launching some key non-COVID products in 2023, which can drive long-term sales and profit growth.

Huge profits from its COVID products strengthened its cash position, which is being used to make acquisitions, increase dividends, buy back shares and reduce debt. Estimates are stable ahead of Q3 earnings. Pfizer has a positive record of earnings surprises in the recent quarters.

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

IBM’s shares have outperformed the Zacks Computer - Integrated Systems industry over the year-to-date period (+5.9% vs. +0.9%). The company is poised to benefit from strong demand for hybrid cloud and AI, which should drive growth in Software and Consulting. Strong free cash flow generation indicates financial stability and the capability to pursue new growth opportunities.

IBM’s active initiative to develop next-generation AI-powered technology will likely drive the top line. IBM's enterprise-focused AI and data platform Watsonx is gaining immense traction. Its unified platform allows AI developers to train, fine-tune and deploy AI solutions as per customer-specific requirements.

However, intense competition in various end markets is putting pressure on profits. Low demand for zSystems, distributed Infrastructure and support services is impeding the top line. The strategy of cutting costs to boost profitability beyond a certain threshold may impact product quality.

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

Other noteworthy reports we are featuring today include NextEra Energy, Inc. (NEE), Zoetis Inc. (ZTS) and HCA Healthcare, Inc. (HCA).

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>>>