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NVIDIA and The Gap have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – January 10, 2022 – Zacks Equity Research shares NVIDIA (NVDA - Free Report) as the Bull of the Day, and The Gap Inc (GPS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Boeing Company (BA - Free Report) , Airbus SE (EADSY - Free Report) , and Embraer SA (ERJ - Free Report) .
NVIDIA, the largest and fast-growing semiconductor innovator in the US, has been a stock market star in recent years, skyrocketing over 700% since 2019 (despite its recent decline) as this GPU pioneer and its visionary leader, Jensen Huang, take the tech sector by storm.
NVDA has experienced this infectious sell-down that so many other richly valued innovators have experienced, sliding into bear market territory (20% or more decline from recent highs) in mid-December and has yet to recover. However, this is a stock that is being bought up on every single dip (despite its incredibly rich 65x P/E), with its ostensibly boundless upside outlook providing endless support.
NVIDIA is the most exciting chipmaker on the public exchanges today, producing chips with unmatchable speed and capabilities that place it at the forefront of next-generation technologies like AI development, data analytics, and even the ambiguous 'metaverse.'
NVIDIA's recent growth is nothing short of incredible as the enterprise sets the bar for prolific innovation in the chip space, and no other business has been even close to keeping up. NVIDIA's intelligence driving chips have solidified their sole GPU market control as we enter a digital renaissance.
The pandemic drove the global economy to digitalize by 10 years in just 10 months, pulling forward unprecedented demand for NVIDIA's hyper-fast GPUs. Society is now conditioned for swift and continuous adaptation to advancing tech, supporting NVIDIA's boundless profitable growth with endless innovation at the core.
Analysts are relentlessly bullish on NVDA as the company consistently blows out estimates each quarter. Sell-side analysts have been pushing up their EPS projections over every time horizon, propelling NVDA into a Zacks Rank #1 (Strong Buy).
NVDA exposure is a must for every portfolio's next-generation allocation as the 4th Industrial Revolution kicks off.
Fundamental & Technical Breakdown
This GPU powerhouse has been able to justify its exceptionally rich 60x P/E multiple with consistently outsized profitable growth that has driven between 40-70% year-over-year revenue appreciation in the past 8 consecutive quarters (flowing down to high-double to triple-digit annual earnings expansions), along with record top and bottom-line results in 6 back-to-back earnings reports.
NVIDIA has proven its ability to generate boundless secular growth that has blown pasts analysts' increasingly aggressive top and bottom-line estimates for years. EPS estimates have been raised across the board after an incredible October quarter, and I still view projection as conservative. NVIDIA's most significant profit drivers in gaming and data centers are still just in their nascent phases of development as we enter this digital renaissance.
I expect demand for NVIDIA's GPU technology to only accelerate over the next decade as this company paves the way for innovation across sectors.
NVDA is a stock that you can't afford to leave out of your portfolio, and after its recent 20% pullback to a critical support level, it'd be prudent to seize on this excellent entry point below $300 a share. $270 has been NVDA's primary support level for the past month, having bounced off it on 4 separate occasions (2 of which were in the past 2 trading days).
If NVDA breaks below $270 a share, I will be watching for its next Fibonacci-extension level lower at $260 to provide some support, then its 200-day moving average, which currently sits at $215 but is trending higher.
The Business
NVIDIA has become the most cutting-edge chipmaker on earth. The company invented the graphics processing unit (GPU), initially purposed for rendering images, but now possesses capabilities beyond graphics cards. NVIDIA's hyper-fast GPUs are becoming a necessity in data centers across the globe, most notably in the development of deep learning and artificial intelligence (as I mentioned above).
Data centers will be a primary end-market for this market disruptor in this world headed towards cloud computing, and Nvidia's hyper-fast GPUs are becoming a necessity. CEO and founder of Nvidia, Jensen Huang, said in a recent press release that "NVIDIA AI is enabling breakthroughs in language understanding, conversational AI and recommendation engines -- the core algorithms that power the internet today. And new NVIDIA computing applications in 5G, genomics, robotics, and autonomous vehicles enable us to continue important work that has great impact."
NVIDIA completely controls the datacenter GPU market with no close competitors (despite AMD's attempts). This company is crucial to the discovery of true AI, which will be an inflection point in human understanding. NVDA chips can already be found in 8 of the top 10 supercomputers and 2/3rd of the top 500.
Nvidia is also leveraging 5G with its anticipated cloud gaming platform. Just as cloud computing is the future of business data and analytics, cloud gaming is the future of gaming. NVIDIA is making a big bet in this field with its cloud platform, GeForce NOW. This platform allows gamers to use their Macs or PCs for gaming anywhere with NVIDIA's GPUs' high-speed, low-latency technology without needing NVIDIA's hardware locally.
Nvidia's Recent Acquisition Announcement
Nvidia announced it would be acquiring Arm Limited from Softbank (SFTBY) in an all-stock deal for $40 billion back in September of 2020 with a closing timeline of 18 months. If this deal goes through, it will be the largest chip deal in history, but first, it must get past the 3 major regulatory authorities, including China, which could pose a challenge amid the reheating US-China trade war.
Regulatory bodies are delaying this deal, which catalyzed the recently added concessions NVIDIA offered to appease EU regulators in the hopes of securing the necessary antitrust approval, which pushed this deal's value up to $54 billion. The merger is still expected to close in March of this year, though it's beginning to look like an aggressive deadline considering pushback from regulators in the UK and China.
Nvidia's announced acquisition would significantly expand the enterprise's chip market control. Nvidia now primarily focuses on GPUs and is leveraging the technology's hyperfast computing power to develop "true AI." The purchase of Arm will give Nvidia a firm grasp on the CPU market and provide the combined company with a whole leg in the smartphone market door.
This AI-juiced semiconductor powerhouse and its visionary CEO, Jensen Huang, have proven that Nvidia is a force to be reckoned with. Softbank's leader, Masayoshi Son, and his close ties with Huang catalyzed this ostensible "value deal" for Arm.
This deal includes a significant amount of NVDA stock, which I believe is a big part of the reason that Son is so excited about the sale. He believes in Nvidia with Jensen Huang at the helm and wants to see his transform this business into and wants to be a part of the action.
If this deal does end up getting rejected, it would not be the end of the world for NVDA, as its current portfolio outlay is still poised for prolific growth. It would also mean that no other company could acquire Arm Holdings moving forward. Either way, NVDA wins.
Final Thoughts
NVIDIA is a stock that every investor should have some exposure to. Despite its recent pullback, the NVDA remains at a very frothy market valuation ($680 billion market cap), after more than doubling in the past year, leaving the stock more vulnerable to short-term volatility as monetary tightening initiates.
Still, NVDA is currently trading nearly 15% below its average 12-month price target and roughly 50% below its most optimistic target. 23 out of 26 analysts call it a buy today (with no sell ratings), and I couldn't agree more.
The hustle and bustle of Main Street had once been the fuel for prosperous brick-and-mortar retailers, but the pandemic and the economic lockdowns that came with it turned every major city into a ghost town, leaving the already antiquing storefronts to either digitalize (aka ecommerce) or die.
The retail apocalypse, which began as a slow transition to the web with leading this digital transformation, was accelerated by years amid the lockdowns, allowing investors to easily distinguish between "the good, the bad, and the ugly" of this economic shift.
The Gap Inc, the parent company of Old Navy, Banana Republic, Athleta, & its namesake brand, have been an unsurprising victim of this digital shift away from Main Street. The company has been frantically restructuring its business model since the pandemic began, as it makes every effort to adapt to the new normal.
Gap had previously made plans to spin off its best-positioned subsidiaries: Athleta & Old Navy, in early 2019. However, it needed every bit of scale it had to keep its operations afloat once the pandemic began. Its latest strategy (Power Plan 2023) consists of closing hundreds of its less productive Gap and Banana Republic storefronts and has closed nearly 20% of its global stores since the pandemic began, while at the same time, investing and expanding its global footprint in Athleta & Old Navy. The company plans on openings 20-30 and 30-40 new stores, respectively.
The question is whether this diverse mix of legacy and growth brands can continue successfully executing this high-margin growth strategy?
Unsustainable Growth?
GPS came into 2021 with an unexpected digitally-powered tailwind, and Old Navy and Athleta were at the core of its margin expanding success. These two brands have become The Gap's pillars of high-margin growth, accounting for 65% of this business's total sales in its first 3 reported 2021 quarters.
Altheta's appealing women's athleisure and competitive 'budget offering' relative to its biggest competitor Lululemon, make it uniquely positioned for the new normal. Old Navy's modestly priced clothing was an attractive offering for working moms during the pandemic lockdowns, with no reason to spend more than needed on clothes (for both them and their kids) that no one but the fam will see.
However, this bullish sentiment about the company has begun to dissipate. The latest results from these two growth drivers show significant decelerations, pushing analysts back on their heels as estimates and price targets get reeled in.
GPS has fallen to a Zacks Rank #5 (Strong Sell), and this falling knife looks like it still may have more room to fall, even after its 25% post-earnings capitulation at the end of November.
Final Thoughts
The Gap is trading at half of the value that it peaked at last May and looks like it could continue lower. The company's "Power Plan" strategy puts the business on track to spend $800 million per year through 2023 to "support growth investments including digital, loyalty, and supply chain capacity projects."
If this strategy doesn't achieve the earnings growth it's targeting, this plan could end up being an unwanted weight on Gap's ability to turn positive cash flows. The firm hasn't been able to break $800 million in earnings since 2018.
GPS managed to rally almost 400% from its low in May of 2020 to its high 52-weeks later. Optimism about the future of Athleta and Old Navy were the primary drivers, and their sudden deceleration in the most recent earnings is cause for significant concern.
Additional content:
Boeing (BA - Free Report) Clinches Deal for Four 777 Freighter Aircraft
The Boeing Company recently clinched an order from Atlas Air Worldwide, a global leader in airfreight, for delivering four of its 777 freighter aircraft amid the rising demand for freighters globally. Already operational with 14 777 freighter aircraft, Atlas Air now grows its 777 freighter family with this new order. The new order expands Atlas Air’s 777 fleet with additional capacity, fuel efficiency and operational flexibility for its customers.
Boeing also marked record-setting growth for its freighters’ family in 2021 and exhibited its capability to capitalize on the growing e-commerce market. Until November 2021, the company outshined itself in the freighter aircraft arena by exceeding the previous freighter record comprising 80 orders for new production freighters and more than 80 orders for converted models.
Importance of 777 Freighter Aircraft
The 777 Freighter Aircraft is the world's largest, longest-range and most capable twin-engine freighter exhibiting the lowest trip cost as well as highest reliability of any large freighter. With a range of 4,970 nmi (Nautical Mile) (9,200km), the 777 Freighter can carry a maximum revenue payload of 102 tons (224,900 lb).
It also boasts environmentally friendly features as it entails less fuel use and CO2 emissions compared with earlier aircraft. Its capability and exceptional efficiency result in substantial savings for cargo operators, with fewer stops and associated landing fees.
Such features of the aircraft, buoyed by the rising cargo demand, have attracted several customers, thus resulting in multiple order wins for Boeing.
Growth Prospects
The emerging trend in the e-commerce market has been bolstering the air-cargo market, thus boosting the prospects of companies like Boeing that manufactures freighters. Per International Air Transport Association, global air cargo demand recorded a surge of 9.1% in September, highlighting the persistence of robust demand.
Considering solid growth trends in the air cargo market, BA stands to benefit as it is a leading global aerospace company. The current deal with Atlas Air is a testament to this fact.
Boeing anticipates the global freighter fleet to grow 70% in the next 20 years. This highlights Boeing’s strong prospects in the freighter aircraft space over the long haul.
Peer Prospects
The robust growth trend in the air cargo market will not only benefit Boeing but also aircraft manufacturers, namely Airbus SE.
Airbus SE’s freighter and cargo jets comprise A330-200F, A321P2F, A330P2F BelugaST and BelugaXL. The company’s newest freighter is the A350F, which brings the latest-generation innovation from the A350 and reduces fuel burn and CO2 emissions. The A330-200F is a new-generation cargo aircraft that meets the needs of the freight business in the mid-size and long-haul segment.
The Zacks Consensus Estimate for Airbus’ 2021 earnings indicates an improvement of 584% from the year-ago figure. Shares of Airbus have returned 20.7% in the past year.
Price Performance
Shares of Boeing have declined 0.6% in the past year compared with the industry’s fall of 29.2%.
Embraer’s third-quarter revenues were $958.1 million, up 26.3% year over year. The Zacks Consensus Estimate for Embraer’s 2021 sales indicates year-over-year growth of 19.5%.
The long-term earnings growth rate for Embraer is pegged at 17%. Shares of ERJ have returned a whopping 153.2% value to its investors in the past year.
Elbit Systems’ quarterly earnings of $2.33 per share surpassed the Zacks Consensus Estimate of $1.85, delivering an earnings surprise of 25.95%.
The Zacks Consensus Estimate for Elbit Systems 2022 earnings has increased 2.2% in the past 60 days to $9.10 per share. ESLT stock has appreciated 36.9% in the past year.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
As one investor put it, “curing and preventing hundreds of diseases…what should that market be worth?” This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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NVIDIA and The Gap have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – January 10, 2022 – Zacks Equity Research shares NVIDIA (NVDA - Free Report) as the Bull of the Day, and The Gap Inc (GPS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Boeing Company (BA - Free Report) , Airbus SE (EADSY - Free Report) , and Embraer SA (ERJ - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
NVIDIA, the largest and fast-growing semiconductor innovator in the US, has been a stock market star in recent years, skyrocketing over 700% since 2019 (despite its recent decline) as this GPU pioneer and its visionary leader, Jensen Huang, take the tech sector by storm.
NVDA has experienced this infectious sell-down that so many other richly valued innovators have experienced, sliding into bear market territory (20% or more decline from recent highs) in mid-December and has yet to recover. However, this is a stock that is being bought up on every single dip (despite its incredibly rich 65x P/E), with its ostensibly boundless upside outlook providing endless support.
NVIDIA is the most exciting chipmaker on the public exchanges today, producing chips with unmatchable speed and capabilities that place it at the forefront of next-generation technologies like AI development, data analytics, and even the ambiguous 'metaverse.'
NVIDIA's recent growth is nothing short of incredible as the enterprise sets the bar for prolific innovation in the chip space, and no other business has been even close to keeping up. NVIDIA's intelligence driving chips have solidified their sole GPU market control as we enter a digital renaissance.
The pandemic drove the global economy to digitalize by 10 years in just 10 months, pulling forward unprecedented demand for NVIDIA's hyper-fast GPUs. Society is now conditioned for swift and continuous adaptation to advancing tech, supporting NVIDIA's boundless profitable growth with endless innovation at the core.
Analysts are relentlessly bullish on NVDA as the company consistently blows out estimates each quarter. Sell-side analysts have been pushing up their EPS projections over every time horizon, propelling NVDA into a Zacks Rank #1 (Strong Buy).
NVDA exposure is a must for every portfolio's next-generation allocation as the 4th Industrial Revolution kicks off.
Fundamental & Technical Breakdown
This GPU powerhouse has been able to justify its exceptionally rich 60x P/E multiple with consistently outsized profitable growth that has driven between 40-70% year-over-year revenue appreciation in the past 8 consecutive quarters (flowing down to high-double to triple-digit annual earnings expansions), along with record top and bottom-line results in 6 back-to-back earnings reports.
NVIDIA has proven its ability to generate boundless secular growth that has blown pasts analysts' increasingly aggressive top and bottom-line estimates for years. EPS estimates have been raised across the board after an incredible October quarter, and I still view projection as conservative. NVIDIA's most significant profit drivers in gaming and data centers are still just in their nascent phases of development as we enter this digital renaissance.
I expect demand for NVIDIA's GPU technology to only accelerate over the next decade as this company paves the way for innovation across sectors.
NVDA is a stock that you can't afford to leave out of your portfolio, and after its recent 20% pullback to a critical support level, it'd be prudent to seize on this excellent entry point below $300 a share. $270 has been NVDA's primary support level for the past month, having bounced off it on 4 separate occasions (2 of which were in the past 2 trading days).
If NVDA breaks below $270 a share, I will be watching for its next Fibonacci-extension level lower at $260 to provide some support, then its 200-day moving average, which currently sits at $215 but is trending higher.
The Business
NVIDIA has become the most cutting-edge chipmaker on earth. The company invented the graphics processing unit (GPU), initially purposed for rendering images, but now possesses capabilities beyond graphics cards. NVIDIA's hyper-fast GPUs are becoming a necessity in data centers across the globe, most notably in the development of deep learning and artificial intelligence (as I mentioned above).
Data centers will be a primary end-market for this market disruptor in this world headed towards cloud computing, and Nvidia's hyper-fast GPUs are becoming a necessity. CEO and founder of Nvidia, Jensen Huang, said in a recent press release that "NVIDIA AI is enabling breakthroughs in language understanding, conversational AI and recommendation engines -- the core algorithms that power the internet today. And new NVIDIA computing applications in 5G, genomics, robotics, and autonomous vehicles enable us to continue important work that has great impact."
NVIDIA completely controls the datacenter GPU market with no close competitors (despite AMD's attempts). This company is crucial to the discovery of true AI, which will be an inflection point in human understanding. NVDA chips can already be found in 8 of the top 10 supercomputers and 2/3rd of the top 500.
Nvidia is also leveraging 5G with its anticipated cloud gaming platform. Just as cloud computing is the future of business data and analytics, cloud gaming is the future of gaming. NVIDIA is making a big bet in this field with its cloud platform, GeForce NOW. This platform allows gamers to use their Macs or PCs for gaming anywhere with NVIDIA's GPUs' high-speed, low-latency technology without needing NVIDIA's hardware locally.
Nvidia's Recent Acquisition Announcement
Nvidia announced it would be acquiring Arm Limited from Softbank (SFTBY) in an all-stock deal for $40 billion back in September of 2020 with a closing timeline of 18 months. If this deal goes through, it will be the largest chip deal in history, but first, it must get past the 3 major regulatory authorities, including China, which could pose a challenge amid the reheating US-China trade war.
Regulatory bodies are delaying this deal, which catalyzed the recently added concessions NVIDIA offered to appease EU regulators in the hopes of securing the necessary antitrust approval, which pushed this deal's value up to $54 billion. The merger is still expected to close in March of this year, though it's beginning to look like an aggressive deadline considering pushback from regulators in the UK and China.
Nvidia's announced acquisition would significantly expand the enterprise's chip market control. Nvidia now primarily focuses on GPUs and is leveraging the technology's hyperfast computing power to develop "true AI." The purchase of Arm will give Nvidia a firm grasp on the CPU market and provide the combined company with a whole leg in the smartphone market door.
This AI-juiced semiconductor powerhouse and its visionary CEO, Jensen Huang, have proven that Nvidia is a force to be reckoned with. Softbank's leader, Masayoshi Son, and his close ties with Huang catalyzed this ostensible "value deal" for Arm.
This deal includes a significant amount of NVDA stock, which I believe is a big part of the reason that Son is so excited about the sale. He believes in Nvidia with Jensen Huang at the helm and wants to see his transform this business into and wants to be a part of the action.
If this deal does end up getting rejected, it would not be the end of the world for NVDA, as its current portfolio outlay is still poised for prolific growth. It would also mean that no other company could acquire Arm Holdings moving forward. Either way, NVDA wins.
Final Thoughts
NVIDIA is a stock that every investor should have some exposure to. Despite its recent pullback, the NVDA remains at a very frothy market valuation ($680 billion market cap), after more than doubling in the past year, leaving the stock more vulnerable to short-term volatility as monetary tightening initiates.
Still, NVDA is currently trading nearly 15% below its average 12-month price target and roughly 50% below its most optimistic target. 23 out of 26 analysts call it a buy today (with no sell ratings), and I couldn't agree more.
Bear of the Day:
The hustle and bustle of Main Street had once been the fuel for prosperous brick-and-mortar retailers, but the pandemic and the economic lockdowns that came with it turned every major city into a ghost town, leaving the already antiquing storefronts to either digitalize (aka ecommerce) or die.
The retail apocalypse, which began as a slow transition to the web with leading this digital transformation, was accelerated by years amid the lockdowns, allowing investors to easily distinguish between "the good, the bad, and the ugly" of this economic shift.
The Gap Inc, the parent company of Old Navy, Banana Republic, Athleta, & its namesake brand, have been an unsurprising victim of this digital shift away from Main Street. The company has been frantically restructuring its business model since the pandemic began, as it makes every effort to adapt to the new normal.
Gap had previously made plans to spin off its best-positioned subsidiaries: Athleta & Old Navy, in early 2019. However, it needed every bit of scale it had to keep its operations afloat once the pandemic began. Its latest strategy (Power Plan 2023) consists of closing hundreds of its less productive Gap and Banana Republic storefronts and has closed nearly 20% of its global stores since the pandemic began, while at the same time, investing and expanding its global footprint in Athleta & Old Navy. The company plans on openings 20-30 and 30-40 new stores, respectively.
The question is whether this diverse mix of legacy and growth brands can continue successfully executing this high-margin growth strategy?
Unsustainable Growth?
GPS came into 2021 with an unexpected digitally-powered tailwind, and Old Navy and Athleta were at the core of its margin expanding success. These two brands have become The Gap's pillars of high-margin growth, accounting for 65% of this business's total sales in its first 3 reported 2021 quarters.
Altheta's appealing women's athleisure and competitive 'budget offering' relative to its biggest competitor Lululemon, make it uniquely positioned for the new normal. Old Navy's modestly priced clothing was an attractive offering for working moms during the pandemic lockdowns, with no reason to spend more than needed on clothes (for both them and their kids) that no one but the fam will see.
However, this bullish sentiment about the company has begun to dissipate. The latest results from these two growth drivers show significant decelerations, pushing analysts back on their heels as estimates and price targets get reeled in.
GPS has fallen to a Zacks Rank #5 (Strong Sell), and this falling knife looks like it still may have more room to fall, even after its 25% post-earnings capitulation at the end of November.
Final Thoughts
The Gap is trading at half of the value that it peaked at last May and looks like it could continue lower. The company's "Power Plan" strategy puts the business on track to spend $800 million per year through 2023 to "support growth investments including digital, loyalty, and supply chain capacity projects."
If this strategy doesn't achieve the earnings growth it's targeting, this plan could end up being an unwanted weight on Gap's ability to turn positive cash flows. The firm hasn't been able to break $800 million in earnings since 2018.
GPS managed to rally almost 400% from its low in May of 2020 to its high 52-weeks later. Optimism about the future of Athleta and Old Navy were the primary drivers, and their sudden deceleration in the most recent earnings is cause for significant concern.
Additional content:
Boeing (BA - Free Report) Clinches Deal for Four 777 Freighter Aircraft
The Boeing Company recently clinched an order from Atlas Air Worldwide, a global leader in airfreight, for delivering four of its 777 freighter aircraft amid the rising demand for freighters globally. Already operational with 14 777 freighter aircraft, Atlas Air now grows its 777 freighter family with this new order. The new order expands Atlas Air’s 777 fleet with additional capacity, fuel efficiency and operational flexibility for its customers.
Boeing also marked record-setting growth for its freighters’ family in 2021 and exhibited its capability to capitalize on the growing e-commerce market. Until November 2021, the company outshined itself in the freighter aircraft arena by exceeding the previous freighter record comprising 80 orders for new production freighters and more than 80 orders for converted models.
Importance of 777 Freighter Aircraft
The 777 Freighter Aircraft is the world's largest, longest-range and most capable twin-engine freighter exhibiting the lowest trip cost as well as highest reliability of any large freighter. With a range of 4,970 nmi (Nautical Mile) (9,200km), the 777 Freighter can carry a maximum revenue payload of 102 tons (224,900 lb).
It also boasts environmentally friendly features as it entails less fuel use and CO2 emissions compared with earlier aircraft. Its capability and exceptional efficiency result in substantial savings for cargo operators, with fewer stops and associated landing fees.
Such features of the aircraft, buoyed by the rising cargo demand, have attracted several customers, thus resulting in multiple order wins for Boeing.
Growth Prospects
The emerging trend in the e-commerce market has been bolstering the air-cargo market, thus boosting the prospects of companies like Boeing that manufactures freighters. Per International Air Transport Association, global air cargo demand recorded a surge of 9.1% in September, highlighting the persistence of robust demand.
Considering solid growth trends in the air cargo market, BA stands to benefit as it is a leading global aerospace company. The current deal with Atlas Air is a testament to this fact.
Boeing anticipates the global freighter fleet to grow 70% in the next 20 years. This highlights Boeing’s strong prospects in the freighter aircraft space over the long haul.
Peer Prospects
The robust growth trend in the air cargo market will not only benefit Boeing but also aircraft manufacturers, namely Airbus SE.
Airbus SE’s freighter and cargo jets comprise A330-200F, A321P2F, A330P2F BelugaST and BelugaXL. The company’s newest freighter is the A350F, which brings the latest-generation innovation from the A350 and reduces fuel burn and CO2 emissions. The A330-200F is a new-generation cargo aircraft that meets the needs of the freight business in the mid-size and long-haul segment.
The Zacks Consensus Estimate for Airbus’ 2021 earnings indicates an improvement of 584% from the year-ago figure. Shares of Airbus have returned 20.7% in the past year.
Price Performance
Shares of Boeing have declined 0.6% in the past year compared with the industry’s fall of 29.2%.
Zacks Rank & Key Picks
Boeing carries a Zacks Rank #3 (Hold). A better-ranked stock from the same sector is Embraer SA, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Embraer’s third-quarter revenues were $958.1 million, up 26.3% year over year. The Zacks Consensus Estimate for Embraer’s 2021 sales indicates year-over-year growth of 19.5%.
The long-term earnings growth rate for Embraer is pegged at 17%. Shares of ERJ have returned a whopping 153.2% value to its investors in the past year.
Elbit Systems’ quarterly earnings of $2.33 per share surpassed the Zacks Consensus Estimate of $1.85, delivering an earnings surprise of 25.95%.
The Zacks Consensus Estimate for Elbit Systems 2022 earnings has increased 2.2% in the past 60 days to $9.10 per share. ESLT stock has appreciated 36.9% in the past year.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
As one investor put it, “curing and preventing hundreds of diseases…what should that market be worth?” This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.