Tuesday, January 16, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time scorecard of the Q4 earnings season and new research reports on 16 major stocks, including Apple Inc. (AAPL), AbbVie Inc. (ABBV) and Toyota Motor Corp. (TM). 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 >>>

Q4 Earnings Season Scorecard

Including this morning's reports from Goldman Sachs, Morgan Stanley and others, we now have Q4 results from 32 S&P 500 members. Total Q4 earnings for these 32 index members are up +7.2% from the same period last year on +5.8% higher revenues, with 93.8% beating EPS estimates and 59.4% beating revenue estimates.

At this relatively early stage in the Q4 reporting cycle, companies appear to be easily beating consensus EPS estimates, but are struggling to come out ahead of revenue estimates.

In fact, the 93.8% EPS beats percentage matches the highest beats percentage for this group of 32 index members in the last 20 quarters (5 years). On the other hand, the 59.4% revenue beats percentage is the lowest for this group of companies since 2022 Q3.

Looking at Q4 as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total S&P 500 earnings are expected to be up +0.3% on +2.2% higher revenues. 

Today's Featured Analyst Reports

Apple shares led the Zacks Tech sector over the past year through roughly mid-December 2023, but have lagged since then. The stock is up +34.8% over the past year vs. +45.2% for the Tech sector and the +20.6% gain for the S&P 500 index. 

The company is benefiting from strong demand for the iPhone. Apple expects the iPhone’s year-over-year revenues to grow on an absolute basis in first-quarter fiscal 2024.

Revenues for Mac are expected to significantly accelerate compared with the fourth-quarter fiscal 2023’s reported figure. It expects the year-over-year revenue growth for both iPad and Wearables, Home and Accessories to decelerate significantly from the September quarter due to a different timing of product launches.

For the Services segment, Apple expects average revenues per week to grow at a similar strong double-digit rate as it did during the September quarter. It is benefiting from increasing customer engagement in the services segment. The expanding content portfolio of Apple TV+ aids subscriber growth.

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

Shares of AbbVie have outperformed the Zacks Large Cap Pharmaceuticals industry over the past six months (+22.8% vs. +16.7%). The company has several new drugs in its portfolio with the potential to drive the top line and make up for lost Humira revenues.

Newer products, Skyrizi and Rinvoq, are performing extremely well, bolstered by approval in new indications. The company has several early/mid-stage candidates that have the potential to drive long-term growth. Though revenues are expected to decline in 2023, AbbVie expects to return to robust sales growth in 2025.

However, the company faces several near-term headwinds like Humira loss of exclusivity, increasing competitive pressure on Imbruvica and economic pressure on Juvederm sales.  AbbVie’s shares have underperformed the industry in the past one year. Estimates have risen ahead of Q4 earnings. AbbVie has a positive record of earnings surprises in recent quarters.

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

Shares of Toyota have outperformed the Zacks Automotive - Foreign industry over the past six months (+22.7% vs. +10.6%). Continued demand for vehicles and a robust lineup of trucks and sport utility vehicles are set to fuel Toyota’s sales volumes. The Japanese auto giant aims to generate 40% of its global sales from electric vehicles by 2025 and 70% by 2030.

Toyota Motors plans to invest 4 trillion yen ($35 billion) for a lineup of 30 battery electric vehicles by 2030. For fiscal 2024, Toyota projects vehicle sales of 9.6 million units, indicating an increase from 8.82 million units sold in fiscal 2023. Its investor-friendly moves also spark optimism.

However, commodity cost inflation is expected to continue to weigh on the company’s margins. High capex and R&D expenses on the development of electric and autonomous vehicles are likely to dent its near-term margins and cash flows. The stock warrants a cautious stance at present.

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

Other noteworthy reports we are featuring today include EOG Resources, Inc. (EOG), Monster Beverage Corp. (MNST) and General Motors Co. (GM).

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>>>