Tuesday, February 6, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time update on the Q4 earnings season and new research reports on 16 major stocks, including Thermo Fisher Scientific Inc. (TMO), Philip Morris International Inc. (PM) and General Dynamics Corporation (GD). 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 the reports that came out this morning, we now have Q4 resutls from 256 S&P 500 members or 51.2% of the index's total membership. Please note that these 256 index members collectively account for 69.6% of the index's total market capitalization. Total Q4 earnings for these companies are up +4.4% from the same period last year on +3.2% higher revenues, with 81.6% beating EPS estimates and 64.1% beating revenue estimates.

The earnings and revenue growth pace for these 256 index members represents a notable acceleration from other recent quarters, wih the Q4 earnings growth rate the highest for this group of companies since +5.7% in 2022 Q2 and the revenue growth pace the highest the +3.8% in 2023 Q1.

The EPS and revenue beats percentages are tracking in-line with historical ranges for this group of companies.

Looking at Q4 as a whole, combining the actuals that have come out with estimates for the still-to-come companies, total earnings are expected to be up +4.4% on +2.9% higher revenues.

Excluding the very strong growth from the 'Magnificent 7' companies - Apple, Alphabet, Amazon, Microsoft, Meta, Nvidia and Tesla - whose Q4 earnings increased +48.7% on +14.5% higher revenues, total S&P 500 earnings for the rest of the 493 index members would be down -4.1% on +1.5% higher revenues.

Today's Featured Analyst Reports

Shares of Thermo Fisher Scientific have gained +0.1% over the past six months against the Zacks Medical - Instruments industry’s gain of +2.0%. The company is navigating the challenging macroeconomic conditions by leveraging its PPI Business System to deliver strong financial results.

The company advanced its proven growth strategy by launching a range of high-impact, innovative new products. The recent launch of the Thermo Scientific Meridian EX System and the Thermo Scientific Aquanex Ultrapure Water Purification System are likely to drive the company’s future growth.

The company also opened a customer experience center for battery manufacturing in Seoul to support its material science customers as they accelerate the development of the next generation of environment-friendly energy solutions.

However, the year-over-year decline in revenues in Life Science Solutions and Laboratory Products looks disappointing. The contraction of gross margins looks discouraging, too.

(You can read the full research report on Thermo Fisher Scientific here >>>)

Philip Morris shares have declined -3.0% over the past six months against the Zacks Tobacco industry’s decline of -3.8%. The company has been benefiting from its pricing power. Higher pricing variance was an upside to the company’s performance in the third quarter of 2023 and is likely to remain a driver.

A focus on reduced-risk products, especially IQOS, has been working well for Philip Morris, which is well-placed to become a majority smoke-free company by 2025. Strength in ZYN is also expected to drive performance in 2023. Management expects net revenues to increase by nearly 8% on an organic basis in 2023. Philip Morris expects to make additional growth-oriented investments in 2023, including the commercialization of ILUMA.

However, this may impact margins. Apart from this, soft cigarette shipment volumes have been a concern. In 2023, cigarette shipment volumes are expected to decline by 1-2%. Shares of Philip Morris have lagged the industry year to date.

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

Shares of General Dynamics have outperformed the Zacks Aerospace - Defense industry over the past six months (+18.2% vs. -3.9%). The company’s R&D expenses in product development will strengthen its footprint in the business jet market. Its G400 is expected to enter service in 2025.

General Dynamics has a solid solvency position and a strong international presence. An impressive backlog of $93.63 billion at the end of the fourth quarter indicates solid demand for the company’s products. Its shares have outperformed its industry in the past year.

However, higher fuel prices continue to pose risks to its operations. The geopolitical uncertainty worldwide, resulting in commodity price hikes and inflation, may adversely impact the company’s financial performance. A shortage of skilled labor might affect its delivery schedule.

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

Other noteworthy reports we are featuring today include Becton, Dickinson and Company (BDX), Cheniere Energy, Inc. (LNG) and Aflac Incorporated (AFL).

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>>>