Thursday, February 2, 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 Netflix, Inc. (NFLX), Canadian National Railway Company (CNI) and Shopify Inc. (SHOP). 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 >>>

For the third quarter in a row, Netflix shares were up big on the Q4 earnings release on January 19th, leaving the stock now down -15% over the past year against the Zacks Broadcast Radio and Television industry’s decline of -27.6% and -11.9% decline for the S&P 500 index. The company’s average revenues per membership declined as it continues to face stiff competition in the streaming space from the likes of Apple, Amazon prime video, HBO Max, Disney+, Peacock, Paramount+ and TikTok.

However, Netflix added 7.66 million paid subscribers globally in fourth-quarter 2022, higher than its estimate of gaining 4.5 million users. It is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content. Netflix currently expects paid net additions to be greater in the second quarter of 2023 compared sequentially.

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

Shares of Canadian National Railway have held up a lot better than other railroad operators and the broader market in the recent market pullback. The shares are down -4.5% over the past year against the Zacks Transportation sector's -11.6% decline and the S&P 500 index's -11.8% decline. The company's exposure to macroeconomic slowdown resulting from tighter financial conditions notwithstanding, it enjoys a fair amount of stability in its operating results.

This stability is evident from Canadian National's track recrod of returning cash to shareholders through dividends and buybacks. In January, the company announced an 8% dividend hike. Canadian National is also active on the share buyback front.

Strong cash flow generating-ability supports Canadian National's shareholder-friendly activities. The company is benefiting from solid pricing. Despite the softening demand scenario, management expects adjusted 2023 earnings to increase in low single-digits y/y in the current year.

(You can read the full research report on Canadian National Railway here >>>)

Shares of Shopify have underperformed the Zacks Internet - Services industry over the past year (-37.9% vs. -28.7%). The company is witnessing the absence of pandemic-triggered acceleration of e-commerce is expected to hurt top-line growth in the remainder of 2022. Further, higher investments in product development, as well as fulfillment platforms and an unfavorable mix, are likely to limit margin expansion in the near term. Raging inflation and cautious consumer spending are expected to hurt top-line growth in the near term.

Nevertheless, Shopify is benefiting from strong growth in the merchant base. It has been focused on winning merchants regularly, based on product offerings including Shop Pay and Shop Pay Installments.

Solid adoption of new merchant-friendly applications holds promise. Partnerships with YouTube, Twitter, Facebook, Instagram and Google are expected to expand its merchant base.

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

Other noteworthy reports we are featuring today include Chubb Limited (CB), Phillips 66 (PSX) and Halliburton Company (HAL).

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>>>