Friday, February 17, 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 NIKE, Inc. (NKE), Union Pacific Corporation (UNP) and KLA Corporation (KLAC). 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 >>>

NIKE shares were in line with the Zacks Shoes and Retail Apparel industry over the past six months (+7.2% vs. +7.1%). The company reported solid second-quarter fiscal 2023 results and provided an upbeat sales view. It reported the 10th and the fifth straight quarters of earnings and revenue beat, respectively. Results gained from brand strength, robust consumer demand and an innovative product pipeline.

Its Consumer Direct Acceleration strategy, along with robust performance in its digital and DTC businesses bode well. Our Model estimates 5.5% revenue growth in fiscal 2023, with 13.2% growth on a currency neutral basis.

NIKE witnessed decline in gross margin due to higher markdowns to liquidate inventory, increased freight and logistics costs, elevated input costs and currency headwinds. The Zacks analyst expect soft gross margin and currency headwinds to continue hurting NIKE results in the quarters ahead.

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

Shares of Union Pacific have underperformed the Zacks Transportation - Rail industry over the past year (-20.2% vs. -11.2%). The company is facing escalation in fuel costs as oil prices move north which is worrisome. This phenomenon induced a 20% rise in operating expenses in 2022. Fuel costs surged 68% last year. The same is likely to be high in the March quarter as well.

However, Union Pacific's efforts to reward its shareholders even in the current uncertain scenario please us. The company hiked dividend twice in 2021. In May 2022, UNP further upped its quarterly dividend by 10%. The railroad operator is also active on the buyback front. In 2022, UNP bought back shares worth $6,282 million.

The railroad operator paid dividends worth $3,159 million in 2022. UNP's strong free cash flow generating ability supports its shareholder-friendly activities. The uptick in overall volumes (up 2% year over year in 2002) as labor woes ease is an added positive.

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

KLA shares have outperformed the Zacks Electronics - Miscellaneous Products industry over the past year (+9.6% vs. -18.4%). The company is benefiting from solid momentum across the Semiconductor Process Control and Specialty Semiconductor Process segments. Further, strong performance of the wafer inspection business owing to rising demand for advanced wafer inspection applications in leading-edge technology development remains a tailwind.

The Zacks analyst expects wafer inspection revenues to see a year-over-year rise of 3.9% in fiscal 2023. Additionally, growing investments across multiple nodes, and rising capital intensity in Foundry & Logic are driving the top-line growth. Considering these factors, our estimates suggest that total revenues are likely to rise 10.4% in fiscal 2023 from fiscal 2022.

However, weakness in the PCB, Display and Component Inspection remains a headwind. Also, the new U.S. export regulations, supply-chain disruptions and mounting expenses remain overhangs.

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

Other noteworthy reports we are featuring today include Airbnb, Inc. (ABNB), Atlassian Corporation (TEAM) and Republic Services, Inc. (RSG).

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>>>