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Research Daily

Sheraz Mian

Top Analyst Reports for Netflix, SAP & Illinois Tool Works


Trades from $3

Friday, January 26, 2024

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), SAP SE (SAP) and Illinois Tool Works Inc. (ITW). 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 >>>

Shares of Netflix have outperformed the Zacks Broadcast Radio and Television industry over the past six months (+36.0% vs. +18.3%), with the streaming giant's blockbuster results on January 23rd adding to the stock's performance momentum. The company added 13.12 million paid subscribers globally in fourth-quarter 2023, with a rise of 1% in average revenue per subscription.

The company attributed the robust top-line growth to its paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general. Netflix 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 and foreign-language content.

However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video, Disney+, Peacock and Paramount+ is a headwind. NFLX’s leveraged balance sheet and a higher streaming obligation are concerns.

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

SAP shares have outperformed the Zacks Computer - Software industry over the past six months (+29.4% vs. +19.4%). The company’s Q4 performance gained from continued strength in its cloud business, especially the Rise with SAP and Grow with SAP solutions. Momentum in SAP’s business technology platform, particularly the S/4HANA solution, along with opportunities presented by proliferation of generative AI bodes well.

SAP is now focusing more on vital strategic growth areas, especially Business AI, and position the company for future growth. Management also reaffirmed its 2025 long-term targets for cloud and total revenues. Frequent product launches, and strategic acquisitions and collaborations are other tailwinds.

However, continued softness in the Software license and support business segment coupled with global macroeconomic weakness and geopolitical instability remain concerning. Increasing costs and stiff competition are additional headwinds.

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

Shares of Illinois Tool Works have gained +3.7% over the past six months against the Zacks Manufacturing - General Industrial industry’s gain of +9.7%. The company is benefiting from improving supply chains and underlying demand. Strength in the Automotive OEM segment, driven by favorable customer mix and product line simplification activities is aiding the company’s performance.

Decreasing cost of sales and enterprise initiatives are supporting Illinois Tool’s margin performance. The company’s efforts to add shareholder value are encouraging. However, persistent weakness in the Test & Measurement and Electronics segment due to softness in semiconductor-related business in the North American region is concerning.

The decline in the consumer packaging, specialty films and strength films businesses within the Specialty Products segment is an added woe. Given Illinois Tool’s international presence, foreign currency headwinds may weigh on its near-term performance.

(You can read the full research report on Illinois Tool Works here >>>)

Other noteworthy reports we are featuring today include Air Products and Chemicals, Inc. (APD), Exelon Corporation (EXC) and Ryanair Holdings plc (RYAAY).

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>>>

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