Thursday, March 7, 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 Adobe Inc. (ADBE), United Parcel Service, Inc. (UPS) and Deere & Company (DE). 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 >>>

Adobe shares have only modestly outperformed the Zacks Computer - Software industry over the past year (+58.3% vs. +53.8%), but they have returned almsot double relative the broader market over that time period (+58.3% vs. +25.8% for the S&P 500 index). Driving the stock's performance momentum is strong demand for Adobe's creative products. The company’s Creative Cloud, Document Cloud and Adobe Experience Cloud products are driving the top-line growth. Rising subscription revenues and solid momentum across the mobile apps are major positives.

Growth in emerging markets and robust online video creation demand remain tailwinds. Additionally, solid demand for Adobe’s commerce offerings and growing adoption of Acrobat are encouraging. Adobe’s strong market position, compelling product lines and continued innovation remain positives. Also, its growing generative AI efforts remain a plus.

However, the ongoing tensions between Russia and Ukraine remain major headwinds for the Digital Media segment. High acquisition expenses do not bode well for Adobe's margin expansion.

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

UPS shares have struggled lately, with the stock lagging rival FedEx (-16.1% vs. +19.4%) as well as the S&P 500 index (-16.1% vs. +25.8%). Driving this underperformance is the unfavorable margin outlook on the back of elevated labor costs as a result of the teamsters deal and volume woes due to softer demand. Rising capital expenses further add to its woes.

These challenges aside, the Zacks analyst is encouraged by UPS' solid free cash flow. Shareholder-friendly actions includes a 15th consecutive annual dividend increase and a $5 billion share repurchase authorization. In 2024, UPS’ board of directors raised its quarterly cash dividend to $1.63 per share. For full-year 2024, UPS expects to make dividend payments of $5.4 billion.

The 2022 UPS-ESW agreement aligns with the thriving cross-border e-commerce trend, especially among millennials and Gen Z. The approval of the five-year deal with the International Brotherhood of Teamsters in August 2023 is a positive development for UPS.

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

Deere shares have declined -7.6% over the past six months against the Zacks Manufacturing - Farm Equipment industry’s decline of -9.7%. The company has been witnessing inflated material and labor costs over the past few quarters. These are likely to persist and put a dent in the company’s margins in the forthcoming quarters. Higher SG&A and R&D expenses will be spoilsports.

The company has been facing supply-chain issues, resulting in delivery delays and less efficient factories. The small agricultural and turf equipment segment will continue to face supply shortages. However, the company is taking steps to enhance its pricing. This is expected to aid its results.

Deere's long-term growth prospects remain strong, owing to consistent investments in new products and markets. Gains from the launch of products equipped with the latest technology will drive the company’s performance. The demand for agricultural equipment will keep supporting Deere’s order levels.

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

Other noteworthy reports we are featuring today include Toyota Motor Corporation (TM), GSK plc (GSK) and Monster Beverage Corporation (MNST).

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>>>