Thursday, May 23, 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 Apple Inc. (AAPL), Mastercard Incorporated (MA) and Amgen Inc. (AMGN), as well as two micro-cap stocks Utah Medical Products, Inc. (UTMD) and Bridger Aerospace Group Holdings, Inc. (BAER). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

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 >>>

Apple shares have lagged the Zacks Tech sector (+10.2% vs. 42.7%) as well as the S&P 500 index over the past year (+10.2% vs. +29.1%) reflecting a combination of the company's China exposure and perception of insufficiently well placed for AI. The company’s second-quarter fiscal 2024 results suffered from weak iPhone demand. It is benefiting from increasing customer engagement in the services segment. The expanding content portfolio of Apple TV+ and Apple Arcade helped in driving subscriber growth.

Apple’s results also benefited from strong growth in emerging markets and growing adoption among enterprises. Apple CEO Tim Cook’s positive comments on plans to expand the usage of AI in the company’s devices and record $110 billion share repurchase announcement reflects strong prospects.

However, Apple has been suffering from stiff competition in the smartphone market and weakness in China. Growing legal complexities, including ongoing EPIC and Masimo lawsuits and the latest case by the U.S. Department of Justice, have been a headwind.

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

Shares of Mastercard have modestly outperformed the Zacks Financial Transaction Services industry over the past year (+24.6% vs. +21.2%). Numerous acquisitions are helping the company to grow addressable markets and drive new revenue streams. The COVID-19 crisis accelerated the adoption of digital and contactless solutions, providing an opportunity for the firm's business to expedite its shift to the digital mode.

It is well-poised to gain from steady cash-generating abilities. A strong capital position allows it to pursue acquisitions and prudently deploy capital through share buybacks and dividend payments.

However, steep operating expenses might stress its margins. Also, we expect general and administrative costs to jump almost 11% in 2024. High rebates and incentives may weigh on net revenues. As such, the stock warrants a cautious stance.

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

Amgen shares have outperformed the Zacks Medical - Biomedical and Genetics industry over the year-to-date period (+9.0% vs. -3.8%). The company beat first-quarter estimates for earnings and sales. It expects strong sales growth of products like Tezspire, Evenity, Repatha, Prolia and Tavneos to offset declining revenues from oncology biosimilars and legacy established products such as Enbrel in 2024.

The addition of Horizon’s rare disease drugs should further boost revenue growth. Amgen also has some key pipeline assets in obesity and inflammation, which have a large market opportunity. Several key pipeline data readouts are expected in 2024, including from the obesity program, MariTide.

However, increased pricing headwinds and competitive pressure are hurting sales of many products, including some biosimilars. Weakness in some key brands like Otezla and Lumakras create potential revenue headwinds.

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

Shares of Utah Medical Products have underperformed the Zacks Medical - Products industry over the past year (+26.9% vs. +4.5%). This microcap company with market capitalization of $237.5 million have witnessed the loss of a major OEM customer which has significantly impacted revenues, leading to a 9.4% sales decline in Q1 2024. Intense competition from industry giants pressures profitability.

Nevertheless, Utah Medical Products is well-positioned in the growing medical device market, driven by rising chronic diseases, aging populations and demand for home healthcare. Its diverse product portfolio in obstetrics, gynecology, electrosurgery and neonatal care targets high-growth segments, ensuring sustained demand.

The company’s Q1 2024 revenue distribution shows robust diversification, enhancing stability with 45.4% from international sales. UTMD's strong cost management improved the net income margin to 34.9% in Q1 2024 despite increased litigation costs. The company’s solid balance sheet, with $93.8 million in cash, supports strategic growth and shareholder returns.

(You can read the full research report on Utah Medical Products here >>>)

Bridger Aerospace’s shares have underperformed the Zacks Aerospace - Defense industry over the past year (-39% vs. -3.9%). This microcap company with market capitalization of $191.82 million taps into the aerial firefighting market, which is expected to witness a modest growth. Risks include high revenue concentration, seasonal variability, steep operational costs, reliance on government contracts, and expansion challenges.

Nevertheless, Bridger’s success hinges on managing these risks while leveraging market growth opportunities. The company saw a revenue jump to $67 million in 2023, up 44.4%, buoyed by significant contracts despite a slow fire season. The firm's global reach expanded, entering markets like Canada and Spain, thereby diversifying its revenue sources.

Fleet and tech advancements, including acquiring Super Scoopers and a fire surveillance Software as a service (SaaS) platform, enhanced operational capacity. Financially, despite a 2023 loss, adjusted EBITDA skyrocketed 405.4%, with an expectation of future growth.

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

Other noteworthy reports we are featuring today Cambium Networks Corporation (CMBM), Canadian Natural Resources Limited (CNQ) 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>>>