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Friday, July 12, 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 Exxon Mobil Corp. (XOM), Merck & Co., Inc. (MRK) and Qualcomm Inc. (QCOM), as well as a micro-cap stock Armanino Foods of Distinction, Inc. (AMNF). 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 >>>

Exxon Mobil’s shares have outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+8.0% vs. +5.3%). The company is a reliable player in the energy sector, boasts a resilient capital structure, a robust balance sheet and track record of prudent capex management. Its strategic discoveries in the Stabroek Block and Permian Basin promise growth and lower greenhouse gas intensity.

Exxon Mobil prioritizes shareholder returns, evidenced by substantial buybacks that are slated to increase to $20 billion through 2025. Exxon Mobil’s entry into the lithium market positions it for long-term gains as the demand for lithium is poised to increase with the growing adoption of electric vehicles.

However, challenges loom, notably in the upstream operations, which are susceptible to volatile oil prices and regulatory hurdles. Reliance on finding economically recoverable reserves and exposure to OPEC production cuts add to uncertainties.

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

Shares of Merck’s have gained +21.2% over the past year against the Zacks Large Cap Pharmaceuticals industry’s gain of +35.1%. The company’s products like Keytruda and Gardasil have been driving sales. With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth.

Animal health and vaccine products are core growth drivers. Merck boasts a strong cancer pipeline, including Keytruda, which should drive long-term growth. The company is investing in M&A activity to strengthen its pipeline.

However, generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade.

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

Qualcomm’s shares have outperformed the Zacks Wireless Equipment industry over the past year (+65.0% vs. +39.5%). The company is benefiting from healthy traction in Android handsets and automotive businesses. The development of Snapdragon Dev Kit for Windows in collaboration with Microsoft will likely boost its commercial prospects in the AI PC market.

The Snapdragon X Series Platform integrated with Qualcomm AI Hub is also witnessing significant market traction among leading global PC manufacturers. The company is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor firm for the intelligent edge. This augurs well for long-term growth.

However, inventory corrections by clients are impeding sales in the IoT business. Increasing competition in the mobile phone chipset market is likely to strain margins. Rising geopolitical instability and high debt obligation remain concerns.

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

Shares of Armanino Foods of Distinction have outperformed the Zacks Food - Miscellaneous industry over the past year (+27.0% vs. -10.2%). This microcap company with market capitalization of $175.72 million boasts strong cash reserves and consistent dividends, with the highest payout in its history.

The company is expanding geographically, securing new customers like Brookshire Brothers and Harris Teeter, and has become the #1 brand in Northern California’s Safeway. Offering a wide range of products, Armanino Foods holds a 65% market share in the food service pesto category. AMNF’s Global Food Safety Initiative BRC Grade AA certification ensures high standards.

Yet, rising operating expenses, the dependence on key customers and exposure to commodity price volatility pose risks. Competition from larger companies and private labels could impact market share and margins. Higher storage and transport costs for frozen products impact profitability, and heavy reliance on the U.S. market limits international growth opportunities.

(You can read the full research report on Armanino Foods of Distinction here >>>)

Other noteworthy reports we are featuring today include Fomento Económico Mexicano, S.A.B. de C.V. (FMX), Vertex Pharmaceuticals Inc. (VRTX) and América Móvil, S.A.B. de C.V. (AMX).

Mark Vickery
Senior Editor

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>>>

Today's Must Read

ExxonMobil's (XOM) Stabroek & Permian Oil Discoveries Aid

Keytruda to Remain Merck's (MRK) Key Top-Line Driver

Qualcomm (QCOM) Rides on Healthy AI Traction in Android & PC

Featured Reports

FEMSA's (FMX) Digital & Other Initiatives Seem Encouraging
Per the Zacks analyst, FEMSA has been gaining pace in the digital space through tech and innovation business unit. Spin by OXXO reached 7.4 million active users during the first quarter of 2024.

Growth Projects, Newcrest Buyout Aid Newmont (NEM)
Per the Zacks analyst, Newmont will gain from the progress of its key growth projects and significant synergies of the Newcrest acquisition amid headwinds from higher production costs.

Alcon (ALC) Banks on Implantable Sales Amid Stiff Rivalry
Per the Zacks Analyst, Alcon continues to lead the implantables market with its flagship Vivity, PanOptix lenses while monofocal torics too are gaining shares. Yet, tough competition may hurt growth.

Archer Daniels (ADM) Growth Plan on Track, Nutrition Unit Soft
Per the Zacks analyst, Archer Daniels is on track with its three strategic pillars, optimize, drive and growth for sustained gains. A sluggish Nutrition unit hurts sentiment.

Metal Prices & Healthy Portfolio Aid Franco-Nevada (FNV)
Per the Zacks analyst, the recent pick up in gold price is aiding Franco-Nevada's performance. The company's healthy portfolio of streaming and royalty agreements is also driving margins.

W.R. Berkley (WRB) Solid Insurance Business Aid, Cat Loss Ail
Per the Zacks analyst, W.R. Berkley's Insurance business is set to grow on rate increases, and improving premiums from international unit. Yet, exposure to cat loss, increasing expenses drag margins.

Investments, Customer Growth Aid Essential Utilities (WTRG)
Per the Zacks analyst, Essential Utilities' (WTRG) $7.2 billion investment to fortify it water and natural gas infrastructure and demand from expanding customer base are going to boost its performance

New Upgrades

Vertex (VRTX) Enjoys a Strong Non-Cystic Fibrosis Pipeline
The Zacks analyst says Vertex saw rapid success in its non-CF pipeline candidates' development in the past year. Casgevy was approved in multiple regions, which diversified its commercial opportunity.

America Movil (AMX) Gains from Rising Subscriber Engagement
Per the Zacks analyst, America Movil's performance is benefiting from an uptick in broadband client base and wireless subscribers. Augmented 5G footprint is a tailwind.

Rising Assets & Strong Liquidity Aid T. Rowe Price (TROW)
Per the Zacks analyst, T. Rowe Price's increasing assets under management and strong liquidity position will positively support its financials.

New Downgrades

Schneider (SNDR) Continues to Grapple With Segmental Weakness
Per the Zacks Analyst, below par performance in the Truckload, Intermodal and Logistics segments is hurting Schneider's top line. Lowered earnings outlook for 2023 looks disappointing.

Weak Industrial & Medical Markets Hurt Advanced Energy (AEIS)
Per the Zacks Analyst, Advanced Energy is suffering from weakness in Industrial & Medical, Data Center Computing and Telecom & Networking end-markets.

Choppy Office Market and High Rates to Affect Vornado (VNO)
Per the Zacks analyst, the overall choppiness in the office market amid rightsizing and elevated interest rate offer bleak prospects for Vornado despite having premium assets in select markets.

Free Report: 5 “Whisper” Stocks Poised to Stun Wall Street

Analysts may be seriously underestimating these stocks. When they announce earnings, they could immediately jump +10-20%.

See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

America Movil, S.A.B. de C.V. Unsponsored ADR (AMX) : Free Stock Analysis Report

Merck & Co., Inc. (MRK) : Free Stock Analysis Report

Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report

Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report

AMCON Distributing Company (DIT): Free Stock Analysis Report

Armanino Foods of Distinction Inc. (AMNF): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.