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Top Research Reports for Microsoft, Eli Lilly & Costco

Friday, May 17, 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 Microsoft Corp. (
MSFT), Eli Lilly and Co. (LLY) and Costco Wholesale Corp. (COST), as well a micro-cap stock Koss Corp. (KOSS). 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 >>>

Microsoft’s shares have outperformed the Zacks Computer - Software industry over the past year (+33.2% vs. +31.4%). The company’s fiscal third-quarter results gained from strong growth in Intelligent Cloud and Productivity and Business Processes revenues. Productivity and Business Processes revenues rose due to a strong adoption of Office 365 Commercial solutions.

Microsoft 365 Consumer subscribers grew to 80.8 million. Continued momentum in the small and medium businesses, frontline worker offerings and a gain in revenue per user drove the top line. Intelligent Cloud revenues were driven by growth in Azure and a rise in AI Copilot business.

However, the office's declining commercial licensing has been a headwind due to the continued customer shift to cloud offerings. Higher operating expenses and spending on Azure enhancements amid stiff competition in the cloud space remain a concern.

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

Shares of Eli Lilly have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+32.7% vs. +16.7%). The company’s revenue growth is being driven by higher demand for drugs like Mounjaro, Verzenio, Jardiance, Taltz and others. Lilly’s new tirzepatide medicines, diabetes drug Mounjaro and obesity medicine, Zepbound, are seeing exceptionally strong demand trends.

Lilly has also launched some other new products expected to drive Lilly’s top line in 2024. Lilly is also making rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s.

However, generic competition for some drugs, rising pricing pressure and challenges in meeting strong demand for incretin products like Zepbound and Mounjaro are some top-line headwinds.

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

Costco’s shares have outperformed the Zacks Retail - Discount Stores industry over the past year (+64.0% vs. +31.4%). The company, being a consumer defensive stock, has been surviving the market turmoil pretty well.

The discount retailer’s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping it register decent sales and earnings numbers.

This outlook reflects Costco’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates. A favorable product mix, steady store traffic, pricing power and strong liquidity position should help Costco keep outperforming. While trading at a premium to its peers, its long-term growth prospects should help the stock see a solid upside.

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

Shares of Koss have outperformed the Zacks Audio Video Production industry over the past year (+24.5% vs. -14.2%). The company maintains financial stability with $2.9 million in cash and $7 million in short-term investments. Its focus on innovation, cost management, and quality ensures that it remains competitive, while its global presence and customer loyalty offer avenues for growth.

However, Koss faces challenges in a competitive, evolving earphone market dominated by giants like Sony and Bose. Market saturation and aggressive competition threaten to erode Koss's share and profitability.

Financially, Koss reported a revenue decline to $9.4 million from $10 million year-over-year, signaling issues in production cost management and pricing strategies. Legal disputes over patents add financial and reputational risks. Additionally, reliance on Chinese and Taiwanese manufacturers exposes Koss to geopolitical risks and supply chain disruptions.

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

Other noteworthy reports we are featuring today include United Parcel Service, Inc. (UPS), Booking Holdings Inc. (BKNG) and O'Reilly Automotive, Inc. (ORLY).

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

Adoption of Cloud & Office 365 Strength Aid Microsoft (MSFT)

Lilly (LLY) New Products Hold Key to Sales Growth in 2024

ADVERTISEMENT

Decent Comparable Sales Run to Fuel Costco's (COST) Top Line

Featured Reports

UPS Banks on Dividends & Buybacks Amid Shipping Volume Woes
The Zacks analyst is impressed with the company's efforts to reward its shareholders. However, shipping volume-related weakness is a concern.

Booking Holdings (BKNG) Benefits From Strong Travel Demand
Per the Zacks analyst, Booking Holdings is benefiting from growing global leisure travel demand, resulting in substantial improvement in booking trends.

Strategic Buyouts to Drive O'Reilly (ORLY) Amid Debt Woes
While O???Reilly's international expansion efforts through the Mayasa and Groupe Del Vasto buyouts are boosting sales, the elevated leverage of over 90% concerns the Zacks analyst.

Paychex (PAYX) Gains From Diversification Amid Talent Cost
Per the Zacks analysts, Paychex's solid business model, diversified products and services have been boosting the top line. A competitive talent market remains a concern.

Housing Demand Aids Weyerhaeuser (WY), High Costs Hurt
Per the Zacks analyst, Weyerhaeuser is benefiting from the consistent flow of carbon/ESG-related projects and improving housing market. However, increasing costs and expenses are concerning.

Investments to Benefit CMS Energy (CMS) Amid Rising Costs
Per the Zacks analyst, investments will boost CMS Energy's grid upgrades. Yet rising costs for closure of solid waste disposal facilities for coal ash may hurt the stock.

Test Volumes Aid Myriad Genetics (MYGN) Amid Stiff Rivalry
The Zacks analyst is impressed with Myriad Genetics rising testing volumes, reflecting market share gains and ongoing initiatives to improve average revenue per test. Stiff rivalry remains a concern.

New Upgrades

Goldman's (GS) Focus on IB, Trading to Drive Revenue Growth
Goldman's focus on its core strengths of investment banking and trading operations and efforts to pivot from the consumer banking business will help it generate more durable and recurring revenues.

Growing Top Line, Solid Capital Position Aid RLI Corp. (RLI)
Per the Zacks analyst, its rising revenues driven by higher premiums and net investment income have led to significant growth. Moreover, robust capital position continues to be a key catalyst.

SM Energy's (SM) Robust Eagle Ford & Permian Presence Aids
Per the Zacks analyst, SM Energy's strategic expansion in Texas, particularly in the Permian and Eagle Ford regions, signals growth, leveraging its assets to capitalize on crude price uptrends.

New Downgrades

Weakness in Safety & Industrial Unit Hurts 3M Company (MMM)
Per the Zacks analyst, weak performance in 3M's Safety & Industrial unit due to softness in industrial specialties, electrical markets and personal safety businesses are weighing on its results.

Cambium (CMBM) Deterred by Price Wars, High Inventory Levels
Per the Zacks analyst, Cambium is likely to be plagued by high inventory levels, supply chain woes, intense price competition from both lower and higher-cost vendors and macroeconomic headwinds.

Sluggishness in China Commerce Business Ails Alibaba (BABA)
Per the Zacks analyst, Alibaba is suffering from sluggishness in its China Commerce business due to softness in direct sales channels.

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

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Eli Lilly and Company (LLY) : Free Stock Analysis Report

United Parcel Service, Inc. (UPS) : Free Stock Analysis Report

O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

Koss Corporation (KOSS): Free Stock Analysis Report

Booking Holdings Inc. (BKNG) : Free Stock Analysis Report

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Zacks Investment Research