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Top Research Reports for Novo Nordisk, QUALCOMM & Caterpillar

Wednesday, May 22, 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 Novo Nordisk A/S (NVO), QUALCOMM Incorporated (QCOM) and Caterpillar Inc. (CAT), as well as two micro-cap stocks CSP Inc. (CSPI) and Epsilon Energy Ltd. (EPSN).  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 >>>

Shares of Novo Nordisk have outperformed the Zacks Large Cap Pharmaceuticals industry over the past year (+59.9% vs. +26.1%) on the back of strong demand for the company’s diabetes drugs Ozempic and Rybelsus and obesity drug Wegovy. Label expansions of the same in cardiovascular and other indications will likely boost sales.

NVO has been tackling the supply constraints of Wegovy by increasing its manufacturing capabilities. The drug is now indicated in the United States to also reduce heart risks, which is a huge boost. The company is also gearing up to buy Cardior to help diversify its portfolio beyond diabetes treatments and obesity drugs.

However, intense rivalry in the obesity sector threatens Novo Nordisk’s market share. Patent expiry and pricing pressure across the diabetes market also remain a woe.

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

Shares of QUALCOMM have outperformed the Zacks Wireless Equipment industry over the past year (+97.5% vs. +51.6%). The company is benefiting from healthy traction in Android handsets and automotive businesses. Development of Snapdragon Dev Kit for Windows in collaboration with Microsoft will boost commercial prospects in the AI PC market.

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

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

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

Caterpillar’s shares have modestly outperformed the Zacks Manufacturing - Construction and Mining industry over the past year (+70.6% vs. +66.2%). The company’s earnings have increased year over year for thirteen straight quarters aided by cost-saving measures, strong demand and pricing actions. These factors mitigated the impact of the industry-wide supply-chain snarls and cost pressures.

The Construction Industries segment will gain from the increased construction activities in the United States and globally. The mining sector will be bolstered by commodity demand driven by the energy transition trend, which, in turn, will support the Resource Industries segment.

The Energy & Transportation segment is well-positioned for growth, backed by strong demand across all applications. Its dividend yield and payout ratio are higher than its peers. A solid liquidity position and investments in expanding services and digital initiatives will help Caterpillar deliver exceptional returns.

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

Shares of CSP have outperformed the Zacks Computer - Integrated Systems industry over the year-to-date period (+54.4% vs. +5.2%). This microcap company with market capitalization of $147.4 million showed strong fiscal second-quarter 2024 results, with net income soaring to $1.6 million from $0.3 million, driven by efficient cost management and 23% growth in high-margin services.

Gross margins improved 900 bps year over year to 47%, aided by higher-margin AZT sales and higher-margin service revenues. Financially, CSPI is stable, with $27.1 million in cash and low debt. The company’s innovation in AI and cloud services enhances its competitive edge. Its deep-rooted presence since 1968 and alignment with rising global IT spending positions it well for sustained growth, leveraging opportunities in AI, cloud computing and cybersecurity.

Also, CSPI is expanding its AZT PROTECT offering from Fortune 500 to mid-market companies, recently securing a significant contract with a global pharmaceutical firm, indicating robust market demand.

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

Shares of Epsilon Energy have gained +7.9% over the past year against the Zacks Oil and Gas - Integrated - United States industry’s gain of +18.8%. This microcap company with market capitalization of $118.6 million faces revenue risks from curtailed production and delayed well start-ups in Pennsylvania, deferring 4.5 million cubic feet per day of natural gas due to low prices, impacting short-term revenues and asset utilization.

High capital expenditure, notably $21.4 million in the first quarter of 2024 for Permian and Pennsylvania developments, stretch liquidity, with cash dropping from $13.4 million as of Dec 31 to $2.3 million as of Mar 31. Hedging may not fully protect against prolonged low oil and natural gas prices, limiting upside potential and exposing the company to market volatility.

Regulatory shifts and market dynamics could further constrain operations. Additionally, challenges in reserve replacement and dependency on core assets like the NE PA Marcellus heighten operational risks, which are critical for Epsilon’s revenues.

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

Other noteworthy reports we are featuring today include GSK plc (GSK), Altria Group, Inc. (MO) and TransDigm Group Incorporated (TDG).

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>>>

Today's Must Read

GLP-1 Drugs Boost Novo Nordisk (NVO), Market Rivalry a Woe

Qualcomm (QCOM) Benefits From Growing Demand for AI Chips

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Caterpillar (CAT) to Gain on Strong Demand in End Markets

Featured Reports

GSK (GSK) Vaccine & HIV Products to Drive Sales Growth
GSK's key products like Dovato, Nucala and Shingrix are driving sales. The Zacks analyst says GSK has some promising new products in Specialty Medicines and Vaccines areas like RSV vaccine, Arexvy.

Altria Group (MO) Gains From Solid Pricing Amid Low Volumes
Per the Zacks analyst, Altria Group has been benefiting from its solid pricing power. In first quarter, higher pricing offered respite to revenues, which was otherwise hurt by low cigarette volumes.

Air Travel Aids TransDigm (TDG), Supply Chain Issues Woe
Per the Zacks analyst, steadily growing commercial air travel has been benefitting TransDigm's revenues. Yet, persistent supply chain constraints may hurt the stock

Strong Orders & Marketplace GOV Benefits DoorDash (DASH)
Per the Zacks analyst, DoorDash is benefiting from strong total orders and Marketplace GOV, alongside enhanced logistics efficiency and an increasing contribution from advertising.

Kinder Morgan (KMI) to Gain From Take-or-Pay Contracts
The Zacks analyst likes Kinder Morgan as the majority of its earnings are secured through take-or-pay contracts. However, elevated operations & maintenance expenses are concerning.

Clean Harbors (CLH) Gains on Thompson Buyout Despite Costs
Per the Zacks analyst, the Thompson acquisition expanded Clean Harbors' Environmental Services segment's industrial service operations. Rising costs are concerning.

Solid Insurance in Force, Persistency Drive Radian (RDN)
Per the Zacks analyst, Radian is poised to grow given solid persistency and rise in new mortgage insurance business driving insurance in force, declining delinquency and lower level of claims paid.

New Upgrades

Ecolab (ECL) Benefits from Volume Gains and Cost Efficiency
Per the Zacks analyst, Ecolab has been benefiting from increase in its sales volumes, driving pricing, and improving its underlying productivity by leveraging its digital capabilities.

Royal Caribbean's (RCL) Solid Booking Trends Aid Revenues
Per the Zacks analyst, increasing demand for cruises and solid booking trends are likely to drive Royal Caribbean's top-line. Strength in consumer spending onboard and pre-cruise purchases bodes well.

Wolverine's (WWW) Product Initiatives to Boost Market Share
Per the Zacks analyst, Wolverine is actively pursuing a comprehensive strategy to enhance brand portfolio, focusing on Merrell and Saucony brands. These efforts are expected to help gain market share.

New Downgrades

Akamai (AKAM) Plagued by Soft Demand in the Delivery Segment
Per the Zacks analyst, the slowdown in traffic growth across the industry, stemming from macroeconomic headwinds, will likely strain Akamai's margin. Rising geopolitical volatility is a concern.

Lower IT Spending to Hurt DXC Technology's (DXC) Prospects
Per the Zacks analyst, DXC Technology's growth prospects might be hurt by soft IT spending as organizations are pushing back their large IT investment plans amid the macroeconomic headwinds.

Poor Asset Quality, High Costs Hurt Hilltop Holdings (HTH)
Per the Zacks analyst, elevated expenses and weakening asset quality are expected to hurt Hilltop Holdings' bottom line. Higher mortgage rates continue to hurt originations and fee income growth.

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

GSK PLC Sponsored ADR (GSK) : Free Stock Analysis Report

QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report

Caterpillar Inc. (CAT) : Free Stock Analysis Report

Novo Nordisk A/S (NVO) : Free Stock Analysis Report

Altria Group, Inc. (MO) : Free Stock Analysis Report

Transdigm Group Incorporated (TDG) : Free Stock Analysis Report

CSP Inc. (CSPI): Free Stock Analysis Report

Epsilon Energy Ltd. (EPSN): Free Stock Analysis Report

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