Tuesday, April 2, 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 Alphabet Inc. (GOOGL), Oracle Corporation (ORCL) and Chevron Corporation (CVX). 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 >>>

Alphabet shares have modestly lagged the Zacks Tech sector over the year-to-date period (+9.6% vs. +12.2%), but have performed roughly in-line with the S&P 500 index (+9.6% vs. +10%) over this time period. The company’s robust cloud division is aiding substantial revenue growth. Expanding data centers will continue to bolster its presence in the cloud space. Further, major updates in its search segment are enhancing the search results.

Moreover, Google’s mobile search is gaining solid momentum. Additionally, strong focus on bolstering generative AI capabilities should aid business growth in the near term. Alphabet’s deepening focus on wearables category remains a tailwind.

The company’s strong efforts to gain foothold in the healthcare industry are other positives. Also, its expanding presence in the autonomous driving space is contributing well. However, sluggish Network advertisement business is a negative. Increasing litigation issues and expenses remain concerns.

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

Shares of Oracle have outperformed the Zacks Computer - Software industry over the year-to-date period (+19.5% vs. +11.4%). The company’s third-quarter fiscal 2023 results benefited from the steady adoption of strategic cloud applications, autonomous database and OCI, as well as a recovery in cloud revenue growth.

Oracle’s Gen 2 Cloud is driving artificial intelligence (AI) clientele because of better performance at a lower cost due to high bandwidth and low-latency RDMA networks. ORCL’s continued investment in cloud infrastructure positions it well for sustained growth in the dynamic software industry. Its share buybacks and dividend policy are noteworthy.

However, the uncertain economy and competition in the cloud computing market weighed on demand for its cloud offerings. Stiff competition in the cloud market is slowing down the growth of its expansion efforts in the competitive market.

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

Chevron shares have underperformed the Oil and Gas - Integrated - International industry over the past year (-2.6% vs. +4.5%). The company is grappling with lower prices in the upstream segment and declining refining margins in the downstream unit.

Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.

Nevertheless, Chevron is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin. Further, the recent acquisition of Hess Corporation is expected to significantly strengthen Chevron's presence in oil-rich Guyana.

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

Other noteworthy reports we are featuring today include Chubb Limited (CB), Automatic Data Processing, Inc. (ADP) and General Dynamics Corporation (GD).

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

Alphabet (GOOGL) Benefits From Search & Cloud Initiatives

Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships

Chevron (CVX) to Gain Guyana Foothold with Hess Buy

Featured Reports

Better Rate, Increased Exposure Aid Chubb (CB), Cat Loss Ail
Per the Zacks analyst, Chubb is set to grow on better rate environment, increasing exposures and market share, solid capital position and cash generation capabilities. Yet, exposure to cat loss ails.

Transformation Initiatives Aid ADP, Escalating Expenses Hurt
The Zacks analyst is positive about Automatic Data Processing's (ADP) transformation initiatives that are helping it innovate, improve operations and expand margins. Rising expenses are concerning.

Solid Demand Aids General Dynamics (GD), High Fuel Costs Ail
Per the Zacks analyst, the multiple contracts for General Dynamics' product resulted in a strong demand during 2023. Yet, high fuel prices may lead to lower jet orders and thereby impact performance.

Organic Growth Aids Cencora (COR) Amid Competition
Per the Zacks analyst, Cencora should benefit from continued solid organic revenue growth, World Courier unit and Specialty distribution business amid cutthroat competition in the Medtech space.

The J. M. Smucker (SJM) Benefits from Pricing, Solid Brands
Per the Zacks analyst, The J. M. Smucker has been benefiting from positive net price realization and solid demand for its brands. High net pricing is likely to boost fiscal 2024 comparable net sales.

Flex's Performance Benefits From Healthy Demand Momentum
The Zacks analyst is optimistic about strong demand for Flex's solutions in the automotive and industrial verticals. Health Solutions' business is gaining from strong medical device demand.

Semtech (SMTC) Benefits From Strength in IoT System Segment
Per the Zacks analyst, Semtech is benefitting from strength in the IoT System segment, owing to its increasing customer-requested shipments on certain end-of-life models.

New Upgrades

Product Launches & Inorganic Moves Aid Armstrong World (AWI)
Per the Zacks analyst, Armstrong World is benefiting from increased volumes on the back of new product investments and digital initiatives. Also, inorganic moves and favorable pricing bode well.

Healthy Demand for Premier Office Spaces Aids SL Green (SLG)
Per the Zacks analyst, healthy demand for premier office spaces, a solid tenant base with long-term leases and opportunistic investments bode well for SL Green.

Ligand's (LGND) Technology Platforms Boost Growth Prospects
The Zacks Analyst is encouraged by Ligand's Captisol technology platform which has resulted in partnerships with several leading drug companies and driving its revenues for the past few years.

New Downgrades

Third-Party Dependency, Seasonality Ail Clearway Energy (CWEN)
Per the Zacks analyst Clearway Energy's dependence on third-party assets can adversely impact its ability to serve customers. Its operating results are negatively impacted due to weather variability.

Weakness in Infrastructure Segment Hurts Kennametal (KMT)
Per the Zacks analyst, weak performance in Kennametal's Infrastructure unit due to softness in aerospace & defense and energy end markets are weighing on its results. High costs also remain a concern.

High Expenses & Debt to Impact RH's Growth Prospects
Per the Zacks analyst, RH's performance is being hurt by elevated expenses and debt level. Also, increased reliance on foreign manufacturing and imports are a concern.

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

General Dynamics Corporation (GD):Free Stock Analysis Report

Chevron Corporation (CVX):Free Stock Analysis Report

Automatic Data Processing, Inc. (ADP):Free Stock Analysis Report

Chubb Limited (CB):Free Stock Analysis Report

Oracle Corporation (ORCL):Free Stock Analysis Report

Alphabet Inc. (GOOGL):Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research