Top Stock Reports for Chevron, Verizon & Eaton

Friday, March 8, 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 Chevron Corp. (CVX), Verizon Communications Inc. (VZ) and Eaton Corp. plc (ETN). 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 Chevron have underperformed the Zacks Oil and Gas – Integrated – International industry over the past year (-4.6% vs. +0.9%). The Zacks analyst believes based on a number of near-term challenges, Chevron appears to be a risky bet. Over the past year, the energy major has seen its stock price decline more than 10% compared with the S&P 500’s increase of 21%.

The supermajor – with 60% liquids-weighted production – is highly exposed to the perils of oil price fluctuations. The drop in downstream segment earnings as a fallout of lower margins is a concern too while reserve replacement ratio remains weak, indicating challenges in replenishing produced energy.

Moreover, it has been experiencing an increase in costs as a percentage of revenue. Finally, Chevron has been a laggard compared to its European peers to jump into the clean energy bandwagon. Considering these factors, the company is unlikely to return to favor anytime soon. This calls for a bearish stance on Chevron.

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

Verizon’s shares have outperformed the Zacks Wireless National industry over the past year (+13.3% vs. +7.5%). The company reported healthy fourth-quarter 2023 results, with the top and bottom line beating the respective Zacks Consensus Estimate, driven by significant 5G adoption and wireless traction.

It is offering various mix-and-match pricing in both wireless and home broadband plans, which has led to solid client additions. Focus on emerging growth services like cloud, security and professional services will likely reap long-term benefits. Its mmWave footprint delivers game-changing experiences for the densest parts of the network.

However, lower wireline and wireless equipment revenues are major concerns. Huge promotional expenses and lucrative discounts to expand its customer base are weighing on margins. High capital expenditures for network upgrade and deployment of fiber assets across the country are headwinds. Muted guidance for 2024 is somewhat worrisome.

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

Shares of Eaton have outperformed the Zacks Manufacturing – Electronics industry over the past year (+72.1% vs. +41.9%). The company’s ongoing research and development are allowing the company to develop new products to provide efficient power management solutions.

It will benefit from improving end-market conditions, increasing demand from the new AI data center and contributions from its organic assets. Eaton is expanding via acquisitions and its rising backlog shows demand for its products. Its strategy to manufacture in the region of its end market has helped it cut costs.

Yet, Eaton’s global operations expose it to unpredictable currency translation, cyber security threats, changes in tax rates and security breaches, which might impact operations. The shortage of raw materials and supplier insolvencies might impact production and operations.

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

Other noteworthy reports we are featuring today include NVIDIA Corp. (NVDA), Canadian Pacific Kansas City Ltd. (CP) and Ford Motor Co. (F).

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

Chevron (CVX) to Gain Guyana Foothold with Hess Buy

Verizon (VZ) Rides on Solid Subscriber Addition, 5G Traction

New Product Development, Wide Market Reach Aid Eaton (ETN)

Featured Reports

Canadian Pacific KC (CP) Rides on Dividends Amid High Costs
The Zacks analyst is impressed with the company’s efforts to reward its shareholders. However, elevated operating costs represent a headwind.

Ford’s (F) Pro Business Unit to be a Key Growth Driver
Per the Zacks analyst, Ford’s commercial arm, Ford Pro, will drive profits in 2024 on strong mix/volume. The unit’s pretax profit is forecast to rise 18.5% year over year at the midpoint of the view.

Higher Rates, Business Transformation to Aid BNY Mellon (BK)
Per the Zacks analyst, global footprint and higher interest rates will keep aiding BNY Mellon. Also, its business transformation program will bolster market share and lead to higher profit margin.

Accelerating Non-Trading Revenue Base Aids Nasdaq (NDAQ)
Per the Zacks analyst, Nasdaq is set to grow on its focus toward Market Technology and Information Services businesses. However, increasing expenses weighing on margin expansion is likely a concern.

Verisk (VRSK) Gains From Opta Buyout, Operational Risks Stay
Per the Zacks analyst, the Opta acquisition is expected to expand Verisk’s footprint in the Canadian market. Chances of security breach remains as a concern.

New Customers, Robust Omnipod 5 Sales Aid Insulet (PODD)
The Zacks analyst is bullish about solid new customer gains and increasing volume growth through the U.S. pharmacy channel of Insulet. Also, the robust global uptake of Omnipod 5 seems encouraging.

Strategic Buyouts to Aid Lithia (LAD), Rising Debt Ails
The Zacks analyst is optimistic about Lithia’s strategic buyouts that are helping the auto retailer increase its market share and boost its portfolio. However, rising debt level remains a concern.

New Upgrades

NVIDIA (NVDA) Rides on Strong Adoption of GPUs, Partnerships
Per the Zacks analyst, rapid adoption of NVIDIA’s GPUs in the gaming and datacenter markets is a key growth driver. Moreover, partnership with companies like Arrow, Baidu and Daimler is a tailwind.

NetApp (NTAP) Benefits From Growing Demand For Hybrid Cloud
Per the Zacks analyst, NetApp’s performance is gaining from continued strength in hybrid cloud business segment. Also, frequent product launch is a tailwind.

Kidney Cancer Drug Cabometyx Drives Sales for Exelixis (EXEL)
Per the Zacks Analyst, sales of the lead drug, Cabometyx, for kidney cancer have been driving revenues for the company while maintaining market share despite severe competition in the market.

New Downgrades

Cactus (WHD) Grapples With Conservative Client Spending
Per the Zacks analyst, Cactus faces challenges as clients’ conservative spending impacts demand for its services. Investors’ demand for higher returns adds to cash flow concerns.

Aaron’s (AAN) Witnesses Sluggishness in Namesake Segment
Per the Zacks analyst, Aaron’s namesake segment has been witnessing a lesser lease portfolio size and lease renewal rate. In fourth quarter, the Aaron’s Business unit sales fell 8.7% year over year.

Strong Free Cash Flow Generation Aids WESCO (WCC) Prospects
Per the Zacks analyst, WESCO benefits from its ability to generate solid free cash flow that helps it to invest in above-market growth.

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