Top Analyst Reports for Wells Fargo, GE Aerospace & Eaton

Friday, October 18, 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 Wells Fargo & Co. (WFC), GE Aerospace (GE) and Eaton Corp. plc (ETN), as well as a micro-cap stock Gencor Industries, Inc. (GENC). 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 Wells Fargo have gained +7.8% over the past six months against the Zacks Banks – Major Regional industry’s gain of +54.4%. The company’s third-quarter 2024 results benefited from higher non-interest income and a decline in expenses. Its loan growth is likely to be limited, as the asset cap remains in place until it complies fully with regulators’ demands regarding operational risk management.

The bank agreed to divest its non-agency third-party servicing segment of the Commercial Mortgage Servicing (CMS) business to Trimont. This, along with low originations, is likely to hurt mortgage banking income in the near term.

Nonetheless, its progress on efficiency initiatives, such as branch and footprint reduction, will support cost reduction and drive bottom-line growth. A decent deposit balance is likely to aid its financials. With a decent liquid profile, the capital distribution seems sustainable.

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

GE Aerospace shares have outperformed the Zacks Transportation – Airline industry over the year-to-date period (+90.2% vs. +50.7%). The company has been witnessing strength in its businesses, driven by robust demand for commercial engines, propulsion and additive technologies. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel augur well for the company.

Its portfolio-reshaping actions are likely to unlock values for its shareholders. For 2024, GE Aerospace expects organic revenues to grow in the high-single-digit range from the year-ago level.

However, it has been dealing with high costs and expenses related to certain projects and restructuring activities, which might affect its margins and profitability. Supply-chain disruptions in the defense market continue to take a toll on its operations. Also, foreign exchange headwinds might be worrying for the company.

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

Shares of Eaton have outperformed the Zacks Manufacturing – Electronics industry over the past year (+75.6% vs. +30.9%). The company benefits from its research and development work that allows to develop new products. Eaton is aided by rising demand from the new AI data center and contributions from its organic assets.

Eaton is expanding via acquisitions, and its strategy to manufacture in the region of its end market has helped the company to reduce expenses. Reindustrialization and megatrends will create more opportunities for the company. The Zacks analyst model projects revenues to increase in 2024-26 period.

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 >>>)

Gencor Industries’ shares have gained +50.3% over the past year against the Zacks Manufacturing – Thermal Products industry’s gain of +61.4%. This microcap company with market capitalization of $320.01 million has a strong backlog whch grew 67% to $46.6 million as of Jun 30, 2024, signaling strong demand and future revenue potential despite a recent revenue decline.

The company’s solid financial position, with $116.6 million in cash and no debt, enhances its strategic flexibility. Benefits from the Infrastructure Investment and Jobs Act (IIJA) further support Gencor’s market position.

Yet, challenges persist, including an 8.3% third-quarter fiscal 2024 revenue decline due to shipment delays, decreasing gross margins and rising operating expenses. While Gencor’s robust backlog is a positive indicator, over-reliance could expose the company to risks if order fulfillment delays persist. Additionally, increased reliance on non-operating income and marketable securities introduces volatility, posing risks in uncertain economic conditions.

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

Other noteworthy reports we are featuring today include CSX Corp. (CSX), The Travelers Companies, Inc. (TRV) and Constellation Brands, Inc. (STZ).

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

Rising Deposit Aid Wells Fargo (WFC) Amid Lower Loan Balance

Solid Product Demand Aids GE Aerospace (GE), High Costs Hurt

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

Featured Reports

CSX’s Dividend Payouts Boost Prospects Amid High Costs
The Zacks analyst is impressed with CSX’s efforts to reward its shareholders. However, high operating expenses, mainly due to elevated labor costs, are hurting its bottom line.

Strong Renewal Rate Change, Retention Aid Travelers (TRV)
Per the Zacks analyst, Travelers is set to gain from continued strong renewal rate change and retention and increase in new business. Yet, exposure to cat loss inducing underwriting volatility ails.

Constellation Brands (STZ) Gains From Strength in Beer Unit
Per the Zacks analyst, Constellation Brands sees immense strength in its beer business for a while. Sales for the beer business advanced 6% year over year in second-quarter fiscal 2025.

Discover Financial (DFS) Rides on Loan Growth, High Costs Ail
Per the Zacks Analyst, loan growth and net interest income margin expansion are aiding Discover Financial’s top line. However, high operating expenses are concerning.

Operating Model Aids PulteGroup (PHM) Amid High Expenses
Per the Zacks analyst, PulteGroup’s cyclically resilient operating model, effective pricing strategy and mortgage rate buydown program bode well. High labor costs are risks.

Operational Workflow Aids Avantor (AVTR) Amid Forex Volatility
The Zacks analyst is optimistic about Avantor’s manufacturing capabilities, including features like flexible unit operations, despite its business being exposed to foreign exchange volatility.

United Therapeutics’ (UTHR) PAH Portfolio Drives Growth
The Zacks Analyst believes that demand for United Therapeutics’ PAH medicines is strong. Potential approvals for expanded use of Orenitram and Tyvaso and its pipeline can drive long-term growth

New Upgrades

Ericsson (ERIC) Rides on Healthy Demand, Cost Optimization
Per the Zacks analyst, rising network investments in North America and new 5G licensing agreements will likely boost Ericsson’s top line. Cost reduction actions are driving the gross margin.

F5 (FFIV) Rides on Firm Growth in its Software Business
Per the Zacks analyst, F5 is benefiting from strong growth in software, driven by security offerings, such as web application firewall, bot defense and mitigation products.

Dolby (DLB) Rides on Continued Strength in Vision & Atmos
Per the Zacks analyst, Dolby’s performance is gaining from a healthy uptake of Dolby Atmos and Dolby Vision across major business verticals. Synergies stemming from acquisitions augur well.

New Downgrades

Marathon Petroleum (MPC) Hurt by High Turnaround Expenses
The Zacks analyst believes that Marathon Petroleum’s anticipated turnaround expenses of around $1.4 billion for 2024 will lower crude throughput volumes and refinery utilization.

Cenovus Energy’s (CVE) Long-Term Commitment & Volatility Ail
Per the Zacks analyst, Cenovus Energy’s exposure to oil price volatility increases with the discontinuation of hedging. With substantial long-term commitments the stock’s high beta adds to the concern

Atlassian (TEAM) Hurt by Softening IT Spendings
Per the Zacks analyst, TEAM is facing challenges from the weak IT spendings amid the persistent macroeconomic uncertainties.

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