Tech Giants and Industry Outlook: Amazon, Prologis, Infosys, and More

Top Research Reports for Amazon.com, Prologis & Infosys

Monday, July 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 Amazon.com, Inc. (AMZN), Prologis, Inc. (PLD) and Infosys Limited (INFY), as well as a micro-cap stock Blue Dolphin Energy Company (BDCO). 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 >>> Amazon.com shares have outperformed the Zacks Internet - Commerce industry over the year-to-date period (+20.7% vs. +14.6%). The company is gaining on solid Prime momentum owing to ultrafast delivery services and strong content portfolio. Strengthening relationship with third-party sellers is a positive. Strong adoption rate of AWS is aiding the company's cloud dominance. Improving Alexa skills along with robust smart home products offerings are tailwinds. Robust advertising business is also contributing well. The company's strong global presence and solid momentum among the small and medium businesses remain a plus. Growing capabilities in grocery, pharmacy, healthcare and autonomous driving are other positives. Deepening focus on generative AI is a major plus. However, macroeconomic challenges remain headwinds. Rising transportation and fulfillment center costs are concerns. (You can read the full research report on Amazon.com here >>>) Shares of Prologis have outperformed the Zacks REIT and Equity Trust - Other industry over the past three months (+18.9% vs. +13.0%). According to the company's recent estimate revision trend for third-quarter 2024 funds from operations (FFO) per share indicates a favorable outlook, with estimates moving north over the past week. Its second-quarter results reflected a rise in rental revenues, though higher interest expenses played a spoilsport. Prologis is well-poised to gain from its portfolio of strategically located industrial facilities in some of the world's busiest distribution markets. Strategic buyouts and development activities appear promising. A solid balance sheet strength aids its growth endeavors. Despite the choppiness in the industrial real estate market, demand is improving and this trend is expected to continue. Also, the shrink in the construction pipeline augurs well. However, high interest rates remain a concern. (You can read the full research report on Prologies here >>>) Infosys shares have outperformed the Zacks Computers - IT Services industry over the year-to-date period (+17.3% vs. +3.7%). The company is gaining from large deal wins and fast-growing digital services. Its sustained focus on Agile Digital and AI-driven Core services is a tailwind. The strong demand for its services in the cloud, the Internet of Things (IoT), cyber security and data and analytics is a key driver. Higher investments by clients in digital transformation, AI and automation are an upside. The solid traction of its Cobalt cloud portfolio is another positive. The latest forecast for worldwide IT spending by Gartner is an upside for Infosys as well. However, the company is suffering from increasing anti-outsourcing sentiments in certain countries. Higher subcontractor costs and compensation revision with higher variable pay and incentives are weighing on its margins. Further, currency volatility between the Indian rupee and the U.S. dollar is a concern. (You can read the full research report on Infosys here >>>) Shares of Blue Dolphin Energy have underperformed the Zacks Oil and Gas - Exploration and Production - United States industry over the year-to-date period (-2.8% vs. +5.0%). This microcap company with market capitalization of $62.67 million is facing risks include heavy reliance on refining margins, which saw first-quarter 2024 revenues drop to $91 million from $116.7 million the previous year, and high customer concentration, with 89% of 2023 revenues from two main customers. Moreover, persistent debt issues, significant default amounts, and concerns over affiliate transactions further cloud its financial stability. Blue Dolphin, operating in the strategic Eagle Ford Shale region, offers a robust investment option with its established market presence and considerable infrastructure, including a 15,000-barrel-per-day refinery and more than 1.25 million barrels of storage. Financially, it managed costs effectively, reducing goods sold from $96.2 million in first-quarter 2023 to $79.2 million in first-quarter 2024, and secured a $5-million credit facility for liquidity. (You can read the full research report on Blue Dolphin Energy here >>>) Other noteworthy reports we are featuring today include América Móvil, S.A.B. de C.V. (AMX), Moderna, Inc. (MRNA) and Discover Financial Services (DFS). 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 Prime Momentum & Growing AWS Adoption Benefit Amazon (AMZN) Improving Demand, Favorable Supply to Aid Prologis (PLD) Digital Transformation, AI Proliferation Aid Infosys (INFY) Featured Reports Moderna's (MRNA) New Launches to Cut COVID Sales Dependency With COVID vaccine sales declining, Moderna (MRNA) is accelerating development of its non-COVID pipeline. The Zacks Analyst is encouraged by the potential product launches over the next five years. Discover Financial (DFS) Aided by Rising Interest Income Per the Zacks Analyst, growth in net interest income has contributed to Discover Financial's top line. Digital transformation efforts drive margins. Church & Dwight (CHD) Organic Sales Gain on Favorable Demand Per the Zacks analyst, Church & Dwight has been benefiting from the favorable consumer demand for its brands. This has been driving the company's organic sales, which grew 5.2% in the first quarter. Cost Reduction Drive Aids Autoliv (ALV) Amid High Volatility The Zacks analyst is optimistic about Autoliv's cost reduction drive, which, once fully implemented, is set to result in significant annual cost savings. High call-off volatility remains a concern. Southwestern's (SWN) Strategic Focus on Appalachia Aids Southwestern Energy's focus on high-return areas like Appalachia positions it well to meet the growing natural gas demand. However, its high debt-to-capitalization ratio concerns the Zacks analyst. Strong Execution Services Unit Aids Virtu Financial (VIRT) The Zacks Analyst believes that product developments and new deals will continue to drive and diversify Virtu Financial's revenues. However, decline in market volatility can affect its profits. National Vision (EYE) Gains Strategically, Rising Costs Ail Per the Zacks analyst, National Vision's strategy to boost exam capacity is aided by solid retention and recruitment of optometrists and remote medicine deployment. Yet, high inflation hikes costs. New Upgrades Expanded Client Base, 5G Footprint to Aid America Movil (AMX) Per the Zacks Analyst, America Movil's performance is benefiting from an uptick in broadband client base and wireless subscribers. Augmented 5G footprint is an added advantage. WIX Benefits from Uptake of New AI Products & WIX Studio Per the Zacks analyst, Wix's performance is benefiting from growing adoption of AI product offerings as well as WIX Studio. Continued strength in Partners' business is an added advantage. Solid Demand, Pricing Actions Aid Carpenter Technology (CRS) Per the Zacks analyst, Carpenter Technology is gaining from strong demand across its end-use markets. Cost-reduction initiatives and efforts to preserve liquidity are also driving growth. New Downgrades Supply Chain Issues, Rising Fuel Price to Hurt Hexcel (HXL) Per the Zacks analyst, supply chain challenges plaguing the aerospace sector forced Hexcel to lower its 2024 sales outlook. Rising fuel price may hurt demand for the company's products Werner (WERN) Continues to Grapple With Weak Freight Market The Zacks analyst believes that as a result of the weakness in the freight market, management gave a bearish 2024 guidance regarding the Truckload Transportation Services segment. Declining Comps Trend Hurts Papa John's' (PZZA) Prospects Per the Zacks analyst, Papa John's is hurting from dismal comps driven by persistent challenging macroeconomic conditions and a decline in consumer confidence. Free Report - 3 Stocks Sneaking Into Hydrogen Energy Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. No guarantees, but three companies are quietly getting the jump on their competition. Zacks Investment Research is temporarily offering an urgent Special Report naming and explaining these emerging powerhouses primed to boom. Click below for Hydrogen Energy: 3 Industrial Giants to Ride the Next Renewable Energy Wave. 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 Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Discover Financial Services (DFS) : Free Stock Analysis Report Prologis, Inc. (PLD) : Free Stock Analysis Report America Movil, S.A.B. de C.V. Unsponsored ADR (AMX) : Free Stock Analysis Report American Noble Gas Inc. (INFY) : Free Stock Analysis Report Moderna, Inc. (MRNA) : Free Stock Analysis Report Blue Dolphin Energy Co. (BDCO): Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zacks Industry Outlook Highlights Intuit, Progress Software and Canaan

Link: https://www.zacks.com/commentary/2305382/3-software-stocks-to-keep-an-eye-on-in-a-troubled-industry Uncertainties related to global macroeconomic conditions and Inflationary pressure are a persistent concern for the Zacks Computer Software industry participants. However, these industry participants are positioned well to gain from the accelerated digital transformation drive across the globe. Software is ubiquitous and has become the focal point of technological innovation. Apart from running devices and applications, its usage has been extended to managing infrastructure. The industry is primarily gaining from the ongoing cloud transition. The role of software is constantly evolving. With the adoption of the hybrid/flexible work model, demand for voice and video communication and productivity software is expected to increase exponentially. These trends bode well for industry participants likeIntuit Inc., Progress Software Corp. and Canaan Inc.. Industry Description The Zacks Computer Software industry includes companies that provide software applications related to cloud computing, electronic design automation (primarily for semiconductor and electronics industries), digital media and marketing, customer relationship management, on-premises and cloud-based database management, accounting and tax purposes, human capital management, cybersecurity and application performance monitoring and cloud-based enterprise communications platform. Some companies develop and market simulation software (like computer-aided design or CAD, 3D modeling, product lifecycle management or PLM, data orchestration and experience creation), which engineers, designers and researchers use across various industries like architecture, engineering and construction, product design, manufacturing and digital media. 3 Trends Shaping the Future of the Software Industry Higher Spending on Software Aids Prospects: The industry's prospects are bright, given higher spending by enterprises on software procurement. The continued investment in big data and analytics and the ongoing adoption of software as a service or SaaS opens up opportunities for these players. Cloud offers a flexible and cost-effective platform for developing and testing applications. The deployment time is also shorter compared with legacy systems. SaaS companies are expected to register strong top-line growth on a higher percentage of recurring revenues, subscription gross margin and a lower churn rate. Cloud Computing Adoption Gaining Traction: The increasing need to secure cloud platforms amid growing cyber-attacks and hacking incidents drives demand for cyber security software. Also, the rapid development of cutting-edge technologies like artificial intelligence, machine learning, and the Internet of Things is leading to increased usage of advanced software applications. Enterprises are focused on rapid migration to the cloud and DevOps technologies to achieve scalability and agility for software development and IT operations. This helps deliver a flawless digital experience to clients. The trend brought immense value to application and infrastructure performance monitoring. It is driving the demand for performance management monitoring tools that are scalable and suitable for cloud-based environments. Increases in IT Spending Bodes Well, Macro Conditions are a Concern: Per a report from Gartner, worldwide IT spending is projected to reach $5.26 trillion in 2024, calling for an increase of 7.5% from 2023 levels. This is an improvement over the earlier projection of overall spending of $5.06 trillion but suggests a decline from the previous growth projection of 8%. The report also highlighted that data center systems spending growth is anticipated to be 24% in 2024, up from the previous projection of 10% growth. The upside will be driven by the increasing compute power demand owing to the rapid proliferation of Generative AI. However, Gartner added that IT services spending is now projected to grow 7.1% in 2024, down from 9.7% projected earlier. This is mainly due to sluggish spending across subsegments, including business process services and consulting. However, uncertain global macroeconomic conditions and supply chain dynamics are a drawback. Uncertainty in the macro backdrop and inflationary pressure could affect spending across small- and medium-sized businesses globally. The uncertainty in business visibility could dent the industry's performance in the near term. Zacks Industry Rank Indicates Bleak Prospects The Zacks Computer Software industry is housed within the broader Zacks Computer And Technology sector. It carries a Zacks Industry Rank #141, which places it in the bottom 44% of more than 250 Zacks industries. The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group's earnings growth potential. Since May 31, 2024, the industry's earnings estimate for 2024 has decreased by 3.4%. Before we present a few stocks you may want to consider for your portfolio, considering bright prospects, let us look at the industry's recent stock-market performance and valuation picture. Industry Outperforms S&P 500 but Lags Sector The Zacks Computer Software industry lags behind the broader Zacks Computer and Technology sector but has outperformed the S&P 500 Index in the past year. The industry has rallied 22.7% over this period compared with the S&P 500 and the broader sector's increase of 21.7% and 32.9%, respectively. Industry's Current Valuation Based on the forward 12-month P/E, a commonly used multiple for valuing software companies, we see that the industry is currently trading at 32.70X compared with the S&P 500's 21.59X. It is also above the sector's forward-12-month P/E of 27.43X. In the last five years, the industry has traded as high as 37.50X, as low as 22.97X and at the median of 30.71X. 3 Software Stocks to Keep An Eye On Canaan: Based in Singapore, Canaan is a technology company with a primary focus on designing ASIC high-performance computing chips. It also is engaged in chip research and development, computing equipment production and software services. The company is benefitting from improving sales executions as well as optimization of mining operations. In the last reported quarter, the company generated Mining revenues of $10.5 million, up 182.1% sequentially. Increasing uptake of new A1566 mining machines and the continued demand for the A14 series (post the halving) are driving the top-line performance. For the second and third quarters of 2024, CAN expects total revenues to be $70 million. For third-quarter of 2024, the company expects total revenues to be also $70 million. Canaan flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. The company's 2024 earnings are pegged at a loss of 90 cents per share, indicating an improvement from a loss of $1.63 reported in the prior-year quarter. Intuit: Headquartered in Mountain View, CA, Intuit is a business and financial software company that develops and sells financial, accounting and tax preparation software and related services for small businesses, consumers and accounting professionals globally. Robust growth in revenues, driven by the Online and Consumer Group business segments, are driving top-line expansion along with steady momentum in international online revenues and solid professional tax revenues. The TurboTax Live offering is also driving growth in the Consumer tax business. Momentum in QuickBooks Capital is an added positive. The company's efforts at migrating its business to a cloud-based subscription model will help generate stable revenues over the long run. Higher costs and expenses stemming from increased investments in marketing and engineering teams are likely to continue denting bottom-line results in the near term. INTU carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for INTU's 2024 EPS has improved 2.6% over the last 60 days to $16.83. INTU's earnings beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise pegged at 16.2%. The long-term growth rate stands at 37.9% Progress Software Corp.: Headquartered in Burlington, MA, Progress Software is a leading provider of AI-powered infrastructure software. The company aids clients with the development, deployment and management of responsible AI-powered applications. PRGS' performance is being cushioned by steady demand for its products and solutions. The addition of advanced AI features is likely to further drive demand for its portfolio amid the rapid proliferation of AI applications. PRGS also remains focused on mergers and acquisitions to drive top-line performance further. PRGS expects non-GAAP revenues to be between $174 million and $178 million for the third quarter of 2024. For the full-year 2024, revenues are expected to be between $725 million and $735 million. The stock carries a Zacks Rank #2. The consensus mark for the company's 2024 earnings is pegged at $4.75 per share. The company's earnings beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise pegged at 11.1%. The long-term earnings growth stands at 2%. Today you can access their live picks without cost or obligation. See Stocks Free >> Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/ Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release. Free Report - 3 Stocks Sneaking Into Hydrogen Energy Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. No guarantees, but three companies are quietly getting the jump on their competition. Zacks Investment Research is temporarily offering an urgent Special Report naming and explaining these emerging powerhouses primed to boom. Click below for Hydrogen Energy: 3 Industrial Giants to Ride the Next Renewable Energy Wave. 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 Intuit Inc. (INTU) : Free Stock Analysis Report Progress Software Corporation (PRGS) : Free Stock Analysis Report Canaan Inc. Sponsored ADR (CAN) : Free Stock Analysis Report The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.