Tuesday, September 17, 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 Meta Platforms, Inc. (META), Texas Instruments Inc. (TXN) and The Charles Schwab Corp. (SCHW), as well as a micro-cap stock IDT Corp. (IDT). 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 >>>

Meta Platforms’ shares have outperformed the Zacks Internet - Software industry over the year-to-date period (+51.1% vs. +15.7%). The company is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its offerings like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.

META has been leveraging AI to improve the potency of its platform offerings. These services currently reach more than 3.2 billion people daily. User growth remained solid in the United States, with WhatsApp reaching more than 100 million monthly users and Thread approaching 200 million milestone.

It witnessed good year-over-year growth across Facebook, Instagram and Threads. Meta now expects to invest significantly more over the next few years in developing more advanced models and the largest AI services in the world. However, monetization of these AI services will take considerable time, which is a concern.

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

Shares of Texas Instruments have gained +19.0% over the year-to-date period against the Zacks Semiconductor - General industry’s gain of +94.4%. The company is benefiting from solid data center demand which is boosting its prospects in the enterprise systems market. Improving conditions in the personal electronics and communication equipment markets are a plus.

Texas Instruments’ growing investments in new growth avenues and competitive advantages are tailwinds. Its deepening focus on manufacturing, advanced technology infusion, product portfolio expansion and consistent returns to shareholders, is another positive.

However, widespread weakness in the industrial, and automotive markets is major concern. Sluggishness in its Analog, Embedded Processing and Other segments is a negative. Increasing manufacturing costs are hurting its profitability. Overall weak demand environment and growing U.S.-China tensions are concerns.

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

Charles Schwab’s have underperformed the Zacks Financial - Investment Bank industry over the year-to-date period (-6.3% vs. +15.7%). As the company deals with low-yielding assets on its balance sheet, it plans to shrink itself to sustain profits and rely more on off-balance sheet arrangements to house deposits. This will likely put pressure on top-line expansion.

The Zacks analyst project total revenues to increase just 1.7% in 2024. Also, elevated expenses are likely to hamper profitability. Though we estimate the total expense to decline in 2024, it will increase in 2025. Yet, higher rates will likely aid net interest margin (NIM) while rising funding costs and low-yielding assets will weigh on it. We project NIM to be 2.13% in 2024.

Also, strategic acquisitions have increased the company’s client assets. We estimate total client assets to see a CAGR of 6.9% by 2026. Also, sustainable capital distributions are encouraging.

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

Shares of IDT have outperformed the Zacks Diversified Communication Services industry over the year-to-date period (+12.0% vs. +8.8%). This microcap company with market capitalization of $ 965.16 million has high-growth, high-margin businesses which enhanced overall results, boosting consolidated gross margin by 310 basis points in third-quarter fiscal 2024.

NRS, with over 30,000 active terminals and a 65.9% year-over-year increase in merchant services revenues, leads growth, indicating robust expansion and profitability. Positive adjusted EBITDA across segments underscores operational efficiency. IDT's consistent gross profit rise, cost management and technological advancements drive sustained growth.

Yet, IDT faces risks from economic downturns, integration challenges, cybersecurity threats and international expansion. Declining traditional telecom revenues and rising operating expenses pose challenges. Compliance with fintech regulations adds to cost pressures, and competitive markets require continuous innovation to maintain market share.

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

Other noteworthy reports we are featuring today include AT&T Inc. (T), Sony Group Corp. (SONY) and The Sherwin-Williams Co. (SHW).

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>>>