Ericsson to Form Network API JV with Deutsche Telekom, Others

By Dominic Chopping

STOCKHOLM--Ericsson will join forces with a group of global telecom operators as they work to make it easier to develop new digital services.

The Swedish telecom-equipment company said Thursday that the deal will see the formation of a new company to accelerate adoption and innovation of network APIs--the interfaces that enable applications and mobile networks to communicate with each other and allow developers to build software applications.

By combining network APIs globally, the new company aims to ensure that new applications will work anywhere and on any network, which will drive new monetization opportunities, Ericsson said.

Niklas Heuveldop, chief executive of Ericsson's Vonage cloud-communications subsidiary, said that developers will benefit from accessing advanced network capabilities in partner networks through common APIs, accelerating the digital transformation of businesses and the public sector.

"This groundbreaking, open industry collaboration effectively removes the single largest barrier for developers to leverage mobile networks to their full potential," he said.

Ericsson said that by making advanced network capabilities easily accessible it will open up a new wave of app development and allow developers to create new use cases across many sectors.

Companies committing to the deal include America Movil, AT&T, Bharti Airtel, Deutsche Telekom, Orange, Reliance Jio, Singtel, Telefonica, Telstra, T-Mobile, Verizon and Vodafone, but additional telecom operators are encouraged to join, it said.

Upon closing, which is expected in early 2025, Ericsson will hold 50% of the equity in the venture while the telecom providers will hold 50% in total.

Write to Dominic Chopping at dominic.chopping@wsj.com

Google looks to dump Samsung Foundry for Taiwan Semiconductor Manufacturing Co by 2025.

What Happened: Samsung Electronics owns Samsung Foundry. The company lost a critical Alphabet Inc Google smartphone deal to rival Taiwan Semiconductor due to Samsung’s outdated FO-PLP (fan-out panel-level packaging) technology, TechNode reports.

Taiwan Semiconductor will manufacture Pixel 10’s Tensor G5 using its 3nm process and the Pixel 11 series’ Tensor G6 using the 2nm process.

Owens & Minor, Inc. OMI has announced a partnership with Google Cloud, owned by the parent holding company, Alphabet GOOGL to enhance the existing capabilities of its cloud-based clinical inventory management system, QSight. The collaboration will combine the company’s expertise in optimizing the healthcare supply chain with Google Cloud’s Vertex AI platform, to tackle the modern supply chain management complexities and support the patients more effectively.

The latest development demonstrates the progress Owens & Minor has been making toward its strategic goals for the Products & Healthcare Services segment.

Following the news, shares of OMI edged up 0.2% to $14.42 at Tuesday’s close. By staying at the forefront of technology, including making investments with one of the most renowned innovators in the market, the company consistently delivers value to its customers and improves clinician efficiency. We expect the market sentiment on OMI stock to stay positive around this development.

Significance of OMI’s New Partnership

The implications of inefficient inventory management in healthcare can extend beyond the stockroom and into the operating room. This includes the risks of expired products being used in patient care and loss of inventory if products expire before. There is also an increasing pressure to deliver high-quality care while managing costs and optimizing efficiency — with less support from clinical staff.

However, traditional clinical inventory management systems often lack the real-time visibility and predictive capabilities to oversee the complex healthcare supply chains, leading to increasing costs and higher workloads for clinical staff.

The partnership between Owens & Minor and Google Cloud aims to focus on enhancing QSight’s ability to help hospitals and health systems optimize how they manage the thousands of medical-grade supplies, high-value surgical implants and human tissue products required for patient care. The company will also lay the foundation for future platform and service innovations with the potential to improve the QSight customer experience.

Favorable Industry Prospects for Owens & Minor

A report by Research and Markets valued the healthcare inventory management software market at $331.5 million in 2021 and forecasts it to see a compound annual rate of 8.9% through 2028.

The rising complexity of the healthcare supply chain, such as worldwide sourcing, diversified product portfolios, regulatory constraints, and the demand for real-time monitoring, have increased the need for sophisticated inventory management systems. Healthcare organizations are implementing advanced inventory management solutions that provide greater visibility, automation and analytics.

Other Major Developments Within OMI

In July 2024, Owens & Minor announced a definitive agreement to acquire Rotech Healthcare Holdings, Inc., a home medical equipment provider based in the United States, for $1.36 billion in cash. The acquisition directly aligns with the company’s broader strategy to expand into the fast-growing home-based care space. In addition, it also bolsters its Patient Direct product offerings through expansion across a complementary portfolio including Respiratory, Sleep Apnea, Diabetes and Wound Care.

OMI Stock Price Performance

In the past year, Owens & Minor shares have plunged 10.8% against the industry’s 18.4% growth.

OMI Estimate Trend and EPS Surprise History

In the past 30 days, estimates for Owens & Minor’s 2024 earnings have remained constant at $1.57 per share. The company beat estimates in each of the trailing four quarters, the average surprise being 11.1%.

OMI’s Zacks Rank and Top MedTech Stocks

Owens & Minor currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Boston Scientific BSX and AxoGen AXGN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific’s shares have risen 55.9% in the past year. Estimates for the company’s earnings per share have remained constant at $2.40 in 2024 and $2.71 in 2025 in the past 30 days. BSX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 7.2%. In the last reported quarter, it posted an earnings surprise of 6.9%.

Estimates for AxoGen’s 2024 loss per share have remained constant at 1 cent in the past 30 days. Shares of the company have surged 141.4% in the past year compared with the industry’s growth of 15.7%. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.

Zacks Investment Research

For Immediate Release

Chicago, IL – September 12, 2024 – Zacks Equity Research shares Eli Lilly LLY as the Bull of the Day and Hertz Global HTZ as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Shopify SHOP, Alphabet GOOGL and Amazon AMZN.

Here is a synopsis of all five stocks.

Bull of the Day:

Eli Lilly has long been a reliable name in the healthcare sector, providing stability for investors during periods of market turbulence. As a leading pharmaceutical company, it enjoys the defensive qualities of healthcare stocks, which typically perform well even in uncertain economic conditions.

In 2022, when the broader market declined by 18%, Eli Lilly delivered an impressive 34% return. However, what sets Eli Lilly apart from other defensive stocks is its explosive growth potential, particularly in the rapidly expanding GLP-1 weight-loss drug market.

Furthermore, Eli Lilly currently boasts a Zacks Rank #1 (Strong Buy) rating, reflecting upward trending earnings revisions and increasing the odds of a near-term rally. Analysts have raised earnings estimates unanimously and across timeframes by as much as 23.4% over the last two months.

LLY is Dominating the Weight-Loss Drug Market

The GLP-1 drug market, which includes treatments for diabetes and obesity, is forecasted to grow at an astonishing rate of 20% annually through 2030. Eli Lilly’s Mounjaro (tirzepatide) has already established itself as a blockbuster drug, outperforming market expectations in both efficacy and sales. With obesity rates rising globally and increased healthcare awareness, the demand for weight-loss drugs like Mounjaro is expected to surge in the coming years.

The company’s success in this space has been a key driver of its financial performance. In Q2 2024, Eli Lilly reported a 36% increase in revenue, driven largely by Mounjaro and other key drugs like Zepbound and Verzenio. Earnings per share (EPS) for the quarter surged 68% year-over-year, exceeding analysts’ estimates by 42%. This strong performance led Eli Lilly to raise its full-year revenue guidance by $3 billion, highlighting its confidence in sustained growth.

A Robust Pipeline and More Growth on the Horizon

Beyond weight-loss treatments, Eli Lilly boasts a rich pipeline of drugs that positions it for continued growth. Notably, the company recently received FDA approval for Kisunla, a treatment for Alzheimer’s disease, and Jaypirca for mantle cell lymphoma in Japan.

Positive clinical trial results for tirzepatide in treating heart failure and obesity further underscore the potential of its pipeline. These developments in key therapeutic areas such as Alzheimer’s, oncology, and autoimmune disorders add more growth levers for Eli Lilly moving forward.

With revenue projected to grow 23% this year and EPS forecasted to increase by 33.3% annually over the next three to five years, Eli Lilly’s growth story is far from over. Analysts expect the company to continue delivering strong results as it expands its offerings and capitalizes on its leadership in the GLP-1 space.

Valuation Justified by Growth Prospects

At first glance, Eli Lilly’s valuation—currently trading at 38.3x next year’s earnings—might appear steep. However, considering its dominant position in a rapidly growing market, the elevated valuation may be justified. The combination of robust earnings growth, a rich drug pipeline, and strong market leadership justifies its premium valuation.

Can Eli Lilly Join the $1 Trillion Market Cap Club?

Currently, Eli Lilly’s market cap sits at approximately $535 billion. However, given the company’s growth trajectory, it is not far-fetched to imagine LLY reaching a $1 trillion market cap within the next five years.

With the GLP-1 market expected to hit $133 billion by 2030 and Eli Lilly holding a dominant position, the stock has the potential to double in value. If the company maintains its current sales growth and sales multiple, it could indeed join the exclusive trillion-dollar club.

Eli Lilly is a Defensive Play with Explosive Upside

For investors seeking a blend of stability and growth, Eli Lilly offers an attractive opportunity. Its defensive characteristics make it a solid choice during times of market volatility, while its exposure to the booming GLP-1 market and a strong pipeline of innovative drugs provide significant upside potential. With the GLP-1 market set to expand and Eli Lilly well-positioned to maintain its leadership, the stock is poised for long-term growth.

Bear of the Day:

Hertz Global business has been stagnant over the last three years, and its stock price has plunged 84% during that time. While the company is a well-known name in the rental car industry, it continues to face significant headwinds. The earnings revision trend has turned sharply negative, and despite a valuation that might catch the eye of some bargain hunters, the broader picture remains concerning.

In addition to stagnant sales growth, Hertz Global also has negative earnings and faces stiff competition in the rental car market. In this article we will cover the reasons why investors should avoid Hertz Global Stock.

Falling Sales and Earnings Estimates

Hertz Global currently has a Zacks Rank #5 (Strong Sell) rating, reflecting downward trending earnings revisions and dimming the stock’s outlook. Analysts have unanimously lowered earnings estimates across timeframes by hefty margins.

Beyond the earnings revisions, Hertz Global has struggled with flat to declining sales growth over the last five years. Additionally, despite efforts to rebuild the business, the company remains in negative earnings territory, a troubling sign for investors.

Hertz Stock Appears Cheap

One noteworthy point is that Hertz is expecting sales of nearly $10 billion next year, while its current market capitalization is just $800 million. This gives the stock an incredibly low forward price-to-sales ratio of 0.1x, which is very cheap by any standard. However, despite this attractive valuation metric, the company has yet to show any material profits, which is critical for turning sentiment around.

Should Investors Avoid Hertz Global Stock?

While Hertz may appear undervalued from a sales perspective, the company’s declining earnings revisions, negative earnings history, and significant stock price drop make it a risky bet at this time. Until Hertz can demonstrate a turnaround in profitability or its Zacks Rank moves higher, investors would be wise to avoid the stock and look for better opportunities elsewhere.

Additional content:

Shopify Declines -12.5% YTD: Buy, Sell or Hold?

Shopify shares have lost 12.5% year to date, underperforming both the Zacks Computer & Technology sector and the Zacks Internet Services industry. Over the same timeframe, the sector and industry have gained 13.6% and 4.7%, respectively.

The underperformance in SHOP’s shares can be attributed to challenging macroeconomic conditions that have negatively impacted small and medium businesses, which form its major merchant base. This cohort has been suffering from persistent inflation.

Nevertheless, Shopify’s expanding merchant base is noteworthy. This has been driving its Gross Merchandise Volume (GMV) which surpassed $1 trillion cumulatively. Offline business surpassed $100 billion in cumulative GMV since the launch of Shopify POS.

So, is this expanding GMV bodes well for Shopify investors or are the near-term challenges too hot to handle for them?

Let’s analyze to find out.

SHOP Stock to Rebound on Expanding Clientele

Shopify’s expanding clientele is a key catalyst. The growing number of multinational brands like EVEREVE and MAJOURI on its platform is noteworthy. These brands are launching online and offline with Shopify, which, on a combined basis, includes more than 130 locations across four regions.

Merchant-friendly tools like Shop Pay, Shopify Collective, Shopify Audiences, Shopify Capital and Shop Cash offers are helping it win new merchants regularly in a challenging economic environment.

In second-quarter 2024, Shop Pay processed $16 billion in GMV and accounted for 39% of SHOP’s Gross Payments volume (GPV). In the reported quarter, GPV grew to $41.1 billion, constituting 61% of GMV processed.

Shopify recorded the highest-ever B2B GMV month with a 140% year-over-year increase fueled by the growth of Plus merchants.

Integration of Shop Pay Installments into the point-of-sale terminal and general availability of Pro makes it easier for merchants to discover and engage their customers.

Shopify plans to improve the operating efficiency of its point-of-sale offering by introducing features, including a new remote smart grid layout editor, omnichannel return rules and the ability to stack multiple discounts at checkout, making it easier for merchants to customize their promotional strategies.

Expanding Partner Base to Aid SHOP Stock

An expanding partner base that includes TikTok, Snap, Pinterest, Criteo, IBM, Cognizant, Alphabet, Amazon, Manhattan Associates, COACH and Adyen is expected to expand its merchant base further.

Alphabet division YouTube recently expanded its partnership with Shopify to bring more brands for its YouTube Shopping affiliate program.

Shopify’s strategy to focus on the core business by divesting the logistics business has been a noteworthy development. Its partnership with Amazon allows Shopify merchants to use the former’s massive fulfillment network. The relationship with Target also strengthens SHOP’s footprint.

Shopify’s expanding international footprint is noteworthy. In the second quarter, it launched a point-of-sale terminal in eight additional countries, contributing to an impressive 2.4 times increase in GMV.

SHOP Stock to Ride on Robust Q3 Guidance

Shopify offered solid guidance for the third quarter of 2024. It expects revenue growth in the low-to-mid-twenties on a year-over-year basis. The gross margin is expected to increase 50 bps sequentially.

The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $2.11 billion, indicating 22.89% year-over-year growth.

The consensus mark for earnings is pegged at 27 cents per share, unchanged over the past 30 days and suggests 12.5% growth from the figure reported in the year-ago quarter.

Shopify Stock Is Overvalued

The Value Score of D suggests a stretched valuation for Shopify at this moment, which makes it a risky bet for investors despite promising growth prospects.

SHOP stock is trading at a premium with a forward 12-month Price/Sales of 8.97X compared with the industry’s 4.87X.

Conclusion

Shopify is benefiting from strong growth in its merchant base as well as expanding its international footprint. Hence, the long-term growth prospects are hard to ignore.

However, challenging macroeconomic conditions and persistent inflation are a near-term concern, along with a stretched valuation.

Shopify currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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