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Wednesday, November 13, 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 UnitedHealth Group Inc. (UNH), Bank of America Corp. (BAC) and SAP SE (SAP). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

UnitedHealth’s shares have outperformed the Zacks Medical - HMOs industry over the past two years (+19.7% vs. +12.8%). The Zacks analyst believes that strong market position, new deals, renewed agreements, expansion of service offerings, government business have aided the company.

However, membership in its global business continues to be a concern. High operating costs due to rising medical expenses are hurting margins.

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

Bank of America’s shares have underperformed the Zacks Financial – Investment Bank industry over the past year (+56.9% vs. +64.7%). The Zacks analyst believes that high funding costs, the challenging macroeconomic environment weighing on the investment banking business, and operating costs remaining high due to continued investments in franchise have ailed.

Yet, the company’s plans to open financial centers in new and existing markets and improve digital capabilities should support the top line.

(You can read the full research report on Bank of America here >>>)

Shares of SAP have outperformed the Zacks Computer - Software industry over the last six months (+23.6% vs. +9.0%). Per the Zacks analyst, amid a volatile macro environment, the company is making significant strides in Business AI initiatives, with innovations like SAP Knowledge Graph. Synergies from WalkMe’s acquisition and ongoing restructuring efforts also bode well. Cloud ERP Suite sales have also driven revenue.

However, softness in the Software license and support business segment remains a headwind.

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

Other noteworthy reports we are featuring today include Boston Scientific Corp. (BSX), Sanofi (SNY) and Sony Group Corp. (SONY).

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

Solid Top Line & Strong Cash Flows Drive UnitedHealth (UNH)

Branch Openings, Lower Rates Aid BofA (BAC), Fee Income Ails

Solid Demand in Cloud & AI Innovations Drive SAP's Prospects

Featured Reports

Dupixent to Remain Sanofi's (SNY) Key Top-Line Driver

The Zacks analyst expects Dupixent to remain Sanofi's key top-line driver as it enjoys strong demand trends. Sanofi has also accelerated its pipeline this year and has been active on the M&A front

Investments & Customer Additions Aid Southwest Gas (SWX)

Per the Zacks analyst, Southwest Gas' strategic investment plans will support system improvements and pipe replacement programs. Consistent customer additions will further boost its results.

Sunoco's (SUN) Robust Motor Fuel Distribution Network Aids

Per the Zacks analyst, Sunoco's long-term contracts with over 10,000 convenience stores across the U.S. should ensure stable earnings. However, its significant reliance on debt raises concerns.

Solid Non-Gaming Business Aid Wynn Resorts (WYNN) Prospects

Per the Zacks analyst, Wynn Resorts is likely to gain from solid non-gaming business and strategic capital investments. Also, focus on development projects like the event center bodes well.

Strength in Games & Network, Music Segments Benefits SONY

Per the Zacks analyst, Sony is gaining from strong performance of its Games & Network and Music segments. Weak macro conditions, lower hardware sales and rising costs are concerns.

Robust EP Gains Aid Boston Scientific (BSX), Cost Woes Worry

Per the Zacks analyst, the stellar performance of Boston Scientific's Electrophysiology (EP) business is led by FARAPULSE PFA system. Yet, rising expenses from macroeconomic headwinds raise concerns.

Solid Top Line Aids American Financial (AFG), Cat Loss Ails

Per the Zacks analyst, American Financial growing revenues driven by higher net investment income, net earned premiums have led to significant growth. However, exposure to cat loss is a concern.

New Upgrades

Strong SMB clientele Aids BILL Holdings (BILL) Prospects

Per the Zacks analyst, BILL is benefiting from an expanding small and medium business (SMB) clientele, as well as a diversified business model.

End-Market Strength & Diversification Aids Amphenol (APH)

Per the Zacks analyst, Amphenol is benefiting from commercial air, military, industrial and automotive end-market demand. Diversified business model also lowers volatility of individual geographies.

Acquisitions & Restructuring Initiatives Aid UBS Group (UBS)

Per the Zacks analyst, UBS Group's emphasis on business restructuring to strengthen its financials is promising, while opportunistic acquisitions are expected to drive long-term growth.

New Downgrades

Decreased Demand Paper Related Products Hurts Xerox (XRX)

Per the Zacks analyst, Xerox is grappling with decreased demand for paper-related systems and products. Rising competition is concerning.

Weak Demand, Low Steel Margins Ail Commercial Metals (CMC)

Per the Zacks analyst, sluggish demand in Europe is putting pressure on Commercial Metals' results. Lower steel product margins also remain worrisome.

Soft Demand to Hurt Capri Holdings (CPRI) Top Line

Per the Zacks analysts, softness in demand for luxury fashion items is likely to hurt Capri Holdings top line. The company is seeing sluggishness across its brands.

Zacks Investment Research

National Vision Holdings, Inc. EYE delivered an adjusted EPS (earnings per share) of 12 cents in the third quarter of 2024 compared with 11 cents in the year-ago period. The figure surpassed the Zacks Consensus Estimate of 5 cents.

The GAAP income from continuing operations was 3 cents per share compared to an EPS of 23 cents in the prior-year quarter.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Following the earnings announcement on Nov. 6, shares of EYE dropped 3.1%, closing at $11.82 yesterday.

National Vision’s Q3 Revenues

During the nine months ended Sept. 28, 2024, the company’s Walmart store operations, including the former Legacy reportable segment and components of the Corporate/Other category, met the requirements to be classified as discontinued operations. As of Sept. 28, 2024, the company operates under one reportable segment, Owned & Host.

Net revenues from continuing operations in the third quarter totaled $451.5 million, which missed the Zacks Consensus Estimate by 0.03%.

The top line rose 2.9% from the year-ago quarter’s number, driven by growth from new store sales and Adjusted Comparable Store Sales Growth and the effect of unearned revenues.

In the third quarter, comparable store sales growth was 1.4% year over year. Adjusted comparable store sales growth was 0.9%. National Vision opened 18 new stores and ended the period with 1,231 stores. Overall, the store count rose 4.9% year over year.

National Vision’s Q3 Margin Performance

On a consolidated basis, the gross profit in the third quarter rose 2.6% from the prior-year quarter’s level to $261.6 million. The gross margin expanded 110 basis points (bps) despite a 3.3% rise in the cost of revenues (comprising products, services and plans).

SG&A expenses fell 1.6% year over year to $224 million. The adjusted operating margin was 8.3%, which expanded 207 bps year over year.

National Vision Holdings, Inc. Price, Consensus and EPS Surprise

National Vision Holdings, Inc. price-consensus-eps-surprise-chart | National Vision Holdings, Inc. Quote

National Vision’s Financial Position

National Vision exited the third quarter with cash and cash equivalents of $81.2 million compared with $179.5 million at the end of the second quarter.

The cumulative net cash flow from operating activities at the end of the quarter was $103.4 million compared with $153.3 million a year ago.

National Vision’s 2024 Outlook

National Vision reaffirmed its outlook for 2024 for the 52 weeks ending Dec. 28, 2024.

Full-year net revenues are expected in the range of $1.820-$1.840 billion (unchanged). The Zacks Consensus Estimate for fiscal 2024 revenues currently stands at $1.83 billion.

Adjusted comparable store sales are expected to grow 0.5%-1.5% (unchanged). Adjusted EPS is estimated in the band of 45-50 cents (unchanged). The Zacks Consensus Estimate for the same is currently pegged at 46 cents.

An Update on National Vision’s Portfolio Review

In a separate release, the company announced the results of its comprehensive store fleet review. In August 2024, National Vision disclosed that it had identified an initial list of less than 5% of its total fleet that was not meeting its profitability thresholds. It plans to close 39 of those stores by the end of fiscal 2026 and convert four Eyeglass World stores to America’s Best by the end of fiscal 2024.

In fiscal 2025, the company will temporarily moderate new store openings to 30-35 new stores. After that time, it expects to return to its more recent store opening cadence as its initiatives gain traction.

Our Take on National Vision

National Vision delivered better-than-expected earnings in the third quarter of 2024, while revenues missed estimates. However, the top and bottom lines rose on a year-over-year basis. America’s Best continued to drive the sales performance supported by strength in the company’s managed care business.

In addition, customers responded well to National Vision’s Wise Buys eyeglass promotion, which helped enhance the value offering and attract new customers. The company is capitalizing on its remote capabilities to expand exam capacity and provide doctors with convenient new ways to practice.

National Vision has shown progress in key aspects of its transformation, including the completion of its store fleet review, the implementation of new traffic-driving initiatives, the expansion of exam capacity and remote exam efficiency and the benefit of its strengthened execution team. The expansion of both margins in the quarter is highly encouraging.

EYE’s Zacks Rank and Key Picks

National Vision currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Haemonetics HAE, Intuitive Surgical ISRG and Boston Scientific Corporation BSX.

Haemonetics reported second-quarter fiscal 2025 adjusted earnings of $1.12 per share, which surpassed the Zacks Consensus Estimate by 2.8%. Revenues of $345.5 million beat the consensus mark by 0.7%. HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

HAE’s fiscal 2025 earnings are expected to surge 15.9%. The company’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 2.8%.

Intuitive Surgical, currently carrying a Zacks Rank #2, posted a third-quarter 2024 EPS of $1.84, beating the Zacks Consensus Estimate by 11.5%. Revenues of $2.04 billion surpassed the Zacks Consensus Estimate by 1.2%.

ISRG has an estimated 2024 earnings growth rate of 20.1% compared with the industry’s 13.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.9%.

Boston Scientific Corporation, currently carrying a Zacks Rank #2, reported third-quarter 2024 adjusted earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion beat the Zacks Consensus Estimate by 4.5%.

BSX has an estimated 2024 earnings growth rate of 17.6% compared with the industry’s 11.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.2%.

Zacks Investment Research

Inogen, Inc. INGN incurred an adjusted loss per share of 11 cents for third-quarter 2024, which was narrower than the adjusted loss per share of 36 cents in the year-ago period and the Zacks Consensus Estimate of a loss of 51 cents per share.

GAAP loss per share for the quarter was 25 cents, narrower than the year-earlier loss of $1.97 per share.

INGN’s Revenues in Detail

Inogen registered revenues of $88.8 million for the third quarter, up 5.8% year over year. The figure surpassed the Zacks Consensus Estimate by 6.2%.

At constant exchange rate (CER), total revenues for the reported quarter increased 6% year over year.

Per management, the year-over-year uptick in the top line was primarily driven by higher demand and new customer gains across the domestic and international business-to-business channels. However, this was partially offset by lower direct-to-consumer sales and rental revenues.

Shares of this company gained nearly 17.2% till last trading.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Inogen’s Segmental Details

Inogen derives revenues from two sources — rental and sales.

Rental revenues for the reported quarter grossed $13.9 million, down 13.1% from the year-ago period both on a reported basis and at CER. Per management, the decrease resulted from continued lower average billing rates due to the mixed shift to private payers.

Sales revenues were $74.9 million, up 10.2% from the prior-year quarter.

INGN’s Revenues by Region & Category

Domestic business-to-business sales for third-quarter 2024 amounted to $16.5 million, up 35.1% on a year-over-year basis. Per management, this was driven by increased demand from new customers and resellers.

International business-to-business sales for the reported quarter amounted to $32.3 million, up 26.2% year over year on a reported basis and up 26.9% at CER. Per management, this resulted from increased demand from new and existing customers.

Domestic direct-to-consumer sales decreased 23.2% year over year to $19.2 million for the quarter.

Inogen, Inc Price, Consensus and EPS Surprise

Inogen, Inc price-consensus-eps-surprise-chart | Inogen, Inc Quote

Inogen’s Margins

For the quarter under review, Inogen’s adjusted gross profit rose 20.1% from the year-ago period to $44.6 million. The adjusted gross margin expanded 598 basis points to 50.2%.

Sales and marketing expenses increased 1% from the year-ago quarter to $26.4 million. Research and development expenses decreased 21.6% year over year to $3.5 million, while general and administrative expenses increased 13.2% year over year to $19.3 million. Adjusted operating expenses of $49.1 million rose 3.2% year over year.

Adjusted operating loss totaled $4.5 million compared with the prior-year quarter’s $10.5 million.

INGN’s Financial Position

Inogen exited third-quarter 2024 with cash and cash equivalents of $105.7 million compared with $97.9 million at the first-quarter end.

The company ended the quarter with no debt on its balance sheet.

Cumulative net cash provided by operating activities at the end of third-quarter 2024 was $8.9 million against cumulative net cash used in operating activities of $0.1 million a year ago.

Inogen’s Guidance

Inogen has provided its revenue outlook for the full year.

The company now expects the metric to lie between $329 million and $331 million (reflecting growth of 4-5% from the comparable 2023 revenues), up from the prior outlook of $325 million to $330 million (reflecting growth of 3-5% from the comparable 2023 revenues). The Zacks Consensus Estimate currently stands at $326.9 million.

Our Take

Inogen exited the third quarter of 2024 with a narrower-than-expected loss per share and better-than-expected revenues. Solid year-over-year top-line and bottom-line performances were encouraging. The robust year-over-year uptick in domestic and international business-to-business sales was impressive. The expansion of the adjusted gross margin also bodes well.

Last month, INGN commenced the U.S. market release of the Inogen Rove 4 Portable Oxygen Concentrator. This looks promising for the stock.

Yet, a decline in domestic direct-to-consumer sales and rental revenues was concerning. Inogen continued to incur operating losses for the third quarter, which did not bode well.

INGN’s Zacks Rank and Key Picks

Inogen currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Quest Diagnostics, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2024 adjusted earnings per share (EPS) of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.4%.

ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.

ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.4%.

Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

Zacks Investment Research