The Zacks Analyst Blog Oracle, Micron Technology, Medtronic and The Cato

The latest trading session saw Medtronic (MDT) ending at $87.72, denoting a -0.45% adjustment from its last day's close. The stock's change was less than the S&P 500's daily gain of 0.38%. Meanwhile, the Dow experienced a rise of 0.59%, and the technology-dominated Nasdaq saw an increase of 0.09%.

The medical device company's shares have seen a decrease of 0.82% over the last month, surpassing the Medical sector's loss of 1.71% and falling behind the S&P 500's gain of 4.9%.

The upcoming earnings release of Medtronic will be of great interest to investors. The company's earnings report is expected on November 19, 2024. The company is forecasted to report an EPS of $1.24, showcasing a 0.8% downward movement from the corresponding quarter of the prior year. At the same time, our most recent consensus estimate is projecting a revenue of $8.26 billion, reflecting a 3.47% rise from the equivalent quarter last year.

MDT's full-year Zacks Consensus Estimates are calling for earnings of $5.44 per share and revenue of $33.6 billion. These results would represent year-over-year changes of +4.62% and +3.81%, respectively.

Investors should also pay attention to any latest changes in analyst estimates for Medtronic. These revisions help to show the ever-changing nature of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Medtronic is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, Medtronic is presently being traded at a Forward P/E ratio of 16.21. This denotes a discount relative to the industry's average Forward P/E of 24.68.

We can additionally observe that MDT currently boasts a PEG ratio of 2.52. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As of the close of trade yesterday, the Medical - Products industry held an average PEG ratio of 2.

The Medical - Products industry is part of the Medical sector. This group has a Zacks Industry Rank of 79, putting it in the top 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Zacks Investment Research

Friday, November 8, 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 Oracle Corp. (ORCL), Micron Technology, Inc. (MU) and Medtronic plc (MDT), as well as a micro-cap stock The Cato Corp. (CATO). 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 >>>

Oracle’s shares have outperformed the Zacks Computer - Software industry over the year-to-date period (+78.9% vs. +18.8%). The company’s stock hit record high of $160.52 a share following strong fiscal Q1 2025 results, driven by solid adoption of strategic cloud applications, autonomous database offerings and Oracle Cloud Infrastructure and recovery in cloud revenue growth.

ORCL’s continued investment in cloud infrastructure positions it well for sustained growth in the dynamic software industry. The recent partnership with Amazon for Oracle Database@AWS and general availability of Oracle Database@Google bodes well. Oracle’s Gen 2 Cloud is driving AI clientele. Its share buybacks and dividend policy are noteworthy.

The Zacks analyst expect fiscal 2025 net sales to grow 8.7% from fiscal 2024. However, higher spending on product enhancements, especially toward the cloud platform amid increasing competition in the cloud domain. is likely to limit margin expansion.

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

Shares of Micron Technology have outperformed the Zacks Computer - Integrated Systems industry over the year-to-date period (+33.3% vs. +18.1%). The company is gaining from improved market conditions, strong sales executions and robust growth across multiple business units. The positive impact of inventory improvement in the data center and stabilization in other end markets, such as automotive, industrial and others, is adding to top-line growth.

Micron expects the pricing of DRAM and NAND chips to surge next year, which will boost its revenues. The pricing benefits should mainly be driven by the high demand for AI servers, which are causing a scarcity in the availability of DRAM and NAND supply.

Also, 5G adoption in the Internet of Things devices and wireless infrastructure is expected to spur demand for memory and storage. However, the United States and China’s tit-for-tat trade war is a major threat to the company.

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

Medtronic’s shares have gained +9.7% over the year-to-date period against the Zacks Medical - Products industry’s gain of +15.0%. The company is strategically expanding its global presence to address the unmet demand for advanced medical devices. Within Cardiovascular, Medtronic is gaining market share, banking on product launches in CRM and Structural Heart.

Hypertension has brought up multibillion-dollar opportunities for MDT. In MedSurg, Medtronic is scaling the production of Hugo RAS. The Surgical and Neuroscience portfolios continues to contribute positively. Further, the company’s Pacing business continued to drive strong growth banking on strong global growth of its Micra leadless pacemaker.

Innovations and market expansion efforts are helping it offset the impact of the inflation and supply disruptions. Medtronic’s strong liquidity position should allow it to meet its near-term debt obligations. All these factors support our bullish stance on the stock.

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

Shares of Cato have gained +2.5% over the past year period against the Zacks Retail - Apparel and Shoes industry’s gain of +26.6%. This microcap company with market capitalization of $129.79 million have strong financial position, with $30.8 million in cash and $69.9 million in working capital, enhances its operational stability and ability to invest in future growth.

Improved cost control, with a 7% reduction in SG&A expenses, has bolstered profitability, and net income nearly doubled to $11.1 million for the first half of 2024. The company's disciplined inventory management minimizes markdown risk, preserving margins. Cato’s consistent dividend payments underscore its financial health. Additionally, it is well-positioned to benefit from expected growth in the global apparel market.

However, challenges persist with an 8% sales decline due to store closures, weak e-commerce performance (less than 5% of total sales) and inflationary pressures affecting consumer spending. Cato’s reliance on physical stores and exposure to economic cycles further heighten risks.

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

Other noteworthy reports we are featuring today include Canadian National Railway Co. (CNI), Arthur J. Gallagher & Co. (AJG) and Coinbase Global, Inc. (COIN).

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

Oracle (ORCL) Gains from Cloud Suite Adoption & Partnerships

Supply Stabilization, Higher AI Spending Aids Micron (MU)

Medtronic (MDT) Banks on Neuromodulation, New Growth Areas

Featured Reports

Dividends & Buyback Aid Canadian National (CNI), Expenses Ail

The Zacks analyst likes the shareholder-friendly measures adopted by Canadian National. However, rising operating expenses are concerning as they are likely to keep the bottom line under pressure.

Improving Fees and Commissions Aid Arthur J. Gallagher (AJG)

Per the Zacks analyst, Arthur J. Gallagher is poised to grow on improving fees and commissions that in turn is driving organic revenues growth. However, rising expenses weighing on margin concerns.

Coinbase (COIN) Banks on Improving Top Line, Expenses Hurt

Per the Zacks analyst, higher transaction revenues, subscription and services revenues, growth in crypto assets should drive Coinbase revenues. However, escalating expenses hurt its margins.

Investments Aid Sempra Energy (SRE), Poor Financials Woe

Per the Zacks analyst, systematic investments in infrastructure are expected to boost Sempra's rate base growth. Yet, the company's poor financial position might remain a concern for its investors

ANSYS' (ANSS) Performance Driven by Robust Product Portfolio

Per the Zacks Analyst, higher demand for simulation solutions across verticals like aerospace and high tech is driving ANSYS's performance. Increasing expenses and stiff competition are concerning.

Solid Transportation Segment Aids Trimble's (TRMB) Prospects

Per the Zacks analyst, Trimble is benefiting from strong momentum in the transportation segment, driven by organic growth in enterprise and strong demand for map solutions.

Service Center Unit Aids Applied Industrial (AIT), Costs Ail

Per the Zacks analyst, Applied Industrial's Service Center Based Distribution segment is driven by sales initiatives and focus on national customer accounts. However, high costs remain concerning.

New Upgrades

Solid Bookings & Fleet Expansion to Aid Royal Caribbean (RCL)

Per the Zacks analyst, Royal Caribbean is likely to benefit from robust booking trends, fleet expansion and digital initiatives. Also, strength in consumer onboard spending bodes well.

Cheniere (LNG) to Gain from Sustained Gas Export Strength

The Zacks analyst believes that being one of the few liquefied natural gas exporters of the U.S., Cheniere Energy is set to capitalize on the sustained strength in shipments to Europe and Asia.

Zillow Group (ZG) Rides on Healthy Demand, Portfolio Strength

Per the Zacks analyst, solid traction in the Premier Agent business and strong multi-family listings will likely drive Zillow Group's top line. Focus on AI integration is a tailwind.

New Downgrades

CSX's Prospects Hurt by High Debt Load & Soft Coal Market

The Zacks analyst is concerned about the weak coal market, which has resulted in below-par coal revenues. CSX's high debt levels are also worrisome.

Hershey (HSY) Remains Troubled by Increasing Commodity Costs

Per the Zacks analyst, Hershey is seeing higher commodity costs. In Q3, adjusted gross margin contracted 460 basis points due to higher commodity costs and fixed cost deleverage among other reasons.

High Costs and Strict Regulation Hurt Franklin (BEN) Growth.

Per the Zacks analyst, Franklin's rising cost will hurt the bottom-line growth. Numerous regulations by U.S. and non-U.S. regulators add further complexity to ongoing operations.

Zacks Investment Research

Elon Musk‘s fortune skyrocketed past $300 billion on Friday, fueled by a sharp rally in Tesla Inc. 's stock after Donald Trump's election as the 47th U.S. president.

According to Forbes’ Real-Time Billionaires List, Musk’s net worth reached $305 billion — distantly followed by Oracle Inc. co-founder Larry Ellison at around $231 billion, and Amazon.com Inc. 's Jeff Bezos, who trails at approximately $225 billion.

Musk is now more than $100 billion richer than Meta Platform Inc.‘s CEO Mark Zuckerberg.

The electric carmaker's shares rocketed nearly 30% over the week, driving the company's market capitalization beyond the $1 trillion mark and delivering Musk a massive windfall.

Other than deriving much of his wealth from Tesla, Musk has also diversified his fortune in SpaceX, founded in 2002, which is worth nearly $210 billion based on a tender offer launched during the second half of 2024. Musk owns an estimated 42% stake.

Musk bought Twitter in a $44 billion (enterprise value) deal in 2022, although Forbes estimates that the social media company, which he renamed X, is worth nearly 70% less as of August 2024.

Musk owns an estimated 60% of xAI, which he founded in 2023. Private investors valued the company at $24 billion in May 2024.

Why Trump's Victory Was A Big Win For Musk

Trump's stance on tariffs, specifically on vehicles imported from Europe and China, could potentially make it tougher for foreign carmakers to compete in the U.S. market — an advantage that could drive up Tesla's market share on its home turf.

A Trump presidency would likely mean the end of EV subsidies and tax credits during Tesla’s second-quarter earnings call.

The impact would be slight for Tesla and devastating for its competitors. “But long term probably actually helps Tesla, would be my guess, yes,” Musk has said.

Musk has also been an active political backer for Trump's 2024 campaign, reportedly donating over $130 million to support his re-election efforts.

Trump’s victory speech didn't shy away from showing gratitude either.

As Forbes highlighted, Trump took nearly 4 minutes in his first speech to praise Musk, calling him a "super genius" and highlighting Tesla's achievements, from SpaceX's rocket launches to the expanding satellite internet network.

"A star is born — Elon!" Trump declared.

Musk has expressed enthusiasm about heading a proposed Department of Government Efficiency (D.O.G.E.), where he'd lead efforts to trim wasteful spending from the federal budget. Trump touted Musk as the ideal candidate to serve as the "Secretary of Cost-Cutting," potentially overseeing an ambitious plan to slash $2 trillion in federal expenses.

Musk’s Wealth Outpaces 475 S&P 500 Companies

To put his wealth into perspective, Musk could theoretically buy out companies in the S&P 500 with valuations smaller than his own, a list as big as 474 names.

Major corporations like Chevron , valued at $287 billion, and The Coca-Cola Company at $276 billion, are now "within reach" for Musk's personal fortune.

With $305 billion, Musk could also theoretically acquire three companies in the $100 billion range, like Prologis , Deere & Company and Lam Research Corporation , with cash to spare.

Read Next:

• S&P 500 Breaks 6,000 Points, Dow Soars Above 44,000, Small Caps Eye Strongest Week In 4 Years, Tesla Hits $1 Trillion: What’s Driving Markets Friday?

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.