The Zacks Analyst Blog features Broadcom, Johnson & Johnson, Verizon, Taylor Devices and Frequency Electronics

For immediate releases

Chicago, IL – June 11, 2024 – Zacks.com Announces Stock List Featured on Analyst Blog. Zacks Equity Research analysts discuss the latest news and events affecting stocks and financial markets every day. Stocks recently discussed on the blog include: Broadcom Inc. AVGO, Johnson & Johnson JNJ and Verizon Communications Inc. VZ, Taylor Devices, Inc. TAYD and Frequency Electronics, Inc. FEIM.

Here are the highlights from Monday’s Analyst blog:

Seasonal earnings update and analyst reports for Broadcom, J&J and Verizon

Zacks Research Daily showcases the best research from our team of analysts. Today’s Research Daily includes an earnings season update and updated analyst reports on 16 major stocks, including Broadcom Inc., Johnson & Johnson and Verizon Communications Inc., as well as two small-cap stocks: Taylor Devices, Inc. and Frequency Electronics, Inc. The Zacks microcap research is unique because 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 selected from approximately 70 reports published today by our team of analysts.

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

Earnings Season Update

Q2 earnings season will really pick up on July 12, when JPMorgan reports its quarterly results. However, the reporting cycle begins earlier when companies whose fiscal quarters end in May announce their results. In fact, Costco and AutoZone’s latest results for fiscal quarters ending in May will be included as part of the Q2 2024 tally.

Total S&P 500 earnings for the second quarter are expected to increase by +8.6% compared to the same period last year on higher revenues by +4.6%. The estimates compared really well to other recent periods.

Today’s expected earnings growth of +8.6% in Q2 is down from +8.8% in early April. Estimates continued to rise through the end of April, but began to decline somewhat in May and since then. Overall, second-quarter earnings estimates performed significantly better compared to other periods we’ve seen in recent periods.

Today’s Featured Research Reports

Broadcom year-to-date, the stock has outperformed the Zacks Electronics – Semiconductors industry (+26.6% vs. +16.0%). The company benefits from a robust AI implementation and broad adoption of generative AI. In the semiconductor segment, AI revenues quadrupled year-over-year to $2.3 billion in the first quarter of 2024, despite sluggish enterprise and telecommunications end markets.

Broadcom currently expects fiscal 2024 AI revenue to be around $10 billion. Network revenues are expected to grow 35% year-over-year, driven by accelerating adoption of network connectivity and the development of hyperscaler AI accelerators.

Broadcom expects continued strong order volume for VMware to accelerate revenue growth through the end of fiscal 2024. VMware revenues are expected to grow sequentially at double digits throughout the rest of the fiscal year. However, it expects flat growth in the wireless segment.

(You can read the full Broadcom research report here >>>)

Shares Johnson and Johnson year-to-date has underperformed the Zacks Large Cap Pharmaceuticals industry (-4.6% vs. +21.5%). The company faces headwinds such as generic competition and pricing pressure. J&J faces impending patent expiration on Stelara. Although the company has taken significant steps to resolve talc and opioid disputes, uncertainty regarding talc litigation remains.

Nevertheless, J&J’s Innovative Medicine division performs above market levels. Its growth is driven by existing products such as Darzalex, Stelara, Tremfya and Erleada, as well as the continuous introduction of new products including Spravato, Carvykti and Tecvayli.

The MedTech unit is showing improvement trends, driven by surgical recovery and new product contributions. J&J is making rapid progress in expanding pipelines and lines.

(You can read the full Johnson & Johnson study report here >>>)

Verizon the company’s stock has gained 23.6% over the past year compared to the Zacks Wireless National industry’s gain of +27.9%. The company offers various mix and match pricing on both its wireless and home broadband plans, which has led to steady growth in customer numbers. A focus on emerging growth services such as cloud, security and professional services will likely provide long-term benefits.

The implementation of a virtualized, cloud-based, container-based architecture has led to greater flexibility, scalability and cost efficiency across the network. It will likely benefit from customer-centric planning, disciplined engineering and ongoing investment to achieve a comprehensive service portfolio.

However, the main problem is lower revenues from wired and wireless equipment. Huge promotional spending and lucrative discounts to expand the customer base negatively impact margins. High capital expenditure for continuous network modernization and fiber deployment is a hindrance. The muted forecasts for 2024 are alarming.

(You can read the full Verizon research report here >>>)

Shares Taylor devices year-to-date has outperformed the Zacks Manufacturing – General Industrial industry (+112.0% vs. +3.1%). This small-cap company, which has a market capitalization of $165.22 million, has demonstrated strong financial performance. Sales in the aerospace and defense sector increased by 88%, offsetting declines in other sectors and highlighting strategic alignment towards profitable segments.

Gross profit margin increased to 46% from 41%, reflecting increased operational efficiency and cost management. The company boasts solid liquidity of $3.1 million in cash and short-term investments, providing a foundation for financial stability and support for strategic initiatives. A positive order backlog of $30.2 million indicates future revenue visibility.

However, reliance on the aerospace and defense sector poses risks, and rising SG&A costs could impact future growth.

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

Frequency Electronics shares have outperformed the Zacks Instruments – Control industry over the last year (+45.1% vs. +22.1%). This small-cap company with a market capitalization of $88.66 million shows strong investment potential with revenue growth of 42.9%, from $27.8 million to $39.7 million for the nine months ended January 31, 2024, driven by increased sales in the government and commercial sectors, particularly in the satellite and communications technology sectors.

The company’s strategic position in markets with high entry barriers, such as precision time and frequency control products essential for defense and communications, ensures stable revenue sources and long-term contracts. Operational efficiency also improved, with cost reductions increasing gross margin from 13.7% to 31%.

The company maintains healthy liquidity. However, heavy reliance on U.S. government contracts poses risks due to political and budgetary uncertainties. Strict regulatory requirements and global political tensions create risks.

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

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Past performance is no guarantee of future results. An inherent element of every investment is the possibility of loss. This material is for informational purposes only and nothing in it constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is given as to whether an investment is suitable for any particular investor. You should not assume that any investments in securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. Any views and opinions expressed may not reflect the views of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of any securities. These returns are derived from hypothetical portfolios consisting of stocks with a Zacks Rank = 1 that have been rebalanced monthly with zero transaction costs. These are not profits from actual stock portfolios. The S&P 500 is an unmanaged index. Information regarding the results presented in this press release can be found at https://www.zacks.com/performance.

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