Friday, June 28, 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 Mastercard Incorporated (MA), Micron Technology, Inc. (MU) and Citigroup Inc. (C), as well a micro-cap stock Tucows Inc. (TCX). 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 >>>

Mastercard shares have outperformed the Zacks Financial Transaction Services industry over the past year (+14.2% vs. +11.3%). The company’s numerous acquisitions are helping it to grow addressable markets and drive new revenue streams. The COVID-19 crisis accelerated the adoption of digital and contactless solutions, providing an opportunity for the firm's business to expedite its shift to the digital mode.

Mastercard is well-poised to gain from steady cash-generating abilities. A strong capital position allows it to pursue acquisitions and prudently deploy capital through share buybacks and dividend payments.

However, steep operating expenses might stress its margins. High rebates and incentives may weigh on net revenues. As such, the stock warrants a cautious stance.

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

Shares of Micron Technology were in line with the Zacks Semiconductor Memory industry over the year-to-date period (+55.0% vs. +54.9%). The company is benefiting from improved market conditions, robust sales executions and strong growth across multiple business units.

The positive impact of inventory improvement in the data center, as well as stabilization in other markets, such as automotive, industrial and others, is contributing to top-line growth. It anticipates the pricing of DRAM and NAND chips to increase next year, thereby improving its revenues.

The pricing benefits should primarily be driven by rising AI servers, causing a scarcity in the availability of cutting-edge DRAM and NAND supply. Also, 5G adoption in the Internet of Things devices and wireless infrastructure is likely 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 >>>)

Citigroup shares have outperformed the Zacks Banks - Major Regional industry over the past six months (+21.5% vs. +13.0%). The company simplified operations via organizational restructuring. It remains on track to exit the consumer banking business in international markets and focus on growth in the wealth management and commercial banking space.

High interest rates will aid its net interest income (NII) while rising funding costs will weigh on it. The Zacks analyst expects NII to decline 1.8% this year. A decent liquidity position makes capital distribution seem sustainable.

Yet, a rise in expenses will affect bottom-line growth. Though we expect costs to decline by 2.9% and 0.6% in 2024 and 2025, respectively, it will rebound and rise 1% in 2026. Also, challenges in growing fee income are a headwind and hinder top-line growth.

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

Shares of Tucows have underperformed the Zacks Internet - Content industry over the past year (-32.3% vs. +27.0%). This microcap company with market capitalization of $204.01 million faces significant challenges, including high debt levels, with $205 million in revolvers and $223.8 million in notes payable, alongside a first-quarter net loss of $26.5 million, worsened by rising operating costs and a negative cash flow from operations.

The strategic pivot to more competitive urban markets could inflate costs and suppress margins amid heightened competition and technological risks. Nevertheless, Tucows shows promising growth, with a 25.6% increase in Ting Internet subscribers and an 8.7% rise in first-quarter 2024 net revenues, driven by expanded serviceable addresses and strong performance across all segments.

TCX's strategic entry into Web3 through the Orange Domains venture positions it at the forefront of emerging tech. Its adjusted EBITDA grew 38.7% year over year in first-quarter 2024 due to effective cost management.

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

Other noteworthy reports we are featuring today include Marsh & McLennan Companies, Inc. (MMC), HubSpot, Inc. (HUBS) and Carnival Corporation & plc (CCL).

Director of Research

Sheraz Mian

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>>>