Lumen Technologies Initiated at Sell by Goldman Sachs

Wednesday, June 5, 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 Bank of America Corporation , Advanced Micro Devices, Inc. and Caterpillar Inc. , as well as a micro-cap stock Weyco Group, Inc. . 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 >>>

Bank of America shares have outperformed the Zacks Banks - Major Regional industry over the past six months (+30.9% vs. +26.0%). While higher funding costs remain a drag, the company’s net interest income (NII) will benefit from the current high-rate regime. Given its status as a major money-center financial player, the company is also well positioned for the improving macroeconomic backdrop.

The opening of financial centers in new and existing markets and improved digital capabilities will support the top line. While the capital markets activity improved of late, the challenging macroeconomic environment might once again weigh on the investment banking (IB) business.

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

Shares of AMD have outperformed the Zacks Electronics - Semiconductors industry over the past six months (+37% vs. +35.7%). The company is benefiting from portfolio strength and an expanding partner base. Data Center revenues benefited from the strong adoption of AMD Instinct MI300X GPUs and a double-digit percentage increase in CPU sales.

In cloud, server CPU revenues increased year over year and sequentially as North American hyperscalers expanded fourth Gen EPYC Processor deployments to power their internal workloads and public instances. Exiting first-quarter 2024, AMD had more than 900 public cloud instances available, with Amazon, Google and Microsoft increasing their usage fourth-gen EPYC processor offerings with new instances and regional deployments.

Microsoft, Meta, Oracle and other cloud providers announced further MI300X deployments in the reported quarter. However, weakness in the Gaming and the Embedded businesses remains a headwind.

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

Caterpillar shares have outperformed the Zacks Manufacturing - Construction and Mining industry over the past six months (+30.4% vs. +26.6%). The company’s earnings have increased year over year for thirteen straight quarters aided by cost-saving measures, strong demand and pricing actions. These factors mitigated the impact of the industry-wide supply-chain snarls and cost pressures.

The Construction Industries segment will gain from the increased construction activities in the United States and globally. The mining sector will be bolstered by commodity demand driven by the energy transition trend, which, in turn, will support the Resource Industries segment.

The Energy & Transportation segment is well-positioned for growth, backed by strong demand across all applications. Its dividend yield and payout ratio are higher than its peers. A solid liquidity position and investments in expanding services and digital initiatives will help Caterpillar deliver exceptional returns.

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

Shares of Weyco have outperformed the Zacks Shoes and Retail Apparel industry over the past six months (+7% vs. -13.2%). This microcap company with market capitalization of $290.22 million stands to benefit from growth in the global footwear industry, driven by trends such as rising disposable incomes, urbanization, and e-commerce.

The company’s Retail segment saw record Q1 sales, mainly due to strong e-commerce performance, highlighting effective online strategies. Improved gross margins, reaching 44.7% in Q1 2024, showcase efficient cost management. Weyco's focus on core brands and innovation in casual and outdoor footwear aligns with market demand. Weyco holds $84.7 million in cash and marketable securities, supporting flexibility and consistent dividends.

However, its Q1 net sales dropped by 17%, affected by lower North American wholesale demand and a 26% decline in overseas sales. Inflation, economic slowdowns, and market saturation pose additional risks. Dependence on key accounts threatens revenue stability.

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

Other noteworthy reports we are featuring today include Anheuser-Busch InBev SA/NV , General Dynamics Corporation and Williams-Sonoma, Inc. .

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>>>

Today's Must Read

Branch Openings, Rates, Decent Loan Demand Aid BofA

AMD Rides on Strong Adoption of Fourth-Gen EPYC Processor

Strong Demand, Strategic Initiatives Aid Caterpillar

Featured Reports

Global Brands Strength Drive AB InBev's Organic Sales

Per the Zacks analyst, strength in global brands aided AB InBev's organic sales growth in first-quarter 2024, backed by improving key market trends and premiumization in majority of its markets.

Order Flow Aids General Dynamics Amid Supply Challenges

Per the Zacks Analyst, solid order flow for its products bolsters General Dynamics' revenue growth prospects. Yet supply chain challenges may continue to adversely impact the company.

Solid B2B Strategy Aids William-Sonoma , High costs Ail

Per the Zacks analyst, William-Sonoma benefits from its B2B initiative, e-commerce business and expansion efforts. However, ongoing softness in the housing market and high costs are a concern.

Insmed Rides on Upbeat Bronchiectasis Drug Study Data

The Zacks Analyst is encouraged by Insmed's recently reported data from a phase III study on brensocatib in treating bronchiectasis. Based on the results, a commercial launch is planned for mid-2025.

Kirby Benefits From Share Buyback and Solid Cash Flow

Per the Zacks analyst, rewarding shareholders through share buybacks boosts investor confidence and positively impacts Kirby's bottom line. KEX's strong cash flow generating ability looks encouraging.

Solid Medical Sales Continues to Aid Integer Holdings

The Zacks analyst is upbeat about Integer Holdings' continued strength in medical sales despite its operation in a highly competitive market.

Lumen to Gain from Momentum in Quantum Fiber Business

Per the Zacks analyst, Lumen's performance is likely to gain from the company's investment in its growth initiatives for the Enterprise business and ramping of the Quantum Fiber business going ahead.

New Upgrades

Strong Demand, Acquisitions to Drive Commercial Metals

The Zacks analyst believes that Commercial Metals will gain on the strong demand in North America. Efforts to increase its capabilities through construction of new mills and acquisitions bode well.

Hanesbrands Gains from Innerwear Unit, Champion Brand

Per the Zacks analyst, Hanesbrands is poised for growth, courtesy of its efforts to enhance Innerwear business and Champion brand. Relevant innovation, especially for young consumer has been aiding.

Rising Premiums, Acquisitions Benefit ProAssurance

Per the Zacks analyst, ProAssurance's net premiums continue rise on higher new business written and strong retention rates. Buyouts and integrations undertaken bode well for the long haul.

New Downgrades

W&T Offshore To Hurt From Significant Exposure to Debt

Per the Zacks analyst, W&T Offshore's significant reliance on debt is concerning as it limits financial flexibility and poses greater financial risk.

Supply Issues & High Input Costs to Hurt Manitowoc

The Zacks Analyst is concerned that the ongoing supply chain challenges, inflationary costs and skilled labor shortages as well as higher steel cost will hurt Manitowoc's results.

Weak Demand for 3D Printers Hurts 3D Systems Prospects

Per the Zacks analyst, 3D Systems' is suffering from uncertain macroeconomic conditions that are keeping customer budgets under pressure. Weak demand remains a concern in the near term.

Zacks Investment Research