Friday, March 7, 2025

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 Walmart Inc. (WMT), HSBC Holdings plc (HSBC) and Adobe Inc. (ADBE), as well as two micro-cap stocks Friedman Industries, Inc. (FRD) and NetSol Technologies, Inc. (NTWK). 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 >>>

Ahead of Wall Street

The daily 'Ahead of Wall Street' article is a must-read for all investors who would like to be ready for that day's trading action. The article comes out before the market opens and attempts to make sense of that morning's economic releases and how they will affect that day's market action. You can read this article for free on our home page and can actually sign up there to get an email notification as this article comes out each morning.

You can read today's AWS here >>> BLS Jobs Numbers: +151K, Unemployment +4.1%

Today's Featured Research Reports

Walmart’s shares have outperformed the Zacks Retail - Supermarkets industry over the past year (+59.3% vs. +55.6%). The company is benefiting from its diverse business model that spans multiple segments, channels and formats. The company's strong omnichannel strategy has boosted traffic across physical stores and digital platforms.

Walmart’s emphasis on improving delivery services has been successful, contributing to steady grocery market share gains. Upsides like these, along with growth in the advertising business, fueled third-quarter fiscal 2025 results, wherein the top and bottom lines grew year over year, and e-commerce sales surged.

However, Walmart is experiencing adverse currency movements and margin pressures from shifts in product mix. While raising its fiscal 2025 guidance, the company’s implied fourth-quarter view for revenues and operating income reflects a slowdown from the reported third-quarter figures.

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

Shares of HSBC have outperformed the Zacks Banks - Foreign industry over the past year (+68.4% vs. +25.6%). The company’s fourth-quarter results reflected lower expenses. A strong capital position, relatively high rates, global network and business simplification efforts will keep aiding its financials.

As part of its Asia pivot strategy, it is moving away from less profitable markets and announced the sale of businesses in Germany and South Africa. It has exited retail operations in the United States, Canada, France, New Zealand, Greece, Russia, Argentina and Armenia.

While efforts to strengthen its market share in the Asia region will support financials, they will likely lead to an increase in expenses. For 2025, the company expects operating expenses to increase 3%. The company’s subdued revenue performance in light of weaker loan demand amid a challenging macroeconomic backdrop is a woe.

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

Adobe’s shares have underperformed the Zacks Computer - Software industry over the past year (-19.4% vs. +1.4%). The company is facing intensifying competition from the likes of Microsoft-backed OpenAI, which is concerning. Lack of monetization is a headwind for Adobe amid challenging macroeconomic conditions.

Nevertheless, Adobe’s prospects are expected to benefit from strong demand for its creative products. Its Creative Cloud, Document Cloud and Adobe Experience Cloud products have been driving top-line growth. New AI releases, including Express, Acrobat AI Assistant, Firefly Services, DX premium tiers and GenStudio for Performance Marketing, have expanded the portfolio of products.

These are expected to drive Adobe’s market share and monetization in the near future. Adobe’s deepening generative artificial intelligence (GenAI) focus and innovative GenAI-powered portfolio are key catalysts.

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

Shares of Friedman Industries have underperformed the Zacks Metal Products - Procurement and Fabrication industry over the past year (-12.4% vs. +24.7%). This microcap company with market capitalization of $110.07 million is facing fiscal third-quarter sales declined 18.9% year over year. The tubular segment remains weak and high inventory levels pose risks amid steel price volatility. Rising costs and debt burdens could pressure profitability despite hedging strategies and operational efficiencies.

Nevertheless, Friedman Industries' sales backlog grew 11% year over year in third-quarter fiscal 2025, signaling stronger demand and potential revenue recovery. Post-election stability has driven increased order activity, with fiscal fourth-quarter sales and margin expansion expected as hot-rolled coil (HRC) prices rebound.

Debt fell 9% to $32.5 million, with $99.2 million in available credit supporting operations. Industry tailwinds include a projected increase in HRC prices and rising infrastructure and manufacturing investments.

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

NetSol Technologies’ shares have underperformed the Zacks Computer - Software industry over the past year (-14.2% vs. +1.4%). This microcap company with market capitalization of $28.48 million have seen license fee revenues plummeted 97.6% year over year, and rising operating expenses ($7.41 million, +20.5%) pressured profitability. Net loss reached $1.15 million due to FX volatility, and revenue from key client Daimler fell 23%.

Trade risks, competitive pressures, and uncertain ROI on growth investments remain concerns. As such, the stock warrants a cautious stance. Nevertheless, NetSol is transitioning to a subscription-based model, enhancing revenue stability. In the second quarter of fiscal 2025, subscription and support revenues grew 27% year over year to $8.6 million (55.6% of total revenues).

Strong customer relationships with BMW and Kubota drive long-term revenue visibility, while North American expansion diversifies income streams. AI-driven product enhancements improve efficiency, and a solid cash position ($21.3 million) supports growth.

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

Other noteworthy reports we are featuring today include Sony Group Corp. (SONY), Constellation Energy Corp. (CEG) and Aflac Inc. (AFL).

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

Walmart (WMT) Benefits from Impressive E-Commerce Operations

Focus in Asia Region, Rates Aid HSBC (HSBC), High Costs Ails

Adobe (ADBE) Rides on Growing Adoption of Cloud Applications

Featured Reports

Solid U.S. Sales Aid Aflac (AFL), Lower Premiums in Japan Hurt
Per the Zacks analyst, Aflac's U.S. segment backed by product innovations and increased face-to-face interactions fuel growth. Declining premiums in Japan put pressure on margins.

Manulife (MFC) Remains Poised to Grow on Solid Asia Business
Per the Zacks analyst, Manulife Financial is set to grow on solid Asia business, expanding Wealth and Asset Management business and cost control. However, increase in expenses weighing on margin ails.

Eni's (E) Hydrocarbon Finds and Renewables Drive Growth
Eni's upstream growth, fueled by new hydrocarbon discoveries and renewable capacity expansion, supports long-term growth. However, its heavy debt reliance concerns the Zacks analyst.

Healthpeak (DOC) to Benefit From Solid Demand for Lab Assets
Per the Zacks Analyst, Healthpeak is likely to benefit from high demand for lab assets and rising senior citizens' healthcare spending. However, substantial debt burden remain a concern.

Vyjuvek Fuels Krystal (KRYS) But Dependence on The Drug a Woe
Per the Zacks analyst, the uptake of Vyjuvek is impressive and approval in additional geographies will boost sales. However, Krystal is solely dependent on Vyjuvek for top-line growth for now.

Strong Enrollment Aids Strategic Education (STRA), Costs Ail
Per the Zacks analyst, Strategic Education benefits from strong enrollment growth in USHE and ANZ segments. However, high costs and regulatory risks are concerns.

Charles River (CRAI) Maintains Talent Edge but Faces Costs
Per the Zacks analyst, Charles River's success depends on talent. Its reputation comes from skilled professionals, but rising talent costs in a competitive market are hurting consulting firms.

New Upgrades

Solid Momentum in Music and G&NS Segment Sales Aids SONY
Per the Zacks analyst, strength in the Game & Network Services, notably software sales and Music units is driving Sony's performance. Higher operating income is a key catalyst.

Focus on Renewable Energy Aid Constellation Energy (CEG)
Per the Zacks analyst, Constellation Energy gains from expansion of renewable portfolio. Its position as an industry leader in the safe operation of nuclear plants helps it increase its nuclear output

Consumer and Professional Products Unit to Aid Griffon (GFF)
Per the Zacks analyst, Griffon's Consumer and Professional Products unit is driven by the resiliency of repair and remodeling activity in the construction market. Its shareholders add to its appeal.

New Downgrades

IPG Photonics (IPGP) Suffers From Weak Demand For its Products
Per Zacks analyst, IPG Photonics is affected by lower consumer spending in industrial, general manufacturing and e-mobility end markets.

Rising Cost Irk Henry Schein (HSIC) Amid Tough Competition
The Zacks analyst is worried about Henry Schein's rising costs that are putting pressure on the company's top line. Also, tough competitive U.S. healthcare products and service market is a worry.

Canadian National Grapples With Rail Network Issues, High Costs
Per the Zacks Analyst, rail network issues due to headwinds like locomotive or crew/labor shortages and other service disruptions are challenges for CNI. Rising expenses weigh on the bottom line.

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Constellation Energy Corporation (CEG) : Free Stock Analysis Report

Walmart Inc. (WMT) : Free Stock Analysis Report

Aflac Incorporated (AFL) : Free Stock Analysis Report

Adobe Inc. (ADBE) : Free Stock Analysis Report

NetSol Technologies Inc. (NTWK) : Free Stock Analysis Report

HSBC Holdings plc (HSBC) : Free Stock Analysis Report

Friedman Industries Inc. (FRD): Free Stock Analysis Report

Sony Corporation (SONY) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research