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Chicago, IL – June 23, 2025 – Zacks Equity Research shares Microvast MVST as the Bull of the Day and Akamai Technologies AKAM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Abercrombie & Fitch Inc. ANF, American Eagle Outfitters AEO and Gap Inc. GAP.
Here is a synopsis of all five stocks.
Microvast is a $1.25 billion provider of lithium-ion battery solutions for transportation, heavy equipment, and energy storage.
Growing sales at 23% to $467 million this year, the little battery maker is also making a huge swing to profitability.
With 2 analysts providing estimates, next year's topline is projected to cross $600 million for 29% growth, and profits are expected to nearly double to $0.24.
Given this growth, and the valuation of only 2X forward sales, I was inspired to start a new position last week.
Let's dive into the fundamentals...
Microvast specializes in the design, development, and manufacture of advanced battery components and systems primarily for electric commercial vehicles and utility-scale energy storage solutions.
Operating from its HQ in Stafford, Texas, the company also maintains manufacturing facilities in China and Germany, positioning itself to serve a diverse and expanding global customer base.
With nearly two decades of experience in battery development, they are accelerating the adoption of clean energy with the installation of more than 31,000 battery systems in 34 countries.
Microvast is vertically integrated with absolute control from the R&D process to the manufacturing of their battery packs and energy storage systems (ESS), including core battery chemistry (cathode, anode, electrolyte, and separator).
The investment case here centers on its strong positioning within the rapidly growing electric vehicle (EV) and energy storage system (ESS) markets. The company’s product portfolio includes lithium titanate oxide (LTO), lithium iron phosphate (LFP), and nickel manganese cobalt (NMC) battery chemistries, catering to a wide range of applications from commercial vehicles to grid-scale storage.
This technological diversity, combined with a focus on innovation and R&D, gives Microvast a competitive edge in addressing the evolving needs of the energy transition.
Evoy: Microvast has formed a groundbreaking partnership with Evoy, integrating its MV-I battery packs into Evoy’s electric boats, marking an expansion into the marine electrification sector.
Gaussin: The company is a long-term partner for Microvast, having been nominated as the battery supplier for Gaussin’s next-generation electric and hydrogen-powered skateboard truck platforms. This collaboration forecasts a volume of over 1.5 GWh in the next five years and up to 29 GWh by 2031, highlighting a substantial commitment.
REE Automotive: Microvast is the battery pack supplier for REE Automotive’s P7 commercial EV platforms, providing high-energy, fast-charging lithium-ion battery solutions tailored for commercial fleets.
Oshkosh Corporation: Microvast has a joint development agreement with Oshkosh Corporation, a leading manufacturer of specialty vehicles and access equipment.
FPT Industrial: The company is listed among Microvast’s marquee customers, supplying battery solutions for industrial and commercial applications.
SAFRA: Microvast supplies batteries for full-electric, hybrid, and retrofit buses manufactured by SAFRA, a French bus maker.
General Motors: Microvast, in collaboration with General Motors, was selected by the U.S. Department of Energy to receive a $200 million grant, underscoring its role in advancing domestic battery technology.
BMW and Argonne National Laboratory: Microvast engages in R&D partnerships with BMW and the United States Council for Automotive Research, as well as with Argonne National Laboratory, to further battery technology innovation.
Minespider: Microvast has partnered with Minespider to implement battery passports compliant with the EU Battery Regulation, ensuring regulatory compliance and sustainability leadership in the European market.
These relationships demonstrate Microvast’s ability to secure high-profile collaborations and supply agreements, positioning it as a key player in the global battery and electrification ecosystem.
Recent financial results indicate a significant turnaround for Microvast. The company reported a 43% year-over-year revenue surge in Q1 2025, achieving $116.5 million in revenue and a net profit of $61.8 million after years of losses. Gross margins improved to 36.9%, a 15.7-point increase from the previous year, driven by cost discipline and high-margin sales in the EMEA (Europe, Middle East, and Africa) region, which now accounts for over half of total revenue. Adjusted EBITDA turned positive at $28.5 million, signaling a durable shift toward profitability.
Looking ahead, Microvast’s revenue guidance for 2025 projects growth between $450 million and $475 million, representing an 18–25% increase over 2024 results. This outlook is supported by a robust backlog of $351 million and ongoing capacity expansion at its Huzhou facility. The company’s focus on high-margin products and its ability to secure partnerships with European commercial vehicle manufacturers position it well for sustained growth.
Microvast’s TAM is substantial, driven by the global shift toward electrification in transportation and energy storage. The commercial vehicle market alone is expected to exceed $20 billion, with additional opportunities in grid-scale storage and industrial applications. The company’s presence in the EMEA region, where it has achieved a 108% revenue explosion year-over-year, highlights its ability to capture significant market share in high-growth geographies.
Microvast faces intense competition from both established industry leaders and innovative startups. Key competitors include Tesla, LG Chem, Panasonic, CATL, and BYD, all of which command significant resources and market share in the battery sector. These companies benefit from vertical integration, extensive R&D budgets, and global manufacturing footprints, making the competitive landscape challenging for Microvast.
In addition to these large players, Microvast competes with public companies such as QuantumScape (QS), Eos Energy Enterprises (EOSE), and Fluence Energy (FLNC), which are also focused on advanced battery and energy storage solutions. Despite this competition, Microvast differentiates itself through proprietary technology, a diverse product portfolio, and strategic partnerships with automotive OEMs, which help it access established supply chains and distribution networks.
Bottom line: With the turn to profitability and a price/sales valuation of less than 3x, MVST appears to have solid upside from here in a market worth many tens of billions.
Akamai Technologies is the $11.5 billion provider of content delivery networks (CDNs) and cloud infrastructure services.
The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, and business applications.
Its offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers, with the data-hog of high-definition video a particular specialty.
AKAM slipped into the cellar of the Zacks Rank after the company's Q1 report in May. The results were not disappointing, but the growth outlook was nothing to get excited about.
I'll give you the bottom line up front: With revenue growth between 3-5% this year and next, the company has slipped into growth that barely qualifies as an energy or utility company.
Insult to injury, EPS estimates for this year continue to drift in negative territory of about minus 3-5%.
Akamai Technologies reported strong first-quarter 2025 results, with both the adjusted earnings and revenues surpassing the Zacks Consensus Estimate.
The company reported a top-line expansion year over year, driven by healthy demand trends in multiple end markets. Strong demand for the Guardicore platform, API security solutions and cloud infrastructure services is a key growth driver.
Net Income
GAAP net income declined to $123.2 million or 82 cents per share from $175.4 million or $1.11 per share in the year-ago quarter. High operating expenses affected the net income.
Non-GAAP net income was $256.1 million or $1.70 per share compared with $255.5 million or $1.64 per share a year ago. The bottom line beat the Zacks Consensus Estimate by 12 cents.
Quarterly net sales were $1.02 billion compared with $987 million reported in the year-ago quarter. The 3% year-over-year uptick was driven by strong momentum in the Security and Compute verticals. Revenues surpassed the Zacks Consensus Estimate of $1 billion.
By product groups, revenues from Security Technology Group were $530.7 million compared with $490.7 million in the year-ago quarter. The 8% year-over-year growth was primarily backed by growing demand for Guardicore Segmentation Solution. The company is experiencing healthy traction for its API security solutions in various end markets, including financial services, retail, electric vehicles, and more. Net sales exceeded our estimate of $522.8 million.
The Delivery segment contributed $319 million, down from $351.8 million in the year-ago quarter. However, the segment’s revenues surpassed our estimate of $318.6 million.
The Compute segment registered $165.5 million in revenues, up from $144.5 million in the prior-year quarter. Solid traction among enterprise customers and multiple deal wins in various verticals, including financial services, retail, cybersecurity and transport, drove net sales in this segment. The segment’s revenues beat our estimate of $162.9 million.
Region-wise, net sales from the United States came in at $528.7 million, up 3% year over year. International revenues totaled $486.4 million, up from $474.6 million in the year-earlier quarter.
For the second quarter of 2025, Akamai expects revenues in the range of $1.012 billion to $1.032 billion. Non-GAAP operating margin is projected to be 28%. Non-GAAP operating expense is projected to be in the range of $315-$320 million. EBITDA margin is forecasted to be in the band of 41%-42%.
Non-GAAP earnings are forecasted to be in the range of $1.52-$1.58 per share. Management anticipates capital expenditure to be in the band of $226-$236 million, which is approximately 22% to 23% of the projected total revenues. Non-GAAP tax rate is expected to be between 19% and 20%.
For 2025, Akamai expects revenues in the range of $4.050 billion to $4.2 billion. It expects a non-GAAP operating margin of 28%. Non-GAAP earnings are now projected to be in the range of $6.10-$6.40 per share. Capital expenditure is likely to be around 19-20% of total revenues. Non-GAAP effective tax rate is expected to be between 19% and 20%.
Bottom line: With explosive "AI Economy" growth in datacenter businesses, AKAM is overlooked even under 3X sales because there is so much more potential to offer in other names and industry niches. There may be a time to buy AKAM soon, and the Zacks Rank will let you know.
Abercrombie & Fitch Inc. entered the first quarter of fiscal 2025 with strong sales momentum but with a strain on gross margins. Despite posting record net sales of $1.1 billion, up 8% year over year, the company saw its gross margin decline 440 basis points (bps). This deterioration was primarily due to elevated freight expenses and markdowns from carryover winter inventory within the Abercrombie brand. These factors forced ANF to lean more heavily on its operating leverage and efficiency gains to deliver an operating margin of 9.3%, down from 12.7% a year ago.
The tariff environment added further weight to the company’s profitability. ANF now assumes a 10% tariff on all global U.S. imports and a 30% tariff specifically on Chinese imports, resulting in an estimated $50 million margin headwind for fiscal 2025 despite mitigation efforts. While the company is not planning broad-based price increases, it continues to adjust its sourcing footprint and negotiate with vendors to preserve margins. Still, these adjustments will take time, and until then, the company’s gross margin remains vulnerable.
On the bright side, ANF's Hollister brand continues to outperform expectations, reporting a stellar 22% net sales growth driven by strong category performance and cultural alignment with its core teen customer. The strength of Hollister helped offset some of the weakness seen in Abercrombie brands, which faced a 4% decline in net sales due to promotional pressure and a tough comparison against last year’s launch of the Wedding Shop. The company’s agile operating model and ability to chase demand helped minimize inventory risk and position it for an expected rebound in the second half.
Looking forward, management expects sequential improvement in gross margin as freight-related cost pressures ease and carryover inventory is worked through. While the road to margin normalization is challenged by factors like tariffs, ANF’s strong brand equity, flexible supply chain and disciplined inventory management could enable it to weather the storm. However, with limited room to maneuver on pricing, any further cost escalation may pressure the company’s ability to sustain recent profit growth.
Like Abercrombie, American Eagle Outfitters and Gap Inc. are managing the pressures of elevated input and operational costs through agile supply chain strategies and margin-protection initiatives.
AEO is taking a disciplined approach to inventory and cost management, much like ANF. The company has tightened its inventory buys and continues to reduce reliance on promotions by focusing on trend-right assortments and faster product cycles. To mitigate rising freight and sourcing costs, AEO is shifting more of its supply base closer to home and investing in logistics efficiency. AEO’s ability to flex inventory levels and chase demand in-season mirrors Abercrombie’s “Read & React” playbook, enabling it to maintain healthy sell-throughs while minimizing markdown exposure.
Gap, facing similar cost inflation challenges, is emphasizing supply-chain transformation and product margin enhancement. It has diversified its vendor base, accelerated nearshoring and focused on SKU rationalization to improve forecasting accuracy and lower logistics costs. Gap has prioritized full-price selling and cleaner inventories, particularly in brands like Banana Republic. In addition, the company is leveraging scale and technology to find cost efficiencies, aiming to rebuild margins without significantly raising prices.
Shares of Abercrombie have lost around 4.5% in the past three months against the industry’s growth of 7.6%.
From a valuation standpoint, ANF trades at a forward price-to-earnings ratio of 7.32X, significantly below the industry’s average of 17.32X.
The Zacks Consensus Estimate for ANF’s 2025 earnings implies a year-over-year decline of 4.9%, whereas its 2026 earnings estimate implies year-over-year growth of 3.9%. The estimates for 2025 and 2026 have been southbound in the past seven days.
ANF stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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