Abercrombie & Fitch and AMN Healthcare Services in the Box have been highlighted as Zacks Bull and Bear of the Day

For Immediate ReleaseChicago, IL – January 17, 2025 – Zacks Equity Research shares Abercrombie & Fitch Co. ANF, as the Bull of the Day and AMN Healthcare Services, Inc. AMN, as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Taiwan Semiconductor TSM, Nvidia NVDA and Apple AAPL.                                                                                                                                                                                                                                                  Here is a synopsis of all five stocks:Bull of the Day:Abercrombie & Fitch Co. had a strong holiday season. This Zacks Rank #1 (Strong Buy) recently raised its fourth quarter and full year net sales outlook.Abercrombie & Fitch is an omnichannel specialty retailer of apparel and accessories whose customers are kids through millennials. It has a family of brands, including Abercrombie & Fitch and Hollister.It operates about 770 stores under these brands across North America, Europe, Asia, and the Middle East. It also operates three e-commerce sites for Abercrombie, Abercrombie Kids and Hollister.Abercrombie & Fitch Raised Q4 and the Full Year Net Sales OutlookOn Jan 13, 2025, Abercrombie & Fitch provided a business update and increased its net sales outlook for the fiscal fourth quarter and full year 2024.For the fourth quarter, net sales are now expected to grow in the range of 7% to 8%, up from the prior guidance range of 5% to 7%.Abercrombie also increased its full year net sales growth outlook to around 15%, which is at the high end of its previous guidance range of 14% to 15%.“Through fiscal December, we delivered record quarter-to-date net sales, exceeding the expectations we provided in November,” said Fran Horowitz, Chief Executive Officer.“Total net sales growth was supported by comparable sales across regions and brands through the holiday selling period,” he added.Analysts Raise Fiscal 2024 and 2025 Earnings EstimatesGiven how bullish Abercrombie is, it’s not a surprise that the analysts are also bullish.3 estimates were raised for the full year 2024 since the business update was provided. 1 was also lowered, however.The Zacks Consensus Estimate rose by a penny to $10.64 during that time. That’s earnings growth of 69.4% as Abercrombie made just $6.28 in fiscal 2023.2 estimates were also raised for fiscal 2025 in the last week as well. But 2 were also lowered. The Zacks Consensus Estimate for fiscal 2025 rose to $11.25 from $11.22 in the past 7 days.That’s another 5.7% in earnings growth.Abercrombie Stock Sells Off on the News: Is It Cheap?But the business update was apparently not good enough for traders. The stock sold off on the news and is now down 19.4% over the last 6 months, versus the S&P 500 which is up 6.2% during that same time.The stock has had a volatile 6 months after reaching new highs in early 2024.But Abecrombie is cheap on a fundamental basis. With the stock sell-off, but the rise in the earnings estimates, Abercrombie now trades with a forward price-to-earnings (P/E) ratio of just 12.2. A P/E ratio under 15 is usually considered a value.For investors looking for a specialty retailer which is on trend and has sales momentum, then Abercrombie & Fitch should be on your short list.Bear of the Day:AMN Healthcare Services, Inc. is still trying to find a bottom in healthcare staffing. This Zacks Rank #5 (Strong Sell) is expected to see falling earnings again in 2025.AMN Healthcare helps healthcare providers optimize their workforce. AMN total talent solutions include direct staffing, vendor-neutral and managed services programs, clinical and interim healthcare leaders, temporary staffing, permanent placement, executive search, vendor management systems, recruitment process outsourcing, predictive modeling, language services, revenue cycle solutions, and other services.An Aging Population and an Aging Healthcare Workforce CollideIn Jan 2025, AMN Healthcare held an Investor Day where it talked about the outlook for the healthcare workforce and an aging population.According to AMN Healthcare, by 2035, the estimate is that there will be 76 million people age 65 or older. That is up from 58 million in 2022.But the healthcare workforce is also aging at the same time. Currently, about 50% of RNs and physicians are 50+.By 2030, 33% of physicians will be 65+.Globally, by 2030, there is expected to be a 4.5 million shortage of nurses.Additionally, the workforce is on the move. AMN Healthcare said that in the first half of 2024, there was a 28% voluntary turnover among the workforce which was higher than all of pre-pandemic history.This will create opportunities for AMN Healthcare over the next 10 years, along with challenges. But first it must get back to “normalized” level of demand post-pandemic.AMN Healthcare Beats Again in the Third QuarterOn Nov 7, 2024, AMN Healthcare reported its third quarter 2024 results and it beat on earnings again. AMN Healthcare reported $0.61 versus the consensus of $0.58.It has a perfect 5-year earnings surprise track record. That is hard to do in normal circumstances, but that 5-year period still includes the start of the COVID pandemic in 2020.However, the industry was still facing competitive conditions in the third quarter even though earnings were better than expected.It’s total talent solutions continues to be well-received by clients and the average number of services used by top clients increased to approximately 10 in the quarter.Revenue, however, fell 19% to $688 million year-over-year as the company continues to look for a bottom.AMN Healthcare’s largest segment, Nurse and Allied Solutions, fell by 30% to $399 million. Travel nurse staffing revenue dropped by 37% year-over-year and was also down 12% sequentially, reflecting a dip in demand earlier in the year.There were some bright spots. The Physician and Leadership Solutions segment saw revenue rise 13% year-over-year to $181 million. Language Services revenue was also higher, by 13% year-over-year to $75 million.Analysts Slash AMN Healthcare’s Earnings Estimates AgainIt seemed like 2024 would be the year there would finally be stabilization in AMN Healthcare’s earnings and that they would find a bottom.But the analysts are again cutting earnings estimates.Earnings are expected to fall 62.6% in 2024 to $3.07 from $8.21 in 2023.But 1 estimate has now been lowered in the last 30 days for 2025, pushing the 2025 Zacks Consensus Estimate down to $1.41 from $1.47. But it had been at $3.26 just 90 days ago.That is another earnings decline of 54.2%.AMN Healthcare’s Stock Sinks to New 5-Year LowsWith the earnings still tumbling, so is the stock. Shares are at new 5-year lows.But it’s also not cheap. AMN Healthcare still trades with a price-to-earnings (P/E) ratio of 18.1. A P/E ratio of 15 or under usually indicates there is value.AMN Healthcare does not pay a dividend. While it had a strong cash flow from operations in the third quarter of $67 million, it chose to reduce debt by $60 million. Year-to-date through the third quarter, it had repaid $175 million in debt.Given that the analysts are still cutting earnings estimates for 2025, investors interested in this healthcare staffing company might want to wait on the sidelines for stabilization in earnings.Additional content:Taiwan Semiconductor: The Backbone of AI Surges on Earnings BeatTaiwan Semiconductor, the world’s largest and most advanced chipmaker, has once again showcased its critical role in powering the AI revolution. Reporting a stellar fourth quarter with a 38.8% year-over-year revenue increase and a 57% surge in net income, TSM’s results highlight the insatiable demand for its cutting-edge 3nm and 5nm chips. These chips are the backbone of AI giants like Nvidia, whose GPUs dominate the market, and Apple, which relies on TSMC to produce its A-series and M-series chips for iPhones and Macs.As advanced technologies (3, 5 and 7 nanometer chips) accounted for a remarkable 74% of TSMC’s wafer revenue, the company’s leadership in innovation continues to solidify its position at the heart of AI and high-performance computing. With robust demand for AI-related applications offsetting seasonal smartphone declines, TSMC's pivotal role in shaping the future of technology has never been clearer.Although Taiwan Semiconductor currently holds a Zacks Rank #4 (Sell), the company has delivered exceptional performance over the past year, reflecting strong investor interest in owning such a pivotal player in the tech industry. The low Zacks Rank primarily stems from minor downward revisions to earnings estimates, but this latest impressive earnings report could prompt analysts to revisit and potentially upgrade their forecasts.Taiwan Semiconductor AI, Geopolitics and New ChipsTaiwan Semiconductor continues to solidify its role as the backbone of the AI revolution, leveraging its advanced 3nm and 5nm technologies to power innovations for major clients like Nvidia, Apple, and many others. In Q4, High-Performance Computing (HPC), which includes AI and 5G applications, accounted for 53% of TSM’s revenue, a significant leap from 43% a year ago—driven by surging AI-related demand. TSM’s CEO, C.C. Wei, affirmed the company’s confidence in navigating geopolitical challenges, including the US export controls on AI chips, emphasizing open communication with both current and future administrations.Despite these geopolitical hurdles, TSM is doubling down on its advanced manufacturing processes, which contributed 74% of total wafer revenue in Q4. With plans to ramp up production of its 3nm and upcoming 2nm nodes, the company is well-positioned to maintain its technological edge. These advancements are crucial not only for sustaining margin expansion but also for supporting high-demand applications like AI inference and training, critical for Nvidia’s GPUs and Apple’s custom silicon.TSM is also taking steps to mitigate risks associated with geopolitical tensions, including expanding its overseas fabs in Arizona and Japan. This diversification strengthens its long-term growth prospects by reducing exposure to regional risks while addressing growing global demand. As the company projects up to $42 billion in capital expenditures for 2025, it reinforces its commitment to advancing AI technologies and maintaining its leadership in the semiconductor industry.Taiwan Semiconductor Shares Trade at a Discount to GrowthTaiwan Semiconductor holds a critical position in the global technology supply chain. As the world's largest foundry, it is unparalleled in its ability to meet the modern world's semiconductor demands at scale. This unique and vital role underscores the company's significance in enabling technological advancements across industries.Given its indispensable position, TSM appears to trade at an attractive valuation of 23.5x forward earnings, even when accounting for geopolitical risks. Additionally, with earnings per share expected to grow at an impressive annual rate of 31.2% over the next three to five years, the company boasts a PEG ratio of 0.75, signaling a discount relative to its growth potential.Although TSM is currently trading above its five-year median valuation of 21.5x, the rapid expansion of the AI sector and the company's integral role in its development justify a premium.Should Investors Buy Shares in TSM?Taiwan Semiconductor continues to solidify its position as a cornerstone of the semiconductor, AI, and broader technology industries. As the manufacturing partner for some of the most innovative and influential companies in the world, including Apple, Nvidia, and many others, TSM is uniquely positioned at the forefront of technological advancement.However, potential investors should note that TSM currently holds a low Zacks Rank, reflecting recent downward revisions in earnings estimates. This could signal near-term headwinds or a cautious outlook from analysts despite the company’s strong fundamentals and growth prospects. For investors who like to stay on the right side of the Zacks Rank, it might be prudent to wait for signs of improving earnings revisions before initiating a position.That said, TSM’s long-term growth trajectory appears intact, driven by its pivotal role in the AI boom and increasing global demand for advanced semiconductors. Investors with a longer time horizon and confidence in the company’s ability to overcome short-term challenges may see the current valuation as an opportunity to buy into one of the most critical players in modern technology. Patience and timing are key, and monitoring earnings revisions and broader market conditions will be essential for making an informed decision.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. 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