Wynn Resorts Struggling To Rebuild Lost Revenue

Wynn Resorts Inc. (WYNN) got hit earlier than most American corporations by the COVID-19 pandemic, with Macao hotels and casinos shutting their doors for two weeks in February, in reaction to the first outbreak in Wuhan, China. The closure of Las Vegas resorts in March completed the revenue destruction, generating a Q1 2020 loss of $3.54 per-share, or $1.85 worse than expectations. Revenue plunged an astounding 42.2% year-over-year to $953.7 million, beating estimates by more than $75 million due to excessively bearish Wall Street calls.

Catastrophic Revenue Loss

Unfortunately for shareholders, gaming aficionados are still avoiding Macao like the plague as we enter the third quarter. The Macao Gaming Inspection and Coordination Bureau just reported that June revenue fell 97.0% year-over-year, following a 93.2% decline in May. Meanwhile, Las Vegas has run into major roadblocks since their reopening began in May, with a surging epidemic in the Southwestern states generating record numbers of positive cases, persuading many visitors to stay away.

Wynn Resorts discussed the continued impact of the pandemic in June, noting that “we expect to continue experiencing the adverse effects of the COVID-19 Pandemic throughout the second quarter of 2020.” The company then disclosed that Macao operations are experiencing an average daily loss of around $2 million, which isn’t a short-term liquidity issue due to $1.71 billion in free cash flow and $24.1 million in resolving credit earmarked for Macao operations.

Wynn Resorts Wall Street And Technical Outlook

Wall Street issued a wave of upgrades in the second quarter but their growing bullishness may be misplaced, given the exceptionally slow pace of business resumption. Nine analysts currently rate Wynn Resorts as a ‘Buy’, while just four have issued ‘Hold’ recommendations.  However, it’s astonishing that no one is recommending that investors sell the stock at this time, despite steep daily losses. It’s wise to keep that in mind if thinking about long-side exposure at these depressed levels.

The current technical outlook remains extremely bearish. Wynn Resorts fell a stomach-churning 77% off the late January peak at 152, finding support at an 11-year low in March. The bounce into the second quarter reversed at heavy resistance above 100 in early June, giving way to a steady decline that relinquished more than 40 points before a month-end reversal. So far at least, price action has failed to remount key levels violated during the selloff, telling market players the stock remains stuck in a decline that could test the deep March low.

American Airlines Takes Leap Of Faith With Increased Capacity

American Airlines Group Inc. (AAL) reported a Q1 2020 loss of $2.65 per share in April, compounded by a 19.5% decline in year-over-year revenue, triggered by a worldwide air travel collapse due to the COVID-19 pandemic. The bearish results weren’t a surprise, given well-documented woes of the airline industry, but Wall Street analysts still understated the severity of the losses. The news set off an aggressive sell-the-news reaction, dumping the stock to an 8-year low on May 14.

American Airlines Ticket Sales Picking Up

The outlook improved in the second half of May, with demand exceeding supply through the end of the second quarter. The load factor also improved at a steady pace, lifting from 15% in April to 63% in June. That uptick gave American Airlines a boost and the incentive to sell flights up to capacity, starting on July 1. However, it’s a risky move, requiring the carrier to add substantial payroll at the same time an out-of-control epidemic is sweeping through Southern and Southwestern states, forcing the EU to ban flights from the United States.

 

Executives outlined the latest initiative on Thursday, advising that “face coverings are now mandatory for all customers and team members while at work. As team members report to work every day, we have temperature checkpoints in place, and we’re also asking customers to certify they are symptom-free before traveling. We have also started a new collaboration with Vanderbilt University Medical Center to create a Travel Health Advisory Panel, which will advise on health and cleaning matters.”

Wall Street And Technical Outlook

Wall Street has taken a cautious approach on the stock, which was underperforming its rivals for many quarters prior to the pandemic. 3 ‘Buy’, 3 ‘Hold’, and a stomach-churning 7 “Sell’ recommendations highlight this skepticism, even though American Airlines has now dropped nearly 60% below the 2020 high. Targets range from a low of $7.00 to a street high $27.00, with price currently sitting at the dead center on the median $12.88 target.

Dilution could mark the biggest negative for American Airlines investors in coming quarters, with secondary offerings and heavy borrowing undermining bounces and uptrends. More importantly, the stock is now trading less than 5 points above the deep March low, raising odds for a retest that could trigger a dreaded death spiral, driving the once-profitable carrier into bankruptcy or a hostile takeover.

FedEx Soars After Stronger-Than-Expected Quarter

FedEx Corp. (FDX) is trading higher by more than 15% in Wednesday’s U.S. session after beating top and bottom line fiscal Q4 2020 estimates. $2.53 earnings-per-share (EPS) blew away expectations by $0.91 while $17.36 billion in revenue surpassed estimates by $800 million. Even so, year-over-year revenue fell 2.5% due to lower volumes as a result of the COVID-19 pandemic. The stock is now trading above 150 for the first time since February 25.

FedEx Headwinds

Amazon.Com Inc. (AMZN) announced it would bring the majority of package deliveries in-house to cut costs in 2018, setting off a FedEx downtrend that posted a 7-year low in March 2020. The e-commerce giant reversed gears in the second quarter and is once again farming out a fair share of deliveries to shipping rivals. This turnaround and the reopening of key markets benefited quarterly results, while increasing optimism about a post-pandemic business revival.

FedEx issued subdued commentary about the quarterly results, warning that “virtually all revenue and expense line items were affected by the COVID-19 pandemic during the quarter. While commercial volumes were down significantly due to business closures across the globe, there were surges in residential deliveries at FedEx Ground and in transpacific and charter flights at FedEx Express, which required incremental costs to serve.”

Wall Street And Technical Outlook

JPMorgan. Raymond James, Cowen, Bernstein, and Credit Suisse upgraded the stock on Wednesday while 9 other analysts issued upbeat opinions and/or raised price targets. Morgan’s Brian Ossenbeck summed up fresh enthusiasm, noting that “ground remains in the driver’s seat at FedEx as the fastest growing and most profitable business segment with opportunities to improve margins by consolidating ISPs, redirecting SmartPost, and leveraging efficiency gains”.

Price action has a long way to go to restore the bullish outlook, despite this week’s big advance. The stock is still trading more than 10 points below the 200-day moving average at 172, which marks the dividing line between bull and bear power. It also needs to add another few points to end the long string of lower highs in place since June 2018. Given those technical headwinds, investors may choose to wait and watch for a string of rally days before taking exposure.

Boeing MAX Test Flight Triggers Fresh Buying Interest

Dow component Boeing Co. (BA) surged 14% off moving average support on Monday after initiating a series of recertification flights for the troubled 737-MAX jetliner. Those test flights, which will last for three days, are being closely monitored by the U.S. Federal Aviation Administration (FAA). As the flights began, the FAA reminded the public that they will lift the no-fly order “only after we are satisfied that the aircraft meets certification standards”.

However, reality struck home just before the NYSE closing bell when Reuters reported that Norwegian Air had cancelled 97 orders that included 92 737-MAX jetliners. It also filed legal action against the company, seeking to recover pre-delivery payments due to their negligence in crashing two planes. This type of news keeps plaguing upbeat reports about recertification, raising doubts about Boeing profits and revenues through the second half of 2020.

Boeing Bearish View

Bernstein analyst Douglas Harned reiterated their bearish view on the stock in a research report last week, noting, “we have seen potential for a recovery from Covid-19 as dependent on a medical solution to bring global travel levels back to normal.” He finished with a highly skeptical outlook that “based on our assessment of the traffic outlook, combined with analyses by Bernstein’s health care team, we believe the solution is farther out.”

Wall Street And Technical Outlook

Wall Street consensus has missed the mark since the grounding in March 2019, maintaining ‘Buy’ ratings despite evidence the plane would stay on the ground due to a toxic corporate culture that culminated with the firing of CEO Dennis Muilenburg. Ratings have also held remarkably steady through this year’s plunge into double digits, with 7 ’Buy’, 6 ‘Hold’, and just 2 ‘Sell’ recommendations, even though the stock has underperformed the Dow Industrial Average for months.

Monday’s euphoric buying pressure stalled within 5 points of resistance at the psychological 200 level, which Boeing has struggled to mount for the last three weeks. The aerospace giant now hopes to resume commercial service sometime in the fourth quarter but supply issues, highlighted by this week’s Norwegian Airlines news, could hamper a return to profitability into 2021 or beyond. In turn, this makes the stock less attractive, even at the currently low valuation.

Square Priced For Perfection As Second Quarter Draws To A Close

Square Inc. (SQ) missed Q1 2020 profit estimates by a wide margin in May, losing $0.02 per-share, much worse than expectations for a $0.13 per-share profit. However, inline revenues of $1.38 billion marked a substantial 44% year-over-year increase, triggering a buy-the-news reaction, underpinned by executives insisting that business had picked up substantially in April, following the first quarter’s pandemic-driven shutdowns.

This e-commerce provider faces a highly cyclical business environment, with revenues dependent upon merchant activity in the United States, Canada, United Kingdom, and Australia. Visa and MasterCard reported that digital transactions dropped precipitously in the first quarter, due to the pandemic. While reopening is now underway, it’s hitting roadblocks due to a runaway epidemic in the U.S. that could further impact business activity. Even so, it’s nearly impossible to accurately forecast transaction levels between now and year’s end, due to massive uncertainty.

Bullish Square View

Credit Suisse analyst Timothy Chiodo illustrated the bullish view on Square in May, noting that “Cash App downloads, a proxy for user growth, continued to improve through May 18th, averaging >1 million downloads per week, +10% vs. April levels, giving May potential to be the 3rd consecutive month of record net new transacting active user additions”. However, the stock has now exceeded his $80 target by 30%, raising odds for a negative valuation call.

Wall Street And Technical Outlook

Wall Street consensus has deteriorated in the second quarter, with 9 ‘Buy’, 11 ‘Hold’, and 4 ‘Sell’ recommendations failing to stem a momentum bid that’s lifted the stock to an all-time high. Price targets currently range from $49 to $125, with price now situated halfway between the median $83 target and street high. That leaves little room for error due to an astronomical 157.0 price-to-earnings ratio that greatly increases risk for new shareholders.

Square broke out above the October 2018 high at 101 in mid-June but has added just three points, raising doubts about long-term buying power. In addition, the channeled advance off the March low carved no consolidations or pullbacks, meaning it will take little selling pressure to trigger a failed breakout that reinforces resistance at the psychological 100 level. The company may then need to blow away second quarter estimates to win back departing shareholders.

Marriott Likely To Trade Lower In The Second Half

Marriott International Inc. (MAR) has been hit hard by the coronavirus pandemic, with business travel worldwide grinding to a virtual halt.  Q1 2020 results released in early May reaffirmed those headwinds, missing profit estimates by a wide margin while revenue dropped 6.6% year-over-year to $4.68 billion. The company also filed a $0.42 per-share ‘impairment charge’, driven by heavy borrowing, bad debt expense, and guarantee reserves.

The lodging giant is highly-levered to the travel industry, which probably won’t recover to pre-pandemic levels for at least one to two years. The European Commission highlighted this sobering reality last week, suggesting it won’t permit American travelers due to a massive spike in infections. In addition, corporations worldwide are growing comfortable with virtual meeting spaces and may find it hard to resume the cost burden of sending employees on the road.

Marriott Bull Expects Rapid Recovery

Not everyone is bearish on Marriott at this time. For example, Barclay’s analyst Anthony Powell upgraded the stock from ‘Equal Weight’ to ‘Overweight’ last week, stating “in the near term, these companies should benefit from improving demand trends for U.S. select-service hotels and resort destinations; next year, the companies should more fully price in a return of corporate and group travel.” Even so, he admits that COVID-19 remains an unknown and ‘major hurdle’.

Wall Street And Technical Outlook

Broad analyst consensus is more cautious than Barclays, with just 3 ‘Buy’ recommendations, 12 ‘Hold’ recommendations, and 1’Sell’ recommendation.  Price targets currently range from a low of $74 to a street high $148, while the stock is now trading nearly $13 below the median $93 target. This weak placement indicates that investors remain skeptical about the long-term outlook, keeping their powder dry until macro conditions sound the ‘all-clear’ signal.

Marriott incurred heavy technical damage in the first quarter swoon and has failed to remount broken support levels during the three-month recovery wave. Committed sellers are getting more aggressive due to spiking COVID-19 cases in more than half of the American states, shining a highly bearish light on the travel industry.  The stock is unlikely to overcome these adverse conditions in the second half of 2020, raising fears it will eventually re-test the deep March low.

NVIDIA Firing On All Cylinders After Pandemic Shutdowns

NVIDIA Corp. (NVDA) beat top and bottom-line estimates in May, reporting a profit of $1.80 earnings-per-share (EPS) while Q1 2020 revenue rose an impressive 38.7% year-over-year to $3.08 billion.  First-quarter shutdowns generated an unexpected windfall for the graphics chip giant, with lockdowns spiking demand for video gaming hardware and data center products that stream video. The company expects continued to benefit from these segments in the second quarter, leading them to raise Q2 2020 revenue guidance from $3.37 billion to $3.65 billion.

Many gains from the expanded digitization of business and home entertainment due to the pandemic could be long-lasting or permanent, with thousands of corporations likely to grow their virtual meeting spaces at the expense of business travel, which may not return to 2019 levels for years.  A handful of chip manufacturers that include NVIDIA stand to benefit from this paradigm shift, which has now lifted the stock to another all-time high.

Wall Street Outlook

Not everyone is bullish on NVIDIA’s outlook. Morgan Stanley downgraded the stock on June 16, with analyst Joseph Moore noting that “even with the best 5-year growth prospects in semis, the current P/E of 59x simply leaves very little room for error. 80% organic growth in HPC/cloud last quarter is probably the high watermark, and we see business plateauing beyond July.” He also takes a skeptical view about the gaming space, declaring “we remain tactically uncertain about when those products will be released.”

However, Wall Street consensus remains decidedly bullish, with 27 ‘Buy’ and just 4 ‘Hold’ recommendations. Not one analyst currently recommends that shareholders sell their positions at this time. Price targets currently range from $260 to a street high $420 while the stock is now trading less than 50 points below the high target. This is an advantageous position because modest gains from here are likely to trigger further upgrades and higher targets.

NVIDIA Technical Price Action

NVIDIA price action has been outstanding since a furious 57% correction ended in December 2018. The recovery wave through 2019 finally completed a round trip into the prior high in February 2020, just in time for the first-quarter decline. However, the second quarter bounce carved the handle of an 18-month cup and handle pattern, yielding a June breakout that now establishes a measured move target above 450.

McDonald’s Could Have Tough Time Rebuilding Lost Revenue

McDonald’s Corp. (MCD) got battered and bruised in the first quarter, with operations all over the world shutting down due to the coronavirus pandemic. The fast food king recovered part of the slack with pick-up and delivery services but franchise operators suffered badly because the company also acts as the landlord in most cases, collecting lease payments. Given the massive headwinds, Q1 2020 revenue contraction of 6.2% year-over-year made perfect sense.

Slow Progress On Business Resumption

Franchisees are now reopening in accordance with local jurisdictions, with most locations requiring social distancing and other safety measures. Results have been encouraging but mixed so far, with May U.S. comparative sales dropping 5.1% year-over-year compared to 19.2% in April. Worldwide sales have underperformed those mixed metrics, dropping 20.9% in May and a whopping 39.0% in April. Even so, Mickey D just announced it will hire about 260,000 employees this summer to fulfil growing demand.

SunTrust analyst Jake Bartlett just raised McDonald’s price target to $208, advising that comparative sales were better than expected, noting “excluding the impact of temporary store closures, we estimate that international sales per store are ‘flat’ to down slightly, demonstrating strong demand as markets re-open. We expect MCD’s $200 million supplemental ad fund contribution to help drive positive global same store sales by Q4 2020 (Q3 2020 for the U.S.)”

Wall Street And Technical Outlook

The rest of Wall Street is generally bullish on the stock as well, with 22 ‘Buy’ and 7 ‘Hold’ recommendations. No analyst is recommending that investors sell shares at this time. Price targets currently range from $170 to a street high $245 while McDonald’s is now trading just 13 points above the low target. This placement is a two-edged sword because, while it offers plenty of room for growth, the sub-par performance could be hiding undisclosed headwinds.

The stock has been an outstanding performer since 2015 when it broke out above 4-year resistance near 100. It more than doubled into August 2019’s all-time high at 222 and turned lower in a persistent downtrend that accelerated in the first quarter of 2020. The second quarter bounce has recovered about two-thirds of the downside but the recovery wave has now reached tough resistance in the 190s. This is a natural location for short sellers to reload positions.

Apple Shakes Off Headwinds and Rallies to All-Time High

Dow component Apple Inc. (AAPL) blew away Q2 2020 top and bottom line estimates in April, posting $2.55 earnings-per-share (EPS) on $58.31 billion in revenue. The company raised their dividend by 6% to $0.82 per share at that time and increased the share repurchase program by a hefty $50 billion. Even so, quarterly revenues rose just 0.5%, highlighting the impact of first quarter shutdowns and quarantines around the world.

Apple Second Quarter Uncertainty

The company posted strong results in most divisions, with iPhone, iPad, and Services beating estimates. However, China revenue came up short, which makes sense because their shutdown began well before Europe or the United States. It also wasn’t a surprise that no fiscal Q3 guidance was offered, given uncertainty that’s likely to extend through 2020. That wisdom came to light last week, when Apple had to close stores in 4 states due to surging COVID-19 cases.

CEO Tim Cook was just interviewed for a “60 Minutes” segment, in which he defended himself and the company on charges they aren’t paying their fair share of taxes. “We turned the company upside-down to help the world on COVID, and donated all of that, hundreds of millions of dollars. And so, I think my own view is, you pay what you owe in taxes. And then you give back to society. And Apple is clearly doing that.”

Wall Street and Technical Outlook

Wall Street analysts are nearly universal in their bullish outlook, with 28 ‘Buy’ and just 6 ‘Hold’ recommendations. Not one analyst is recommending that investors sell the stock at this time. Price targets range from a low of $250 to a street high $410 while Apple is now trading just 20 points above the median $348 target. Given the rapid pace of upgrades so far in 2020, it’s likely those estimates will keep rising in the second half.

The stock sold off 114 points in the first quarter and turned tail, recouping the entire loss into May. It broke out to a new high in early June and has added more than 30 points since that time, carving a steady uptrend. However, accumulation readings have failed to keep up with bullish price action, signaling a bearish volume divergence that could short-circuit the rally with a minor bearish catalyst.  Even so, a pullback could mark a low risk buying opportunity, ahead of even stronger upside into 2021.

Tesla Probing All-Time High Despite Deep Skepicism

Tesla Inc. (TSLA) dodged a bullet in the first quarter, reporting a Q1 2020 profit of $1.24 earnings-per-share (EPS), beating estimates by a hefty $1.45. The Shanghai Gigafactory was closed for two weeks during the quarter due to the coronavirus outbreak while the Fremont, California plant shut down in March. The unexpected profit overcame both of those obstacles, prompting a strong buy-the-news reaction.

Tesla Balance Sheet Issues

The electric vehicle manufacturer declined to provide net income or free cash flow guidance during the April earnings presentation, two metrics that are needed to evaluate Tesla’s performance accurately, due to heavy cash burn and high debt levels. In addition, the Fremont plant didn’t reopen until mid-May, adding to anxiety about second-quarter performance. On the flip side, the company just reported record sales in China, countering the continued drag of slumping United States and European revenue.

David Einhorn, head of Greenlight Capital, questioned CEO Elon Musk about the Q1 results, sarcastically commenting “I will continue to be left wondering if not only your accounts receivable are suspect, but your income statement as well”. He points out apparent inconsistencies in the SEC quarterly filing, which he says omit the negative impacts of the lower average selling price, factory shutdowns, interruption costs, margin compression, and currency factors.

Wall Street and Technical Outlook

Wall Street analysts are evenly divided on Tesla’s outlook, with 8 ‘Buy, 9 ‘Hold’, and 11 ‘Sell’ recommendations. The broad distribution of price targets highlights widely conflicting opinions, with a low of $246 and a street high of $1250.  The stock is now trading less than $250 below the high target and nearly $1000 above the low target. All in all, this disagreement translates into an excessive market risk that many investors may wish to avoid.

The stock’s price action has been phenomenal so far in 2020, with a 600-point decline from February high at 969, followed by an equal-sized rally into June. It broke out after completing the round trip but has made little progress so far, consolidating around the first-quarter peak. Accumulation and relative strength readings are solid as a rock, despite mixed analyst calls and skepticism from market insiders, raising odds for even higher prices in the coming weeks.

Microsoft Trading At All-Time High After V-Shaped Recovery

Microsoft Corp. (MSFT) performed admirably during the first quarter’s pandemic swoon, beating fiscal Q3 2020 consensus estimates with $1.40 earnings-per-share (EPS) on $35.02 billion in revenue. Outstanding performance in the Productivity, Business Processes, and Intelligent Cloud divisions underpinned an impressive 14.6% year-over-year revenue growth while the company boasted that COVID-19 had a minimal impact on the bottom line.

‘Mr. Softee’ could lose commercial product sales in coming quarters, despite the first quarter’s remarkable results, because U.S and European corporations are primed to slash information technology budgets to cope with historic revenue contraction, triggered by the pandemic. I.T. spending tends to follow natural economic cycles, increasing during periods of economic growth and shrinking when recessions and downturns depress free cash flow across a vast customer base. These headwinds could eventually undermine the company’s long-term bullish outlook.

Protest Impact And Initiatives

Microsoft is headquartered in Seattle, on the front line of protests after the murder of George Floyd. The company has fostered a strong social identity in the last two decades so it isn’t surprising that CEO Satya Nadella outlined racial diversity initiatives, including a responsibility to “use our platform and resources intentionally to address systemic inequalities in our communities.” However, he offered few specifics, except for banning police from using their facial-recognition systems.

Microsoft Outlook

Wall Street analysts are nearly unanimous in their bullish outlook, issuing 22 ‘Buy’ and just one ‘Hold’ recommendation. Not one of the 23 analysts polled recommends that investors sell the stock at this time, despite the cyclical properties of company divisions.  Price targets currently range from a low of $190.00 to a street high $250.00, while the stock is now trading well below the median target of $207.26. This distribution strongly favors higher prices in coming weeks.

Microsoft has been an outstanding performer since 2017 when it finally cleared 17-year old resistance in the upper 50s. It nearly quadrupled into February 2020 and plunged with world markets into March, losing more than 30% of its value. The second quarter rally recouped those losses, lifting the stock to an all-time high last week. It’s also recovered 100% of the shareholder base lost during the downdraft, setting the stage for bullish price action into the third quarter.

Zoom Video Lifts To All-Time High Despite Mixed Commentary

Zoom Video Communications went ballistic in February when the pandemic triggered huge interest in their video conferencing software.  The easy-to-use interface fit perfectly with the need to conduct business and connect with family and friends during a tough period. In turn, this generated major Wall Street attention, triggering a flood of upgrades. A sense of normalcy returned in the second quarter but that didn’t stop the stock from breaking out after blowing away first quarter estimates on June 2.

Zoom Security Issues

Still, Zoom security holes have been well-documented, forcing many American and European businesses to switch to competitive offerings. The company has pledged to fix these flaws and recently opened discussions with Google to use their cybersecurity service. Public and government sales are also increasing, underpinned by Zoom for Government, which received Federal clearance in April 2109.

Analysts Divided On Prospects

Analyst rating consensus has grown more divided in the second quarter. This isn’t surprising, given the end of shutdowns in most parts of the world. The consensus currently features 11 ‘Buy’ recommendations and 10 ‘Hold” recommendations.  No analyst recommends selling the stock at this time.  Price targets range from $105.00 to $261.00, with a median $214 target. The stock is now trading less than 25 points under the high estimate, raising odds for downgrades.

Needham’s Richard Valera raised their target from $230 to $240 earlier this month, stating Zoom has “smashed its Q1 2021 print and guide – a performance unlike we’ve seen in 20+ years of tech coverage”. He tempered his enthusiasm, agreeing the company faces roadblocks that include “sharply increased churn relative to historic levels”. However, he expects headwinds to ease in 2022 and beyond, allowing a re-acceleration of net paid user growth.

Zoom Technical Outlook

The stock topped out just above 100 in June 2019 and sold off into the lower 60s in October. It resumed its uptrend in February 200, reaching the prior high a few weeks later. The subsequent breakout has added near 140 points in less than 4 months, highlighting intense momentum buying interest. Accumulation readings match bullish price action, making it easy for Zoom to gain additional points into the third quarter.

Intel Upgrade Could Stoke Buying Interest

Dow component Intel beat Q1 2020 estimates in April, posting $1.45 earnings-per-share (EPS) on $19.83 billion in revenue. However, the chip giant also warned that Q2 results would not meet expectations, lowering EPS guidance to $1.10. Not surprising, they didn’t offer annual profit or revenue guidance due to continued uncertainly, driven by the pandemic. The company is scheduled to report Q2 2020 earnings on July 23.

The semiconductor sector held up well in the first quarter, with idled workers turning to virtual meetings, digital communications, and video gaming. Intel has benefited from this usage because the pandemic has bolstered sagging demand for personal computers and video gaming consoles. However, smartphones have yet to show a 2020 sales uptick, undermining one source of steady income.

KeyBank Upgrade

KeyBanc’s Weston Twigg just upgraded the stock to ‘Overweight’, highlighting their competitive advantages. He noted the company is “aggressively tackling new markets, quickly launching products on 10nm, and unifying chips, software, and developers.” He also mentioned that CEO Bob Swan “appears to be gaining confidence”, shaking the company out of its “recent malaise.” Swan took the helm in January 2019 from former CEO Brian Krzanich. Twigg has established a price target of $82, or 16 times the firm’s 2021 EPS estimate of $5.12.

Wall Street analysts have been mixed on the mega-cap’s long-term outlook so far in 2020, providing 11 ‘Buy’, 15 ‘Hold’, and 3 ‘Sell’ recommendations. Price targets range from a low at $51 and a high at $85. The stock is now trading about $3.00 below the median $64.25 target. COVID-19 has weighed on these ratings, with the company now forced to prove it can prosper in the new landscape.

Intel Price Action

Intel has failed to match the outstanding performance of high tech peers in recent years. The stock slumped through the first half of the last decade due to an ‘old school’ approach by the former CEO, who departed in 2018. It’s gained ground in the last 5 years but is still trading more than 14 points under the all-time high posted in 2000. This compares unfavorably with the Nasdaq-100 index, which has more than doubled in price during the same period.

Netflix Near All-Time High After COVID-19 Shutdowns

Netflix (NFLX) posted strong Q1 2020 results in April, meeting aggressive revenue guidance at $5.75 billion. The company added 15.77 million subscribers, more than double the consensus, but the streaming giant missed the $1.57 EPS estimate. Analysts may have miscalculated the impact of stay-at-home and quarantine orders, triggering the shortfall. Upside guidance for Q2 expects the the company to earn $1.81 EPS and $6.05 billion in revenues. Spokesmen haven’t discussed recent performance but Q2 2020 earnings are scheduled for July 21 release.

Wall Street Bullish Consensus

Wall Street rushed to upgrade Netflix when the pandemic hit the USA in the first quarter,  realizing that subscriber growth would escalate due to shutdowns. It’s now rated a ‘Moderate Buy’ at TipRanks, based upon estimates from 35 analysts covering the stock. 24 ‘Buy’, 7 ‘Hold’, and just 4 ‘Sell’ recommendations support the bullish consensus rating, despite the lofty 84.61 price-to-earnings ratio (P/E). Updated price targets range from $198 to $580 and the stock is now trading nearly 50 points below the mid-range target of $465.

The bullish performance has generated enthusiastic analyst commentary this June, with JP Morgan analyst Doug Anmuth maintaining an overweight rating. He reiterated a $535 price target while noting that “daily average user (DAU) growth remains elevated from pre-COVID-19 levels and has been stable for about 6 weeks at 20% year-over-year, suggesting strong engagement”. He also highlighted Southeast Asian growth after successful launches in the Philippines, Thailand, Indonesia, and Malaysia.

Mixed Netflix Outlook

The technical chart has generally tracked bullish commentary so far in 2020. Netflix broke out above 2018 resistance at $423 in April but has struggled to gain ground since that time, wobbling back and forth across the breakout price. This price action denotes high levels of uncertainty, with post-outbreak normalcy favoring bears while fears about a dreaded ‘second wave’ reinforce the bullish argument.

Netflix growth could be hampered by a highly-competitive landscape after the current crisis. New services from Walt Disney (DIS), Apple (AAPL),  and Comcast (CMCSA) could take market share and stretch subscriber budgets. The ‘steaming wars” became a hot topic in 2019 before the November Disney+ release but has receded during the pandemic. It’s certain to make headlines once again if Netflix’s July earnings fail to meet estimates.