IBM Slides After Revenues Miss Wall Street Forecasts

International Business Machines Corporation (IBM) shares fell 2.77% in after-hours trade Monday after the computing giant posted its third consecutive quarter of declining revenue as the coronavirus pandemic continued to weigh heavily on its end customers in industries such as retail and transportation.

The company reported third-quarter (Q3) net income of $2.3 billion, or $2.58 a share, roughly in-line with analyst forecasts. However, the figure was down from earnings per share (EPS) of $2.68 in the same quarter last year. Revenues during the period slumped 2.5% to $17.56 billion and came in below the consensus mark of $17.54 billion. The company has now seen revenue decline in all but four of the last 33 quarters on an annualized basis.

Through yesterday’s close, IBM stock has a market capitalization of $111.8 billion, offers an enticing 5.18% dividend yield, and trades relatively flat on the year and over the past three months as of Oct. 20, 2020.

Company Spinoff

Earlier this month, IBM announced that it plans to spin off its IT outsourcing business to focus more closely on cloud computing and artificial intelligence (AI). The company said revenue for its cloud computing offerings grew 19% in the third quarter. “We are making strategic decisions, taking actions, and increasing investments today to better position our business and accelerate our top-line growth on a sustainable basis,” CEO Arvind Krishna told investors during the earnings call, per CNBC.

Wall Street View

Morgan Staley’s Katy L. Huberty raised her price target on IBM to $140 from $128 while maintaining her ‘Equal-weight’ on the stock after the firm revealed details of the spinoff. The analyst argues the company is moving in the right direction by reducing its reliance on its legacy businesses and investing more in technology growth areas like the cloud and AI. More broadly, the stock receives 4 ‘Buy’ ratings, 9 ‘Hold’ ratings, and 2 ‘Sell’ ratings. IBM currently trades 11.5% below Wall Street’s median 12-month price target of $140.

Technical Outlook and Trading Tactics

IBM shares have oscillated roughly within a 20-point range since early May, offering several opportunities for traders who favor rangebound strategies. More recently, price broke above both an eight-month downtrend line and the 200-day simple moving average (SMA) after the company announced the spinoff. Since then, profit-takers moved in, leading to a retracement back to the initial breakout point, which now becomes a crucial support area.

Active traders who take a long position here should look for a move back up to major resistance at $151.50 while managing risk with a stop-loss order placed somewhere below the blue downtrend line.

United Airlines Flies Sideways After Quarterly Earnings Crash

United Airlines Holdings, Inc. (UAL) traded flat in the extended-hours session Wednesday after the Chicago-based carrier swung to a net loss of $1.8 billion in the third quarter (Q3) as the coronavirus pandemic continued to pummel air travel demand.

The airline reported adjusted earnings of -$8.16 per share, a wider loss than the -$7.53 figure Wall Street had expected. This compares to earnings per share (EPS) of $4.07 a share in the year-ago quarter. Revenue of $2.49 billion came in roughly in-line with analysts’ expectations of $2.50 billion. However, the metric fell nearly 80% from the September 2019 quarter as the airlines slashed capacity.

Management anticipates the challenging conditions to continue over the short-term but remains more optimistic about the longer-term future. “Even though the negative impact of COVID-19 will persist in the near term, we are now focused on positioning the airline for a strong recovery that will allow United to bring our furloughed employees back to work and emerge as the global leader in aviation,” United CEO Scott Kirby said in a statement accompanying the quarterly results, per Business Insider.

Through Wednesday’s close, United Airlines stock has a market capitalization of $10.36 billion and trades nearly 70% lower on the year. Since mid-July, price performance has improved, with the shares gaining 12%.

Improving Efficiency

The company said it reduced its daily cash burn and principal debt payments during the quarter to $25 million a day, down from an average of $40 million per day in the previous quarter. Meanwhile, total operating costs plummeted by nearly 60% compared to the third quarter of 2019. United also said it had commenced furloughing up to 13,000 employees after federal payroll support expired at the end of last month.

Wall Street View

JPMorgan analyst Jamie Baker upgraded United Airlines to ‘Overweight’ from ‘Neutral’ and lifted his price target to $52 from $44. Baker argues the company “can endure the current downturn with sufficient liquidity,” despite the recent volatility in the airline sector.

Most other analysts on Wall Street remain mostly bullish on the stock. It receives 7 ‘Buy’ ratings, 1 ‘Overweight’ rating, and 12 ‘Hold’ ratings. Just one analyst currently recommends selling. Price targets range between $60 and $32, with the average consensus 12-month target sitting at $43.41. This implies an upside of 22% from yesterday’s $35.61 close.

Technical Outlook and Trading Tactics

United shares have remained in a narrow eight-point range since late June, with neither the bulls nor bears able to take control of the price action. Instead of trying to guess which way price will break out, let the market determine direction. If the stock breaks to the upside, look for a retest of the June swing high at $48.95. Alternatively, if the shares break below the trading range, anticipate a fall back down to crucial support around the $22.50 level.

Disney Shares Surge After Entertainment Reshuffle

Dow competent Walt Disney Company (DIS) gained over 5% in extended-hours trading Monday after the media giant revealed its plans to reorganize its entertainment and media business, focusing on streaming content.

The company said it will accelerate its direct-to-consumer strategy to centralize its media businesses into a single organization that oversees content distribution, ad sales, and Disney+. The move comes as the global COVID-19 pandemic has crushed the company’s theatrical business and resulted in lackluster movie theater sales. Disney recently delayed its highly anticipated Pixar film “Soul,” which it now plans to screen on Disney+ later this year.

“I would not characterize it as a response to Covid. I would say Covid accelerated the rate at which we made this transition, but this transition was going to happen anyway,” Disney’s CEO Bob Chapek told CNBC’s “Closing Bell” program in relation to the restructuring.

As of Oct. 13, 2020, Disney stock has a market capitalization of over $200 billion and trades down 13.59% on the year. However, since mid-July, the shares have gained nearly 5%. From a valuation standpoint, the company trades at around 48 times projected earnings, substantially above its five-year average multiple of around 21 times.

Wall Street View

In late August, Citi analyst Jason Bazinet raised the bank’s price target on Disney to $150 from $135 and maintained a ‘Buy’ rating on the stock. Even before Disney’s announcement yesterday to accelerate its direct-to-consumer business, Bazinet saw “robust growth” in the segment. The analyst also expects a measured recovery within the company’s core businesses of Parks, Studio, and Media Networks.

Elsewhere on Wall Street, sentiment remains mostly bullish. The stock receives 14 ‘Buy’ ratings, 1 ‘Overweight’ rating, and 10 ‘Hold’ ratings. Price targets range from as high as $163 to as low as $103. The shares currently trade at a 10% discount to the 12 -month median consensus target of $138 as of yesterday’s close.

Technical Outlook and Trading Tactics

After rallying more than 70% between mid-March and early September, Disney shares have undergone a month-long retracement. They currently find support from the 200-day simple moving average (SMA) and a multiyear horizontal trendline.

Momentum appears to be once again turning bullish, with the moving average convergence divergence (MACD) indicator crossing above its trigger line to generate a buy signal. Furthermore, the 50-day SMA moved back above the 200-day SMA last week – a technical sign that often marks the start of a new uptrend. Those who buy the stock at these levels should look to book profits near significant overhead resistance at $146.50, with a stop placed beneath this month’s low at $120.61 to protect trading capital.

GoPro Rockets Nearly 30% Amid Growing Subscriber Base

GoPro, Inc. (GPRO) shares surged 29.23% Wednesday after the action camera company impressed investors with the growth of its subscription service GoPro Plus. The firm said its new flagship HERO9 Black camera has helped drive its subscriber base over 500,000, up from 400,000 in August. Moreover, the company expects to exceed its subscriber growth target of 600,000 to 700,000 between now and the end of the year if the current take-up continues.

“Thanks to a stellar global launch of HERO9 Black, our paid GoPro subscriber count is ahead of where we expected to be at this time and bodes well for us to exceed our previously-stated target of 600,000 to 700,000 paid subscribers by year-end,” said GoPro founder and CEO Nicholas Woodman, per PR Newswire.

As of Oct. 8, 2020, GoPro stock has a market capitalization of $1.01 billion and trades nearly 50% higher on the year. Gains have accelerated over the past three months, with the shares up 33%, outperforming the sector over that time by around 10%.

Promotions Helping Drive Subscribers

Whether the company can retain its subscriber base over the long term remains to be seen. To attract new members, GoPro has offered a range of enticing promotions in 2020, such as discounts, bundle deals with a camera, and free trial periods. The real test will be if these newcomers continue to pay up for their subscription when these sign-on sweeteners end.

Wall Street View

Most analysts are waiting to see if GoPro can continue to grow its subscriber base post-COVID and if members are prepared to pay extra for premium services. Currently, the stock receives 3 ‘Hold’ ratings, 1 ‘Buy’ rating, and 2 ‘Sell’ ratings. Price targets range widely from $8 at the high end to $2.50 at the low end. At yesterday’s close, the shares trade 33% above analysts’ 12-month consensus price target of $4.83.

Technical Outlook and Trading Tactics

GoPro shares broke above both a long-term downtrend line and the neckline of an inverse head and shoulders chart pattern on Wednesday’s stock-specific news. The move, which occurred on above-average volume, may act as a catalyst for a trend change back to the upside. Traders who play the breakout could place a stop-loss order either at the midpoint of yesterday’s wide-ranging day or just below the downtrend line at around $4.90, depending on risk tolerance. Consider booking profits at either $11 or $17 – both areas of crucial overhead resistance.

Alteryx Surges Over 20% after Lifting Sales Outlook

Alteryx, Inc. (AYX) shares surged 23.46% in Monday’s extended-hours trading session after the data analytics software company raised its third-quarter (Q3) revenue forecast and announced a new chief executive officer (CEO).

Management now expects sales to come in between $126- and $128 million, up from its previous forecast range of $111- to $115 million. FactSet analysts had tipped a consensus figure of $113.5 million. Meanwhile, the company has appointed Mark Anderson to succeed Dean Stoecker as CEO, effectively immediately. However, Stoecker will continue to serve as the firm’s chairman.

“When I decided to transition from day-to-day operations, it was clear to me that Mark is the ideal candidate to serve as Alteryx’s next CEO given his passion for our company and our newly created Analytic Process Automation category, coupled with his experience in scaling organizations,” said Stoecker, per PR Newswire.

As of Oct. 6, 2020, the stock has a market capitalization of $8.11 billion and is down nearly 35% over the past three months. Year to date (YTD), the shares have gained 13.8%. From a valuation standpoint, investors have factored in plenty of upside into the stock. Currently, it trades at 126 times forward earnings.

Earnings Beat in Challenging Conditions

The company swung to a profit of 2 cents per share in its latest quarter despite noting higher levels of scrutiny on spending across all sectors, resulting in longer sales cycles and smaller deals. The result came in substantially better than the 14 cent EPS loss analysts had anticipated and improved 100% from the year-ago quarter. Moreover, Alteryx added 271 net customers during the period, taking the firm’s total customer count to 6,714, up almost 30% year-over-year (YoY).

Wall Street View

Loop Capital analyst Yun Kim initiated coverage on the stock last month with a ‘Hold’ rating and a $110 price target. Kim argues that the company’s fundamentals remain strong and its business sits well positioned to benefit from a post Covid recovery. However, the analyst believes Alteryx’s exposure to large deals present sales execution risks in the current operating environment. Elsewhere on Wall Street, the sentiment is mostly bullish. The stock receives 10 ‘Buy’ ratings, 4 ‘Hold’ ratings, while just one analyst recommends selling the shares.

Technical Outlook and Trading Tactics

Alteryx shares have more or less remained rangebound for the past twelve months, fluctuating between $76 and $185. Despite the recent ominous death cross formation – when the 200-day simple moving average (SMA) crosses below the 50-day SMA – the stock looks like opening up today at $140.60 to partially fill the Aug. 7 earnings gap. Active traders should view an impulse rally to crucial overhead resistance around $185 as a mean reversion shorting opportunity. Those who take a short sale should consider buying to cover on a retrace back down to the 200 SMA around the $129 level.

Boeing Shares Edge Higher After FAA Chief Nods 737 MAX Fixes

The Boeing Company (BA) climbed 2.38% in extended-hours trading Wednesday after Federal Aviation Administration (FAA) head Steve Dickson gave a tentative endorsement to the fixes the airplane maker has made to its troubled 737 MAX jet. “I like what I saw on the flight this morning,” said Dickson, per the Wall Street Journal, after sitting in the cockpit on a recent test flight over the Pacific Northwest with other Boeing and FAA pilots.

Since the agency grounded the MAX in March 2018, Boeing has made several hardware and software changes relating to the airplane’s flight-control system that led to two fatal crashes, which killed 346 people. Wednesday’s flight was earmarked as one of the final steps to tick off before the FAA grants approval for the jet to take to the skies again – possibly as soon as November.

Through Wednesday’s close, Boeing stock has a market capitalization of $93 billion and trades nearly 50% lower on the year. The shares have faced stiff headwinds from uncertainty to when the 737 MAX will fly again and slumping global travel demand brought about by the coronavirus pandemic.

Passage of Preventative Bill

As the MAX waits for regulatory approval, the House Transportation Committee approved a bipartisan bill Wednesday that aims to prevent mistakes that downed the airliners from reoccurring in the future. Under the legislation, the FAA has more say in which Boeing employees carry out safety reviews on the agency’s behalf. It also increases whistleblower protections and introduces civil fines for manufacturers who fail to fully disclose details of critical flight-control systems.

Wall Street View

Not surprisingly, analysts remain somewhat divided about Boeing, given the ongoing uncertainty surrounding the challenges facing the company. Its stock receives 10 ‘Buy’ ratings, 1 ‘Overweight’ rating, and 14 ‘Hold’ ratings. Just one research firm currently recommends selling the shares. High-end price targets sit around $270, while lower targets come in around $125. The average 12-month target of $184.38 offers nearly 12% upside to yesterday’s $165.26 close.

Technical Outlook and Trading Tactics

After rallying over 100% between mid-May and early June, Boeing shares have remained entrenched in a sideways to lower trend. However, a recent cross of the moving average convergence divergence (MACD) line above its signal line indicates a shift in momentum.

Active traders should consider buying a volume-driven breakout above the blue four-month trendline and 50-day simple moving average (SMA) at the $165 level. In terms of trade management, look to book profits near the June swing high at $234.20 and limit downside with a stop-loss order placed under last month’s low at $145.02.

Inovio Plunges after COVID-19 Vaccine Setback

Inovio Pharmaceuticals, Inc. (INO) shares plummeted 28.34% Monday after the biotech company announced that the U.S. Food and Drug Administration (FDA) had put its COVID-19 vaccine on hold until it answers further questions about its vaccine technology.

The company previously told investors that it had intended to move to Phase 3 trials this month, in line with other developers searching for the elusive vaccine, but now must wait until the fourth quarter for the FDA’s findings before it can move forward. “The company is actively working to address the FDA’s questions and plans to respond in October,” Inovio said in a statement cited by the Wall Street Journal.

Inovio’s vaccine, which aims to provide immunity to the virus by inserting genetic instructions into cells to get them to release a protein found on the coronavirus, insisted that the early-stage trial of its Covid vaccine showed promising signs without any significant complications. It said the FDA’s concerns were more in relation to the details about administering the shot in its upcoming trial. As of Sept. 29, 2020, Inovio stock has a market capitalization of $2.03 billion, and still trades 268% higher on the year, despite Monday’s selling rout.

Additional Funding Required

Unlike many of its rivals that have secured millions – and in some cases – billions of dollars from government grants and industry investment, Inovio has flagged it’ll require additional funding to complete its Phase 3 trial. The company, which had just $372 million at the end of the June quarter, recently reported that it had received less than $20 million in grants.

Wall Street View

Despite Inovio’s vaccine setback, Maxim Group’s Jason McCarthy upgraded the shares to ‘Buy’ from ‘Hold,’ arguing the FDA trial holdup will be short-lived. Consensus elsewhere on the Street remains mixed. The stock receives 2 ‘Buy’ ratings, 5 ‘Hold’ ratings, and 1 ‘Sell’ rating. Twelve-month price targets range from as high as $36 to as low as $8, with an average target of $15.29. This represents a 26% premium from yesterday’s close of $12.14.

Technical Outlook and Trading Tactics

News of the delayed late-stage vaccine trial pushed Inovio shares down toward the $9.50 level, where they find a confluence of support from the 200-day simple moving average (SMA) and a multi-month horizontal trendline stretching back to late March. Active traders who buy the retracement to this high probability entry area should consider placing a stop-loss order beneath the September swing low at $8.78 and targeting a move back up to overhead resistance around $32. Manage risk by moving the stop to break even if the price climbs above this month’s high at $18.69.

Nike Swooshes Higher After Digital Sales Soar

NIKE, Inc. (NKE) shares soared 13% in extended-hours trading Tuesday after the athletic footwear and apparel giant reported a surge in quarterly online sales and remained upbeat about growing demand throughout the upcoming holiday season.

The company posted fiscal Q1 adjusted earnings of 95 cents per share, almost double the Street’s forecast of 48 cents a share. Meanwhile, revenue of $10.59 billion came in comfortably ahead of the $9.15 billion figure analysts had expected. Furthermore, the company also lifted its fiscal full-year outlook. It now expects sales to register in the high single digits to low double digits from the previous year.

Through Tuesday’s close, Nike stock has a $182 billion market cap, yields 0.86%, and trades 16% higher on the year. Over the past three months, the shares sport a 17.69% gain as of Sept. 23, 2020. From a valuation standpoint, the stock looks pricey. It trades at about 47 times projected earnings – 67% above its five-year average multiple of 28.34 times.

Digital Sales Spike

Nike’s Q1 digital sales, which account for roughly 30% of its total quarterly revenue, jumped 82% from a year earlier and 75% from the previous quarter as more shoppers purchased gear online during the pandemic. “We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back,” CEO John Donahoe told investors during the conference call. In recent years, the company has invested heavily in its website and mobile apps as more consumers move away from department stores and shopping malls.

Wall Street View

Bank of America expects Nike to continue benefiting from consumers’ shift to more solitary leisure activities. “We believe COVID-19 is accelerating the consumer spending shift away from traditional entertainment (e.g. amusement parks, movie theaters, & tourist attractions) and international travel to solitary leisure activities (bicycling, golf, marine, hiking, camping),” the investment bank said in a note cited by Investor’s Business Daily.

Sentiment elsewhere on Wall Street also remains bullish. The stock receives 23 ‘Buy’ ratings, 3 ‘Overweight’ ratings, 4 ‘Hold’ ratings, and 1 ‘Underweight’ rating. Analysts have an average 12-month price target on the stock at $126.07 – nearly 8% above yesterday’s $116.87 close.

Technical Outlook and Trading Tactics

Nike shares have continued trending higher after breaking above multiyear resistance in mid-August. Moreover, aftermarket data indicates the stock will open above $132 Wednesday, taking its price to an all-time high (ATH).

Given the recent runup into the company’s quarterly earnings, don’t be surprised to see profit-taking over the mid- to short-term as traders take some money off the table. Instead of chasing the price, look for a retracement entry back to $105, where previous resistance now acts as support.

Roku Flies to All-Time High After Peacock Deal

Roku, Inc. (ROKU) shares surged 17.67% Monday after the streaming dongle-maker said it had entered into a carriage deal with Comcast’s subscription video-on-demand streaming service Peacock. The NBCUniversal subsidiary, which has more than 15 million users, offers paid tier services and free ad-supported access that provides Roku opportunities to grow its advertising revenue.

“We’re focused on delivering the kind of high-quality news and entertainment content Roku users want and love, and we’re excited to welcome Peacock’s world-class programming to America’s #1 TV streaming platform and help NBCUniversal build a bigger fan base through our industry-leading, audience development tools,” Roku’s vice president of content acquisition Tedd Cittadine said in a statement cited by Barron’s.

As of Sept. 22, 2020, Roku has a market capitalization of $24.16 billion and trades 41% higher year to date (YTD). Over the past three months alone, the stock has added 47%.

Advertising Revenue Boost

The agreement boosts Roku’s growing advertising revenues, with management saying the deal includes “a meaningful partnership around advertising.”  Although the companies didn’t disclose specific details about their ad-sharing arrangement, Roku has previously stated that it receives a 30% cut of ad revenues from the channels its platform carrries.

Wall Street View

Rosenblatt Securities analyst Mark Zgutowicz reiterated his buy rating on the stock and told clients that the deal – as well as providing advertising revenue – gives Roku bargaining power in its negotiations with WarnerMedia to carry its HBO Max service. “We expect an HBO Max deal inked (prior to) the onset of holiday season (TV) sales,” the analyst said.

Other research firms also remain bullish, with the stock receiving 17 ‘Buy’ ratings, and 5 ‘Hold’ ratings. Just two analysts recommend selling the shares. Twelve-month price targets range wildly on the Street from as high as $228 to as low as $65. The shares currently trade 10% above the average price target of $169.38.

Technical Outlook and Trading Tactics

Roku shares broke out of a two-month trading range Monday to set a new all-time high (ATH) after news of the Peacock deal surfaced. Furthermore, the move occurred on huge volume, indicating participating from larger market players. Also, the 50-day simple moving average (SMA) crossed up through the 200-day SMA in late July, a signal that typically marks the start of a new uptrend.

Breakout traders who buy at these levels should consider using the 50-day SMA as a trailing stop to let profits run as far as possible. To use this exit strategy, remain in the stock until price closes below the indicator. This would involve placing an initial stop-loss order just below $160.

Southwest Airlines Flies Above Resistance After Lifting September Load Factor

Southwest Airlines Co. (LUV) shares rose 3.67% Wednesday after the low-cost carrier raised its September Load factor and flagged that its cash burn in the third quarter will be lower than expected.

The Dallas-based airline lifted its load factor this month to between 45- to 50% from its previous forecast of 40- to 50%. Looking further ahead, it sees the metric ranging between 45- and 55% in October. On the revenue front, Southwest reaffirmed its expectation of a top-line contraction of 65- to 70% in September and expects October revenue to fall 65- to 75%. While operating revenue declined 70% in August, the figure came in 5% better than expected.

The airline, easily recognized by its Disney-themed livery on selected jets, said summer leisure demand trends have so far continued into the early fall. Moreover, the company expects its third-quarter (Q3) cash burn to slow to $17 million a day, less than its earlier forecast of $20 million per day.

Through Wednesday’s close, Southwest stock has a market capitalization of $24.83 billion and trades 21.67% lower on the year. However, performance has taken off over the past three months, with the shares gaining around 15% as of Sept. 17, 2020.

Shrinking Capacity

Southwest expects Q3 capacity to decline by 30- to -35%, followed by a fall of between 35- and 40% in November due to its decision to leave middle seats unbooked on flights through Nov. 30 as part of its ongoing social distancing protocols during the pandemic. “As we transition into autumn and the upcoming Thanksgiving holiday season, we want Southwest customers to have the confidence of knowing that middle seats will remain open through Nov. 30 to accommodate their fall travel plans,” said vice president Ryan Green, per USA Today.

Wall Street View

Sell-side analysts remain overwhelmingly bullish on the stock, impressed by the airline’s ability to attract holiday travelers amid a sharp slump in corporate demand. It receives 13 ‘Buy’ ratings and 8 ‘Hold’ ratings. No research firm currently recommends selling the shares. Twelve-month price targets range from as high as $54 to as low as $29, with an average consensus at $43.31. This indicates a modest upside gain of nearly 3% from Wednesday’s $42.10 close.

Technical Outlook and Trading Tactics

Southwest shares climbed to a five-month high Wednesday, closing comfortably above the 200-day simple moving average (SMA) on above-average volume. Given that the relative strength index (RSI) has recently moved into overbought levels, the stock may consolidate over the short-term before trying to push higher. Those who buy here should look to book profits near $48, where the price is likely to find overhead resistance from the August 2019 swing low. Protect capital by placing a stop-loss order somewhere beneath the 200-day SMA.

Lennar Beats Earnings Expectations – Shares Slide

Lennar Corporation (LEN) shares plunged 4.24% in extended-hours trading Monday despite the nation’s largest homebuilder surpassing Wall Street’s quarterly earnings estimates.

The Miami-based home construction company disclosed a third quarter (Q3) adjusted profit of $2.12 per share, hammering past analysts estimate of $1.51 a share. Moreover, the bottom line grew 33% from a year ago and has surpassed analyst EPS forecasts for five consecutive quarters. Meanwhile, sales of $5.87 billion topped the consensus forecast by 10.10% and came in slightly ahead of the $5.86 billion figure reported a year earlier.

As of Sept. 15, 2020, Lennar stock has a market capitalization of $24 billion, issues a modest 0.65% dividend yield, and is up 33.54% over the last three months. Year to date (YTD), the shares trade over 40% higher.

Home Construction Boom

The homebuilder’s executive chairman Stuart Miller credited the better-than-expected results on record low interest rates and tight supply in the housing market. What’s more, Miller sees these macro trends continuing. “Given strong demand and limited new and existing home inventory, we expect home sales to remain strong for the foreseeable future,” he said in a statement accompanying the earnings call, per Barron’s.

Management expects new orders for the current quarter of 13,800 to 14,300 and deliveries of between 15,500 to 16,000. This compares to 13,054 new orders and 16,391 deliveries in the same quarter last year.

Wall Street View

Analysts remain overwhelmingly bullish on Lennar based on favorable industry tailwinds such as low borrowing costs and changing lifestyle trends brought about by the pandemic. The stock receives 9 ‘Buy’ ratings, 1 ‘Overweight’ rating, and 10 ‘Hold’ ratings. Currently, no research firms recommend selling the shares. Price targets range from as high as $95 to as low as $62, with the average target pegged at $79.97. This implies a slight 1.2% premium to Monday’s $79 close.

Technical Outlook and Trading Tactics

Since the 50-day simple moving average (SMA) crossed above the 200-day SMA in early July to indicate a new uptrend, the stock has continued rising. Therefore, active traders should view any profit taking as a buying opportunity. Look for entries at the $71 level, where the price has flipped previous resistance into support. Those who take a position should protect capital with an initial stop-loss order placed somewhere beneath this month’s low at $71.34 and trail it under each successive higher swing low.

GameStop Tumbles as Earnings Fall Short of Expectations

GameStop Corp. (GME) shares plunged 10.88% in extended-hours trading Wednesday after the video game retailer missed Wall Street’s quarterly earnings projections as gamers pivoted to digital downloads and cloud gaming subscription plans.

The company reported a second-quarter (Q2) loss of $1.40 per share, more than the $1.27 loss analysts had expected. Revenues of $942 million came in above the consensus estimate by 0.48% but fell $358 million from a year earlier. Moreover, same-store sales declined around 13%, even when adjusted for reduced stores operating during the quarter due to the pandemic. However, online sales jumped 800% as consumers accelerated their shift to digital purchases.

Through Wednesday’s close, GameStop stock has a market capitalization pushing toward $500 million and trades 21% higher year to date (YTD). Since early June, the shares are up 48%, outpacing the industry average over the same period by more than 30% as of Sept. 10, 2020.

Cost and Inventory Reductions

Management told investors the firm slashed expenses by $133.7 million during the quarter and reduced inventory by 50% on a year-over-year (YoY) basis to free up cash flow for navigating the current environment and launching new products.

“We believe the actions we are taking to optimize the core operations of our business by increasing efficiencies and creating a frictionless digital ecosystem to serve our customers, wherever and whenever they choose to shop, are enabling us to navigate the COVID-19 environment while positioning us well for the launch of the next generation of consoles,” CEO George Sherman said, per Barron’s.

Wall Street View

Despite GameStop’s share price gaining considerably since early August, analysts remain mostly bearish on the bricks-and-mortar video gamer seller as consumers move away from physical discs. The stock receives 6 ‘Hold’ ratings, 1 ‘Underweight’ rating, and 2 ‘Sell’ ratings. The Street has a 12-month average price target on the shares at $4.79 – 35% below Wednesday’s $7.35 closing price.

Technical Outlook and Trading Tactics

GameStop shares broke out from a multi-month trading range in late August on above-average volume after an SEC filing revealed that between Aug. 13 and Aug. 28, RC Ventures purchased nearly 6 million shares in the company, giving it a 9.6% stake in video gamer retailer. Furthermore, the 50-day simple moving average (SMA) recently crossed above the 200-day SMA to generate a golden cross buy signal.

After-hours trading indicates the stock will open Thursday’s session around $6.55 – placing price back at the trading range’s top trendline, where previous resistance now becomes support. Those who buy the stock should consider setting a stop-loss order under the Aug. 31 wide-ranging day at $5.69 and targeting a move to crucial overhead resistance at $12.15.

DocuSign Slumps Despite Impressive Earnings Beat

DocuSign, Inc. (DOCU) shares plunged 10.64% Friday despite the electronic-signature company sailing past earnings forecasts and lifting its second-half outlook on the back of companies requiring more digital signatures from a growing number of remote workers.

For the quarter ended July 2020, the firm reported adjusted earnings of 17 cents per share, crushing analysts’ estimate by a dime, and improving from 1 cent a share in the year-ago quarter. Revenues of $342.21 million also came in ahead of expectations and grew 45% year over year (YoY).

As of Sept. 8, 2020, DocuSign shares have a market capitalization of nearly $40 billion and trade 191.81% higher on the year. Gains have accelerated in recent months, with the stock adding more than 50%.

Looking Ahead

The company raised its guidance for the full fiscal year, saying it now expects sales of $1.384 billion to $1.388 billion, up from its previous forecast range of $1.313 billion to $1.317 billion. Meanwhile, it projects billings growth of around 40% in the second half, easing from a record 60% in the first half. “Customers have pulled projects forward. Whether that will continue will depend on whether everyone is still working from home. But we’re very bullish about the growth prospects for this business going forward,” CEO Dan Springer told Barron’s.

The company continues to move into other digital contract management areas, such as analytical tools that help businesses sort a repository of digitized documents. It’s also developing video-based notary solutions. The firm expects that 45 states could allow remote notaries as early as next year.

Wall Street View

Despite the stock’s sizable year-to-date (YTD) gain, analysts remain mostly bullish on the stock. It receives 9 ‘Buy’ ratings, 8 ‘Hold’ ratings, and just 1 ‘Sell’ rating. Twelve-month price targets range from as high as $300 to as low as $158, with the average price pegged at $250.26 – implying a 16% premium to Friday’s $216.26 close.

Technical Outlook and Trading Tactics

DocuSign’s share price staged a breakaway gap above crucial overhead resistance at $230 on Sept. 1 before promptly reversing below that level on heavy volume in subsequent trading sessions. The move indicates a possible head-fake trade that may give way to further profit-taking in the weeks ahead.

Those looking to buy the stock should look for entries near $136, where price finds support from a previous horizontal trendline and the rising 200-day simple moving average (SMA). Traders who expect a deeper retracement should monitor the $92.50 level, which is likely to encounter significant support from the February swing high.

CrowdStrike Shares Fall Despite Earnings Beat and Lifted Guidance

CrowdStrike Holdings, Inc. (CRWD) shares retreated 6.42% in after-hours trade Wednesday despite the cloud-based security software company reporting better-than-expected quarterly results and lifting its outlook for the current quarter amid businesses rushing to secure their systems as more staff work remotely during the pandemic.

The Sunnyvale, California-based technology firm reported second-quarter (Q2) adjusted earnings of 3 cents per share, with the figure topping the consensus forecast by 200% and improving from EPS of -18 cents in the year-ago quarter. Revenues of $198.97 million also came in ahead of Wall Street forecasts and grew 84% from a year earlier.

The company’s CEO George Kurtz told investors that recurring subscriptions and ongoing demand for security software underpinned recent growth. “CrowdStrike’s strong momentum continued into the second quarter with net new ARR reaching a new record and exceeding $100 million. A favorable competitive environment and strong secular tailwinds are fueling our growth,” he said in a statement accompanying the earnings call.

Through Wednesday’s close, CrowdStrike stock has a market capitalization of $30.69 billion and trades up a massive 185% year to date (YTD). In the past three months alone, the shares have added over 50%.

Raised Outlook

The company also lifted its fiscal 2021 top- and bottom-line outlook. It now expects to earn between 2 and 8 cents a share, up from its previous forecast of a projected loss between 5 and 8 cents per share. On the revenue front, CrowdStrike sees sales of $809.1 million to $826.7 million, higher than its previous expected range of $761.2 million to $772.6 million.

Management sees increasing demand for its products in the quarters ahead, believing that security breaches will impact businesses more severely in the current environment due to economic vulnerability caused by the pandemic.

Wall Street Outlook

Before the company disclosed its Q2 earnings, Barclays analyst Saket Kalia raised the bank’s price target on Crowdstrike Holdings to $130 from $114, while maintaining his Overweight rating based on reoccurring revenue upside potential. Analysts elsewhere also remain bullish on the stock. It receives 17 ‘Buy’ ratings and 5 ‘Hold’ ratings. No research firm currently recommends selling the shares.

Technical Outlook and Trading Tactics

CrowdStrike shares rose to a new all-time high (ATH) yesterday before closing the session lower as profit-takers moved in. Selling looks like continuing on Thursday, with after-hours trade indicating a fall to around $133 on the open.

Traders should consider buying deeper pullbacks to the $120 level, where previous resistance should now act as support. Before committing capital, consider waiting for signs of a reversal in this area, such as the formation of a hammer candlestick pattern, to confirm the uptrend has resumed. Limit downside by placing a stop-loss order somewhere below the 50-day simple moving average (SMA).

Zoom Video Shares Stream Higher After Knockout Earnings

Zoom Video Communications, Inc. (ZM) added 22.74% in after-hours trade Monday after the video conferencing company reported blowout quarterly results as people and businesses rushed to the platform to stay connected while staying closer to home during the pandemic.

The firm posted adjusted earnings of 92 cents per share on revenues of $663.52 million. Analysts had expected a profit of 45 cents a share and sales of $500.5 million. Moreover, top- and bottom-line growth increased by 355% and 1050%, respectively, from the year-ago period.

Management cited an accelerated shift to remote working, distance learning, and socializing for the better-than-expected quarter. “Organizations are shifting from addressing their immediate business continuity needs to supporting a future of working anywhere, learning anywhere, and connecting anywhere on Zoom’s video-first platform,” CEO Eric Yuan said in a statement cited by Barron’s.

As of Sept. 1, 2020, Zoom stock has a market capitalization of $91.71 billion and trades a whopping 378% higher on the year. In the past three months alone, the shares are up 80%. However, the stock comes with a lofty valuation, trading at over 200 times projected earnings.

Looking Ahead

The company substantially hiked its guidance for the current quarter, now expecting earnings per share (EPS) of 73- to 74 cents and revenues of $2.37 million to $2.39 million. It had previously forecast EPS of 35 cents on sales of $493 million.

Wall Street Outlook

Analysts remain bullish on Zoom Video stock on the back of more users signing up for paid plans after trialing a free account earlier in the pandemic. Research firms are also impressed with the company’s ability to grow its market share. “Zoom has captured the biggest portion of market share, increasing from 34% of total MAU’s back in March, to over 48% as of July 24th,” JP Morgan analysts wrote in a recent note to clients. The stock currently receives 11 ‘Buy’ ratings, 3 ‘Overweight’ ratings, 13 ‘Hold’ ratings, and 5 ‘Sell’ ratings.

Wall Street Outlook and Trading Tactics

While most stocks plunged to multiyear lows during the coronavirus sell-off, Zoom Video shares flipped previous resistance into support at the $105 level. Since then, the price has continued to trend sharply higher, with only minor pullbacks to the 50-day simple moving average (SMA). Given that the relative strength index (RSI) indicates short-term overbought conditions, traders should look to buy pullbacks to major support areas, namely at $280 and $175, rather than chasing recent gains.

Dick’s Sporting Goods Knocks Quarterly Earnings Out of Ballpark

DICK’S Sporting Goods, Inc. (DKS) jumped 15.68% Wednesday after the sport’s equipment and apparel retailer smashed Wall Street’s earnings and revenues forecasts on the back of surging digital sales.

The company reported second-quarter (Q2) adjusted earnings of $3.21 per share, with the figure coming in well above analysts’ expectation of $1.30 a share and increasing 155% from last year’s profit of $1.24 per share. Sales of $2.71 billion ballooned  20% from a year ago and came in 8.21% ahead of the Street expectation.

As of Aug. 27, 2020, DICK’s stock has a market capitalization of $4.82 billion, issues a 2.68% dividend yield, and is up a whopping 57% over the last three months.

Steep Hike in Online Sales

The company’s digital sales, including curbside pickup orders, grew 194% during the quarter as consumers visited the website to purchase hiking apparel, kayaks, weights, and activewear gear to stay fit during the pandemic. “During this pandemic, the importance of health and fitness has accelerated and participation in socially distant, outdoor activities has increased,” CEO Ed Stack told investors during the conference call, per CNBC. “There has also been a greater shift toward athletic and active lifestyle products with people spending more time working and exercising at home,” he added.

Wall Street View

Analysts remain mostly bullish on the stock as stay-at-home fitness trends look likely to continue into the fall. There’s also a consensus the sporting goods retail giant could gain market share, given that many of its major brick-and-mortar competitors have filed for bankruptcy. The stock receives 10 ‘Buy’ ratings, 14 ‘Hold’ ratings, and 1 ‘Sell’ rating. Price targets range from $71 to $34, with the median Street target sitting at $52. Currently, the shares trade at $53.99.

Technical Outlook and Trading Tactics

The DICK’s share price broke above key resistance at $48 on heavy volume Wednesday, indicating institutional buying interest behind the move. Furthermore, earlier this week, the moving average convergence divergence (MACD) indicator crossed above its trigger line to generate a buy signal. Additionally, a golden cross signal last month suggests further upside.

Those who play the breakout should look for a retest the all-time high (ATH) at $62.88, with a stop-loss order placed underneath yesterday’s low at $50.47. The trade offers a risk/reward ratio of around 1:2.5, assuming a fill at Wednesday’s $53.99 closing price. ($8.89 profit per share vs. $3.51 risk per share)

Intuit Climbs After KeyBanc Ups Price Target

Intuit Inc. (INTU) shares jumped 3.38% Monday after KeyBanc reiterated its ‘Overweight’ rating on the accounting software maker’s stock and lifted its 12-month price target to $350 from $315. The upgrade implies a 5% premium to Monday’s $333.12 close.

Analyst Josh Beck says his analysis of Key First and IRS data prompts a more positive bias on TurboTax fundamentals. Beck also argues the company has synergy opportunities through its recent acquisition of Credit Karma – a fintech startup with more than 37 million active users. In February, Intuit announced that it had bought the firm for $7.1 billion to bolster its personal finance offerings.

As of Aug. 25, 2020, Intuit’s shares have an $86.87 billion market capitalization, offer a modest 0.66% dividend yield and trade 28% higher on the year. Over the past three months, they have gained 16%. From a valuation standpoint, the stock trades at about 40 times future earnings, above its longer-term multiple of 30 times.

Upbeat Earnings Expected

Analysts expect Intuit to post fiscal Q4 earnings of $1.20 per share when the company reports its quarterly results after the closing bell on Tuesday. This compares to a loss of 9 cents a share in the year-ago quarter. Meanwhile, the Street tips revenues to come in at $1.55 billion, indicating year-over-year (YoY) top-line growth of 55.8%. The postponement of IRS tax filing from the third quarter to the fourth is likely to have provided a considerable tailwind during the period.

Wall Street Ratings

Analysts remain bullish, impressed by financial software company’s opportunity to grow its QuickBooks Online subscriber base. Currently, the stock receives 12 ‘Buy’ ratings, 6 ‘Hold ratings, and just 2 ‘Sell’ ratings. Price targets range from as high as $350 to as low as $220, with the median consensus pegged at $308.

Technical Outlook and Trading Tactics

Intuit shares broke above an ascending triangle pattern last week, with gains accelerating on above-average volume yesterday after the KeyBanc price upgrade. Given the relative strength index (RSI) sits in overbought territory, traders should consider waiting for a pullback entry instead of chasing recent gains.

Look for buying opportunities near $313.50, where the stock finds support from the triangle’s upper trendline. Traders who enter at this level should consider placing a stop-loss order below the 50-day simple moving average (SMA). Set a profit target that is at least twice the amount risked. For instance, if using a $15 stop, consider targeting a move of at least $30.

Target Shares Soar After Blowout Quarterly Earnings

Target Corporation (TGT) soared 12.65% Wednesday after the big-box retailer smashed Wall Street’s quarterly earnings and revenue forecasts. The company reported Q2 adjusted earnings of $3.38 per share, more than double analysts’ estimates of $1.64 a share. The top line grew 86% from a year earlier due to customers continuing to shop close to home during the coronavirus pandemic.

Sales of $22.98 billion topped expectations by 13.54% and grew 25% from the year-ago period as the company benefited from its designation as an essential retailer during U.S. lockdowns that forced some of its smaller rivals to close. “In the current environment, each of our categories is operating very well,”  CEO Brian Cornell said during the earnings call, per MarketWatch. He added that the company picked up $5 billion in market share in the quarter as several competitors filed for bankruptcy and laid off staff.

Through Wednesday’s close, Target stock has a market capitalization of $77.11 billion, offers a 1.99% dividend yield, and trades 25.76% over the past three months as of Aug. 20, 2020. Year to date (YTD), the shares have gained nearly 22%.

Digit Sales Growth

Target’s e-commerce sales registered a 195% increase during the quarter, propelled by more than 700% growth in its curbside pickup service. Meanwhile, the company’s Shipt online delivery service rocketed by 350% year over year (YoY). The retailer also said it added 10 million new digital customers in the first half of the year.

Wall Street View

Most analysts remain bullish as sales continue to show strength in the fragmented retail space. The stock receives 15 ‘Buy’ ratings, 2 ‘Overweight’ ratings, 9 ‘Hold’ ratings, and just 2 ‘Sell’ ratings. Price targets range from as high as $180 to as low as $105, with the median price pegged at $152 – 1.4% below Wednesday’s $154.22 close.

Technical Outlook and Trading Tactics

Target shares catapulted above the psychological $150 level after the company delivered its better-than-expected results. The move was accompanied by the largest volume in twelve months, indicating buyer conviction. Active traders who enter the stock at these levels should consider using a trailing bar stop to book profits. To use this strategy, remain in the position until the price closes beneath the current day’s low or the prior day’s low – whichever is lower. Conservative traders may opt to wait for a retracement to previous resistance at $130, which has now flipped to support.

JD.com Nudges Toward All-Time High After Earnings Beat

JD.com, Inc. (JD) jumped 7.93% Monday to trade just below its all-time high after the Chinese e-commerce giant delivered better-than-expected quarterly results. The company reported second-quarter (Q2) adjusted earnings of 50 cents per share, easily surpassing analysts’ expectations of 39 cents a share.

The company did not offer guidance for the current quarter, due to restrictions relating to its recent listing on the Hong Kong stock exchange.

The Beijing-based online retailer grew its active customer accounts by an impressive 30% to 417.4 million over the past year ended June 30. Moreover, mobile daily active users grew by 40% in June. As of Aug. 18, 2020, the Nasdaq-listed JD.com ADR has a market capitalization of $105.24 billion and trades over 90% higher on the year. In the past three months alone, the shares have gained 31.72%.

Supply Chain Focus

The company continues to invest heavily in supply chain management for future growth. In July, the firm bought a stake in established supply chain manager Li & Fung to leverage private-label initiatives for the Chinese domestic market. “Our strong financial and operating performance form the basis for JD’s continued investment in innovative supply chain capabilities and a superior customer experience to support our long-term growth,” said Sandy Xu, the company’s chief financial officer.

Wall Street Outlook

Goldman Sachs analyst Ronald Keung upgraded JD.com to a ‘Conviction Buy’ after the results and raised his price target to $85 from $73, implying a 27% premium from Monday’s $66.98 close. The analyst argues the company’s strong Q2 should sustain the stock’s uptrend amid the ongoing retail scale expansion from discretionary to staple goods. Elsewhere, analysts overwhelmingly believe the shares have further upside. The stock receives 1 ‘Strong Buy’ rating, 17 ‘Buy’ ratings, and 3 ‘Hold’ ratings. At this time, no analyst recommends selling the shares.

Technical Outlook and Trading Tactics

After trading within an ascending triangle for the better part of six weeks, JD.com shares finally broke through the pattern’s top trendline on above-average volume after the upbeat earnings report. Furthermore, the moving average convergence divergence (MACD) indicator crossed above its trigger line in Monday’s session to generate a buy signal.

Traders who anticipate a continuation move higher should consider using the 50-day simple moving average (SMA) average as a trailing stop. To implement this strategy, stay in the trade until price closes below the indicator.

Cisco Tumbles After Soft Q1 Earnings Guidance

Cisco Systems, Inc. (CSCO) plunged 6.44% in after-hours trade Wednesday on the back of declining fiscal Q4 revenues and downbeat guidance for the current quarter. The company, which manufactures networking hardware and security software, reported quarterly sales of $12.15 billion, down from year-ago revenues of $13.43 billion.

Meanwhile, adjusted earnings for the period came in at 80 cents per share compared to 83 a share in the quarter ended July 2019. However, the San Jose-based company’s top- and bottom-line figures surpassed Wall Street expectations by 0.50% and 8%, respectively.

Through Wednesday’s close, Cisco stock has a market capitalization of $203 billion, yields an enticing 3.05%, and trades just 2.52% higher on the year. Performance has improved over the past three months, with the shares gaining around 12%.

Soft Forward Guidance

Management forecast Q1 adjusted earnings guidance of 69 cents to 71 cents and a revenue decline of 7% to 9%.  Analysts had projected earnings of 76 cents and $12.25 billion in sales for the quarter, representing about a 7% decline.

Software Focus

The company said it plans to acquire network intelligence company ThousandEyes in the quarter for $1 billion to provide a range of remote work and learning solutions. In recent years, Cisco has made a strategic shift to generate more revenue from software and service solutions to compete with cloud offerings from tech heavyweights Amazon.com, Inc. (AMZN), Microsoft Corporation (MSFT), and Alphabet Inc. (GOOGL).

“By the end of fiscal 2020, we achieved our goal of more than half of our revenue coming from software and services, and this strategy continues to resonate with customers as they digitize their organizations,” Cisco Chief Executive Chuck Robbins said in a statement accompanying the quarterly results, per MarketWatch.

Wall Street Outlook

Despite the stock’s lackluster performance relative to the technology sector, analysts remain modestly bullish. The stock receives 13 ‘Buy’ ratings, 1 ‘Overweight’ rating, and 13 ‘Hold’ ratings. Price targets range from as high as $60 to as low as $41, with a consensus of $50.05. This represents a 4% premium to Wednesday’s $48.10 close.

Technical Outlook and Trading Tactics

Since testing the low 30s in mid-March, Cisco shares have made a Nike swoosh-like recovery. Over the past two months, the price looks to be carving out the right shoulder of an inverse head and shoulders pattern – a formation that typically signals a market bottom. Furthermore, the 50-day simple moving average (SMA) crossed above the 200-day SMA last month to indicate a new uptrend. Traders should use any weakness as a buying opportunity, providing the stock remains above the June 11 low at $43.64. Look for a move up to the $57.50 level, where price funds overhead resistance from a horizontal trendline.