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.

MGM Surges Over 13% Amid IAC’s $1 Billion Stake

MGM Resorts International (MGM) shares rose 13.77% Monday after IAC/InterActiveCorp. (IAC) announced that it has taken a 12% stake in the  Las Vegas-based casino and resort operator worth about $1 billion.

IAC, an internet media company with over 150 brands, sees the investment in MGM as a “once in a decade opportunity” to grow its online gaming business with a preeminent brand. “What initially attracted us to MGM, besides its leadership in leisure, hospitality, and gaming, was an area that currently comprises a tiny portion of its revenue – online gaming,” IAC Chairman Barry Diller said in a statement, per MarketWatch.

Online gaming has increased in popularity in recent years due to the easing of state regulations and the takeup of E-Sports betting. According to IAC, the online gaming market represents a $450 billion global opportunity, with less than 10% penetration.

As of Aug. 11, 2020, MGM stock has a market value of $10.68 billion, yields 0.05%, and trades 34.47% lower on the year. However, the shares have recovered over 30% in the past three months as leisure travel began to slowly recommence.

Second-Quarter Earnings Beat Estimates

Although the owner of MGM Grand and Mandalay Bay reported a second-quarter loss of $1.52 per share, it was narrow than the $1.65 analysts had expected. Moreover, the company said that demand across its properties had been better than expected since they started reopening from early June.

Wall Street View

Analysts have taken the “wait and see” approach to MGM, especially after a second wave of COVID-19 infections swept across many states throughout late June and early July. The stock receives 13 ‘Hold’ ratings, 5 ‘Buy’ ratings, and 1 ‘Sell’ rating. Wall Street has a 12-month median price target on the shares at $18. This implies a 17% downside from Monday’s $21.65 close.

Technical Outlook and Trading Tactics

MGM shares gapped above the top trendline of a broad symmetrical triangle on heavy trading volume yesterday, indicating institutional buying interest behind the move. However, the stock may consolidate before attempting further gains, given the relative strength index (RSI) sits in overbought territory. If the stock closes above the 200-day simple moving average (SMA) and June peak in subsequent trading sessions, look for a possible test of the 2020 high at $34.38. Conversely, a reversal at these levels may see price revisit crucial support at $12.50.

WW International Tumbles on Slim Earnings Miss

WW International, Inc. (WW) slumped nearly 8% Wednesday after the company formally known as Weight Watchers reported quarterly results that fell short of Wall Street expectations.

The firm disclosed second-quarter (Q2) adjusted earnings of 67 cents a share, missing analysts’ forecast of 72 cents a share. On the sales front, revenues for the period of $333.64 million came in 1.67% below consensus and declined from the year-ago figure of $369.02 million. Studio closures resulting from the health crisis weighed down the company’s top line.

Through Wednesday’s close, WW International stock has a market capitalization of $1.65 billion and is down 36.12% so far in 2020. However, over the past three months, the shares have recovered about 7%.

Adding Subscribers

The weight-loss program operator grew its subscriber base during the quarter by 23% to 5 million members thanks to a record level of digital subscribers. Moreover, management believes the transition to online fitness sessions will continue to benefit the company amid the ongoing coronavirus pandemic.

“Creating exciting new coaching experiences, adding new digital features and producing creative content that is insightful, interactive and engaging will greatly increase our ability to attract new members to WW, retain them longer, help them achieve their weight loss and wellness goals, and deliver on our mission to democratize wellness for all,” the firm’s CEO Mindy Grossman said, per Barron’s.

Wall Street View

Riley Securities analyst Kara Anderson expects the company’s digital offerings to continue performing, given they meet consumers’ shift to online participation. The brokerage reiterated its ‘Buy’ rating after the Q2 result and bumped its price target to $36 from $30 – indicating a 47% gain from Wednesday’s $24.41 close. Elsewhere on Wall Street, the stock receives 6 ‘Buy’ recommendations, 1 ‘Overweight’ recommendation, and 6 ‘Hold’ recommendations. Currently, only one analyst has an “Underweight” rating on WW International shares.

Technical Outlook and Trading Tactics

Although the stock has trended steadily higher since plumbing its March low, it trades beneath the 200-day simple moving average (SMA), indicating price remains in a longer-term downtrend. Yesterday’s earnings-induced breakdown on above-average volume below a symmetrical triangle could drive further falls in the coming days. Those who want to buy the stock should look for entries between $17.50 and $20, where the shares find a zone of support from two key horizontal trendlines extending back over the past 12 months.

Take-Two Interactive Sets All-Time High After Earnings Top Estimates

Take-Two Interactive Software, Inc. (TTWO) surged 5.44% in after-hours trade Monday on the back of better-than-expected quarterly results. The videogame publisher behind “Grand Theft Auto” and “NBA 2K” titles reported fiscal first-quarter (Q1) adjusted earnings of $2.68 a share, up from 27 cents in the year-ago period and easily outpacing analysts’ forecasts of $1.58 a share.

Net bookings of $996.20 million also exceeded Street projections and grew 136% from the June 2019 quarter. The company credited the blowout results to more people staying at home playing video games during the pandemic and the absence of a costly Q1 blockbuster title launch. As of Aug. 4, Take-Two Interactive stock has a market value nearing $20 billion and trades 37% higher year to date (YTD). Despite the strong gains, the shares lag the electronic gaming and multimedia industry average over the same period by 36.98%.

Looking Ahead

Management also raised its full-year guidance in which it now expects a profit of $3.04 to $3.30 per share and bookings of $2.8 billion to $2.9 billion. It had previously forecast a profit range of $2.60 to $2.85 a share on net bookings of $2.55 billion to $2.65 billion. “As a result of our better-than-expected first-quarter operating results and increased forecast for the balance of the year, we are raising our fiscal 2021 outlook, which is poised to be another great year for Take-Two,” CEO Strauss Zelnick told investors during the conference call, per Barron’s.

Wall Street View

Analysts remain in the bull camp as the trend of people staying closer to home looks like continuing for the foreseeable future. The stock currently receives 18 ‘Buy’ ratings, 2 ‘Overweight’ ratings, and 9 ‘Hold’ ratings. Price targets range from as high as $189 to as low as $137, with a median consensus of $167. This implies an upside potential of just 1.8%. Moreover, Take-Two Interactive shares appear fully priced from a valuation standpoint, given they trade at around 45 times forward earnings – well above their five-year average multiple of 30 times.

Technical Outlook and Trading Tactics

The video game maker’s share price has trended sharply higher since the March low, with only one steep pullback to the 50-day simple moving average (SMA). Yesterday’s earnings result propelled the stock to an all-time time (ATH) on above-average volume. Given the relative strength index (RSI) sits above the 70 overbought threshold, active traders should consider waiting for a retracement entry. Look for “buy the dip” opportunities at the $144 level, where price finds support from a horizontal trendline and the 50-day SMA. In terms of trade management, consider placing a stop-loss order somewhere below $160 and using a short-period moving average as a trailing stop.

PayPal Registers 52-Week High As Earnings Top Forecasts

PayPal Holdings, Inc. (PYPL) jumped 4.73% Wednesday after the San Jose digital payments company reported better-than-expected second-quarter (Q2) results amid surging e-commerce transactions during the pandemic. Adjusted earnings came in at $1.07 a share, up from 71 cents a year earlier and well ahead of the analysts forecast of 87 cents a share. Revenues also impressed, registering $5.26 billion in the quarter compared to Street expectations of $4.99 billion.

Chief Executive Officer Dan Schulman believes the company will continue to benefit from changing consumer preferences brought about by pandemic. “Simply put, our business has never been more relevant and important in the midst of the Covid pandemic. We have seen substantial macro changes that we believe will have a lasting and profoundly positive impact on our business,” he told investors during the earnings call, per Barron’s.

Through Wednesday’s close, PayPal stock has a market capitalization of $216.72 billion and trades 70% higher on the year. In the past three months alone, the shares have gained nearly 50% as of July 30, 2020.

Transaction and User Growth

Total Q2 transactional volume through the platform climbed to $222 billion, $12 billion above what analysts had expected and up from $172 billion in the year-ago quarter. The company added 1.7 million new merchant users during the quarter as businesses moved to accommodate a shift to contactless payments. Meanwhile, PayPal’s person-to-person payment service Venmo processed $37 billion in payments. Looking ahead, the company expects total payment volume to grow 30% in the third quarter.

Wall Street View

Analysts remain overwhelmingly bullish, despite the stock trading 71% above its five-year average projected earnings multiple. Currently, it receives 32 ‘Buy’ ratings, 4 ‘Overweight’ ratings, and 7 ‘Hold ratings. Just one analyst recommends selling PayPal shares. Wall Street has placed a 12-month price target on the stock at $186.36, indicating a 6% premium to Wednesday’s $184.60 close.

Technical Outlook & Trading Strategy

Since bottoming out in the low 80s at the height of the pandemic selloff, PayPal shares have remained in a steady uptrend. Gains accelerated after the stock gapped up by more than 14% in mid-May when the accompany announced it saw a record day of transactions earlier that month. Yesterday’s blowout earnings report added fuel to the fire, propelling the price to a new 52-week / all-time high on above-average volume.

Active traders who want to play the bullish momentum should consider using a 15-day simple moving average (SMA) to ride the trend as far as possible. To implement this strategy, stay in the position until the stock closes below the indicator. If the PayPal reverses at these levels, look for a possible decline to major support at $124, where price finds a confluence of support from the February swing high and 200-day SMA.

Hasbro Breaks Down After Earnings Miss

Hasbro, Inc. (HAS) shares plunged 7.41% Monday after the toy and boardgames maker missed Wall Street’s top- and bottom-line expectations. The Rhode Island-based company reported second-quarter (Q2) adjusted earnings of 2 cents per share, falling well short of analysts’ forecast of 19 cents per share. The figure also contracted 96% from the year-ago quarter. Meanwhile, revenue of $860.3 million in the period came in below the consensus mark of $983 million and declined 29% year-over-year (YoY).

CEO Brian Goldner cited COVID-19-related disruptions to the company’s supply chain and the closures of retailers selling its toys as contributing factors to the disappointing quarterly result. Still, he sees things improving in the second half. “We believe the outlook improves from here,” Goldner told investors during the conference call, per Barron’s. The CEO also believes the reopening of the television, film, and entertainment industries position the company for a good holiday season.

As of July 28, the company has a market capitalization of $9.84 billion, offers an enticing 3.51% dividend yield, and is down 30.69% on the year. From a valuation standpoint, the stock trades at 22.37 times projected earnings, 14% above its five-year average multiple of 19.58 times.

Balance Sheet Position

Even though Hasbro’s cash position has decreased slightly from a year ago, it still has a stockpile of $1.04 billion and access to a $1.5 billion credit facility to help navigate challenges in the months ahead. The company’s long-term debt has risen to $4.8 billion from $1.7 billion, with $300 million due in May 2021.

Wall Street View

Wells Fargo analyst Timothy Conder told clients Monday that he believes the earnings and revenue miss will erase some of the stock’s recent gains. However, Street ratings indicate further upside. The stock receives 10 ‘Buy’ recommendations, 1 ‘Overweight’ recommendation, and 6 ‘Hold’ recommendations. Moreover, analysts have placed an $86.69 12-month price target on the stock, indicating a 12% upside from Monday’s $77.59 close.

Technical Outlook

After making an impressive recovery throughout March and April, Hasbro shares have oscillated within a symmetrical triangle. Yesterday’s earnings miss saw sellers rush for the gates, with price breaking down below the pattern’s lower trendline on above-average volume. Furthermore, the moving average convergence divergence (MACD) indicator crossed below its trigger line to generate a sell signal. In the weeks ahead, look for a possible test of $62.50, where price finds support from the mid-May swing low. Conversely, a reversal back to the upside could drive a move back to significant overhead resistance around $94.

Whirlpool Gains As Earnings Top Estimates

Whirlpool Corporation (WHR) shares edged 2.18% higher Wednesday after the home appliance maker delivered better-than-expected quarterly results.

The company posted second-quarter adjusted earnings of $2.15 a share, easily surpassing analysts’ forecast of 96 cents a share. Meanwhile, revenues of $4 billion topped the Street expectation by 11%. Both figures declined from the year-ago quarter due to disruptions caused by the pandemic.

The company’s North American business saw EBIT margins grow 20 basis points to 12.6%, while all geographic regions experienced a significant recovery in June. CEO Marc Bitzer said he pleased with the results. “While we recognize the uncertainty and volatility which lies ahead of us, we are proud of the way in which we managed through the most difficult quarter of this global crisis,” he said.

Through July 22, Whirlpool stock has a market capitalization of $9.13 billion, offers a healthy 3.34% dividend yield and trades flat on the year. However, over the past three months, the shares have surged almost 50%.

Managing the Pandemic

Management’s COVID-19 response plan remains on track, generating cost savings of roughly $100 million and freeing up $124 million in free cash flow in the second quarter. The company also boasts a strong liquidity position, with $5 billion in cash and available credit as of June 30.

“In the quarter, we delivered solid cost takeout globally and strong cash flow improvement through disciplined working capital management,” CFO Jim Peters, said, per Barron’s. “The actions we took earlier this year to sustain our margins and protect our liquidity strengthened our ability to succeed through the ongoing COVID-19 pandemic and have prepared us to withstand current economic uncertainty.”

Wall Street View

Analysts sit mostly on the fence, hesitant to make a call until more retail sales data becomes available in the upcoming quarters. The stock receives 4 ‘Hold’ ratings, 3 ‘Buy’ ratings, and 1 ‘Sell’ rating. The Street has a consensus 12-month price target on the shares at $132.86, representing 12.6% downside from Wednesday’s $152.10 close.

Technical Outlook

Whirlpool shares have staged a remarkable v-shaped recovery over the past four months to trade just 6% below their 2020 high. The company’s upbeat earnings yesterday helped price breakout from a tight pennant sitting above an ascending triangle in a move that could see a test of the multiyear high around $160. Traders should also watch for a golden cross buy signal – when the 50-day simple moving average (SMA) crosses above the 200-day SMA. This often marks the start of a new uptrend. On the other hand, a reversal at current levels could trigger a decline to crucial horizontal support at $122.

Dollar Tree Gains Amid New CEO Appointment

Dollar Tree, Inc. (DLTR) shares climbed 1.74% Monday after the discount variety retailer said it had appointed Michael Witynski as its new chief executive officer. Witynski, will succeed outgoing CEO Gary Philbin, who had been in the role since 2017. He brings comprehensive experience to the top job, having served as the company’s chief operating officer, and most recently as its enterprise president. To facilitate a smooth transition, Philbin will remain as an executive and board member until Sept. 23, 2020.

The timing of the move in the middle of a global pandemic raised eyebrows with some analysts. ‘While past promotions made it fairly obvious that Mr. Witynski was being groomed as the next in line, timing of the news is a bit peculiar, in our view,’ Jefferies analyst Christopher Mandeville wrote in a note to clients cited by Barron’s. However, the analyst believes Witynski’s focus on sales and margins justified the market’s positive reaction.

Dollar Tree stock has a market capitalization of $23 billion and trades 3.26% higher on the year through July 20. Performance has improved over the last three months, with the shares gaining 23%.

Navigating the Pandemic

The retailer told investors in May that it has access to a $1.25 million credit line and holds around $1.9 million in cash and investments to ride out uncertainty caused by the pandemic. Dollar Tree also said it plans to halt its repurchase program for the immediate future, though its current buyback has $800 million remaining. At the store level, the firm has reduced its planned renovations this year to 750 from its original expectation of 1,250.

Wall Street View

The majority of analysts remain neutral on the stock as they wait for further clarity about earnings in the coming quarters. Currently, it receives 13 ‘Hold’ ratings, 1 “Overweight’ rating, and 10 ‘Buy’ ratings. The 12-month Street consensus price target on Dollar Tree shares sits at $105.50. This represents an 8.6% premium to Monday’s $97.12 close.

Technical Outlook

The share price broke above a multi-month downtrend line in mid-May but has traded within a symmetrical triangle since. Price started to climb above the pattern’s top trendline last week, with gains consolidating Monday as traders digested the CEO announcement. In the coming days, watch for a cross of the 50-day simple moving average (SMA) above the 200-day SMA. Technical analysts refer to this as a golden cross – a signal that indicates the formation of a new uptrend. If the upside continues, look for a test of the 52-week high around $120. Alternatively, a breakdown below the triangle could see a test of crucial support at $75.

Western Digital Jumps After Bernstein Outperform Rating

Western Digital Corporation (WDC) gained 4.82% Wednesday after Bernstein initiated coverage of the data storage firm’s stock with an ‘Outperform’ rating and $60 price target. The bullish call indicates a 36% premium to Wednesday’s $44.07 close.

Analyst Mark Newman belies the company’s strategic diversification into NAND flash memory through its 2015 acquisition of SanDisk positions it to take advantage of a shift in data storage management from local storage to data centers. He sees NAND flash memory devices growing 35% a year on average over the next decade.

‘NAND will capture the majority of growth due to its performance, power and form-factor advantages over HDDs,’ Newman wrote in a note to clients cited by Barron’s. ‘Mission-critical data-center storage will shift to 100% NAND by 2024,’ he added.

The analyst argues the current stock price undervalues the company’s NAND business.  He says its implied valuation of $4.4 billion represents just 25% of the $19 billion the company forked out to acquire SanDisk. The firm trades around seven times future earnings, well below its five-year average multiple of nine times earnings. As of July 15, Western Digital stock has a $13.31 billion market capitalization and is down almost 30% this year.

Quarterly Earnings Approach

Analysts expect the company to disclose fiscal fourth-quarter earnings of $1.01 per share when it reports after the closing bell on Wednesday, Aug. 5. In the third quarter, the firm’s data center devices and solutions segment increased 22% year-over-year amid growing demand for enterprise SSDs and double-digit terabyte drives. Traders should watch for continued strength in this business after Bernstein’s bullish outlook on data storage growth.

Wall Street Outlook

Analysts overwhelmingly support the stock, with 18 ‘Buy’ ratings, 2 ‘Overweight’ ratings, and 11 ‘Hold’ ratings. Currently, no research firm advises selling the company’s shares. Price targets fluctuate between $45 and $90, with the consensus coming in at $61.45. Given the favorable Wall Street view, watch for a possible runup into Western Digital’s next earnings report as traders bet on a better-than-expected quarter.

Technical Outlook

Despite sitting under a death cross, the stock has remained in a trading range since late March. More recently, a descending triangle has formed over the past six weeks to establish crucial support and resistance areas. Yesterday’s breakout above the pattern’s upper trendline may see bulls test the downward sloping 200-day SMA around $51. Conversely, a breakdown below the triangle could trigger a decline to the trading range’s lower boundary at $37.5.

WDC Chart

Carnival Stock Sinks After Wedbush Slashes Price Target

Carnival Corporation & Plc (CCL) sank 5.45% Monday after Wedbush cut its price target on the embattled cruise operator’s stock from $29 to $20 while reiterating a ‘Neutral’ rating. However, the revised target still implies a 31% upside from Monday’s $15.28 close.

Despite Carnival announcing last week that several of its AIDA cruises will recommence sailing in August and that it continues to see demand from new bookings next year, analyst James Hardiman sees trouble on the horizon amid increasing COVID-19 cases in the United States.

“While a legitimate target for the restart of the AIDA brand is encouraging, we can’t help but think that we remain a far distance away from operations resuming in the United States given a resurgence in COVID-19 cases as well as halted (in some instances reversed) economic reopenings,” Hardiman said, per MarketWatch.

Through July 13, Carnival stock has a market capitalization of $11.95 billion and trades nearly 70% lower on the year. Although, the shares have fared much better over the past three months, clawing back 30%. Earlier this year, the company suspended its dividend and share buyback programs to improve its liquidity position.

Reducing Fleet Size

Carnival, which operates over 100 vessels across nine brands, said it expects to reduce its fleet by 13 ships, representing nearly 9% of its total capacity. The company sold one of its ships last month and has agreements to offload another five. It also has preliminary sale agreements for three vessels and previously announced transactions for four other ship removals. The move creates a more efficient company to navigate the unchartered waters of the ongoing pandemic.

Wall Street View

Analysts overwhelmingly remain on the sidelines, with the stock receiving 12 ‘Hold’ ratings. This is hardly surprising, given the uncertainty surrounding sailing schedules and passenger demand in 2021 and beyond. The stock also has 7 ‘Buy’ ratings and 4 ‘Sell’ ratings. Street price targets range from as low as $9.93 to as high as $27.

Technical Outlook

Since running into resistance at the 100-day simple moving average (SMA) in early June, Carnival shares have retraced back down to the $14.5 level, where price finds vital support from a horizontal trendline. Providing the stock can hold steady in this area, look for a test of the June 8 high around $25. Alternatively, if a breakdown below $14.5 occurs, anticipate a decline to the next key area of support at $11.50.

CCL Chart

Twitter Shares Climb On Subscription Service Speculation

Twitter, Inc. (TWTR) climbed over 7% Wednesday on speculation that the San Francisco-based company plans to launch a subscription service. The social media giant posted a job advert for an engineers to work on a subscription platform. “We are building a subscription platform, one that can be reused by other teams in the future,” the listing stated, per The Verge. The new web engineers will work on the company’s Gryphon team, which collaborates closely with the payroll team and the Twitter.com group.

According to Bloomberg, a person familiar with the matter said the company is exploring alternative revenue sources. The social media firm currently generates about 85% of its revenue from advertising. Therefore, a subscription service would help diversify the top line as businesses rein in their marketing budgets amid ongoing uncertainty. Despite Twitter adding 14 million new users in the first quarter, its revenues rose just 3% from the March 2019 quarter, the smallest increase in over two years.

Through July 8, Twitter stock is up 10.48% year to date, with the shares surging 27% in the past three months alone. The company looks fully priced from a valuation front, given it trades 52% above its five-year forward earnings multiple.

Wall Street View

Rosenblatt Securities analyst Mark Zgutowicz outlined to clients what a Twitter subscription service may look like. For instance, he believes the firm would be more likely to launch an offering utilizing its data and analytics, rather than moving to paid tiers for Twitter usage.

Sentiment among analysts skews toward a bullish outlook, with 24 ‘Hold’ ratings and nine ‘Buy’ ratings. Only four research gurus recommend selling Twitter stock. Furthermore, look for a string of analyst upgrades if the company does indeed announce a subscription service. Wall Street has a 12-month consensus price target of $33.14 – indicating 6% downside from Wednesday’s $35.41 close.

Technical Outlook

Twitter shares have formed a loosely constructed inverse head and shoulders pattern over the past nine months. The price tested the formation’s neckline in Wednesday’s trading session on the highest volume in nearly two years. Also, a likely cross of the 50-day simple moving average (SMA) above the 200-day SMA early next week adds to the bullish technical landscape. A clean breakout above $37 could see buyers run the stock up to around $46, where price encounters resistance from the 52-week high. Alternatively, a failure to push through this closely-watched resistance level could trigger a fall to horizontal trendline support at $28.5.

TWTR Chart

NIO Drives Higher On Upbeat June Sales

NIO Inc. (NIO) shares charged 22.71% higher Monday after the Chinese electric vehicle maker reported June sales jumped 179% from a year earlier despite challenges from the pandemic. The better-than-expected figure comes on the back of U.S. rival Tesla, Inc. (TSLA) smashing Wall Street quarterly delivery projections.

NIO delivered 3,740 vehicles last month, taking its second-quarter tally to 10,331 vehicles. It marks the first times the Shanghai-based carmaker has exceeded 10,000 quarterly shipments – an impressive feat amid slipping global auto sales.

As well as topping its delivery expectations, the company’s chief operating officer Steven Feng remains confident of meeting operational efficiency targets. ‘We are pleased to deliver solid results driven by our competitive products, superior services, and expanding sales network. Our deliveries in the second quarter of 2020 exceeded the high end of our earlier projection, and we are confident that our goals on gross margin and operational efficiency will be achieved.’ Feng said, per CleanTechnica.

Investors may have already factored in most of the upside, given the company’s American Depositary Receipt (ADR) listed on the New York Stock Exchange has risen a staggering 366% over the past three months as of July 7.

Wall Street View

Goldman Sachs analyst Fei Fang upgraded the stock from ‘Neutral’ to ‘Buy’ in early June but revised his rating back to ‘Neutral’ by the end of the month and slashed his 12-month price target from $7 to $6.4.

Although the analyst still likes the company’s underlying fundamentals, he has grown more concerned about its lofty valuation. Since Fang’s initial upgrade on June 3, NIO shares trade over 100% higher, despite the firm posting an unaudited first-quarter net loss of $243.3 million.

Most other analysts have also taken the ‘wait and see’ approach, with the stock receiving 9 ‘Hold’ ratings. Currently, the consensus price target among analysts sits at $39.01, according to Yahoo! Finance – amazingly representing another 239% upside from Monday’s $11.51 close.

Technical Outlook

Since bottoming out just above $2 in mid-March, Nio shares have trended steadily higher with price accelerating on heavy volume in the past two trading sessions. Investors should be mindful of chasing recent gains as the relative strength index sits deep in overbought territory, increasing the probability of a retracement. Instead, those who wish to buy should look for an entry point near $5, where the stock finds a confluence of support from a horizontal trendline and the 50-day simple moving average.

NIO Chart

PG&E Shares Jump After Emerging From Bankruptcy

PG&E Corporation (PCG) shares powered 4.65% higher in Thursday’s pre-holiday trading session after the San Francisco-based company announced it had emerged from bankruptcy. The embattled utilities giant, which filed for Chapter 11 reorganization in January 2019, said Wednesday it had paid $5.4 billion and a portion of its stock into a trust established for wildfire victims impacted by its aging infrastructure.

PG&E’s interim CEO Bill Smith acknowledged the milestone was a step in the right direction but insisted the firm had more work to do. “Our emergence from Chapter 11 marks just the beginning of PG&E’s next era — as a fundamentally improved company and the safe, reliable utility that our customers, communities, and California deserve,” Smith said, per MarketWatch.

Because the restructure plan gained approval from the U.S. bankruptcy court by June 30, the utility now has access to a $21 billion insurance fund set up by California to cover damage caused by future catastrophic wildfires. Through Thursday’s close, PG&E trades down 13% on the year, underperforming the regulated electric utilities industry average by around 3%.

Analyst View

Anticipating a successful move out of bankruptcy, UBS analyst Daniel Ford upgraded the stock to ‘Buy’ from ‘Neutral’ in May and lifted his 12-month price target from $14 to $15 – indicating almost 60% upside from Thursday’s $9.45 close.

The analyst also noted that PG&E should achieve its long-term growth target of between 7- and 8%, adding that the firm’s income could grow at an even higher rate. Ford concluded by saying he sees limited downside in the stock given an equity backstop commitment by a consortium of private investors.

Elsewhere on Wall Street, the consensus sits evenly split with 6 ‘Buy’ ratings and 6 ‘Sell’ ratings. However, the stock has no ‘Strong Buy’ or ‘Strong Sell’ ratings, indicating a lack of conviction from research analysts. Interestingly, most of the upgrades have come in the past three months leading up to the bankruptcy outcome.

Technical Outlook

PG&E shares have oscillated within a textbook symmetrical triangle since late February, with neither the bulls nor bears able to gain the ascendancy. However, buyers cheered the company’s successful climb out of bankruptcy yesterday, driving price higher from the triangle’s lower trendline on rising volume. Ongoing bullish momentum in the weeks ahead could see a test the February double top around $18. Conversely, a breakdown through current levels may spark a fall to the $6.25 pandemic selloff low.

PCE Chart

Conagra Brands Hits Two-Month High After Upbeat Outlook

Conagra Brands, Inc. (CAG) jumped over 4% Tuesday after the packaged food giant surpassed Wall Street expectations and issued an upbeat forecast. The Chicago-based firm posted fourth-quarter fiscal 2020 earnings of 75 cents per share, easily eclipsing analysts’ expectation of 51 cents a share. The figure also grew 108% from the profit reported in the year-ago quarter. Meanwhile, revenue came in at $3.13 billion, well ahead of $2.39 billion reported in the March quarter last year.

Behind The Numbers

Management credited increased at-home food consumption resulting from the coronavirus pandemic and favorable pricing as major drivers for the better-than-expected quarterly result. Furthermore, the firm anticipates improving demand across its retail business in the first quarter of fiscal 2021 and reaffirmed its full-year earnings guidance range of between $2.66 and $2.76, outpacing analysts’ consensus forecast of $2.50 per share.

Analyst View

Last month, Jeffries analyst Rob Dickerson upgraded the company’s stock to ‘Buy’ from ‘Hold’ and lifted his price target by $10 to $41 a share – representing a 17% premium to Tuesday’s $35.17 close. Dickerson says more people eating at home over the next few years bode well for the packaged food giant.

“A reduction in CAG’s brand portfolio risk via higher at-home food consumption increases FY’22 target achievability, in our view, given further top-line tailwinds,” the analyst said. Dickerson also argues that the stock’s 15% relative P/E valuation discount relative to its U.S. food industry rivals is unjustified. As of July 1, 2020, the company trades at 15 times forward earnings, around 20% below its 5-year average multiple of 18 times.

More broadly, Wall Street analysts have a mostly bullish outlook for the stock, with 6 ‘Buy’ ratings, 9 ‘Hold’ Ratings, and 1 ‘Strong Buy’ rating. Interestingly, no analysts recommend selling the stock, indicating possible further upside in the months ahead.

Technical Outlook

Conagra now trades more than 35% above its pandemic-selloff low, placing it into bull market territory. Buyers piled into the stock after yesterday’s upbeat earnings report, driving the price to a two-month high on above-average volume. Furthermore, the MACD indicator crossed back above its trigger line to generate a buy signal. The breakout may result in a retest of the multiyear high around $42. Alternatively, if the breakout fails, look for a decline to $31, where price finds a confluence of support from the April and September 2019 swing highs, and rising 200-day simple moving average.

CAG Chart