Macy’s Shares Gain as Earnings Top Estimates

Macy’s Inc, an American department store chain founded by Xavier Warren in 1929, reported better-than-expected earnings in the fourth quarter, largely driven by strong online sales as shoppers purchased everything from the comfort of their homes amid the COVID-19 pandemic, sending its shares up about 3% on Tuesday.

The fashion retailer said its diluted earnings per share of $0.50 and adjusted diluted earnings per share of $0.80 both exceeded the expectations for the quarter the company set in the fall. That was also higher than the market expectations for a profit of $0.05 per share.

Macy’s net sales declined about 19% to $6.78 billion in the fourth quarter; however, it came in well above the Wall Street estimates of $6.50 billion. Digital remained a growing and increasingly profitable platform.

Sales grew 21% over fourth quarter 2019, with digital penetration at 44% of net sales. Nearly 25% of Macy’s digital sales were fulfilled from stores, including curbside pickup and same-day delivery.

The U.S. premier omni-channel fashion retailers forecast sales in the range of $19.75 billion and $20.75 billion for 2021.

Macy’s shares, which slumped over 30% in 2020, rose over 37% so far this year. The stock traded about 3% higher at $15.69 on Tuesday.

Executive Comments

“We anticipate annual digital sales to reach $10 billion within the next three years, and that digital will become an even more profitable contributor to our business. Additionally, we exited the quarter with a lower cost base and a strong liquidity position, supported by a $3 billion asset-based lending facility that we have not drawn upon,” said Jeff Gennette, chairman and chief executive officer.

Macy’s Stock Price Forecast

Six analysts who offered stock ratings for Macy’s in the last three months forecast the average price in 12 months of $12.00 with a high forecast of $15.00 and a low forecast of $8.00.

The average price target represents a -22.78% decrease from the last price of $15.54. From those six analysts, two rated “Buy”, one rated “Hold” and three rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $11 with a high of $22 under a bull scenario and $1 under the worst-case scenario. The firm gave an “Underweight” rating on the department store chain company’s stock.

Several other analysts have also updated their stock outlook. Macy’s had its target price increased by analysts at Telsey Advisory Group to $14 from $10. The brokerage currently has a “market perform” rating on the stock. Jefferies Financial Group upgraded shares of Macy’s from a “hold” rating to a “buy” rating and set a $14 target price. Credit Suisse Group upped their target price on shares of Macy’s from $6.00 to $7.00 and gave the company an “underperform” rating.

Analyst Comments

Macy’s continues to undergo core operating challenges, similar to peers in the department store space (eg. market share cessation to peers, falling store traffic, contracting margins, eCommerce disintermediation). Despite closing stores proactively, store-only comps remain negative and we forecast them to remain so in the future, eroding ROIC,” said Kimberly Greenberger, equity analyst at Morgan Stanley.

“Expense cuts (eg. headcount reduction), real estate monetization, and secondary growth initiatives are encouraging but are unlikely to stimulate enough cash flow to reinstate its dividend while also covering upcoming debt maturities. We anticipate COVID related disruption accelerates market share loss to peers, especially to brands with owned eComm.”

Check out FX Empire’s earnings calendar

Palo Alto Networks Tops Q2 Earnings Estimates; Stock Has Over 30% Upside Potential

The Santa Clara, California-based cybersecurity company Palo Alto Networks reported better-than-expected revenue and profit in the fiscal second quarter, but shares slumped as earnings projections fell short of analysts’ expectations.

The global cybersecurity leader reported quarterly adjusted earnings of $1.55​​ per share for the quarter ended in January, beating the Wall Street consensus estimates of $1.43 per share. Similarly, the company’s revenue surged over 24% to $1.02 billion from a year earlier​, beating the market expectations of $985.68 million.

Palo Alto Networks’ 25% year-over-year revenue growth in the second quarter surpassed our expectations as sales pushed above the $1 billion thresholds for the first time. We believe investor concerns surrounding the firewall transition from hardware to software and Palo Alto’s ability to grow outside of the firewall can be pacified. The firewall business continues to generate abundant free cash flow, whether in physical or virtual forms, which is fueling the higher growing cloud and automation security solutions,” said Mark Cash, senior equity analyst at Morningstar.

“We are raising our fair value estimate to $400 from $345 per share, as we expect higher revenue growth and an improved margin profile emanating from next-generation security products over the longer term. Shares of this narrow-moat cybersecurity stalwart are slightly undervalued, in our view.”

For the fiscal third quarter 2021, Palo Alto Networks forecasts diluted non-GAAP net income per share in the range of $1.27 to $1.29 per share, which incorporates net expenses related to the proposed acquisition of Bridgecrew, using 100 million to 102 million shares. Total revenue in the range of $1.05 billion to $1.06 billion, representing year-over-year growth of between 21% and 22%.

However, that was lower than the analysts’ expectations of $1.29 per share on revenue of $1.05 billion for the third quarter.

Palo Alto Networks shares, which surged about 54% in 2020, rose over 8% so far this year. However, the stock fell 3.16% to $384.35 on Monday.

Executive Comments

“The SolarStorm attack highlighted enterprises need a comprehensive up-to-date map of their full IT infrastructure environment, including understanding their own networks as well as external attack surfaces and supply chains,” said Nikesh Arora, Palo Alto Networks chairman and chief executive, on the conference call.

“We expect that this attack will be a wakeup call to all enterprises to modernize cybersecurity and will serve as a net incremental tailwind, not just for us but also for the industry.”

Palo Alto Networks Stock Price Forecast

Twenty-two analysts who offered stock ratings for Palo Alto Networks in the last three months forecast the average price in 12 months of $417.68 with a high forecast of $515.00 and a low forecast of $305.00.

The average price target represents an 8.67% increase from the last price of $384.35. From those 22 analysts, 20 rated “Buy”, one rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $515 with a high of $655 under a bull scenario and $255 under the worst-case scenario. The firm gave an “Overweight” rating on the cybersecurity company’s stock.

Several other analysts have also updated their stock outlook. Piper Sandler raised the target price to $425 from $400. Palo Alto Networks had its price target raised by Royal Bank of Canada to $425 from $380. The firm currently has an outperform rating on the network technology company’s stock.

Moreover, Mizuho increased their price target to $450 from $360 and gave the company a buy rating. Northland Securities increased their price target to $410 from $350 and gave the company an outperform rating.

Analyst Comments

Palo Alto Networks offers a disruptive platform, well-positioned to address the evolving threat landscape. We believe Palo Alto Networks will continue to differentiate itself from its peers as it proves out a broader TAM around a NextGen Security Platform (and executing to that opportunity),” said Keith Weiss, equity analyst at Morgan Stanley.

“With the strong billings base and the continued drive towards higher operating margins, we remain confident in the durability of our FCF estimates. Currently trading at 22x CY22e FCF vs. our model which looks for 18% FCF CAGR from CY21-26e and terminal 23x CY26e FCF, we continue to see attractive risk/reward in PANW shares.”

Check out FX Empire’s earnings calendar

M&T Bank to Acquire People’s United Financial in $7.6 Billion Deal, Shares Gain

M&T Bank Corp said on Monday that it has agreed to acquire a savings and loan holding company People’s United Financial in an all-stock transaction deal worth nearly $7.6 billion.

Following this announcement, People’s United Financial‘s shares, which slumped 23% in 2020, jumped over 13% to $17.79 on Monday. Similarly, M&T Bank’s shares, which slumped 25% last year, rose 20% so far this year. The stock traded about 2% higher at $152.83.

According to the deal, People’s United shareholders will receive 0.118 of a share of M&T common stock for each People’s United share they own. Following the completion of the transaction, former People’s United shareholders will collectively own nearly 28% of the combined company.

“The implied price would be a small premium to PBCT‘s $6.6 billion market cap., which, along with MTB‘s higher P/TBV multiple, would help the deal math. PBCT is a $62 billion asset bank with a New England and NYC tri-state area footprint. The deal would add scale to MTB‘s $145 billion asset base, bringing efficiency ratio and ROTCE benefits from cost saves and expansion into New England,” noted Ken Usdin, equity analyst at Jefferies.

The combined company will create a diversified, community-focused banking franchise with approximately $200 billion in assets and a network of more than 1,100 branches and over 2,000 ATMs that spans 12 states from Maine to Virginia and the District of Columbia, the company said in the press release.

M&T Bank Stock Price Forecast

Nine analysts who offered stock ratings for M&T Bank in the last three months forecast the average price in 12 months of $150.00 with a high forecast of $163.00 and a low forecast of $131.00.

The average price target represents a -1.64% decrease from the last price of $152.50. From those nine analysts, four rated “Buy”, five rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $160 with a high of $213 under a bull scenario and $100 under the worst-case scenario. The firm gave an “Equal-weight” rating on the bank’s stock.

Several other analysts have also updated their stock outlook. M&T Bank had its price objective boosted by equities research analysts at Deutsche Bank to $161 from $155. The firm currently has a “buy” rating on the financial services provider’s stock.

Moreover, the Royal Bank of Canada boosted their target price to $150 from $130 and gave the stock an “outperform” rating. Barclays boosted their target price to $163 from $159 and gave the stock an “overweight” rating.

Analyst Comments

“We view M&T Bank as one of the more conservative and higher-quality banks we cover, with better-than-peer credit losses through the cycle. In times of credit volatility, MTB tends to be favored among investors as more of a safe-haven play,” said Ken Zerbe, equity analyst at Morgan Stanley.

“It is considerably more profitable than peers, but the negative is its lack of loan growth as it continues to see run-off of its acquired Hudson City residential loan portfolio. We believe MTB deserves to trade at a modest premium to its peers.”

Check out FX Empire’s earnings calendar

VMware Shows Signs of Recovery But Margins and Management Remain Unresolved: Morgan Stanley

Morgan Stanley in its latest research note said their channel work on the California-based tech giant VMware pointed towards sequential improvement in the fourth quarter and similar expectations for the first quarter, though macro pressure still lingers.

On Thursday, Palo Alto cloud computing and software company is widely expected to report EPS of $2.05 per share in the fourth quarter. That was in line with Morgan Stanley’s forecasts of $2.05 per share.

The investment bank forecasts a total revenue of $3.23 billion, up 5.1% year-over-year, in line with the market consensus estimates of +5% y/y growth. Morgan Stanley forecasts EBIT of $1.09 billion (33.6% margin) to round out FY21 at $3.74 billion (32% margin), in line with guidance and consensus.

“Beyond an improving top line, however, the stock performance will likely be tied to two other factors: 1) margins – preliminary guidance suggesting margin compression of 4% points YoY in FY22, therefore heavily pressuring near-term EPS growth; and 2) management – with CFO Zane Rowe as interim CEO, VMware‘s Board is currently searching for a permanent replacement after Pat Gelsinger’s departure. As such, even with shares at 20x CY22e P/E, trading at a meaningful discount to the large-cap average of 29x, we remain ‘Equal-weight’ on these uncertainties,” wrote Keith Weiss, equity analyst at Morgan Stanley.

VMware’s shares, which declined about 8% in 2020, had risen over 3% so far this year. The stock closed 1.54% higher at $144.68 on Friday.

Seventeen analysts who offered stock ratings for VMware in the last three months forecast the average price in 12 months at $167.21 with a high forecast of $199.00 and a low forecast of $145.00.

The average price target represents a 15.57% increase from the last price of $144.68. From those 17 equity analysts, nine rated “Buy”, eight rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $156 with a high of $193 under a bull scenario and $94 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the IT company’s stock.

Other equity analysts also recently updated their stock outlook. Mizuho cut their target price on shares to $147 from $152 and set a “neutral” rating. Cleveland Research lowered shares to a “neutral” rating from a “buy”. Barclays dropped their price target to $180 from $187 and set an “overweight” rating. At last, Piper Sandler increased their price objective to $179 from $170.

“Improved Positioning Largely Priced In: Over the last several years, fast-growing ‘Act 2’ product categories including vSAN, NSX and EUC have scaled to drive a better growth profile at VMware. However, the necessity of further investment to improve secular positioning weighs on op margins and EPS growth leaving the stock expensive on a PEG basis,” Morgan Stanley’s Weiss added.

“With CBLK and PVTL acquisitions closed, we wait for evidence of VMW‘s expansion strategy into security and app dev to take hold, as early partner conversations have been positive. Current trade of 20x CY22 P/E is a discount to the large-cap SW average/median of 29x/31x, justified considering VMW‘s on-premise exposure and margin pressure in FY22.”

Earnings to Watch Next Week: Palo Alto Networks, Home Depot, Nvidia and Salesforce in Focus

Earnings to Watch Next Week: Palo Alto Networks, Home Depot, Nvidia and Salesforce in Focus

Earnings Calendar For The Week Of February 22

Monday (February 22)

IN THE SPOTLIGHT: PALO ALTO NETWORKS

The Santa Clara, California-based cybersecurity company is expected to report a profit of $1.43 per share in the fiscal second quarter, which represents year-over-year growth of over 20% from $1.19 per share seen in the same quarter a year ago.

The global cybersecurity leader would post year-over-year revenue growth of over 20% to $985.681 million.

“A rapidly growing Next-Gen Security platform plus a stable core network security business remains the equation for durable 20%+ billings growth heading into the FQ2 print. More clarity into the dual growth engines should drive further multiple expansion, with our SoTP valuation yielding a $515 price target,” noted Keith Weiss, equity analyst at Morgan Stanley.

Palo Alto Networks offers a disruptive platform, well-positioned to address the evolving threat landscape. We believe Palo Alto Networks will continue to differentiate itself from its peers as it proves out a broader TAM around a NextGen Security Platform (and executing to that opportunity). With the strong billings base and the continued drive towards higher operating margins, we remain confident in the durability of our FCF estimates. Currently trading at 22x CY22e FCF vs. our model which looks for 18% FCF CAGR from CY21-26e and terminal 23x CY26e FCF, we continue to see attractive risk/reward in PANW shares.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 22

Ticker Company EPS Forecast
DPH Dechra Pharma £32.57
BNZL Bunzl £71.65
DISCB Discovery Communications Discb $0.72
DISCA Discovery Communications $0.71
GHC Graham $8.87
DISCK Discovery Communications Disck $0.72
KBR KBR $0.49
DORM Dorman Products $0.92
KFY Korn Ferry International $0.51
CTB Cooper Tire Rubber $0.92
THRM Gentherm $0.65
DISH Dish Network $0.78
BZLFY Bunzl plc $0.13
CDNS Cadence Design Systems $0.74
PANW Palo Alto Networks $1.43
SBAC SBA Communications $0.52
RSG Republic Services $0.81
WMB Williams Companies $0.30
O Realty Ome $0.35
SID Companhia Siderurgica Nacional $0.11
OKE ONEOK $0.74
IR Ingersoll Rand $0.45
EXR Extra Space Storage $0.91
TREX Trex $0.36
FIVN Five9 $0.23
NDSN Nordson $1.06
FANG Diamondback Energy $0.82
LSI LIFE STORAGE $0.54
XEC Cimarex Energy $0.68
AL Air Lease $0.75
PSB PS Business Parks $0.80
SBRA Sabra Health Care Reit $0.18
CNNE Cannae -$0.09
NHI National Health Investors $1.01
AWR American States Water $0.47
BCC Boise Cascade $0.99
HTA Healthcare Of America $0.11
RIG Transocean -$0.18
MRO Marathon Oil -$0.20
CVI CVR Energy -$0.72
GDOT Green Dot $0.18
WRI Weingarten Realty Investors $0.10
ACC American Campus Communities $0.09
OXY Occidental Petroleum -$0.58
ICAD Icade €2.33
PPERY PT Bank Mandiri Persero TBK $0.09
MGEE Mge Energy $0.51
CCU Compania Cervecerias Unidas $238.63
TPL Texas Pacific Land $4.66
SHCAY Sharp ADR $0.08
BKRKY Bank Rakyat $0.13
PKX Posco $1.52
WF Woori Bank $0.75
GPFOY Financiero Inbursa ADR $0.13
OSH Oak Street Health -$0.25
YALA Yalla $0.12
KHOLY Koc Holdings AS $0.20
DM Dominion Midstream Partners -$0.06
AU Anglogold Ashanti $1.85
CRI Carters $2.74
AVST Avast Holdings £0.12

 

Tuesday (February 23)

IN THE SPOTLIGHT: HOME DEPOT

The U.S. largest home improvement retailer is expected to report a profit of $2.61 per share in the fourth quarter, which represents year-over-year growth of over 14% from $2.28 per share seen in the same quarter a year ago. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of 3.60%.

The Cobb County, Georgia-based company’s revenue would surge more than 18% to $30.45 billion.

Home Depot has witnessed continued strong demand for home-improvement projects as customers spent more time at home during the coronavirus pandemic. The company has been gaining from the high-demand environment, driven by investments in its business. This coupled with broad-based strength across stores and geographies has been boosting comparable sales (comps) performance,” noted analysts at Zacks Equity Research.

“Amid the pandemic, customers have been blending the physical and digital elements of the shopping experience more than ever before making the company’s interconnected One Home Depot strategy the most relevant. Its interconnected retail strategy and underlying technology infrastructure have helped consistently boost web traffic in the past six months. Additionally, it has been benefiting from enhanced delivery and fulfilment options to provide a robust interconnected experience. Gains from these efforts are likely to have aided the company’s sales and earnings performance in the fiscal fourth quarter.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 23

Ticker Company EPS Forecast
UTG Unite Group £45.10
HSBA HSBC Holdings £0.01
CROX Crocs $0.82
ARNC Arconic Inc $0.35
CBRL Cracker Barrel Old Country Store $0.75
WLK Westlake Chemical $0.74
MDT Medtronic $1.15
SPR Spirit AeroSystems -$0.83
FE FirstEnergy $0.47
BCO Brinks $0.98
HD Home Depot $2.61
BNS Scotiabank $1.24
BMO Bank Of Montreal USA $1.69
CBRE CBRE Group Inc $0.94
LDOS Leidos $1.61
BLD TopBuild Corp $1.95
NXST Nexstar Broadcasting $6.99
TRI Thomson Reuters USA $0.46
M Macy’s $0.05
AWI Armstrong World Industries $0.67
RLGY Realogy $0.57
ETRN Equitrans Midstream Corp $0.34
LGIH LGI Homes $4.05
SATS EchoStar -$0.03
GMAB Genmab A/S kr7.68
XNCR Xencor -$0.38
ARNA Arena Pharmaceuticals -$1.84
EC Ecopetrol $0.22
HSBC HSBC $0.08
TX Ternium $1.02
COG Cabot Oil Gas $0.21
CBD Companhia Brasileira De Distrib $0.46
FLS Flowserve $0.53
PXD Pioneer Natural Resources $0.69
INFN Infinera $0.02
MTG MGIC Investment $0.40
XP XP Inc $1.05
SQ Square $0.24
INTU Intuit $0.99
CSGP CoStar $2.42
VRSK Verisk Analytics $1.30
PODD Insulet -$0.04
HEI Heico $0.48
MASI Masimo $0.85
EQH AXA Equitable Holdings Inc $1.21
CHE Chemed $5.13
TOL Toll Brothers $0.47
WES Western Gas Partners $0.59
HALO Halozyme Therapeutics $0.53
INSP Inspire Medical Systems Inc -$0.46
JAZZ Jazz Pharmaceuticals $4.24
Y Alleghany $5.04
RRC Range Resources $0.05
EPRT Essential Properties Realty Trust Inc $0.16
MTDR Matador Resources $0.12
CHX ChampionX Corp $0.04
MATX Matson $1.36
APLE Apple Hospitality -$0.14
ATRC AtriCure -$0.28
PEB Pebblebrook Hotel -$0.90
DAR Darling Ingredients $0.42
MRTX Mirati Therapeutics -$2.28
ALLK Allakos -$0.85
JBGS JBG SMITH Properties $0.29
IHG Intercontinental Hotels $0.94
VERX Vertex Inc. Cl A $0.07
JYSK Jyske Bank kr8.46
VIV Telefonica Brasil $0.15
CXO Concho Resources $1.18
MNTA Momenta Pharmaceuticals -$0.50
IHG Intercontinental £0.97
VJBA Vestjysk Bank kr0.08
FMS Fresenius Medical Care $0.74

 

Wednesday (February 24)

IN THE SPOTLIGHT: NVIDIA

The Santa Clara, California- based multinational technology company is expected to report a profit of $2.80 per share in the fiscal fourth quarter, which represents year-over-year growth of over 48% from $1.89 per share seen in the same quarter a year ago.

The company, which designs graphics processing units for the gaming and professional markets, as well as system on a chip unit for the mobile computing and automotive market, forecasts revenue of $4.8 billion.

NVIDIA‘s fiscal fourth-quarter performance is likely to have benefited from growth across all of its business segments except the Automotive and Professional Visualization units. NVIDIA is also anticipated to have benefited from strength in its data-centre business on the growing adoption of cloud-based solutions amid the coronavirus crisis-induced work-from-home wave. Increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds during the to-be-reported quarter,” noted analysts at Zacks Equity Research.

“Additionally, the pandemic-induced remote-working wave is likely to have bolstered sales of graphic chips utilized in desktops and laptops. This, in turn, is anticipated to have aided the quarterly performance. Nonetheless, disruptions in retail channel sales due to lockdown and social-distancing measures implemented by governments across the world to contain the spread of coronavirus might have partially offset the benefit of solid demand for the remote-working and online-learning hardware infrastructure.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 24

Ticker Company EPS Forecast
RY Royal Bank Of Canada $1.78
TCP TC Pipelines $0.99
RGEN Repligen $0.31
ENBL Enable Midstream Partners $0.11
LOW Lowe’s Companies $1.20
LIVN LivaNova PLC $0.66
HZNP Horizon Pharma $1.05
IONS Ionis Pharmaceuticals $0.26
CLH Clean Harbors $0.39
VER VEREIT $0.19
IRM Iron Mountain $0.31
WEX WEX $1.46
AVA Avista $0.79
SBGI Sinclair $5.07
ITRI Itron $0.34
SIX Swiss Exchange -$0.89
WYND Wyndham Destinations Inc $0.49
PNW Pinnacle West Capital $0.04
VRT Veritas Pharma $0.33
HFC HollyFrontier -$0.71
ODP Office Depot $0.95
TJX TJX Companies $0.61
OSTK Overstock $0.17
EXC Exelon $0.69
ETR Entergy $0.67
TRN Trinity Industries $0.15
IBP Installed Building Products $1.23
EV Eaton Vance $0.89
UTHR United Therapeutics $2.95
ORA Ormat Technologies $0.37
WTRG Essential Utilities Inc $0.45
VAC Marriottacations Worldwide $0.03
SJI South Jersey Industries $0.54
STN Stantec USA $0.33
STAA STAAR Surgical $0.08
ACAD Acadia Pharmaceuticals -$0.47
PDCE PDC Energy $0.85
APA Apache -$0.10
ANSS Ansys $2.54
PSA Public Storage $1.93
KW Kennedy Wilson $0.07
EPR EPR Properties -$0.32
UNVR Univar Solutions Inc $0.24
DDD 3D Systems $0.09
ADPT Adeptus Health -$0.29
RVLV Revolve $0.11
LB L Brands $2.90
GEF Greif $0.54
FTI FMC Technologies $0.15
ESI Itt Educational Services $0.28
MMSI Merit Medical Systems $0.43
NOVA Nova Mentis Life Science Corp -$0.36
CHDN Churchill Downs -$0.39
AGI Alamos Gold $0.13
CW Curtiss-Wright $2.33
RCII Rent-A-Center $1.00
DOOR Masonite International $1.14
RDN Radian $0.63
FNF Fidelity National Financial $1.32
AMED Amedisys $1.46
AWK American Water Works $0.80
NVDA Nvidia $2.80
NTAP NetApp $1.01
PTVE Pactiv Evergreen $0.25
UFPI Universal Forest Products $0.71
TNDM Tandem Diabetes Care $0.12
BKNG Booking Holdings Inc -$3.85
GBT BMTC Group -$0.95
PAC Grupo Aeroportuario Del Pacifico $0.67
CIB Bancolombia $0.17
PBR Petroleo Brasileiro Petrobras $0.15
GGB Gerdau $0.07
ASR Grupo Aeroportuario Del Sureste $14.83
UGP Ultrapar Participacoes $0.05
TS Tenaris $0.00
LYG Lloyds Banking $0.02
DY Dycom Industries $0.05
WB Weibo $0.72
SRPT Sarepta Therapeutics -$1.99
SSYS Stratasys -$0.10
KOF Coca Cola Femsa Sab De Cv $0.60
MIDD Middleby $1.40
CLGX CoreLogic $1.06

 

Thursday (February 25)

IN THE SPOTLIGHT: SALESFORCE.COM

The San Francisco, California-based global cloud computing company is expected to report a profit of $0.75 in the fourth quarter, which represents year-over-year growth of about 14% from $0.66 per share seen in the same quarter a year ago.

The company, which develops CRM solutions and provides business software on a subscription basis, would post revenue growth of 17% to nearly $5.7 billion.

“While Salesforce remains one of our best secularly positioned names given enterprise IT spend prioritized towards digital transformation, we see current valuation reflective of long-term share gains and achieving management’s target for $50 billion revenue in CY25,” said Keith Weiss, equity analyst at Morgan Stanley.

“At CRM‘s current scale and market cap, an increasing focus on FCF and earnings is necessary for further price appreciation, in our view. However, the recent large ($27 billion) and dilutive acquisition of Slack makes margin expansion in the near to medium term less likely. We look for greater clarity and confidence into revenue growth and margin framework at CRM in order to get more constructive.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 25

Ticker Company EPS Forecast
AMRN Amarin -$0.02
SHEN Shenandoah Telecommunications $0.85
NTLA Intellia Therapeutics Inc -$0.61
ITCI Intra Cellular Therapies -$0.86
SHOO Steven Madden $0.21
PLUG Plug Power -$0.07
AGIO Agios Pharmaceuticals -$1.31
DPZ Dominos Pizza $3.88
INSM Insmed -$0.67
MRNA Moderna Inc -$0.34
PCG PG&E $0.21
EME EMCOR $1.44
NLSN Nielsen $0.46
NRG NRG Energy $0.45
BCRX BioCryst Pharmaceuticals -$0.24
TREE LendingTree -$1.00
AES AES $0.43
DCI Donaldson $0.51
TD Toronto-Dominion Bank $1.16
WWW Wolverine World Wide $0.17
AMT American Tower $1.25
CCOI Cogent Communications $0.21
OGE OGE Energy $0.29
SRE Sempra Energy $1.58
SJM J.M. Smucker $2.17
SAFM Sanderson Farms -$0.66
ROCK Gibraltar Industries $0.63
CWT California Water Service $0.26
W Wayfair Inc. $0.82
SEAS SeaWorld Entertainment -$0.71
CNP CenterPoint Energy $0.19
PZZA Papa John’s International $0.48
STWD Starwood Property $0.49
EVOP EVO Payments Inc $0.21
DOC Physicians Realty $0.08
CLNY Colony Financial -$0.58
LI Li Auto -$0.24
NTES NetEase $2.82
PLAN Progressive Planet -$0.10
CLF Cliffs Natural Resources $0.20
EXLS ExlService $1.07
KDP Keurig Dr Pepper $0.40
PWR Quanta Services $1.00
FSS Federal Signal $0.41
FCN FTI Consulting $1.17
GIL Gildan Activewear USA $0.21
CWH Camping World Holdings $0.18
PCRX Pacira $0.81
NCLH Norwegian Cruise Line -$2.17
TFX Teleflex $3.05
FLIR FLIR Systems $0.62
VIPS Vipshop $3.13
IOVA Iovance Biotherapeutics -$0.44
IRTC iRhythm Tech -$0.29
MNST Monster Beverage $0.55
REGI Renewable Energy $0.68
XLRN Acceleron Pharma -$0.59
AAON AAON $0.29
DRNA Dicerna Pharmaceuticals -$0.08
PVG Pretium Resources $0.25
LPSN LivePerson $0.01
SWI Solarwinds $0.25
EIX Edison International $1.20
VGR Vector $0.18
BMRN BioMarin Pharmaceutical -$0.17
EOG EOG Resources $0.37
RKT Rocket Cos. Inc. $0.88
VICR Vicor $0.19
SFM Sprouts Farmers Market $0.39
ETSY ETSY Inc $0.57
PTCT PTC Therapeutics -$0.92
SEM Select Medical $0.36
EGO Eldorado Gold USA $0.33
SWN Southwestern Energy $0.14
ACHC Acadia Healthcare $0.68
UHS Universal Health Services $2.79
MTZ MasTec $1.67
ERIE Erie Indemnity $1.09
BVN Compania De Minas Buenaventura $0.22
FTCH Farfetch -$0.13
WDAY Workday $0.55
VMW VMware $2.05
HPQ HP $0.66
CRM Salesforce.com $0.75
MED Medifast $2.38
OUT Outfront Media -$0.04
PRAH PRA Health Sciences Inc $1.47
LHCG LHC $1.39
RLJ RLJ Lodging -$0.64
STOR STORE Capital Corp $0.21
ICUI ICU Medical $1.51
CUBE CubeSmart $0.20
ENDP Endo International Ordinary Shares $0.46
LYV Live Nation Entertainment -$2.25
ALTR ALTAIR ENGINEERING $0.00
AMH American Homes 4 Rent $0.06
CABO Cable One Inc $11.60
ADT ADT $0.30
RUN Sunrun Inc $0.07
CZR Caesars Entertainment -$1.94
HHC Howard Hughes -$0.70
PK Park Hotels & Resorts Inc -$0.90
FOXF Fox Factory $0.78
ADSK Autodesk $1.07
CWK Cushman & Wakefield plc $0.35
FSLR First Solar $1.25
NUVA NuVasive $0.56
ENV Envestnet $0.65
INT World Fuel Services $0.23
FIX Comfort Systems USA $0.84
NKTR Nektar Therapeutics -$0.67
BIG Big Lots $2.50
AY Atlantica Yield $0.16
PDCO Patterson Companies $0.51
KWR Quaker Chemical $1.52
AEBZY Anadolu Efes ADR $0.01
SWX Southwest Gas $1.57
AEP American Electric Power $0.78
ARRY Array Technologies Inc $0.05
ALXO Alx Oncology Holdings Inc. -$0.36
ACIW ACI Worldwide $0.49
VIST Vista Oil Gas -$0.08
BUD Anheuser-Busch $0.89
BAYRY Bayer AG PK $0.38
CM Canadian Imperial Bank Of Commerce USA $2.19
SRCL Stericycle $0.63
BBY Best Buy $3.45
ABEV Ambev $0.05
NNI Nelnet $5.78
AGO Assured Guaranty $0.57
BRFS BRF $0.08
TEF Telefonica $0.23
VALE Vale $0.91
NGLOY Anglo American ADR $0.62

 

Friday (February 26)

Ticker Company EPS Forecast
CNK Cinemark -$1.46
IEP Icahn Enterprises -$0.47
EVRG Evergy Inc $0.22
LSXMK Liberty Media SiriusXM C $0.15
PNM PNM Resources $0.15
AMCX AMC Networks $0.49
VST Victory Square Tech $0.64
BLDR Builders Firstsource $0.90
FL Foot Locker $1.29
FLR Fluor New $0.22
RHP Ryman Hospitality Properties -$1.90
STRA Strayer Education $1.48
LAMR Lamar Advertising $0.78
MGLN Magellan Health -$0.30
GRFS Grifolsbarcelona $0.22
PEG Public Service $0.65
For a look at all of today’s economic events, check out our economic calendar.

Deere Starts 2021 on Strong Note, Shares Gain Over 7% on Upbeat Earnings

Deere & Company, the world’s largest maker of farm equipment, reported better-than-expected earnings in the first quarter on improved demand for farm and construction machines, sending its shares up over 7% in pre-market trading on Friday.

Agricultural, construction and forestry equipment manufacturer reported net income of $1.224 billion for the first quarter ended January 31, 2021, or $3.87 per share, compared with net income of $517 million, or $1.63 per share, for the quarter ended February 2, 2020. That was nearly doubled than the Wall Street consensus estimates of $2.12 per share.

The Moline, Illinois-based company said its worldwide net sales and revenues increased 19%to $9.112 billion. Equipment operations net sales were $8.051 billion for the quarter, compared with $6.530 billion in 2020.

Deere forecasts net income attributable for fiscal 2021 in a range of $4.6 billion to $5.0 billion, an upgraded from the previous forecast of $3.6 billion-$4.0 billion.

“With 1Q Equip Ops margins of 17.1% coming in ~6ppts+ above Street & well above DE‘s 15% target during the seasonally weakest Q of the year, we continue to see an upside to DE‘s mid-cycle targets. We expect a strong reaction to both the 1Q print and DE‘s 25%+ raise to FY21 net income guidance,” said Courtney Yakavonis, equity analyst at Morgan Stanley.

Following this upbeat result, Deere‘s shares, which surged over 55% last year, rose over 7% to $321.79 in pre-market trading on Friday.

Deere Stock Price Forecast

Seventeen analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $309.63 with a high forecast of $400.00 and a low forecast of $220.00.

The average price target represents a 3.12% increase from the last price of $300.25. From those 17 analysts, 12 rated “Buy”, four rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $341 with a high of $467 under a bull scenario and $146 under the worst-case scenario. The firm gave an “Overweight” rating on the agricultural equipment manufacturer’s stock.

Analyst Comments

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” Morgan Stanley’s Yakavonis added.

“With management continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE‘s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Upside and Downside Risks

Risks to Upside: 1) Recovery in commodity prices and US cash receipts. 2) Better than expected margin improvement efforts. 3) US infrastructure bills pass, driving outsized C&F growth – highlighted by Morgan Stanley.

Risks to Downside: 1) Commodity prices truncate the ongoing replacement cycle. 2) Excess Used inventories limit pricing power and demand pull-through. 3) Mis-execution around 15% operating margin target. 4) Supply chain woes and price/material headwinds persist.

Check out FX Empire’s earnings calendar

Roku Tops Q4 Earnings Estimates; Provides Upbeat Guidance

Roku, an American publicly-traded company that manufactures a variety of digital media players for video streaming, reported better-than-expected earnings in the holiday quarter with total active accounts rising 14.3 million in the year to 51.2 million.

San Jose, California-based video-streaming device maker said its total net revenue surged about 60% to $649.9 million, above the market expectations of $617.25 million. Adjusted profit came in at $0.49 per share, beating the Wall Street consensus estimates of $0.05 per share.

“There is often a degree of noise in ROKU‘s results mainly due to the revenue structure complexity in the Platform segment, which, in some quarters, masks strong core business results. We don’t see any noise this quarter and think the stock should react positively. Video advertising Y/Y growth accelerated to >100%; the commentary on the growth in SVOD subscription revenue stands out as an incremental positive,” said Vasily Karasyov, equity analyst at Cannonball Research.

However, Roku‘s shares, which surged nearly 150% last year, dipped about 1% to $452.99 on Thursday. The shares rose as high as 3% in extended trading.

The digital media hardware company forecasts total revenue in the range of $478 million and $493 million for the first quarter. That was higher than the market expectations of nearly $462 million.

Roku Stock Price Forecast

Sixteen analysts who offered stock ratings for Roku in the last three months forecast the average price in 12 months of $413.60 with a high forecast of $500.00 and a low forecast of $250.00.

The average price target represents a -8.70% decrease from the last price of $452.99. From those 16 analysts, ten rated “Buy”, five rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $275 with a high of $450 under a bull scenario and $150 under the worst-case scenario. The firm gave an “Underweight” rating on the video-streaming device maker’s stock.

Roku‘s Platform segment revenue growth benefited from both secular and COVID-19-related tailwinds. Gross margins a notable standout. Looking ahead, 1Q guidance is in-line and the company noted 2H deceleration likely. Remain ‘Underweight’ as valuation reflects success in our view,” said Benjamin Swinburne, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Truist Securities raised the target price to $390 from $220. Deutsche Bank upped their price objective to $400 from $260 and gave the stock a buy rating.

Moreover, JP Morgan set an overweight rating and a $475 price objective. Zacks Investment Research gave a buy rating and set a $352 price target. Citigroup increased their price target to $460 from $375 and gave the company a buy rating.

Analyst Comments

“We believe the market is underestimating the competition on Platform active accounts in the U.S., as well as the time it takes for international expansion to scale. Active account growth has benefited strongly in the U.S. from share gains at TCL, and sustained growth will require additional share gains or major new smart TV partners,” Morgan Stanley’s Swinburne added.

“We believe the market may be underestimating the ability to monetize strong streaming hours growth long term. Not all hours are equally valuable to Roku, and impressive hours growth reported by Roku is at least in part driven by ‘cable’ TV viewing benefit from MVPDs that are likely structurally less valuable to Roku than hours of long-tail publishers.”

Upside and Downside Risks

Risks to Upside: Strong user adoption increases scale and leverage against content partners to secure greater advertising-supported content; international expansion can drive incremental advertising – highlighted by Morgan Stanley.

Risks to Downside: New product/feature launches by competitors could pressure Roku‘s account growth and time spent. Competitors could announce competing software licensing deals with smart TV manufacturers.

Check out FX Empire’s earnings calendar

Walmart Shares Slump as Full-Year Sales Forecasts, Q4 Profit Disappoints

Bentonville, Arkansas-based retailer Walmart reported better-than-expected revenue in the fourth quarter but surprised traders with a rare profit miss and said it expects full-year sales and earnings to decline primarily due to the impact of anticipated divestitures.

Following this disappointing result, Walmart‘s shares, which surged more than 20% last year, slumped over 6% to $138.03 on Thursday.

The multinational retail corporation that operates a chain of hypermarkets said total revenue jumped 7.3% to record $152.1 billion in the quarter ended January 31, 2021 and during the fiscal 2021 year it surged 6.7% to $559.2 billion.

The closely watched same-store sales rose 8.6% in the U.S., beating the Wall Street consensus estimates of 5.6%. That was largely driven by online sales, which grew 69% due to the COVID-19 pandemic.

Walmart’s (WMT) comps were better than expected including an 8.6% increase in the WMT U.S. business, ahead of consensus of 5.6% and an acceleration from 6.4% last quarter. Gross margins were up 29bp, in line with estimates and off just a bit from 50bp last quarter,” said Michael Baker, MD and senior research analyst at D.A. Davison & Company.

“But this strength is being overshadowed by higher expenses, including deleverage in the international and Sam’s businesses. This led to EPS of $1.39 or $1.46 adding back a $0.07 tax issue. This is in line with our estimate of $1.45 but below consensus of $1.51. We would buy the associated pressure in the stock today.”

The retail giant said its operating income surged more than 3% to $5.49 billion. On the other hand, adjusted earnings came in at $1.39 per share, missing analysts’ expectations of $1.51 per share.

The world’s largest retailer forecast adjusted net sales to grow low single-digits with operating income and EPS expected to be flat to up slightly.

“Guidance was muted, locking in gains from FY21 but stalling profit expansion in favour of critical investments in people (avg wage to >$15) and platform (capex +33% vs. prior levels). We’re specifically looking to test the degree of conservatism in guidance as new streams of value take hold and COVID-19 costs should moderate,” noted Stephanie Wissink, equity analyst at Jefferies.

Walmart Stock Price Forecast

Eleven analysts who offered stock ratings for Walmart in the last three months forecast the average price in 12 months of $161.33 with a high forecast of $177.00 and a low forecast of $131.00.

The average price target represents a 16.22% increase from the last price of $138.82. From those 11 analysts, nine rated “Buy”, one rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $156 with a high of $240 under a bull scenario and $95 under the worst-case scenario. The firm gave an “Overweight” rating on the multinational retail corporation’s stock.

Several other analysts have also updated their stock outlook. Oppenheimer lowered the price target to $162 from $165. JP Morgan cut the price target to $157 from $160. Deutsche Bank raised the target price to $170 from $168. Credit Suisse Group gave a target price of $161 and rated “buy”.

Moreover, Royal Bank of Canada set a $170.00 price objective and gave the company a “buy” rating. DA Davidson lifted their price objective to $177 from $154 and gave the company a “buy” rating. Smith Barney Citigroup lifted their price objective to $172 from $155. Jefferies Financial Group lifted their price objective to $170 from $165 and gave the company a “buy” rating.

Analyst Comments

“Q4’21 EPS light. F’22 underlying growth guidance seems fine, but absolute F’22 EPS lower than expected. Investments picking back up mean the stock could tread water in the N-T,” said Simeon Gutman, equity analyst at Morgan Stanley.

“We expect WMT to sustain recent momentum in its core business in F’21/F’22 and see a growing ability to balance longer-term investments with near-term returns. Our OW rating and $156 PT are underpinned by a preference for 1) quality players with scale and 2) defensive retailers in the current COVID-19 environment.”

Upside and Downside Risks

Risks to Upside: 1) Comps accelerate to +MSD-HSD led by continued Grocery strength. 2) Sustainable US e-comm growth of 50-60%+ behind Click & Collect momentum. 3) PhonePe gains wider market appreciation, driving incremental multiple expansion. 4) Walmart+ gains more traction than expected – highlighted by Morgan Stanley.

Risks to Downside: 1) E-commerce loses begin to rise again after briefly moderating. 2) US e-comm growth slows to <30% (comps <2%). 3) Greater than expected Flipkart losses.

Check out FX Empire’s earnings calendar

Chinese Tech Giant Baidu Ends 2020 on Solid Note, Shares Gain

Baidu, a leader in the Chinese search industry in terms of user market share, reported better-than-expected earnings in the fourth quarter, largely driven by pent-up demand for its cloud and other services, sending its shares up over 3% in extended trading on Wednesday.

The most used search engine in China said its total revenue jumped 5% to CNY 30.26 billion or $4.69 billion in the fourth quarter ended December 31, 2020, beating the Wall Street consensus estimates of CNY 30.06 billion.

Baidu’s non-GAAP EPS came in at CNY 20.08 or $3.08, well above the market expectations of CNY 16.89 or $2.51 per share.

Baidu reported 4Q results with revenue in-line with market expectations and non-GAAP earnings ahead of consensus. For Baidu core, revenue and non-GAAP earnings beat our estimates, with non-GAAP op margin at 35%. For IQ, revenue came in-line and earnings beat on lower-than-expected costs. Mid-point of 1Q revenue guidance for Baidu beat consensus while IQ was inline,” wrote Thomas Chong, equity analyst at Jefferies.

The company, which generates the bulk of its revenue from pay-for-performance advertising and tailor-made advertising services, forecasts revenue in the range of CNY 26 billion to 28.5 billion in the first quarter of 2020.

The U.S.-listed Baidu‘s shares, which surged more than 70% last year, rose 3.5% to $319.5 in extended trading on Wednesday.

Executive Comments

Baidu ended 2020 on a solid note with our business benefiting from improving macroeconomic environment and the digitalization of industrial Internet. Our focus on innovation through technology is paying off with Baidu Core non-marketing revenue growing 52% year over year in the fourth quarter,” said Robin Li, Co-founder and CEO of Baidu.

“As we enter 2021, Baidu is well-positioned as a leading AI company with strong Internet foundation to seize the huge market opportunities in cloud services, autonomous driving, smart transportation, and other AI opportunities. We also hope to capitalize on our huge Internet reach with more non-marketing services.”

Baidu Stock Price Forecast

Thirteen analysts who offered stock ratings for Baidu in the last three months forecast the average price in 12 months of $271.42 with a high forecast of $376.00 and a low forecast of $180.00.

The average price target represents a -12.07% decrease from the last price of $308.68. From those 13 analysts, 11 rated “Buy”, two rated “Hold”, none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $190 with a high of $250 under a bull scenario and $130 under the worst-case scenario. The firm gave an “Equal-weigh” rating on the Chinese tech giant’s stock.

Several other analysts have also updated their stock outlook. Mizuho raised the target price to $325 from $250. Baidu had its price objective hoisted by Oppenheimer to $305 from $165. The firm currently has an outperform rating on the information services provider’s stock. KeyCorp raised their target price to $290 from $190 and gave the stock an overweight rating. Citigroup raised their target price to $292 from $183 and gave the stock a buy rating.

Analyst Comments

“Following a sharp recent rally, we maintain our EW rating on an industry-relative basis. Baidu has provided better disclosure and has struck a constructive tone on its AI initiatives. We find it well-positioned in certain industrial applications. We also like its rich cash position and strategic investments,” said Gary Yu, equity analyst at Morgan Stanley.

“Our price target reflects the materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from the competition. The company is well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 18x consensus 2021e non-GAAP P/E the vs. historical 11-24x trading band since 2019.”

Check out FX Empire’s earnings calendar

U.S. Hotel Operator Hilton Posts Surprise Q4 Loss, Shares Fall

Hilton Worldwide Holdings, one of the largest and fastest-growing hospitality companies in the world, reported a loss for the third consecutive time during the December quarter as a fresh spike in COVID-19 cases and tightening travel restrictions hurt bookings, sending its shares down over 2% in pre-market trading on Wednesday.

The company, which has more than 4,000 hotels, resorts and timeshare properties comprising more than 650,000 rooms in 90 countries and territories, reported a net loss of $225 million for the fourth quarter and $720 million for the full year. Adjusted EBITDA was $204 million for the fourth quarter and $842 million for the full year.

Hilton said its system-wide comparable RevPAR slumped 59.2% and 56.7% on a currency-neutral basis for the fourth quarter and full year, respectively, from the same periods a year ago.

The hotel company said its revenue slumped more than 60% to $890 million, well below the Wall Street consensus estimates of $1.03 billion.  Adjusted for special items, the company reported earnings per share of -$0.10 per share, well below the market expectations for a profit of $0.03 per share.

“We expect shares to react modestly lower on the lower than expected results, ahead of management’s commentary on the call later this morning. Within the results, we focus on the commentary for the continued generation of mid-single-digit system growth in 2021, which is a primary driver of long-term earnings and margin expansion as well as the valuation,” said David Katz, equity analyst at Jefferies.

“Our confidence remains high in recovery, the trajectory of which is still taking shape.”

Following this disappointing result, Hilton Worldwide Holdings‘ shares, which has risen over 2% so far this year, fell 2.3% to $111 in pre-market trading on Wednesday.

Hilton Stock Price Forecast

Six analysts who offered stock ratings for Hilton in the last three months forecast the average price in 12 months of $112.00 with a high forecast of $130.00 and a low forecast of $85.00.

The average price target represents a -1.42% decrease from the last price of $113.61. From those six analysts, three rated “Buy”, three rated “Hold”, none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $101 with a high of $141 under a bull scenario and $56 under the worst-case scenario. The firm gave an “Equal-weigh” rating on the hospitality company’s stock.

Several other analysts have also updated their stock outlook. BMO raised the target price to $110 from $92. UBS upped the target price to $124 from $114. Berenberg increased the target price to $100 from $77. Baird raises target price to $106 from $105. BMO Capital Markets raised their target price to $92 from $89 and gave the stock a “market perform” rating.

Moreover, Gordon Haskett raised their target price to $114 from $97 and gave the stock a “hold” rating. Wells Fargo & Company raised their target price to $105 from $95 and gave the stock an “equal weight” rating. Argus raised shares to a “buy” rating from a “hold” and set a $120 price target.

Analyst Comments

“The spread of coronavirus will pressure RevPAR growth, unit growth, and non-room fee growth. Strong management team with a track record of creating value for owners. We see a wide risk-reward that will depend on the severity and speed of recovery from COVID-19,” said Thomas Allen, equity analyst at Morgan Stanley.

“We think HLT is well placed from a liquidity standpoint, but its ability to repurchase stock medium- term may be impaired.”

Check out FX Empire’s earnings calendar

U.S. Oil Firm Continental Resources Posts Wider Q4 Loss, Shares Drop

Oklahoma City-based shale producer Continental Resources reported a loss for the fourth consecutive time during the December quarter with losses exceeding analysts’ expectations as the COVID-19 pandemic disrupted energy demand, sending its shares down over 2% in extended trading on Tuesday.

However, the U.S. crude oil and natural gas company upgraded their capital expenditures budget and expect oil and gas output to increase in 2021, largely due to recent recovery in commodity prices.

The largest oil producer in North Dakota said it is now projecting a $1.4 billion capital expenditures budget, higher than the previous forecast of 1.2 billion. The 2021 capital budget is projected to generate approximately $2.4 billion of cash flow from operations and $1.0 billion of free cash flow (non-GAAP) for full-year 2021 at $52 per barrel WTI and $2.75 per Mcf Henry Hub.

A $5 increase per barrel WTI is estimated to increase cash flow by approximately $250 million, the company said.

Continental Resources said annual crude oil production is projected to range between 160,000 to 165,000 Bopd and annual natural gas production is projected to range between 880,000 to 920,000 Mcfpd.

CLR is sticking to low growth, high FCF yield model by looking to spend $1.1 billion D&C (60% Bakken, 35% Oklahoma, 5% PRB) and another $300m on workovers, leasehold, facilities and mineral acquisitions. We had modelled $1.3 billion and consensus had expected $1.29 billion that we expect is largely varied vs. guidance due to non-D&C spend. The budget is expected to deliver production growth of 3% at the midpoint with oil vols of 160-165 MBD (2% below Cowen estimate) and gas vols of 880-920 MMcf/d (17% above our estimate),” noted David Deckelbaum, equity analyst at Cowen and Company.

“Importantly, the implied reinvestment rate at $52/bbl is 58%. CLR expects to TIL 210 gross op wells and end the year with roughly 135 DUCs. Overall, the guided implies $1 billion of FCF at $52/bbl/$2.75/Mcf that is effectively in line with our prior model. The update contains few surprises and the commitment to shareholders returns is likely favoured by the market.”

The oil firm reported an adjusted net loss for the quarter ended December 31, 2020 of $81.9 million, or $0.23 per diluted share, largely missing the Wall Street estimates for a loss of $0.08 per share. The company’s revenue declined about 30% to $837.6 million; however, that beats analysts’ expectations of $62.81 million.

Continental Resources‘ shares, which slumped over 52% in 2020, had risen 49% so far this year. However, the stock declined over 2% to $23.74 in extended trading on Tuesday.

Continental Resources Stock Price Forecast

Thirteen analysts who offered stock ratings for Continental Resources in the last three months forecast the average price in 12 months of $19.71 with a high forecast of $26.00 and a low forecast of $11.00.

The average price target represents a -18.86% decrease from the last price of $24.29. From those 13 analysts, three rated “Buy”, eight rated “Hold”, two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $14 with a high of $28 under a bull scenario and 3 under the worst-case scenario. The firm gave an “Underweight” rating on the crude oil and natural gas company’s stock.

Several other analysts have also upgraded the stock outlook. Continental Resources had its price objective raised by KeyCorp to $23 from $22. The firm currently has an overweight rating on the oil and natural gas company’s stock. TD Securities increased their price objective to $15 from $14 and gave the stock a hold rating.

Moreover, Truist increased their price objective to $26 from $22. Citigroup increased their price objective to $19 from $16. Barclays increased their price objective to $21 from $19 and gave the stock an equal weight rating.

Analyst Comments

“Lack of downside protection to lower oil prices. Lack of hedges offers outsized exposure should oil prices recover, though weighs on the cash flow profile in our base case. Low oil prices weigh on net asset valuation. On our commodity price deck of $45 WTI, Continental Resources’ (CLR) net asset value suggests intrinsic downside from current trading levels,” said Devin McDermott, equity and commodities Strategist at Morgan Stanley.

“Elevated leverage. CLR‘s elevated leverage remains a concern at 1.7x YE-21 vs 1.2x for Permian peers.”

Check out FX Empire’s earnings calendar

Southwest Airlines Expects Slower Cash Burn as Leisure Bookings and Demand Improves, Shares Gain

Southwest Airlines, the world’s largest low-cost carrier, forecasts cash burn to be less than previously thought, primarily driven by an improvement in leisure passenger demand and bookings, sending its shares up about 2% in pre-market trading on Tuesday.

The U.S. low-cost carrier said its average core cash burn was about $15 million per day in January 2021 and forecasts average core cash burn to be nearly $15 million per day in the first quarter of 2021, down from previous guidance of about $17 million per day.

Following this, Southwest Airlines‘ shares, which slumped about 14% in 2020, had risen over 10% so far this year. The stock rose 1.29% to $52 in pre-market trading on Tuesday.

However, the company remains cautious in this uncertain demand environment and continues to plan for multiple scenarios for its fleet and capacity plans. Southwest Airlines continues to experience significant year-over-year negative impacts to passenger demand and bookings due to the COVID-19 pandemic.

Southwest Airlines Stock Price Forecast

Twelve analysts who offered stock ratings for Southwest Airlines in the last three months forecast the average price in 12 months of $56.73 with a high forecast of $65.00 and a low forecast of $50.00.

The average price target represents a 10.50% increase from the last price of $51.34. From those 12 analysts, eight rated “Buy”, three rated “Hold”, one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $59 with a high of $90 under a bull scenario and 29 under the worst-case scenario. The firm gave an “Overweight” rating on the passenger airline company’s stock.

Several other analysts have also upgraded the stock outlook. Citigroup raised the price target to $51 from $50. Southwest Airlines had its price objective lifted by Credit Suisse Group to $62 from $51. They currently have an outperform rating on the airline’s stock. Cowen lifted their price target to $55 from $46 and gave the stock an outperform rating.

In addition, Sanford C. Bernstein upgraded to an outperform rating from a market perform and set a $59.00 price objective. BNP Paribas issued an outperform rating and a $55.00 target price.

Analyst Comments

“Why Overweight? Southwest Airlines (LUV) is arguably the highest quality airline in the US with a good balance sheet and high margins. As a largely US domestic medium-haul airline, we believe its network is in a sweet spot for a COVID-19 rebound and it has one of the attractive loyalty programs with a loyal customer base,” said Ravi Shanker, equity analyst at Morgan Stanley.

“All of these make LUV the most resilient at the bottom and well-positioned for a recovery, especially being able to capitalize on share gain or M&A opportunities as other Airlines falter/lag.”

Check out FX Empire’s earnings calendar

BHP Shares Gain on Strong Profit and Record Dividend; Target Price GBX 2,560

BHP Group, one of the largest diversified natural resource companies in the world, delivered a strong profit in the first half of the 2021 financial year and declared record half-year dividend of $1.01 per share and ROCE up to 24%, helping its shares soar over 5% on Monday.

The Anglo-Australian multinational mining, metals and petroleum dual-listed public company said its profit from operations rose 17% to $9.8 billion, up. Attributable profit came in at $3.9 billion, which included an exceptional loss of $2.2 billion predominantly related to the impairments of New South Wales Energy Coal and associated deferred tax assets, and Cerrejón.

The world’s largest listed miner said its underlying attributable profit rose 16% to $6.0 billion.

The London-listed BHP‘s shares, which surged over 8% in 2020, had risen about 16% so far this year. The stock closed 5.22% higher at GBX 2,228 on Monday.

“Our analysis shows that the fair value estimate for BHP is between a bear case of GBX 1,200 per share and a bull case of GBX 2,950 per share, leading to our high fair value uncertainty rating,” said Mathew Hodge, director at Morningstar.

“The bulk of our BHP Billiton fair value estimate derives from just three commodities: iron ore, copper, and petroleum, in broadly equal contributions of approximately one third apiece. Coking coal is a minor contributor.  As commodity prices tend to move in unison, our valuation scenario uses high, low, and baseline prices. We don’t split individual commodities out.  Our price scenarios also factor in currency, operating, and capital cost adjustments.”

The dual-listed company forecasts to make an investment decision soon on its $5.3-$5.7 billion Jansen potash project in Canada and the Scarborough natural gas project off Western Australia, in which BHP will invest $1.4-1.9 billion, Reuters reported.

BHP Stock Price Forecast

Fourteen analysts who offered stock ratings for BHP in the last three months forecast the average price in 12 months of GBX 2,146.43 with a high forecast of GBX 2,560 and a low forecast of GBX 1,610.

The average price target represents a -3.66% decrease from the last price of GBX 2,228. From those 14 analysts, seven rated “Buy”, six rated “Hold”, one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of GBX1,950 with a high of GBX4,380 under a bull scenario and GBX680 under the worst-case scenario. The firm gave an “Overweight” rating on the natural resource company’s stock.

“We value BHP based on a simple average of our EV/EBITDA and P/NAV methodologies. This allows us to reflect both the shorter-term earnings power and longer-term value of the company. We apply an EV/EBITDA multiple of 6.7x, in line with its historical average. We apply a 1.0x multiple to our NPV estimate, which is based on a blended WACC of 9% and terminal growth rate of 2.0% from 2035,” said Alain Gabriel, equity analyst at Morgan Stanley.

Several other analysts have also upgraded the stock outlook. Citigroup raised the price target to GBX 2,100 from GBX 2,000. Berenberg initiated the coverage with hold rating and GBX 2,000 price target. Credit Suisse cuts to neutral from outperform; raises target price to GBX 2,100 from GBX 1,900.

In addition, UBS upped the target price to GBX 2,200 from GBX 2100. Independent Research increased the target price to GBX 2,100 from GBX 1,660 and rated hold. RBC cuts target price to GBX 2,500 from GBX 2,600. Liberum cuts price target to GBX 1,880 from GBX 2,400.

Analyst Comments

BHP declared a solid dividend of USc101/sh, exceeding our and cons. estimates of USc84-85/sh. Underlying EBITDA was in-line with cons. and within 1% of MSe but EPS missed by 2-5% on higher depreciation. Net Debt was broadly in-line and opex guidance was unchanged but is still based on favourable FX,” Morgan Stanley’s Gabriel added.

BHP‘s portfolio mix and quality stand out among peers. The low-cost position of its assets enables the company to generate FCF yield even in a stress scenario. It maintains a strong B/S, giving flexibility to pursue growth and/or increase cash shareholder returns, in particular given the company’s net debt target of US$12-17bn (post IFRS16 adjustment) vs FY20 levels of US$12.5bn. Spot FCF yields are comparable to peers, even without contributions from the Petroleum division, thus implying long-term optionality to a potential oil price recovery. We prefer BHP on a relative basis, given its attractive commodity mix ex-Iron Ore and free optionality on a potential oil price recovery.”

Upside and Downside Risks

Risks to Upside: Growth projects (Jansen potash, Escondida growth, Spence hypogene, Olympic Dam) successfully executed. Better operating performance, lower costs and capital expenditure. Higher commodity prices – highlighted by Morgan Stanley.

Risks to Downside: Execution issues at growth projects (Jansen potash, Escondida growth, Spence hypogene, Olympic Dam). Weak operating performance, higher costs and capital expenditure. Lower commodity prices.

Check out FX Empire’s earnings calendar

Moody’s Beats Revenue Estimates, But Misses on Earnings

Moody’s, an American business and financial services company, reported better-than-expected revenue in the fourth quarter, growing 5% to $1.3 billion, but higher costs kept profits subdued.

Moody’s Corporation said its revenue for 2020 rose 11% to $5.4 billion, surpassing the Wall Street consensus estimates of $1.22 billion. However, in the fourth quarter diluted EPS fell 12% to $1.66 per share; adjusted diluted EPS of $1.91 per share, down 5%. That was lower than the market expectations of $1.95 per share.

The company projected the fiscal year 2021 diluted EPS of $9.70 to $10.10 and adjusted diluted EPS of $10.30 to $10.70.

“For its fourth quarter, wide-moat-rated Moody’s reported $1.29 billion in revenue, above FactSet consensus of $1.22 billion, though adjusted EPS of $1.91 missed the Street’s $1.95, which we’d attribute to higher operating expenses. As is customary during its fourth quarter, Moody‘s provided its initial 2021 outlook, which did beat Street expectations,” said Rajiv Bhatia, equity analyst at Morningstar.

“Moody’s expects 2021 revenue growth in the mid-single digits (versus the 1% implied by the Street) and adjusted EPS of $10.30-$10.70 (versus the Street’s $10.34). Moody’s is continuing to invest in its business, and as a result, adjusted operating margins are expected to be about flat. Following the strong results, we expect to tweak our fair value estimate higher.”

Moody’s shares, which surged over 20% in 2020, closed nearly flat at $278.67 on Friday.

Moody’s Stock Price Forecast

Six analysts who offered stock ratings for Moody’s in the last three months forecast the average price in 12 months of $313.00 with a high forecast of $327.00 and a low forecast of $292.00.

The average price target represents a 12.32% increase from the last price of $278.67. From those six analysts, three rated “Buy”, three rated “Hold”, none rated “Sell”, according to Tipranks.

Morgan Stanley upgraded the base target price to $292 from $435 with a high of $473 under a bull scenario and $188 under the worst-case scenario. The firm gave an “Equal-weight” rating on the ratings company’s stock.

Several other analysts have also upgraded the stock outlook. Raymond James reissued a “hold” rating on shares. Barclays lifted their price target to $320 from $305 and gave the stock an “overweight” rating. Deutsche Bank assumed coverage and issued a “hold” rating and a $300 target price on the stock.

In addition, BidaskClub raised shares of Moody’s from a “sell” rating to a “hold” rating. UBS Group upped their price objective to $368 from $358 and gave the company a “buy” rating.

Analyst Comments

“Mixed 4Q, but better than expected ’21 guidance lead us to raise ’21 and ’22 adj. EBITDA by 1.5% for both years. ’21 issuance expected to be down HSD, but MIS rev guide flat driven by strong recurring, pricing, and mix. Maintain equal-weight and price target of $292,” Toni Kaplan, said equity analyst at Morgan Stanley.

“With 60% of revs and 80% of profits coming from its rating agency business, Moody’s (MCO) shares will be levered to the issuance environment. Facing a difficult comp given a strong 2020, issuance is expected to decline in 2021 with MCO forecasting a high single-digit decline. Though MCO forecasts flat MIS revenue, we think there could be downside risk to this forecast if the issuance is weak. At 19x ’22 EV/EBITDA, MCO trades at in-line to Info Services peers ex-NSLN, which we view as fair.”

Check out FX Empire’s earnings calendar

Datadog’s Demand Trends Looking Better, Raises Target Price to $120: Morgan Stanley

Morgan Stanley raised their stock price forecast on Datadog Inc, a monitoring and security platform for cloud applications, to $120 from $112 and said there were several positives out of Q4 earnings that suggest that the New York City-based company is emerging out of the rough patch seen in the summer of 2020.

On Friday, the company which offers a cloud analytics platform for customers that include Cornell University, Samsung and Whole Foods reported quarterly adjusted earnings of $0.60 per share in the last quarter of 2020, beating the Wall Street consensus estimates of $0.20 per share. Datadog said its revenue surged more than 55% to $177.53 million from a year ago​, also above the market expectations of $163.56 million.

“Closing 2020 with 56% rev growth supported by customer expansion returning to pre-pandemic levels and record new logo additions suggests momentum heading into 2021. However, initial guidance calling for 37-38% growth, while conservative, likely isn’t enough to fuel shares higher at 34x CY22 sales,” wrote Sanjit Singh, equity analyst at Morgan Stanley.

“The FY21 revenue outlook calls for 38% growth at the high end of guidance compared to 66% growth in 2020 which we think reflects 1) tougher compares in 1H, 2) lingering headwinds from slower customer expansion trends in 2Q20 and 3) general conservatism on the still difficult to predict spending environment. Taking this into account, we view FY21 guidance as conservative and see the current trajectory of growth given recent outperformance consistent with mid-to-high 40% revenue growth for the full year. However, at ~34x CY21e sales, we think shares currently anticipate this level of growth in 2021, leaving us waiting for a more material pullback.”

Datadog’s shares, which surged over 160% in 2020, had risen about 15% so far this year. However, the stock closed 4.03% lower at $112.86 on Friday.

Fourteen analysts who offered stock ratings for Datadog in the last three months forecast the average price in 12 months at $119.09 with a high forecast of $141.00 and a low forecast of $95.00.

The average price target represents a 5.52% increase from the last price of $112.86. From those 14 equity analysts, six rated “Buy”, eight rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $120 with a high of $180 under a bull scenario and $40 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the IT company’s stock.

Other equity analysts also recently updated their stock outlook. Stifel raised the stock price forecast to $120 from $100. Truist Securities upped the price objective to $125 from $120. Needham increased the target price to $141 from $109.

In addition, Mizuho raised the target price to $135 from $115. Berenberg upped the target price to $111 from $103. RBC increased the target price to $120 from $110. Barclays upped the price objective to $135 from $115.

“Leading Product in a Growing Market Supports Continued Rapid Growth. Datadog has positioned itself as the leading observability platform for most modern cloud environments. Strong secular tailwinds towards modern performance monitoring with the re-platforming to the cloud creates an underpenetrated market that we estimate at >$30 billion, supporting our 30%+ annual revenue forecast through CY23,” Morgan Stanley’s Singh added.

“However, Shares Fairly Incorporate Growth and Unit Economics At Current Levels. DDOG is currently trading at ~34x EV/CY22e sales, a premium to high-growth SaaS peers at ~30x. We believe that a ~34x multiple reflects investor expectations that build in a significant outperformance, keeping us EW.”

Earnings to Watch Next Week: Advance Auto Parts, Baidu, Walmart and Magna in Focus

Earnings to Watch Next Week: Advance Auto Parts, Baidu, Walmart and Magna in Focus

Earnings Calendar For The Week Of February 15

Monday (February 15)

IN THE SPOTLIGHT: LIBERTY GLOBAL

Liberty Global, the largest international broadband communications provider, is expected is report a profit of $0.25 per share in the fourth quarter, which represents year-over-year growth of over 110% from the same quarter last year when the company reported loss of $1.98 per share.

The Anglo-Dutch-American multinational telecommunications company is expected to post report a rise in revenue to $3.28 billion, up from $2.98 billion seen in the same period a year ago.

Liberty offers a complex proposition, but it has also a good story ahead if it’s able to replicate its Dutch merger success (combination of Ziggo & Vodafone) in the UK and Swiss transactions. From here we see two key value drivers: (1) the delivery on deal synergies, and (2) Liberty‘s ability to renew with growth. Meanwhile, 2021 is a transition/integration year,” noted Nawar Cristini, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 15

Ticker Company EPS Forecast
SCI Service International $0.88
LBTYA Liberty Global Class A Ordinary Shares $0.25
RIG Transocean -$0.16
DM Dominion Midstream Partners -$0.06
ICAD Icade €2.33
MELI MercadoLibre $0.08
OSH Oak Street Health -$0.23
YALA Yalla $0.12
OMAB Grupo Aeroportuario Del Centro Nort $7.07
LBTYK LIBERTY GLOBAL $0.25

 

Tuesday (February 16)

IN THE SPOTLIGHT: ADVANCE AUTO PARTS, ROYAL CARIBBEAN CRUISES

ADVANCE AUTO PARTS: The leading automotive aftermarket parts retailer is expected is report a profit of $1.97 per share in the fourth quarter, which represents year-over-year growth of over 20% from the same quarter last year when the company reported profit of $1.64 per share.

The company will report a rise in revenue to $2.36 billion from $2.11 billion seen in the same period a year ago.

“Conditions seem supportive for Advance Auto Parts (AAP) to deliver more meaningful margin expansion in 2021 and beyond. Expect in-line Q4 results; the April Virtual Strategy Update represents a more important potential catalyst. We are Overweight as risk/reward screens favourable,” said Simeon Gutman, equity analyst at Morgan Stanley.

AAP operates in a defensive (recession-resistant) category and has one of the largest long-term EBIT margin expansion opportunities in our coverage (we estimate 300-400 bps over time). COVID-19 slowed parts of AAP‘s transformation but gross and EBIT margin upside from internal initiatives is still expected beginning in 2021. Significant and improving FCF generation plus share repurchases likely to enhance EPS growth. We think the combination of a defensive category, AAP‘s progress generating stable top-line growth, and significant margin upside all make for a positive risk/reward skew.”

ROYAL CARIBBEAN CRUISES: The company which operates over 50 cruise ships on a selection of worldwide itineraries that call on more than 1,000 destinations is expected to report a loss of $5.20 in the fourth quarter, which represents a year-over-year decline of over 450% from the same quarter last year when the company reported a profit of $1.42 per share.

The Miami-based company will report revenue of $35.616 million, down over 98% from $ 2.52 billion seen in the same period a year ago.

“We think the cruise industry will be one of the slowest sub-sectors to recover from COVID-19. Cruising needs not just international travel to return, but ports to reopen, authorities to permit cruising, and the return of customer confidence. We expect cruising to resume in Q2 2021, and expect FY19 EBITDA to return in FY23 given FY22 will be the first normal year, and pricing will likely come under pressure. FY19 EBITDA implies EPS 40% lower given share issue dilution and higher interest expense,” said Jamie Rollo, equity analyst at Morgan Stanley.

“We see debt doubling in FY21 vs FY19 due to operating losses and high capex commitments, and leverage looks high at 6x even in FY23e, so we see a risk more equity might need to be raised.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 16

Ticker Company EPS Forecast
OMC Omnicom $1.66
AN AutoNation $2.03
RCL Royal Caribbean Cruises -$5.20
ES Eversource Energy $0.85
LPX Louisiana Pacific $1.70
BRKR Bruker $0.55
TRU TransUnion $0.79
BKI Black Iron Inc. $0.56
ALLE Allegion $1.18
IAA IAA Inc $0.44
SABR Sabre -$0.66
FELE Franklin Electric $0.52
CVS CVS Health $1.24
AAP Advance Auto Parts $1.97
ZTS Zoetis $0.86
ECL Ecolab $1.26
IPGP IPG Photonics $0.98
VMC Vulcan Materials $0.99
GNW Genworth Financial $0.20
EXAS Exact Sciences -$0.22
FQVLF First Quantum Minera $0.11
CAR Avis Budget -$0.60
ENLC EnLink Midstream $0.02
CMP Compass Minerals International $1.40
ACC American Campus Communities $0.09
TNET TriNet $0.26
QTS QTS Realty $0.02
CSOD Cornerstone OnDemand $0.27
KAR Kar Auction Services $0.29
IOSP Innospec $0.77
RPAI Retail Properties Of America $0.01
OXY Occidental Petroleum -$0.58
DVN Devon Energy $0.03
DIOD Diodes $0.70
A Agilent $0.90
SEDG Solaredge Technologies Inc $0.66
AIG AIG $0.93
RNG RingCentral $0.27
BYD Boyd Gaming $0.39
LSCC Lattice Semiconductor $0.17
HE Hawaiian Electric Industries $0.34
MCY Mercury General $0.69
CLR Continental Resources -$0.08
VERX Vertex Inc. Cl A $0.07
TX Ternium $1.15
SGMS Scientific Games -$0.39
EXPD Expeditors International Of Washington $1.07
AMED Amedisys $1.45
MDT Medtronic $1.15
AWK American Water Works $0.80
BLUE Bluebird Bio -$3.01
WLK Westlake Chemical $0.68

 

Wednesday (February 17)

IN THE SPOTLIGHT: BIDU

Baidu.com Inc, a leader in the Chinese search industry in terms of user market share to report $2.51 earnings per share (EPS) for the current fiscal quarter, which represents a year-over-year decline of over 30% from the same quarter last year when the company reported a profit of $3.81 per share.

The Chinese tech giant will post sales of $4.46 billion for the current fiscal quarter, up over 7% from $4.15 billion during the same quarter last year.

“Following a sharp recent rally, we maintain our EW rating on an industry-relative basis. Baidu has provided better disclosure and has struck a constructive tone on its AI initiatives. We find it well-positioned in certain industrial applications. We also like its rich cash position and strategic investments,” wrote Gary Yu, equity analyst at Morgan Stanley.

“Our price target reflects materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from competition. The company is well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 18x consensus 2021e non-GAAP P/E the vs. historical 11-24x trading band since 2019.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 17

Ticker Company EPS Forecast
RPRX Repros Therapeutics $0.71
DAVA Endava Ltd $0.26
GPC Genuine Parts $1.35
ADI Analog Devices $1.32
EQT EQT -$0.27
OC Owens Corning $1.37
GRMN Garmin $1.39
CRL Charles River Laboratories $2.11
NI NiSource $0.33
HSIC Henry Schein $1.00
HLT Hilton Worldwide $0.03
FUN Cedar Fair -$2.28
COMM CommScope $0.44
CHH Choice Hotels International $0.64
ALE Allete $0.75
WIX WIX -$0.11
PXD Pioneer Natural Resources $0.70
SUN Sunoco $0.82
JACK Jack In The Box $1.74
VCYT Veracyte -$0.10
RBC Regal Beloit Corporation $1.58
CF CF Industries $0.11
SPWR SunPower $0.11
BFAM Bright Horizons Family Solutions -$0.23
SNBR Scs Group Plc $1.42
VMI Valmont Industries $1.79
UFPI Universal Forest Products $0.72
SUI Sun Communities $0.09
ALSN Allison Transmission $0.61
AM Antero Midstream Partners $0.19
WCN Waste Connections $0.63
CDE CoEUR Mining $0.13
PEGA Pegasystems $0.23
GMED Globus Medical $0.51
TROX Tronox $0.19
CONE CyrusOne -$0.03
WRI Weingarten Realty Investors $0.10
AR Antero Resources $0.06
CAKE Cheesecake Factory -$0.04
HPP Hudson Pacific Properties $0.05
AEL American Equity Investment Life $0.97
OGS One Gas $1.06
MOS Mosaic $0.20
H Hyatt Hotels -$1.37
MRO Marathon Oil -$0.20
PAAS Pan American Silver USA $0.43
QTWO Q2 $0.05
MANT ManTech International $0.71
HLF Herbalife $0.84
LOPE Grand Canyon Education $1.79
BIDU Baidu $17.78
SNPS Synopsys $1.47
ALB Albemarle $1.10
STMP Stamps $2.92
AJRD Aerojet Rocketdyne $0.50
ETR Entergy $0.68
GDOT Green Dot $0.16
DISH Dish Network $0.75
AU Anglogold Ashanti $1.85
CBD Companhia Brasileira De Distrib $0.46
TS Tenaris $0.01
TLRY Tilray -$0.14
MIC Macquarie Infrastructure $0.21
SAM Boston Beer $2.63

 

Thursday (February 18)

IN THE SPOTLIGHT: WALMART

Walmart, an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores from the United States, is expected to report a profit of $1.51 in the fourth quarter, which represents year-over-year growth of over 9% from the same quarter last year when the company reported profit of $1.38 per share.

Zacks Research forecasts Walmart‘s Q4 comparable sales to pop 5.2%, with its adjusted EPS set to climb 6.5% to $1.47 a share.

“On the top-line, we think market expectations are for 6-8% US comps, low double-digit Sam’s Club SSS growth, and mid-single-digit International revenue growth. We believe the buy-side is anticipating 40-60 bps of gross margin expansion and 20 bps SG&A leverage, translating to 70 bps of EBIT margin expansion and 25%+ EBIT growth. Overall, the bar for Q4 EPS seems to be in the range of $1.75-1.85,” said Simeon Gutman, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 18

Ticker Company EPS Forecast
EPAM EPAM Systems $1.71
LXP Lexington Realty $0.08
BRC Brady $0.61
CFX Colfax $0.50
SYNH Syneos Health Inc $1.10
LKQ LKQ $0.58
GOLD Randgold Resources $0.31
RS Reliance Steel & Aluminum $1.96
SCL Stepan $1.08
DAN Dana $0.38
VC Visteon $1.14
WMT Walmart $1.51
MAR Marriott International $0.09
FOCS Focus Financial Partners Inc $0.77
SO Southern Co. $0.42
WM Waste Management $1.09
VG Vonage $0.05
IDCC InterDigital -$0.02
TRN Trinity Industries $0.15
TPH Tri Pointe Homes $0.67
IART Integra LifeSciences $0.73
WAB Westinghouse Air Brake Technologies $1.03
TRP Transcanada USA $0.78
IDA IdaCorp $0.67
SHLX Shell Midstream Partners $0.33
NICE Nice Systems $1.55
WST West Pharmaceutical Services $1.12
VTR Ventas $0.07
HL Hecla Mining $0.02
PPL PPL $0.61
AVNS Avanos Medical Inc $0.21
NEM Newmont Mining $0.95
HRL Hormel Foods $0.41
MD Mednax $0.36
TRGP Targa Resources $0.32
EBS Emergent BioSolutions $3.28
GLPI Gaming And Leisure Properties $0.56
TXRH Texas Roadhouse $0.49
COG Cabot Oil Gas $0.21
ATR AptarGroup $0.90
CWST Casella Waste Systems $0.14
QDEL Quidel $9.76
CVA Covanta -$0.01
OPK Opko Health $0.04
ROG Rogers $1.42
OLED Universal Display $0.64
KEYS Keysight Technologies $1.36
LNT Alliant Energy $0.23
ANET Arista Networks $2.39
HST Host Hotels & Resorts -$0.42
HASI Hannon Armstrong Sustnbl Infrstr Cap $0.34
ED Consolidated Edison $0.76
RBA Ritchie Bros. Auctioneers USA $0.58
TRIP TripAdvisor -$0.26
RXT Rackspace $0.23
DBX Dropbox $0.24
AMAT Applied Materials $1.28
MSA MSA Safety $1.05
ADC Agree Realty $0.83
FLS Flowserve $0.53
AG First Majestic Silver $0.11
SNN Smith Nephew $1.18
GFI Gold Fields $0.35
BCS Barclays -$0.01
CS Credit Suisse $0.22
ORAN Orange $0.45
CPRT Copart $0.79
ARRY Array Technologies Inc $0.05
AEP American Electric Power $0.79
PBR Petroleo Brasileiro Petrobras $0.02
VALE Vale $0.90
TCP TC Pipelines $0.98
FSLR First Solar $1.27
USM United States Cellular -$0.02
RY Royal Bank Of Canada $1.68
TDS Telephone Data Systems $0.03
GOL Gol Linhas Aereas Inteligentes -$0.41
PCRX Pacira $0.82
NCLH Norwegian Cruise Line -$2.31
RGEN Repligen $0.31
TV Grupo Televisa Sab $0.25
ENV Envestnet $0.65
FMS Fresenius Medical Care $0.70
TFX Teleflex $3.03
PAC Grupo Aeroportuario Del Pacifico $0.46
NUVA NuVasive $0.55
SATS EchoStar $0.00
CIB Bancolombia $0.15

 

Friday (February 19)

IN THE SPOTLIGHT: MAGNA INTERNATIONAL

Magna International, one of the largest and most diversified auto parts suppliers in the world, is expected to report a profit of $2.02 in the fourth quarter, which represents year-over-year growth of over 40% from the same quarter last year when the company reported profit of $1.41 per share.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 19

Ticker Company EPS Forecast
THRM Gentherm $0.65
BCPC Balchem $0.69
POR Portland General Electric $0.42
ITT ITT $0.92
SRC Spirit Realty Capital New $0.18
MGA Magna International USA $2.02
ESNT Essent $1.21
DE Deere & Company $2.12
HBM HudBay Minerals Ord Shs -$0.07
AEE Ameren $0.42
TKC Turkcell $0.15
DANOY Danone PK $0.45
HMSY HMS $0.44
CNK Cinemark -$1.46
E ENI $0.01

 

HubSpot Shares Soar After Earnings Top Estimates; Stock Has 40% Upside Potential

HubSpot, a cloud-based marketing and sales software platform that enables businesses to deliver an inbound experience, reported better-than-expected earnings in the fourth quarter, ending the wild 2020 in a much better position as compared to before the COVID-19 pandemic hit.

Cambridge-based developer and marketer of software products reported quarterly adjusted earnings of $0.40​ per share, beating the Wall Street of $0.23 per share. Revenue surged more than 35% to $252.07 million from a year ago​; also beating the market expectations of $236.66 million.

Following this upbeat result, HubSpot shares, which surged over 150% in 2020, hit a fresh high by rising over 17% to $527.689 on Friday.

For the first quarter of 2021 HubSpot forecasts total revenue in the range of $260 million to $265 million. Non-GAAP operating income is expected to be in the range of $17 million to $19 million. Non-GAAP net income per common share is expected to be in the range of $0.28 to $0.30.

“Narrow-moat HubSpot reported another excellent quarter featuring significant upside to guidance and provided an outlook that was well ahead of expectations. We see accelerating revenue as a sign of the company’s strengthening position. Management pushed guidance nicely ahead of Street expectations for the year—but we still see upside potential, especially on profitability. We note that at the midpoint of revenue guidance for the year, HubSpot will be growing at approximately the same rate that Salesforce was at roughly the same size,” said Dan Romanoff, equity analyst at Morningstar.

“We think the portfolio keeps getting stronger, which allows new customers to land at different solutions initially, even as they adopt additional hubs over time. After rolling our annual model forward and adjusting for quarterly strength and guidance, we are raising our fair value estimate to $390 per share, from $248. With shares quadrupling since the March 2020 lows, we find valuation challenging.”

HubSpot Stock Price Forecast

Thirteen analysts who offered stock ratings for HubSpot in the last three months forecast the average price in 12 months of $537.08 with a high forecast of $725.00 and a low forecast of $445.00.

The average price target represents a 5.90% increase from the last price of $507.15. All those 13 analysts unanimously rated “Buy”, according to Tipranks.

Morgan Stanley upgraded the base target price to $567 from $435 with a high of $726 under a bull scenario and $349 under the worst-case scenario. The firm gave an “Overweight” rating on the cloud-based marketing company’s stock.

HubSpot delivered outstanding Q4 results, with a beat across all growth metrics, combined with healthy profitability. With initial FY21 guidance suggesting a year of accelerating growth at $1B revenue scale, we think the stock deserves to trade with the best-in-class SaaS assets growing 30%+. Remain Overweight,” said Stan Zlotsky, equity analyst at Morgan Stanley.

Several other analysts have also upgraded the stock outlook. UBS raised the target price to $523 from $352. RBC upped the stock price forecast to $570 from $430. Stifel increased the price objective to $550 from $400. Needham raised the target price to $520 from $400. Truist Securities upped the price objective to $600 from $455. BMO increased the target price to $565 from $470.

In addition, Mizuho raised the stock price forecast to $525 from $360. Guggenheim upped the price objective to $600 from $400. Citigroup increased the price target to $545 from $425. Piper Sandler raised the target price to $600 from $488. Raymond James upgraded to strong buy from outperform and upped the target price to $725 from $365.

Analyst Comments

HubSpot is an emerging leader in the Marketing Automation space, with particular strength in the SMB B2B segment. Marketing Automation is a fragmented and increasingly competitive space, but HUBS has significantly differentiated itself from peers through a focus on smaller businesses and Inbound Marketing techniques,” Morgan Stanley’s Zlotsky added.

“The TAM is potentially large ($28B) but predominately greenfield today as SMBs have been slow to adopt marketing technology historically, driving a long runway of growth in our view. HUBS currently trades at a discount to SaaS peers on a growth adjusted basis, which we expect to narrow as investors price in greater confidence in HUBS‘ durability during COVID-19.”

Upside and Downside Risks

Risks to Upside: Improving sales productivity yields better than growth and operating margins. COVID-19-driven tailwinds to Marketing Automation customer acquisition persist into 2021. Uplift from M&A potential – highlighted by Morgan Stanley.

Risks to Downside: Increased competitive pressures as HUBS moves upmarket and into the CRM/Service markets. Macro weakness drives spending slowdown among SMB customers.

Check out FX Empire’s earnings calendar

Walt Disney Shares Hit Fresh Record High on Surprise Profit; Target Price $210

Walt Disney, a family entertainment company, reported better-than-expected earnings in the first fiscal quarter, largely driven by a fast-growing streaming business with Disney Plus reaching roughly 95 million subscribers, helping its shares hit fresh all-time highs on Thursday.

The world’s leading producers and providers of entertainment and information said its diluted EPS for the quarter decreased by 79% to $0.32 from $1.53 in the prior-year quarter. However, that was way better than the Wall Street consensus estimates of a loss of -0.34 cents per share.

Although Disney’s revenue declined to $16.25 billion from $20.88 billion a year earlier, it was higher than the market expectations of $15.93 billion.

Results in the quarter ended January 2, 2021 were adversely impacted by the novel coronavirus. The most significant impact was at the Disney Parks, Experiences and Products segment where since late in the second quarter of fiscal 2020, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended, the company said.

“In a little over a year after launching, the service has exceeded the top end of the company’s original fiscal 2024 guidance of 60-90 million subscribers. The pandemic once again hammered the parks and theatrical businesses as revenue collapsed by 73% and 98%, respectively, versus a year ago. We are maintaining our wide moat and plan to modestly increase our $140 fair value estimate,” Neil Macker, senior equity analyst at Morningstar.

“While we expect these hurdles to remain in place for the segment for at least the first half of calendar 2021, we are encouraged by relative demand from consumers and the continued growth in bookings. The cost reduction plans have largely worked as Florida, Shanghai, Hong Kong, and Paris all generated enough revenue to cover the variable costs of being open despite capacity constraints.”

Walt Disney shares, which surged over 25% in 2020, hit a fresh high by rising 1.2% to $193.2 in extended trading on Thursday.

Walt Disney Stock Price Forecast

Twenty-three analysts who offered stock ratings for Walt Disney in the last three months forecast the average price in 12 months of $190.95 with a high forecast of $210.00 and a low forecast of $160.00.

The average price target represents a 0.02% increase from the last price of $190.91. From those 23 analysts, 19 rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $200 with a high of $145 under a bull scenario and $130 under the worst-case scenario. The firm currently has an “Overweight” rating on the family entertainment company’s stock.

Several other analysts have also recently commented on the stock. JP Morgan raised the target price to $220 from $210. Evercore ISI upped the target price to $210 from $200. Cowen and Company raised the price target to $147 from $115. Smith Barney Citigroup lifted their price target to $175 from $150.

Analyst Comments

Disney‘s Parks segment rebounded faster than expected. While the road to recovery remains long and uncertain, it appears the worst is behind it and underlying demand/operating leverage encouraging. Disney‘s DTC business also beat expectations, with Disney Plus likely to pass 100mm subs any day,” said Benjamin Swinburne, equity analyst at Morgan Stanley.

Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead. Disney’s underlying IP remains best-in-class, supporting long term content monetization opportunities. During this period of FCF pressure from Parks closures, ESPN’s FCF generation is key to driving down leverage. Historical cycles suggest a potential return to above prior peak U.S. Parks revenues in FY23.”

Upside and Downside Risks

Risks to Upside: Accelerated OTT adoption drives higher DTC revenues and faster profitability. Distribution renewals lead to favourable pricing acceleration. Film success drives strong franchise monetization – highlighted by Morgan Stanley.

Risks to Downside: Macro econ weakness. Acceleration in pay-TV cord-cutting remains a risk, given DIS exposure to pay-TV revenues. Franchise fatigue could pressure box office, lower Consumer Products monetization.

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Virtu Financial Ends 2020 on a Strong Note; Revenue Jumps Over 69%

Virtu Financial, the world’s largest retail market makers and liquidity providers, reported better-than-expected earnings in the fourth quarter, largely driven by heightened levels of volatility, bid-ask spreads and trading volumes across global markets and asset classes due to the COVID-19 pandemic.

Total revenues increased 69.3% to $676.7 million for this quarter compared to $399.6 million for the same period in 2019. Trading income, net, increased 121.0% to $505.5 million for this quarter, compared to $228.7 million for the same period in 2019.

The leading financial services firm said its net income totalled $197.7 million for this quarter, compared to a net loss of $29.4 million in the prior-year quarter, which included costs related to the ITG acquisition. Basic earnings per share for this quarter was $0.89 and diluted earnings per share was $0.88, compared to a basic and diluted loss per share of $0.16 for the same period in 2019.

Virtu Financial (VIRT) reported 4Q20 adj EPS of $1.18, vs JEF/Cons est’s of $0.79. The strength in revenues (+$98M vs our est) essentially all flowed through to the bottom line. The company noted that 1Q21TD ANTI is tracking similar to FY2020 levels of $9.0M, which is approx. 50% above our current est. of $6.0M. 2021 expense guidance was reiterated and the buyback authorization was increased by an add’l $70M (post $50M of repurchases in 4Q20),” said Daniel T. Fannon, equity analyst at Jefferies.

Virtu’s product offerings allow clients to trade on hundreds of venues across 50+ countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income and myriad other commodities.

However, Virtu shares, which surged over 57% in 2020 and have risen 15% since the beginning of the year, fell over 5% to $27.48 on Thursday.

Virtu Stock Price Forecast

Two analysts who offered stock ratings for Virtu in the last three months forecast the average price in 12 months $27.50 with a high forecast of $31.00 and a low forecast of $24.00.

The average price target represents a -0.07% decrease from the last price of $27.52. From two analysts, one rated “Buy”, none rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $24 with a high of $35 under a bull scenario and $8 under the worst-case scenario. The firm currently has an “Underweight” rating on the financial services firm’s stock.

Several other analysts have also recently commented on the stock. JP Morgan raised the target price to $31 from $27. UBS upped the target price to $26 from $25. Rosenblatt Securities upgraded raises to buy from neutral and raised the price target to $28 from $25. Citigroup upped the price target to $26 from $25.

Analyst Comments

“Elevated near-term market volatility and volumes boosting VIRT‘s near-term revenue base that’s strongly tied to volatility levels and volumes… but once the recovery begins and volatility normalizes VIRT‘s revenue is likely to decline sharply,” said Michael Cyprys, equity analyst at Morgan Stanley.

“Lack of visibility into a hard-to-predict revenue stream to weigh on the multiple. The business is driven by both volatility, volumes and retail flow, each of which are not directly in the company’s control. Organic growth initiatives to expand into new asset classes and geographies could offer new revenues pools, but limited visibility and still early stage.”

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Uber Shares Slump in After-Hours as Earnings Miss Estimates But Eats Business Reduce Losses

Uber Technologies’ shares fell about 5% in extended trading on Wednesday after the ride-sharing company missed Wall Street expectations on revenue and profit in the fourth quarter of 2020; however, it managed to post narrower loss due to its growing food delivery business amid the COVID-19 pandemic.

San Francisco-based Uber Technologies reported a quarterly adjusted loss of $0.54 per share, slightly missing the market consensus estimate for a loss of $0.53 per share. The company’s revenue declined more than 20% to $3.17 billion from the same period a year ago​, missing the Wall Street estimates of $3.58 billion.

Uber reported mixed fourth-quarter results as the firm missed top-line expectations but beat FactSet consensus estimates on the bottom-line. Delivery net revenue growth accelerated again while the decline in mobility revenues lowed for the second consecutive quarter. While the firm awaits a post-pandemic world which likely will return its mobility segment back to growth, that business remains profitable on an adjusted EBITDA basis,” said Ali Mogharabi, senior equity analyst at Morningstar.

“On the delivery segment side, we think Uber’s various acquisitions, which will help the firm provide on-demand delivery service for products beyond meals, are strengthening its network effect and should drive further progress toward profitability. We have slightly increased our projections and rolled our model forward, increasing our fair value estimate to $67 from $61. While the stock is trading at a discount to our fair value estimate, we recommend new investors wait for a wider margin of safety before allocating capital to this narrow-moat name.”

Uber shares, which surged over 70% in 2020, fell about 5% to $60.14 in extended trading on Wednesday.

Uber Stock Price Forecast

Twenty-one analysts who offered stock ratings for Uber in the last three months forecast the average price in 12 months $63.76 with a high forecast of $80.00 and a low forecast of $50.00.

The average price target represents a 0.92% increase from the last price of $63.18. All those 21 analysts rated “Buy”, according to Tipranks.

Morgan Stanley gave a base target price of $68 with a high of $85 under a bull scenario and $35 under the worst-case scenario. The firm currently has an “Overweight” rating on the ride-sharing company’s stock.

Several other analysts have also recently commented on the stock. BTIG raised the price target to $80 from $70. Keybanc upped the price objective to $75 from $63. Canaccord Genuity increased the price target to $75 from $65. Uber Technologies had its target price increased by analysts at KeyCorp to $63 from $60. The firm presently has an “overweight” rating.

In addition, Cowen raised their target price to $64 from $58 and gave the stock an “outperform” rating. Needham & Company LLC raised their target price to $60 from $50 and gave the stock a “buy” rating. Loop Capital raised their target price to $59 from $40.

Analyst Comments

Uber is a truly global platform with multiple large addressable markets. We see a path forward for both ridesharing and Eats bookings growth, primarily driven by MAPC and frequency growth. We forecast fairly flat ridesharing ANR take rates (albeit on a growing gross booking base) and significant growth in Eats ANR take rate, driven principally by order velocity and positive restaurant mix,” said Brian Nowak, equity analyst at Morgan Stanley.

Uber‘s scale and liquidity gives drivers higher earnings power and riders lower wait times. Uber‘s platform approach allows it to rapidly expand into new business lines (Eats, Freight) and leverage shared expenses.”

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