European Equities: Service Sector PMIs and Brexit in Focus

Economic Calendar:

Thursday, 3rd December

Spanish Services PMI (Nov)

Italian Services PMI (Nov)

French Services PMI (Nov) Final

German Services PMI (Nov) Final

Eurozone Markit Composite PMI (Nov) Final

Eurozone Services PMI (Nov) Final

Eurozone Retail Sales (MoM) (Oct)

Friday, 4th December

German Factory Orders (MoM) (Oct)

IHS Markit Construction PMI (Nov)

The Majors

It was a mixed day for the European majors on Wednesday, following Monday’s gains. The DAX30 and EuroStoxx600 fell by 0.52% and by 0.05% respectively, while the CAC40 ended the day up by 0.02%.

For the majors, concerns over a lack of progress towards Brexit pegged the majors back on the day. Also weighing on the majors and the DAX30, in particular, was news that the Democrats would retain the phase 1 trade agreement with China near-term.

There were positives, however, that provided support. News of the UK approving the BioNTech/Pfizer.inc vaccine delivered support, as did Joe Biden talk of a COVID-19 stimulus package.

According to reports on Wednesday, the President-Elect stated that delivering a COVID-19 stimulus package was an immediate priority.

The Stats

It was a relatively busy day on the Eurozone economic calendar. German retail sales figures for October were in focus going into the European open.

According to Destatis, retail sales rose by 2.6% in October, reversing a 1.9% slide in September. Economists had forecast a 1.2% rise.

  • Compared with the same month a year ago, retail sales were up by 8.2%.
  • Supermarket, self-service department shops, and hypermarket sales were up by 7.9%, year-on-year.
  • In the non-food retail sector, sales rose by 9.0%.
  • When compared with February 2020, the pre-COVID-19 pandemic month, retail sales rose by 5.9%.

Unemployment numbers from Spain and the Eurozone released later in the day had a muted impact on the majors.

In Spain, the unemployment rose by 25.3k in September, following a 49.6k jump in August.

For the Eurozone, the unemployment rate slipped from an upwardly revised 8.5% to 8.4% in October. Economists had forecast an unemployment rate of 8.4%.

According to Eurostat,

  • While down from 8.5% in September, unemployment was up from 7.4% in October 2019.
  • Compared with September 2020, Eurostat estimates that the number of unemployed persons fell by 91,000.
  • By contrast, however, the number of unemployed persons increased by 2.186 million when compared with October 2019.

From the U.S

ADP non-farm employment change figures were in focus late in the day.

In November, nonfarm employment increased by 307k, falling short of a forecasted 410k increase. In October, nonfarm employment had increased by 365k.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Continental slid by 1.56%, with BMW and Volkswagen falling by 0.39% and by 0.44% respectively. Daimler rose by 0.24%, however, to buck the trend on the day.

It was a bullish day for the banks. Deutsche Bank rose by 0.90%, with Commerzbank ending the day up by 1.81%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.69% and by 1.67% respectively, with Soc Gen gaining 2.10%.

It was a mixed day for the French auto sector, however. Peugeot fell by 0.79%, while Renault rose by 1.45%.

Air France-KLM slipped by 0.85%, while Airbus SE rose by 2.15%, following Tuesday’s 1.90% gain.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX, after having fallen for 5 consecutive days. Following on from Tuesday’s 0.97% gain, the VIX rose by 1.93% to end the day at 21.17.

Disappointing ADP nonfarm figures had limited impact, while plans to retain the phase 1 trade agreement with China was market negative. On the positive, however, remained progress towards a COVID-19 vaccine and hopes of a stimulus package to support the U.S economy.

For the U.S markets, it was a mixed day after Tuesday’s gains and last month’s rally. The Dow and S&P500 rose by 0.20% and by 0.18% respectively, while the NASDAQ slipped by 0.05%.

VIX 031220 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats include services and composite PMI numbers for Italy and Eurozone retail sales figures.

Finalized services and composite PMI figures for November are also due out for France, Germany, and the Eurozone.

We would expect the Eurozone’s composite and services PMI to have the greatest impact on the majors.

From the U.S, the all-important ISM services PMI and weekly jobless claims figures will also influence later in the day.

Away from the economic calendar, Brexit and COVID-19 news updates will need monitoring. Any further chatter on a stimulus package from Capitol Hill would influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 18 points.

For a look at all of today’s economic events, check out our economic calendar.

COVID-19 Vaccine Update – The UK Wastes No Time as MHRA Approves Vaccine

The Latest

BioNTech and Pfizer Inc. became the first pharma to have their mRNA COVID-19 vaccine approved on Wednesday.

The UK’s Medical & Healthcare Products Regulatory Agency (“MHRA”) became the first agency to approve a COVID-19 vaccine.

With the UK suffering at the hands of the COVID-19 pandemic, the independent regulator wasted little time.

The UK Government has pre-ordered 145 million doses of COVID-19 vaccines from Pfizer Inc., Moderna Inc., and AstraZeneca. Of the 145 million doses, the government has pre-ordered 40 million from BioNTech/Pfizer Inc.

With an efficacy rate of 95% and effective across all age groups, the first doses of the vaccine are due to arrive in days.

The UK Government announced that a first batch of 800,000 doses forms part of an expected 10 million doses by the end of the year.

With the vaccine coming in 2 doses, 5 million patients will receive inoculation if BioNTech/Pfizer Inc. delivers the full quota.

The Government’s Joint Committee on Vaccination and Immunisation (“JCVI”) affirmed on Wednesday that the first priorities should be the prevention of COVID-19 mortality and the protection of health and social care staff and systems.

The JVIC has given older adult residents in care homes the highest priority for vaccination, followed by care home workers.

Secondary priorities could include vaccination of those at increased risk of hospitalization and at an increased risk of exposure.

Logistics will now need to be in place to transport the vaccine, at -70C, for administration across the UK.

How the Markets Reacted

The FTSE100 rose by 1.23% on Wednesday, with the upside coming off the back of the MHRA announcement.

For the European majors, while it was a mixed day, the DAX30 and CAC40 came off lows in response to the news.

BioNTech SE share price rose by 6.21% in response to the news. Pfizer Inc. ended the day up by a more modest 3.51%.

While trailing Pfizer Inc. in the race to deliver a global vaccine, there was also support for AstraZeneca and Moderna Inc., which rose by 1.26% and by 1.41% respectively.

What’s next?

With UK regulators beating the FDA and the EU’s European Medicines Agency (“EMA”) to the punch, BioNTech/Pfizer Inc. will now need to deliver the doses.

There’s no trial run for BioNTech/Pfizer Inc. in terms of delivering the doses in a timely manner.

Both BioNTech/Pfizer Inc. and the government will likely face logistical challenges and the markets and governments from overseas will likely watch closely.

Successful distribution and administration of the first batch are now key. For the FDA and the EMA, both will have the benefit of the UK government’s experiences in distribution and vaccination.

The FDA is set to review the BioNTech/Pfizer Inc. vaccine on 10th December. In the New Year, the EMA review is due on 12th January.

Key areas of focus in the coming weeks will be production and distribution and geographical allocation.

The EU has pre-ordered 300 million doses of the BioNTech/Pfizer Inc. vaccine, with the U.S pre-ordering 100 million and an option for an additional 500 million doses.

BioNTech/Pfizer Inc. has projected between 5 million to 50 million doses to be available by the end of the year.

The UK is due to receive 10 million doses, which leaves 40 million assuming that 50 million doses are produced.

With the EU review of the vaccine not due until mid-January, that leaves the U.S and Japan in focus. While the U.S has pre-ordered 100 million, Japan has pre-ordered 120 million of the BioNTech/Pfizer Inc. vaccine.

Pressure may mount on the likes of the EMA to bring forward vaccine reviews. BioNTech/Pfizer Inc. may also feel increased pressure to deliver on the higher side of production forecasts…

US Stock Market Overview – Stock Rise Led By Energy; ADP Payrolls Disappoint

US stocks rose on Thursday following news that House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer had urged Senate Majority Leader Mitch McConnell to use a $908 billion bipartisan stimulus plan as the basis for relief talks before the end of the year. Sectors in the S&P 500 index were mixed, led higher by energy shares, consumer staples bucked the trend. News before the opening bell that the UK had approved the Pfizer vaccine, helped buoy stock prices. Mortgage applications in the US jumped more than expected while ADP private payrolls disappointed.

Mortgage Applications Rise

Mortgage applications to purchase a home jumped 9% last week from the previous week, according to the Mortgage Bankers Association’s index. Purchase applications were a robust 28% higher from a year ago.

ADP Private Payrolls Rise Less than Expected

Private companies added 307,000 jobs in November below the 475,000 expected. The October figure was revised higher to 404,000. This was the smallest gain since July’s 216,000. The revision added 39,000 to the original estimate from October, making the November miss not as bad as it appears. This comes ahead of Friday’s payroll report. The Labor Department on Friday is expected to report that the economy in November added 440,000 jobs, down from the 638,000 in October. Private payrolls are estimated to grow by 590,000.

Biden Says He won’t Immediately Terminate Chinese Tariffs

President-elect Joe Biden will not immediately remove tariffs imposed by President Donald Trump on China. Biden said he first wants to conduct a full review of the “phase one” trade deal that the Trump administration reached with China before he makes any decision on the future direction of trade with the worlds second largest economy.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Strengthens Over 3677.50, Weakens Under 3592.00

December E-mini S&P 500 Index futures are trading flat at the mid-session as fewer-than-expected private job additions in November added to concerns about the near-term pressure on the economy.

The weakness in the private jobs report is the latest sign that soaring new infections and business restrictions were hampering the labor market’s recovery. The more crucial employment report is expected on Friday.

At 16:45 GMT, December E-mini S&P 500 Index futures are trading 3660.25, down 0.25 or -0.01%.

Private payrolls grew by 307,000 in November, a decline from the 404,000 the previous month, ADP reported. The total was well below the Dow Jones estimate of 475,000. Hospitality led the way in job creation, adding 95,000 positions despite increasing pressure on bars and restaurants as coronavirus cases rise.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 3677.50 will signal a resumption of the uptrend. The main trend will change to down on a trade through the nearest main bottom at 3225.00.

The minor trend is also up. A trade through 3592.25 will change the minor trend to down. This will also shift momentum to the downside.

The first minor range is 3592.25 to 3677.50. Its 50% level at 3634.75 is support.

The second minor range is 3506.50 to 3677.50. Its 50% level at 3592.00 is a second support zone. This is also a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index futures contract into the close is likely to be determined by trader reaction to 3634.75.

Bullish Scenario

A sustained move over 3734.75 will indicate the presence of buyers. This could lead to a retest of 3677.50 and a potential acceleration to the upside.

Bearish Scenario

A sustained move under 3734.75 will signal the presence of sellers. This could trigger a sharp break into the support cluster at 9592.25 to 3592.00. Look for a technical bounce on the first test of this area.

If 3592.00 fails as support then look for a potential acceleration into the next minor bottom at 3542.25.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Price Forecast – Stock Markets Continue Grind Higher

The S&P 500 has pulled back just a bit during the trading session on Wednesday in the Globex session, but as the cash market opened in New York City, we started to see buyers jump back in. All things being equal, the market is trying to break out to the upside and with monetary policy been so loose it is likely that we will continue to try to go higher. Pullbacks will be supported all the way down to the 3600 level, as it was a large, round, psychologically significant figure that also offer both support and resistance multiple times.

S&P 500 Video 03.12.20

Based upon the measured move from previous trading, we should see about 400 points, from the breakout at the 3600 level. Ultimately, this is a market that should go looking towards the 4000 handle. The 4000 level course will be a psychological level that a lot of people will be paying attention to and I would anticipate that it would be a big reaction just waiting to happen. Ultimately, I think this is a market that will be noisy but there should be plenty of opportunities to get long based upon monetary policy, stimulus, and of course the post vaccine trade.

All things being equal, if we get a Republican Senate confirmed in January, that will keep the US government out of the equation as well and could send this market higher based upon a bit of a “Goldilocks situation.” The 50 day EMA underneath should be massive support as well, ultimately, I think that there is no way to short this market anytime soon. With this, look for value and then take advantage of it.

For a look at all of today’s economic events, check out our economic calendar.

Visa Could Rally 40% in 2021

Dow component Visa Inc. (V) price action has tracked the evolution of world economies during the COVID-19 pandemic, with credit and debit card spending plunging in the first quarter and recouping a good share of losses during the second and third quarters. Surprisingly, U.S. sales numbers are ticking higher in the fourth quarter despite surging infections around the world, forcing analysts to lift 2021 growth targets, especially in the United States.

Visa Breakout Pattern

Better yet, Visa has completed the last stage of a cup and handle pattern, with a breakout having the potential to lift the digital payments giant at least 30% to 40% in 2021.  Accumulation readings have already hit new highs, highlighting growing optimism about economic growth under a Biden administration. Even so, the winter of 2020 – 21 could throw a few curveballs, especially if hospitals get overwhelmed or the U.S. election dispute takes an unexpected turn.

Visa reported that November spending levels were similar to October on Wednesday, with U.S. payments volume up 6% year-over-year. Debit rose a healthy 19%, highlighting the switch from paper checks to digital transactions for everyday goods, while Credit declined 5%, indicating that more customers were using savings to pay for things. Unfortunately, other countries didn’t fare as well, with the United Kingdom, Italy, and Germany reporting lower payment volumes.

Wall Street And Technical Outlook

Wall Street has been wildly bullish on Visa for years, with a current ‘Strong Buy’ rating based upon 14 ‘Buy’ and 4 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines at this time. Price targets now range from a low of $195 to a Street-high $250 while the stock opened Wednesday’s U.S. session about $13 below the median $223 target. This placement should support plenty of upside after a breakout.

The stock topped out at 214 in February after a multiyear uptrend and sold off more than 40% during the pandemic decline. A two-legged recovery wave reached the prior high in September, giving way to a secondary downdraft that found support at the 200-day moving average. Price action bounced back to the prior peak in November, ahead of narrow sideways action that has now completed weekly- and daily-scale cup and handle breakout patterns.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Veeva Systems Shares Plunge Despite Strong Q3 Earnings; Target Price $301

Veeva Systems, an American cloud-computing company focused on pharmaceutical and life sciences industry applications, reported better-than-expected earnings in the third quarter of the fiscal year 2021 and forecasts revenue between $1,446-$1,448 million for the next fiscal.

Despite that Veeva Systems’ shares plunged about 10% to $257.47 in pre-market trading on Wednesday. However, the stock is up over 100% so far this year.

The cloud-computing company reported revenues of $377.5 million in the third quarter, beating the Wall Street consensus of $362 million, up from $280.9 million one year ago, an increase of 34% year-over-year. Subscription services revenues for the third quarter were $302.9 million, up from $226.8 million one year ago, an increase of 34% year-over-year.

For the third quarter, fully diluted net income per share was $0.60, compared to $0.52 one year ago, while non-GAAP fully diluted net income per share was $0.78, compared to $0.60 one year ago. That was higher than the market expectations of $0.68.

“Veeva reported a beat-and-raise F3Q with strength across all areas of the business. Guidance for F4Q and FY22 came in above consensus and looks conservative, especially as initial FY22 revenue guidance calls for a deceleration to 19% Y/Y growth. FY22 non-GAAP operating margin guidance reflects Veeva investing more in newer growth drivers, such as Data Cloud and MyVeeva, which we view as the right move. We maintain our BUY rating and $325 price target on Veeva Systems Inc,” said Rishi N. Jaluria, Senior Research Analyst at D.A. Davidson & Company.

Veeva Systems Stock Price Forecast

Seven equity analysts forecast the average price in 12 months at $301.71 with a high forecast of $335.00 and a low forecast of $225.00. The average price target represents a 6.16% increase from the last price of $284.20. From those seven analysts, five rated “Buy”, one rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $332 with a high of $532 under a bull-case scenario and $194 under the worst-case scenario. The firm currently has an “Overweight” rating on the cloud-computing company’s stock.

“Veeva delivered 11% billings upside in Q3, doubling the typical beat, while also driving op margins to company high of 41%. First look at FY22 revenue and profitability suggests plenty of conservatism to deliver beat/raise quarters. We roll forward estimates, remain OW and increase PT to $332,” said Stan Zlotsky, equity analyst at Morgan Stanley.

Several other analysts have also upgraded their stock outlook. Stifel raised their target price to $325 from $300. Needham upped the target price to $327 from $310. Raymond James increased the target price to $335 from $285. In August, Bank of America boosted their price objective to $302 from $230 and gave the stock a “buy” rating. Piper Sandler boosted their price target to $310 from $220and gave the stock an “overweight” rating.

Analyst Comments

“Veeva’s core products provide SaaS solutions for the Life Sciences industry, targeting $10B+ of spending today with potential overtime to address more of the $44B Life Sciences spend on IT, leveraging the company’s strong brand recognition and expanding its TAM into other regulated industries and use cases,” said Stan Zlotsky, equity analyst at Morgan Stanley.

“As Veeva penetrates this large TAM, we see a sustainable 17% revenue CAGR over the next 5 years. Our $332PT is based on 2.4x EV/CY25 FCF/Growth adjusted, a premium to large-cap peers, but justified given the long term FCF durability and large market opportunity,” Zlotsky added.

Upside and Downside Risks

Risks to Upside: 1) VEEV penetrates its TAM faster than expected as it gains traction outside life sciences. 2) Traction within newer products and add-ons accelerates – highlighted by Morgan Stanley.

Risks to Downside: 1) 70%+ seat penetration in CRM could limit growth while declining sales headcount in Life Sciences may be a headwind. 2) TAM may be more limited due to vertical-specific focus. 3) Increased competition on CRM by competitors such as Iqvia.

Check out FX Empire’s earnings calendar

Stocks Retreat As Traders Are Not Impressed With The Restart Of Stimulus Talks

Stimulus Negotiations Are Back Into Spotlight

U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi talked about the potential stimulus package for the first time after the presidential election.

At first glance, Republicans and Democrats remain far apart. Senate leader Mitch McConnell wants to include a targeted relief bill into the $1.4 trillion funding bill for the government, but Democrats will likely oppose this proposal.

Meanwhile, a group of lawmakers unveiled a new coronavirus aid package plan worth $908 billion, which is aimed at bridging the gap between Republicans and Democrats.

It remains to be seen whether both sides are ready to reach a compromise deal. The market is not impressed, and S&P 500 futures are losing ground in premarket trading.

ADP Employment Data Disappoints

The U.S. has just released ADP Employment Change report which indicated that private businesses hired 307,000 workers in November. Analysts expected that the ADP Employment Change report will show that about 400,000 jobs were added.

The report shows that the second wave of coronavirus has started to put material pressure on the job market. Traders will soon have a chance to take a look at additional employment data. On Thursday, Initial Jobless Claims and Continuing Jobless Claims reports will be released. Analysts expect Initial Jobless Claims of 775,000 and Continuing Jobless Claims of 5.9 million.

On Friday, market’s focus will shift to Non Farm Payrolls and Unemployment Rate reports. The Non Farm Payrolls report is projected to show that the economy added 481,000 jobs in November while Unemployment Rate is expected to decline to 6.9% to 6.8%.

If these reports confirm that the recovery of the job market is slowing down, stocks may find themselves under pressure.

UK Approves Pfizer’s COVID-19 Vaccine

UK has just approved the coronavirus vaccine developed by Pfizer and BioNTech. Vaccinations are expected to begin early next week.

Not surprisingly, Pfizer and BioNTech shares are gaining ground in premarket trading.

The reaction of the broader market is muted. Perhaps, traders wait for the approval of Pfizer/BioNTech and Moderna‘s vaccines in the U.S.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Wednesday, Dec. 2 – Gold Back Above $1,800

The gold futures contract gained 2.13% on Tuesday, as it retraced its recent declines. On Monday the market has extended a short-term downtrend following breaking below the recent local lows along the price level of $1,850. Three weeks ago gold sold off 5% in one day after global financial markets’ euphoria rally in reaction to Covid-19 Pfizer’s vaccine news release. Last week there has been a breakdown below the support level of $1,850, as we can see on the daily chart ( the chart includes today’s intraday data ):

Gold price is 0.3% higher this morning, as it is retracing some more of its recent decline. What about the other precious metals? Silver gained 6.63% on Tuesday and today it is 0.2% lower. Platinum gained 3.93% and today it is 0.6% higher. Palladium gained 0.99% yesterday and today it’s 0.4% lower. So precious metals are mixed this morning .

Yesterday’s ISM Manufacturing PMI release has been slightly lower than expected at 57.5. Today we will get ADP Non-Farm Employment Change , Beige Book releases and some more Fed talk including Fed Chair Powell’s Testimony.

The markets will wait for Friday’s monthly jobs data release .

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Wednesday, December 2

  • 8:15 a.m. U.S. – ADP Non-Farm Employment Change
  • 9:00 a.m. U.S. – FOMC Member Quarles Speech
  • 10:00 a.m. U.S. – Fed Chair Powell Testimony
  • 1:00 p.m. U.S. – FOMC Member Williams Speech
  • 2:00 p.m. U.S. – Beige Book
  • 8:45 p.m. China – Caixin Services PMI

Thursday, December 3

  • 8:30 a.m. U.S. – Unemployment Claims
  • 9:45 a.m. U.S. – Final Services PMI
  • 10:00 a.m. U.S. – ISM Services PMI

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Correction on Gold and Oil Accelerates

Gold accelerates with a bullish reversal. One horizontal and one dynamic resistance are broken, time to test the 1850 USD/oz.

Brent and WTI go lower but still inside the flag.

Nasdaq continues the upswing.

DAX bounces from the lower line of the channel up.

SP500 bounces from the horizontal support.

Dollar Index collapses.

EURUSD aims significantly higher.

EURJPY surges after the Inverse Head and Shoulders pattern.

USDCAD goes deeper after breaking crucial long-term horizontal support.

For a look at all of today’s economic events, check out our economic calendar.

Salesforce.com Earnings Beat Wall Street Estimates But Slack Acquisition Steals Thunder

Salesforce.com Inc, an American cloud-based software company, reported better-than-expected profit in the third quarter of the fiscal year 2021 with revenue increasing 20% year-over-year to $5.42 billion, but shares plunged over 4% in extended trading on news of Slack acquisition.

The company reported GAAP net income of $1.08 billion, or $1.15 per share, compared with a loss of $109 million, or 12 cents per share a year ago. Adjusted earnings came to $1.74 a share. That higher than the market consensus for earnings of 75 cents per share and revenue of $5.25 billion.

“Wide-moat Salesforce reported strong results, including a meaningful upside to both revenue and non-GAAP EPS, while guidance for the fourth quarter was mixed. Stealing the thunder from fine results was the formal announcement that the company is acquiring Slack, and this dominated the earnings call. We have mixed feelings on the Slack acquisition,” said Dan Romanoff, equity analyst at Morningstar.

“We are maintaining our fair value estimate of $253 for Salesforce as good organic results are offset by the seemingly modest deleterious impact on shareholder value arising from the Slack acquisition. With the recent pullback, we think Salesforce shares are looking increasingly attractive,” Romanoff added.

Salesforce’s shares closed 1.81% lower at $241.35; traded over 4% lower at $231.50 in extended trading on Tuesday. However, the stock is up about 50% so far this year.

Salesforce Stock Price Forecast

Eighteen equity analysts forecast the average price in 12 months at $291.53 with a high forecast of $325.00 and a low forecast of $234.00. The average price target represents a 20.79% increase from the last price of $241.35. From those 18 analysts, 15 rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $275 with a high of $332 under a bull-case scenario and $187 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the enterprise cloud computing solutions leader’s stock. Raymond James raised their target price to $280 from $255.

Several other analysts have also upgraded their stock outlook. Salesforce.com has been given a $275 price target by The Goldman Sachs Group. The brokerage currently has a “buy” rating on the CRM provider’s stock. Bernstein restated a “neutral” rating and set a $234 price target. Barclays boosted their price target to $315 from $264 and gave the stock an “overweight” rating.

Analyst Comments

“While Salesforce.com (CRM) 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 within an estimated $175 billion TAM over the next 4 years and >$200 billion longer-term,” said Keith Weiss, equity analyst at Morgan Stanley.

“We see total revenue nearly doubling by FY24, but at CRM’s current scale and market cap, an increasing focus on FCF and earnings is likely necessary for further price appreciation. Our Equal-weight view on CRM shares is based on our $275 PT, which is based on 30X our CY25e FCF per share of $12.07, discounted back at 8.5%,” Weiss added.

Upside and Downside Risks

Risks to Upside: Slack Connect becomes a powerful contributor to net new customer additions. Net dollar retention rate stabilizes as new COVID-19 customers begin to meaningfully expand – highlighted by Morgan Stanley.

Risks to Downside: Competition from Microsoft, which offers a similar product for free to Office 365 users; Difficulty expanding outside of the IT department; Organizations defer to a bundled alternative (MSFT Teams, Google Workspace) in a weaker macro.

Check out FX Empire’s earnings calendar

COVID-19 Vaccine Update – Moderna Inc. Requests Approval from the FDA and the EMA

Moderna Inc.

Moderna Inc. has submitted its request to the FDA for a EUA approval. With the FDA reviewing the Pfizer Inc. vaccine on 10th December, the Moderna Inc. review will take place on 17th December.

With the race to deliver a COVID-19 vaccine to the U.S and beyond continuing, it has become a two-horse race.

Both pharmas have gone down the same road on the virology front, delivering an mRNA vaccine. Until now, no regulator has reportedly approved such a vaccine.

With COVID-19 efficacy rates of between 94% and 95%, the FDA and other regulators will likely have little choice but to approve the vaccines.

Following impressive results from Pfizer Inc. and BioNTech, Moderna Inc.’s final results were as impressive. An efficacy rate of 94.1% and 100% effectiveness in preventing severe cases of COVID-19 were well received.

Assuming that the FDA approves both vaccines, Pfizer Inc. and Moderna Inc. are likely to deliver vaccines days after the approvals.

According to the European Medicines Agency (“EMA”), it has also received applications for COVID-19 vaccines from Pfizer Inc. /BioNTech and Moderna Inc.

The Agency’s human medicines committee has scheduled extraordinary meetings to conclude the evaluations. In terms of timelines, the scientific committee for human medicines (“CHMP”) will conclude its assessment during an extraordinary meeting scheduled for 12th January at the latest.

Production Projections

Since lodging EUA requests, both have provided details on vaccine production numbers for this year and the next.

Moderna Inc. expects to have 20 million doses of the vaccine available to the U.S by the end of this year. For next year, the target is to manufacture between 500 million and 1 billion doses globally.

BioNTech/Pfizer Inc. is aiming to deliver between 5 million and 50 million doses by year-end.

Both vaccines require two doses. This means that Moderna Inc. and BioNTech/Pfizer Inc. could inoculate as many as 30 million people by year-end.

The Centers for Disease Control and Prevention

On Tuesday, the CDC is due to meet in order to deliver prioritization advice to the U.S states.

Expectations are for the CDC to prioritize health-care workers and residents of long-term care facilities.

The recommendations will come ahead of a Friday deadline for U.S states to submit vaccine distribution plans to the Federal Government.

Once phase 1a of the prioritization is complete, the CDC will then deliver further priority recommendations.

E-mini S&P 500 Index (ES) Futures Technical Analysis Forecast – Move Under 3592.25 Shifts Momentum to Down

December E-mini S&P 500 Index futures are trading higher at the mid-session on Tuesday as better-than-expected factory data from China and hopes that a COVID-19 vaccine will be rolled out before the end of the year bolstered bets of a speedy economic recovery.

Investors seem to be overlooking a resurgence in infections in the United States that has prompted state-wise restrictions, with California considering new “stay-at-home’ orders.

At 15:54 GMT, December E-mini S&P 500 Index futures are trading 3663.25, up 40.00 or +1.16%.

Investors are closely following updates on a handful of leading vaccine candidates as well as the start of global shipments as drugmakers submit paperwork for regulatory approvals. Pfizer Inc gained about 2.3% in premarket trade as the drugmaker and Germany’s BioNTech SE sought emergency approval of their vaccine from the European regulator.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend resumed after about three weeks of sideways price action when buyers took out the November 9 main top at 3668.00. The main trend will change to down when sellers take out the main bottom at 3225.00.

The minor trend is also up. A trade through 3592.25 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is 3225.00 to 3675.50. Its retracement zone at 3450.25 to 3397.00 is support. This zone will move up as the market moves higher.

Daily Swing Chart Technical Forecast

The index hit a new all-time high on Tuesday. Since this is technically a breakout, we’d like to see buyers continue to drive it higher through this level since there is no true resistance.

A break back under 3668.00 will be a sign that the buying is getting weaker or the selling is getting stronger. This could drive the index into yesterday’s close at 3623.25.

A close under 3623.25 will form a potentially bearish closing price reversal top. This won’t change the trend, but it could trigger the start of a short-term correction.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Price Forecast – Stock Markets Continue to See Inflows

The S&P 500 broke higher during the trading session on Tuesday as we continue to see inflows into the market yet again. Ultimately, this market is likely to continue seeing upward pressure as we head into the end of the year which is typical. A lot of large fund managers are looking to do a bit of” window dressing” or their clients, and therefore they are forced to buy anything and everything they can. With that being the case, I think that dips are to be bought for the time being, and the 3600 level should now be thought of as a potential support level.

S&P 500 Video 02.12.20

I do like the idea of taking advantage of these dips in order for an attempt to be made to go towards the 4000 handle, which I think is very likely based upon the previous rectangle and the measured move. Ultimately, this is the right time of year for rally, because traditionally December is one of the best-performing months. Beyond that, we also have vaccines in the short future, with some of the first doses being delivered to the United States within the next couple of weeks. After that, we also have stimulus talks starting backup so really at this point in time it is essentially a perfect set up for Wall Street and what it likes.

For that being the case, I think that shorting is all but impossible at this point unless there is some type of unforeseen “black swan event.” Ultimately, the only thing that is left now is to see whether or not the Senate stays Republican in early January, which of course Wall Street would prefer as it will keep some of the more leftist policies away from becoming law.

For a look at all of today’s economic events, check out our economic calendar.

Apple Could Test All-Time High In December

Dow component Apple Inc. (AAPL) posted an all-time high at 137.98 in September and eased into a correction that unfolded through a symmetrical triangle pattern. Buying pressure is now picking up, raising odds the tech superstar will test, and possibly break, range resistance prior to year’s end.  A trio of benign forces should underpin this uptick, with positive seasonality, vaccine distribution, and the surging Nasdaq-100 index encouraging investors to come off the sidelines.

December ‘Window Dressing’

The Nasdaq-100 has now reached within 100 points of the September high, stoking buying pressure throughout the tech universe. This is great news because 2020’s top performers, including the famed FAANG quintet, have underperformed so far in the fourth quarter, with capital rotating into 2021 recovery plays. However, market leaders often end the year at their highs because funds buy shares in December to ‘dress up’ annual reports to investors.

Apple news flow has been quiet in the last month or so, characterized by a Loop Capital upgrade, App store developments, and a few product and partnership announcements. Everyone is waiting on iPhone 12 sales statistics but CEO Tim Cook is unlikely to provide metrics until the end of the 2020 holiday season. This news vacuum can be good news for investors because it fosters speculation on sales strength without the threat of a sudden reality check.

Wall Street And Technical Outlook

Wall Street consensus has grown more cautious in recent months due to Apple’s 68% year-to-date return, with a ‘Moderate Buy’ rating based upon 23 ‘Buy’, 6 ‘Hold’, and 1 ‘Sell’ recommendation.  Price targets currently range from a low of $75 to a Street-high $150 while the stock is now trading about $7 below the median $129 target. Share gains should be relatively easy to achieve into year’s end, given this humble placement.

The stock broke out above the February 2020 high at a split-adjusted 81.22 in June, entering a powerful trend advance that added more than 50 points into the September high. It sold off to 103 a few weeks later, setting the boundaries of a symmetrical triangle that should resolve to the upside. Price action posted the first higher high in this pattern in the first hour of Tuesday’s session, raising odds for a triangle breakout and test of the rally high.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

 

 

 

UnitedHealth Forecasts 2021 Revenue Between $277-$280 Billion; Target Price $400 in Best-Case

For this year, UnitedHealth Group expects revenues of about $257 billion, with net earnings to approach $15.90 per share and adjusted net earnings to approach $16.75 per share.

“Management previously braced investors that 2021 EPS growth would be below its long-term target of 13-16% due to COVID-19 uncertainty. The $18 starting point represents 8% growth, which is 2% below the Street. However, ex $1.80 of potential COVID-19 impact, growth would be an impressive 18%,” said David Windley, equity analyst at Jefferies.

“Other takes: 1) Positive enrollment updates: MA +13.5%, Commercial+1%; 2) Optum margins expand 45bps while Commercial declines 85bps due to COVID;3) Repurchases of $5BN vs $4.5BN in ’20,” Windley added.

At the time of writing, UnitedHealth’s shares traded 4.47% higher at $351.99 on Tuesday; the stock is up about 20% so far this year.

UnitedHealth Stock Price Forecast

Sixteen equity analysts forecast the average price in 12 months at $367.47 with a high forecast of $409.00 and a low forecast of $330.00. The average price target represents a 4.48% increase from the last price of $351.71. From those 16 analysts, 13 rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $371 with a high of $449 under a bull-case scenario and $183 under the worst-case scenario. The firm currently has an “Overweight” rating on the insurance company’s stock.

“We calculate our price target by applying a 20.5x P/E multiple to our base case FY21E EPS of $18.14. Multiple reflects 0.8 turn premium to S&P 500 multiple of 19.6x. Premium in-line with UNH 5 year average premium UNH has historically traded at the adjusted repeal of HIF (+0.4x) and for periods in 2019 where fears over M4A weighed on multiple (we don’t believe this outcome is likely),” said Ricky Goldwasser, equity analyst at Morgan Stanley.

Several other analysts have also upgraded their stock outlook. UnitedHealth Group had its price target increased by equities research analysts at Piper Sandler to $409 from $385. The firm presently has an “overweight” rating on the healthcare conglomerate’s stock. SVB Leerink lifted their price target to $373 from $370 and gave the company an “outperform” rating. Credit Suisse Group boosted their target price to $395 from $355 and gave the stock an “average” rating.

Analyst Comments

“UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with 20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” said Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in the breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the U.S. healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A,” Goldwasser added.

Upside and Downside Risks

Risks to Upside: 1) MA growth above the market. 2) Optum integration leads to industry-leading MLR performance. 3) Medicaid margins improve to target 3%-5% range – highlighted by Morgan Stanley.

Risks to Downside: 1) Regulatory uncertainty. 2) Slower growth in core growth areas such as Medicare Advantage, commercial, and Medicaid with focus on services. 3) Optum growth slows as competitors become more reluctant to work with UnitedHealth.

Stocks Set To Test New Highs

Traders Are In A Good Mood At The Beginning Of The Month

S&P 500 futures are gaining about 1% in premarket trading as stocks look ready to test new highs.

There are no special catalysts for this move, and it looks like traders continue to believe that vaccines will soon improve the economic situation.

Shares of Moderna, whose vaccine is set to be approved by FDA in December, are the main beneficiary of traders’ hopes. After gaining more than 50% in recent days, Moderna’s stock is up by almost 10% in premarket trading.

In addition to vaccine optimism, investors look forward to the new coronavirus aid package. Expectations of more money-printing have recently put material pressure on the U.S. dollar which is trading near yearly lows.

OPEC+ Postponed Its Meeting To December 3

WTI oil is swinging between gains and losses while traders struggle to evaluate OPEC+ decision to postpone the second part of its meeting from December 1 to December 3.

On the one hand, this decision shows that OPEC+ members are willing to negotiate a viable deal. On the other hand, it is obvious that OPEC+ members failed to reach common ground during the first day of the meeting, and the extension of current production cuts is under question.

Yesterday, oil-related stocks suffered a serious pullback, and they will likely have a chance to rebound during today’s trading session in case oil manages to stay above the $45 level.

PMI Reports In Focus

Today, the U.S. will release the final reading of Manufacturing PMI report for November. Analysts expect that Manufacturing PMI increased from 53.4 to 56.7. Sometimes, final readings differ materially from preliminary estimates, so this report may have a significant impact on the market.

Traders will also have a chance to take a look at ISM Manufacturing PMI report which is projected to show a decline from 59.3 in October to 58 in November. Meanwhile, Construction Spending is projected to grow by 0.8% month-over-month in October.

It remains to be seen whether stocks will be sensitive to economic data or traders will remain focused on vaccines and the potential stimulus package that could be delivered in early 2021.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Gold’s Upward Correction, Back Above $1,800

The gold futures contract lost 0.40% on Monday, as it extended its short-term downtrend following breaking below the recent local lows along the price level of $1,850. Three weeks ago on Monday gold sold off 5% in one day after global financial markets’ euphoria rally in reaction to Covid-19 Pfizer’s vaccine news release. Last week there has been a breakdown below the support level of $1,850. And today the market is retracing some of the decline, as we can see on the daily chart ( the chart includes today’s intraday data ):

Gold price is 1.7% higher this morning, as it is retracing some of its short-term decline. What about the other precious metals? Silver lost 0.20% on Monday and today it is 3.6% higher. Platinum gained 0.11% and today it is 1.8% higher. Palladium lost 1.39% yesterday and today it’s 1.0% higher. So precious metals are advancing this morning .

Yesterday’s Chicago PMI and Pending Home Sales releases have been worse than expected. Today we will get the ISM Manufacturing PMI and the Fed Chair Powell Testimony at 10:00 a.m.

The markets will wait for Friday’s monthly jobs data release .

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Tuesday, December 1

  • 9:45 a.m. U.S. – Final Manufacturing PMI
  • 10:00 a.m. U.S. – ISM Manufacturing PMI , Fed Chair Powell Testimony , Construction Spending m/m, ISM Manufacturing Prices
  • 7:00 p.m. Australia – RBA Governor Lowe Speech
  • 7:30 p.m. Australia – GDP q/q
  • All Day, Eurozone – ECOFIN Meetings

Wednesday, December 2

  • 8:15 a.m. U.S. – ADP Non-Farm Employment Change
  • 9:00 a.m. U.S. – FOMC Member Quarles Speech
  • 10:00 a.m. U.S. – Fed Chair Powell Testimony
  • 1:00 p.m. U.S. – FOMC Member Williams Speech
  • 2:00 p.m. U.S. – Beige Book
  • 8:45 p.m. China – Caixin Services PMI

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

3 Airline Stocks Ready for Takeoff

Coronavirus-induced stay-at-home orders and border closures have wreaked havoc on the airline industry in 2020. Furthermore, a move to remote working during the pandemic threatens to significantly reduce corporate travel moving forward. Philanthropist and Microsoft co-founder Bill Gates recently said he expects business travel to disappear by over 50% longer-term. “My prediction would be that over 50% of business travel and over 30% of days in the office will go away,” Gates told the New York Times’ Dealbook conference, per CNBC.

However, over the past month, airline stocks have flown back into favor with investors after successful COVID-19 vaccine breakthroughs give hope that pre-pandemic travel levels may return as more people take to the skies. Below, we take a look at the three largest airline stocks by market capitalization.

Southwest Airlines Co. (LUV)

The Dallas-based low-cost carrier operates over 700 aircraft in an all-Boeing 737 fleet, primarily targeting leisure and independent small business customers. Although the Federal Aviation Administration (FAA) lifted its 20-month ban of the troubled Boeing 737 Max from flying passengers Wednesday, Southwest said the jet wouldn’t re-enter service until later next year. From a technical standpoint, the share price broke out above a nine-month downtrend line that may see it retest its pre-pandemic high at $58.83. The airline has a market cap of $27.35 billion.

Delta Air Lines, Inc. (DAL)

With a market cap of $25.67 billion, Delta flies to over 300 destinations in more than 50 countries. The company announced in September that it plans to borrow $6.5 billion, backed by its frequent-flyer loyalty program to secure liquidity to ride out the tail end of the pandemic.

More recently, the full-service airline canceled one in every five flights it was scheduled to operate on Thanksgiving Day amid crew shortages brought about by the health crisis. Turning to the charts, a recent cross of the 50-day SMA back above the 200-day SMA and breakout above a multi-month downtrend line may lead to further gains toward crucial overhead resistance at $51.

United Airlines Holdings, Inc. (UAL)

United Airlines operates as a full-service carrier through its strategically located hubs in San Francisco, Chicago, Houston, Denver, Los Angeles, New York/Newark, and Washington, D.C. Last month, Raymond James’ airline analyst Savanthi Syth upgraded the airline’s stock to ‘Outperform’ from ‘Market Perform’ and reiterated the firm’s $60 price target.

Syth argues the company sits in a better position than its competitors for a travel revival after securing a pilot agreement through 2022. He also noted that United has no pending fleet retirements, allowing it to rapidly increase capacity when demand picks up. Moving on to the chart, a comprehensive breakout above a crucial downtrend line and the 200-day SMA could see the shares take flight to the January swing low at $74.34. The airline has a market value of $13.18 billion.

For a look at today’s earnings schedule, check out our earnings calendar.

Zoom Earnings Beat Wall Street Estimates But Shares Dip 5% After Hours on Disappointing Margins

Zoom, a cloud video communications provider, reported better-than-expected earnings in the third quarter of the fiscal year 2021 with a revenue surge of over 365% and forecasts total revenue between $2.575-$2.580 billion in the full fiscal year.

But shares traded down 5% in the aftermarket, partially on gross margins that were light of consensus and down sequentially, driven by the high volume of free users and higher public cloud usage. Zoom’ shares closed 1.43% higher at $478.36 on Monday; the stock is up over 600% so far this year.

The company said its revenue climbed 367% to $777.2 million in the third quarter ended October 31, beating the Wall Street consensus estimate of around $694 million. Adjusted earnings came in at 99 cents per share, also beating market expectations of 76 cents per share.

Zoom forecasts revenue between $806-$811 million in the fourth quarter, above estimates of $730.1 million and non-GAAP income from operations between $243.0 million and $248.0 million. Non-GAAP diluted EPS is expected to be between $0.77 and $0.79 with nearly 306 million non-GAAP weighted average shares outstanding.

“Zoom (ZM) reported a record F3Q21, but shares traded down 5% AMC on light gross margins (partly the result of more free users). We would be buyers on a sustained pullback, as the quarter was beyond impressive, with ZM scoring a 420 on a “Rule of 40” basis,” said Rishi N. Jaluria, Senior Research Analyst at D.A. Davidson & Company.

“In our view, the key debate is about the sustainability of ZM’s growth post-pandemic and we take the view that ZM will be increasingly necessary to enable a hybrid remote work strategy and that many of the changes in work brought on by the pandemic are irreversible in nature. We maintain our BUY rating and $600 price target on Zoom Video Communications,” N. Jaluria added.

Zoom Stock Price Forecast

Twenty equity analysts forecast the average price in 12 months at $486.33 with a high forecast of $611.00 and a low forecast of $315.00. The average price target represents a 1.67% increase from the last price of $478.36. From those 20 analysts, ten rated “Buy”, nine rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $380 with a high of $530 under a bull-case scenario and $250 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the video communications provider’s stock.

“We are rolling forward our price target a year as the year comes to a close. As a result, our price target increases to $380 from $350, which represents 29x EV/FY23e Revenue or 28x EV/discounted FY32e FCF. We believe that while COVID-19 keeps video conferencing as a critical piece of employee connectivity, valuation is likely to remain closer to our bull case,” said Meta Marshall, equity analyst at Morgan Stanley.

“Our bull case moves to $530 from $500 and represents 31x EV/FY23e Rev or 29x EV/discounted FY32e FCF. Our bear case also increases to $250 from $210, which represents 19x EV/FY23e Revenue or 27x EV/discounted FY32e FCF. Risks to valuation remain macro headwinds, competitive efforts, COVID-19 vaccine causes a return to work/school.”

Several other analysts have also upgraded their stock outlook. Citigroup raised their stock price forecast to $467 from $377; RBC lowered the price target to $550 from $600; Credit Suisse upped their target price to $340 from $315; JP Morgan raised the target price to $450 from $425; Bernstein increased their target price to $611 from $228 and D.A. Davidson increased their target price to $600 from $460.

Analyst Comments

“Zoom eliminates barriers to video conferencing growth. Company has meaningful competitive moat built on more than just architecture. Leveraging position with customers to be center of UC platform. WFH has permanence but diminishes post-COVID-19. Valuation credits significant expansion opportunities in broader unified communications landscape, supported by initial Phone execution,” Morgan Stanley’s Marshall added.

Upside and Downside Risks

Risks to Upside: 1) Zoom Phone adopted faster than expected. 2) Sales efficiency matches previous levels. 3) International business shows continued leverage. 4) Topline beats to flow to bottom line WFH permanence. 5) K-12 Market – highlighted by Morgan Stanley.

Risks to Downside: 1) Macro conditions suffer. 2) Large competitor refreshes portfolio and gets aggressive on the price. 3) WFH wanes post COVID-19. 4) China / K-12 opportunity not monetizable.

Check out FX Empire’s earnings calendar