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February 2017

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RBC Capital remains bullish on Starbucks Corporation after Proprietary Consumer Analysis

Starbucks Corporation (NASDAQ:SBUX) has been reiterated by RBC Capital as Outperform, along with a Price Target of $68.00, which represents 23.93% upside potential from stock’s current price of $54.87. The reiteration came after a proprietary consumer analysis.

On basis of the analysis results, Sell-Side Firm RBC Capital maintained its 3Q of fiscal year for US only Same Store Sales (SSS) growth estimate of around 6%. Moreover, the Panel data for first two months of this quarter also results in 3Q of fiscal year SSS to be at 6%, while the consensus is of 6.2%.

The analyst David Palmer at RBC Capital stated that it is maintaining its 6% growth in SSS estimates for the 3Q fiscal year, which is on basis of results of the proprietary consumer analysis until May.

The Sell-Side is of the view that 6% SSS growth in the quarter would result in upside potential for the stock, as it reflects a steady two-year trend despite of changes in company’s reward program and also broader consumer weakness in the month of April and May.

The average PT for the stock by analysts at Street is of $68, with the most bullish and bearish PT of $75.00 and $58.00, respectively. Out of 29 analysts covering the stock at Street, 13 have presented Strong Buy rating for the stock while 11 presented a Buy rating. Only 5 analysts have rated the stock as Hold. Earlier in April this year, Guggenheim initiated its coverage for the stock with a Buy rating as well. Such ratings represent analysts’ confidence in the stock.

Stock’s Year-to-Date (YTD) performance has been quite sluggish, as the stock has declined by around 9.78%. In past one month of trading only, stock has lost 2.54% of its value. However, the stock has started to gain some momentum in past week of trading and has appreciated by meager 0.48%. Considering recent upgrade from Sell-Side, along with Proprietary consumer analysis, the stock is surely expected to surge upwards.

The Country Caller compares the live streaming options on the two social media platforms

Live streaming is the social media trend these days. Social media plays an undeniably important role in digital marketing. In order to remain competitive and relevant, innovative marketers must keep an eye out for what’s new, what’s hot, and what’s trending on the social media platform, and should also incorporate these new ways of connecting and communication into their strategies in order to attract more users.

The live streaming world now has a strong hold on social media platforms. It all started out with Meerkat, escalating with Twitter Inc.’s (NASDAQ:TWTR) Periscope Producer, which caught the attention of Alphabet Inc.  subsidiary Google’s video streaming venture, YouTube, and Facebook Inc. (NASDAQ:FB). Gaming enthusiasts have been creating live videos for a long time now, but have not had the appropriate apparatus set up; accounts was a challenge as well, until now. Now, with the availability of two big live streaming giants – Facebook Live and Periscope Producer – users can now stream live videos from their mobile phones, whenever and wherever they want.

Definitely, live video is here to stay, and the figures prove it. For businesses, in particular, live streaming videos is a great method to reach out to more potential consumers. Both Facebook Live and Periscope Producer enables businesses to build stronger and healthier relationships with their customers by offering intimate and exclusive aspects into the businesses’ culture, promotions, and management. However, in addition to this, live streaming also allows easy means of communication and interaction with the target audience (which is not the case with traditional advertising), getting instant real-time feedback concerning the company’s services and products on offer. People spend three times longer watching a video which is live compared to recorded ones, according to Social Media Today.

In the early 2015 timeframe, Periscope was acquired by social media giant Twitter even before its launch, surprisingly. The app attracted around 10 million users within the first four months of its launch. According to The New York Times, in December 2015, the live streaming app was declared “App of the Year” by Apple.

Users can easily broadcast on their Twitter and Periscope accounts simultaneously. The app is very simple to set up, and is considered great for impromptu live streaming of events. With a user friendly interface, it is easy for followers to like a video, exchange links, or comment on the ongoing live event. The easy-to-use chat function enables viewers to ask questions or even comment on the event. The live streaming app also has an option via which followers can invite other users to watch the live event, which lasts for as long as the broadcaster wishes – but look out for your device’s battery life!

Live streaming sessions are permanently stored on Periscope, unless users decide to limit the stream to 24 hours only, after which they get deleted from the broadcaster’s channel. The integration of the social network Twitter allows users to link their tweets to their broadcasting sessions, but sadly, the direct integration to Twitter has one flaw, a larger audience means more spam comments.

In response to the increasing demand of live-streaming platforms, Facebook launched its own version of live streaming app with “Facebook Live.” The app was seamlessly built into Facebook’s current app, allowing users an easy, hands-on approach for broadcasting to their friends and followers without having to leave the app. “Live is like having a TV camera in your pocket. Anyone with a phone now has the power to broadcast to anyone in the world,” said Facebook CEO Mark Zuckerberg in one of his Facebook posts.

With live streaming as a priority in news feeds, the app is outperforming its potential competition in terms of both consumption and reach. Followers get an instant notification when a broadcaster they follow goes live. Plus, good metrics show peak viewing times of broadcasts, enabling the broadcaster to decide when and where to start his broadcasting to target the masses. The audience can engage with the events via Facebook reactions and comments section.

Live videos for Facebook Live are limited to a 90-minutes timeframe, which is not the case with Periscope, as we discussed. These streams are stored permanently on Facebook unless the broadcaster wishes to delete them.

The rapidly-growing, latest offering from social media, live streaming, has gained a lot of popularity on major social media platforms such as Twitter and Facebook. While Periscope’s functionality and simplicity has made a firm place in fans’ hearts, Facebook’s unlimited resources and greater reach makes it a better option for companies looking to launch new marketing campaigns. However, news outlets planning to enhance their user engagement consider Periscope as the better choice given its easy integration with Twitter.

New loyalty program to drive better store traffic than expected, resulting in increasing sales and better revenues for future quarters

According to commentary released by BTIG, Starbucks Corporation (NASDAQ:SBUX) shares were reiterated at Buy. The price target on the stock was also maintained at $64. This news came in after the brewer made a presentation in the last week related to its store traffic. The company has seen improvements in its store traffic after transition into improved loyalty program recently. The results were far better than the expectations of the management.

Following this, BTIG analyst Peter Saleh commented that traffic impact was due to changes in Starbucks Rewards program. This was stated in the conference presentation which was hosted by the coffeehouse chain in New York last week. The results that it had presented exhibited that the traffic impact amounted to (200) basis points. In comparison to this, the impact previously discussed amounted to (100) basis points.

Furthermore, Saleh stressed that investors should expected reasonably moderate results for store traffic especially in the US segment in the upcoming quarters. However, he stressed that this would have no impact on the comparable store sales. Nonetheless, average check and traffic composition in the Washington-based enterprise could be positively impacted.

However, the traffic in the US markets is expected to be flat or slightly negative in this quarter, despite predictions of greater impact of increased traffic and enhanced sales results. Nevertheless, the traffic would be flat or slight positive once the loyalty program starts materializing and starts exhibiting positive results for the $78.86 billion enterprise.

Therefore, Saleh is not making any changes to his estimates for the comparable store sales. The analyst stated that the firm and he were only highlighting the impact that this dynamic change could have on the coffee business.

As a result of this expected improvement in store traffic, the investors of business have sided with the bulls. The analysts at FactSet Fundamentals have also provided the investors with 22 Buy, two Overweight, and five Hold ratings for Starbucks. The median PT has been reaffirmed at $65.92. This shows an upside potential of 3% on BTIG’s price target and 20.49% over the closing price of September 12.

Ron Baron believes Tesla could be one of the world’s largest companies, as it is years ahead of competition

Baron Capital’s billionaire founder, Ron Baron, appeared on CNBC’s “Squawk Box” earlier today to discuss his recent most-wanted stock: Tesla Motors Inc (NASDAQ:TSLA).  He said that he expects the young electric vehicle (EV) maker to become the one of the biggest companies in the world.

Mr. Baron intends to hold his investment in Tesla over the next decade or two, with expectation of making $6 to $7 billion on this investment.  Over the last three years, his investment in the company has grown to $300 million with average cost of $210 per share. Tesla stock closed the trading session at $220.68 on Monday

Today, the stock is skyrocketing, up 2.62% at $226.46 just 25 minutes after the market opened. This could be related to Mr. Baron’s bullish comments on Tesla.

During the interview, Mr. Baron stated, “I think this could be one of the largest companies in the United States and the whole world.”

He enlightened that he visits Tesla Factory in Fremont, CA about every quarter to see the changes taken place. Baron Capital’s head believes that he is actually putting his money on the Tesla man Elon Musk and his workforce of 14,000 employees.

“The competition is not anywhere,” He continued,  “They could have caught him four or five years ago but they can’t catch him now; he’s too far ahead.”

Using General Motors Company (NYSE:GM) as an example, Mr. Baron said that to become a major force in the EV market, an automaker requires securing a strong battery supply, like Tesla has via the Gigafactory. He thinks that it is highly unlikely that GM CEO Mary Barra would go to her board and propose a $5 billion battery plant to put an end to the largest US automaker’s gasoline vehicle plants.

Following the recent $1.46 billion equity raise via sale of 6.8 million new shares, the investor believes that Mr. Musk will not enter the market again for some time. He expects the company to continue growing quickly over the coming years, increasing its revenue from $8-9 billion this year to $20 billion by 2017.

Advanced Micro Devices Inc’s Team Red might just be about to give Nvidia a run for its money with the upcoming M400 line of GPUs

Advanced Micro Devices (NASDAQ:AMD) is all set to put into motion plans for its Radeon M400 series of notebook chips for the next generation of laptops and computer hardware. The M400, like its predecessors and the industry standard, will be a mix of both current gen chips rebranded or rebadged to a lower equivalent variant of their existing configurations. This is essentially an industry standard which will see the silicon giant push its existing chips as newer variants of the M400 series, something that allows OEM partners to move inventory across the board to channel partners.

According to a report by VideoCardz, the leak was first detected via a benchmark made by a laptop review website which tested the R5 M430 which appears to be 14% faster than its predecessor, the R5 M330. This essentially provided confirmation about the fact that the M400 series was already available to OEM partners as well as reviewers across the board nearly 2 months after Lenovo confirmed its presence.

The M400 series’ presence hardly comes as a surprise especially when one considers the current market trends of annual refreshes from all OEMs including current high end partners such as Apple Inc. (NASDAQ:AAPL) for its current and next generation Mac devices.

This could essentially put pressure on Nvidia Corporation’s (NASDAQ:NVDA) current 900M series which currently dominates the mobile computing market thanks to its lead in efficiency in terms of performance per watt. It must also be noted that Nvidia’s current lineup, with the exception of the entry level tier, is exclusively Maxwell-based; this is no mean feat considering the current generation of refresh cycles in play across the board when it comes to both manufacturers at a desktop level.

Should AMD’s M400 series offer significant performance boosts with higher clocks, hardware-level optimizations as well as DirectX 12 in play, its rebadged cards could very well give Nvidia a run for its money when it comes to raw performance at the mobility tier GPU market, something that is increasingly lucrative with potential spillover into smartphone territory where Nvidia has relatively unsuccessfully tried to push its Tegra lineup. More importantly, this could very well goad an otherwise reluctant Nvidia to showcase Pascal’s own offerings at a consumer-tier level in the near future as it threatens to push for more profit share in a market that Nvidia has been able to essentially dominate over time.

A release now could allow AMD some breathing room especially when all eyes are on the chip manufacturer’s next generation Zen CPU architecture, as well as its Polaris 10 and 11 chips which are expected to publically debut during Computex this May. The top line of the M400 series is expected to be currently on hold and supposed to propel the highly energy efficient Polaris 11 chips, something that could very well bring out the next generation of VR offerings to mid-range laptops as well as offer discrete solutions to gamers looking to make their foray into the much hyped VR industry around the $200 mark.

The industry as a whole has decided to seize war for market share in favor of profitability and ASP stability

Micron Technology, Inc. (NASDAQ:MU) is finally expected to deliver some profitability as the top guns of the industry decide to cut down capital expenditure in a bid to focus more on profitability instead of gaining market share. The heated market share war resulted in a meltdown of DRAM pricing which has led to severe profitability crisis in the industry combined with decline in PC components demand. Hynix, one of the leaders in the semiconductor industry announced a cut in capital expenditure yesterday during earnings call. The announcement comes after MU and Samsung, two of the industry leaders, decided to tone their CAPEX down.

Vijay Rakesh, analyst at Mizuho sees this as a positive for industry and particularly MU as DRAM trends and pricing are now headed towards stability. The cost cuts along with moderate improvement in prices are likely to address profitability issues to a great extent. With ASPs increasing and having entered the 3D-NAND flash drive fray on both client and enterprise level, Mr. Rakesh sees a relatively better second half of 2016 for Micron. Combined with seasonal build and improving average selling price trends, Micron’s risk reward profile improves considerably driven by 20nm DRAM and 3D-NAND client business. The DDR4 business is likely to bring in some demand as PC users are likely to shift from older DDR3 along with moderate cost tailwinds, given the prices remain above a certain threshold.

DDR4 made up about 5-10% of total shipments at the end of February quarter, while, production ramp in 2nd Gen 3D-NAND and DDR4 should lead to further cost cuts. The analyst maintained a Buy rating with a price target of $13.50. The analyst opinion for MU has three strong Buy, 15 Buy, 10 Hold, four Underperform and one Sell rating. The stock is currently traded at $11.08 in the first few minutes of the trading session.

Investors ignore launch of Amazon Payments Partner Program and AWS’ over $100 billion valuation estimate by SunTrust

On Monday, Amazon.com, Inc. (NASDAQ:AMZN) introduced a new global payments program under Amazon Payments (AP). Additionally, its cloud-computing arm Amazon Web Services (AWS) received a valuation of over $100 billion by SunTrust Robinson Humphrey. Yet, its stock shed value during the trading hours today.

Hitting a session low of $590.55, Amazon shares declined as much as 1.33% and were trading down 0.97% by noon.

The largest US e-commerce company announced the launch of a new global program named Amazon Payments Partner Program, which is established to assist e-commerce platform developers and providers to “extend the trust and familiarity of Amazon Payments to their merchant customers.”

With AP integration, the program provides unique services and tools to back Partners expand their merchant businesses. Merchants will receive exclusive services and benefits from the program, including white glove integration and knowledge sharing services. The program will be available via invitations in Germany, Japan, UK, and US.

Amazon Payments VP Patrick Gauthier said in the press release: “We are working together across geographies and industries to help merchants grow and create experiences that delight customers throughout the shopping journey.”

Interesting, SunTrust’s Robert Peck highlighted that AWS accounts for a massive portion of AMZN’s valuation, services, and future. The analyst, who rates Amazon stock as a Neutral with $600 price target, stated: “We think Amazon is positioned well in a large and growing market and believe the AWS asset is worth >$100 billion.”

According to the research firm, AWS is not only the market leader; it is also the pioneer in the cloud computing space. Currently it holds 42% of the market and Mr. Peck believes Amazon will experience substantial opportunities in the future. Amazon’s revenues have grown rapidly (70%) in the industry, and it has strong operating margins of 25% and total addressable market of $50 billion by 2019, the analyst stated.

Since the cloud-computing business’s revenues, currently at $8 billion, are growing by 70% annually, along with strong EBITDA margins of 50-55%, Mr. Peck thinks that AWS could be valued over $100 billion. This shows a 7x revenue multiple and 12x EBITDA multiple. The sell-side believes these multiples are reasonable or possibly conservative, considering comparison trading multiples.

A stock on which 90% of analysts have a Buy rating, the short interest this year has grown even faster than the underlying equity

After several years of heavy investments and skepticism about Amazon.com’s (NASDAQ:AMZN) ability to generate profits, it has exhibited consistent earnings growth for four consecutive quarters. Notably, the stock price and financial results of the online retailer have strengthened this year.

Investors believe Amazon has reached a saturation point as it is already retailing everything to everyone. Since February, Amazon stock has risen 70%, with Friday’s closing price of $822.96, practically outperforming the market. On October 5, Amazon stock reached its all-time high of $844.36.

Analysts expect Amazon’s revenue to rise 28% this year, to nearly $137 billion. Earnings are expected to increase over 370%, to about $11 per share. Furthermore, 90% of analysts rate the stock a Buy. Despite all positive news, short selling of AMZN shares has grown faster than the underlying equity. The sky-rocketing share price of the retail giant could be headed toward a bumpy road along with a short-term price reversal.

According to S3 Partners, short interest reached a high of $5.3 billion two weeks ago, up by 89% or by $2.5 billion this year. The firm’s head of research, Ihor Dusaniwsky, noted that most of the rise has increased since September, with $1.8 billion stocks shorted in the past six weeks. He believes that its unusual for a strong business like Amazon to see more than $2 billion of new short interest without a major negative event.

According to Mr. Dusaniwsky, “the shorting is more momentum-based, that traders are betting Amazon’s red-hot stock—with a price/earnings ratio of about 140—will cool off temporarily after hitting that all-time high.” He noted that there have been 74 similar cases in the past two years where stock’s short interest sky rocketed to two billion dollars within a month. The stock has a negative return on investment over the next two weeks, in 57% of those cases. While 16% of the stocks lost more than 5%. Likewise, if AMZN drops in the short-term, short-selling as well as investors taking profits on big share gains could fuel the slide, he added.

Given Amazon’s strong fundamentals and with the analysts’ price targets reaching to $1,000, the shares could spike further, driven by Bulls who seek to get back into the Game, and also by those who seek to buy from short sellers to cover their positions.

Users can disable the algorithmic timeline taking no time at all

Twitter Inc (TWTR) updated news feed has seemingly borrowed extensively from Facebook and without a doubt, the algorithmic timeline has made it easier for users to stay up-to-date with the latest news. However, not everyone was happy about the new feature. Seeing how Twitter has been trying real hard to increase its user base, the move does make sense, but similar moves and new features that have already been introduced so far have done little to help the giant reach its goals.

Keeping this in mind, Twitter is enhancing its site through trial and error; or so it seems. Since the updated feature was not all that popular, the social media giant clarified that it is possible for users to opt out of it.

The feature was supposed to appeal to new and casual users, but all it did was cause a lot of controversy among loyal Twitter users. The update which is available for the web, iOS and Android apps, can fortunately be disabled.  To make this possible, here’s what users need to do:

Select the Profile and Settings option on the right hand side of the screen.

Select Settings.

Select Account.

Under the Content Section, uncheck ‘Show me the best Tweets first’.

Click on Save Changes.

The new feature is not recommended and neither is it being forced, but seeing how Twitter is trying too hard, it may end up doing more harm than good in the long run. There are many who are already claiming the website is becoming very similar to Facebook, and if things continue the way they are, Twitter may leave its users with no option but to move to its competitor.

SoundHound has been developing this project for the better part of a decade

A new powerful, virtual assistant is in town as “Hound” from SoundHound and has now been released for Apple Inc. (NASDAQ:AAPL) iOS and Android. Hound recognizes “Ok” like Alphabet Inc.’s (NASDAQ:GOOG) Google Now, and the speech interpretation program is also available for download now on the two most popular mobile operating systems.

Hound was previously released in July of last year as an invite-only beta. Apart from performing actions like providing weather forecast information, sending texts and setting alarms, Hound is also very capable of recognizing and responding to follow-up questions and questions.

What differentiates Hound from other personal assistants, and especially the very best of the lot like Siri, is that users do not have to utter their queries in a robotic, unnatural way. The app is powerful and intelligent enough to understand the queries put forward by the users, and it pulls up result after result from Google in a smooth, slick way. It handles the first question promptly, and it is ever-ready for the second question that arises.

Founder of SoundHound, Keyvan Mohajer, made Hound perform a series of tasks which were triggered through a series of commands. When describing Hound’s efficiency and power, Mr. Mohajer said that Hound can perform all tasks that the user gives it in one breath! To put it in perspective, the only thing that limits Hound’s power is your own breath.

In a bid to include more and more functionality to Hound, the company is working to partner up with other companies and services, so that further improvements can be made to the execution of different commands.

Siri is probably the most popular personal virtual assistant on mobile currently, but the sheer power on display in the demonstration by Hound is testament to the fact that it could prove to be a hefty competitor for the top spot. Still, it is an achievement for SoundHound to build a powerful virtual assistant, even though it has taken them almost a decade to do so.