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March 2017

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The iPhone maker proves it knows how to keep rivals at bay

As we noted earlier, at its “Let Us Loop You In” event yesterday, Apple Inc. (NASDAQ:AAPL) unveiled two new products: the 4-inch iPhone SE, and the 9.7-inch iPad Pro. The tech giant also announced a price cut for the Apple Watch Sport, which now starts at $299. Now, analysts at the Street are disclosing their stance on the tech giant’s strategy.

In a recent note, Drexel Hamilton said that Apple has a lot to look ahead to this year; the research firm pointed out that the iPhone maker is supposed to expand into India, maximize value for shareholders, and further develop the Apple Watch. Furthermore, the company also has a new iPhone cycle to look forward to with its upcoming 7th-generation iPhone.

Analyst Brian White pointed out that the stock is currently trading just above 9 times its earnings per share (EPS) estimate for calendar year 2016, which provides an attractive entry point for investors. Commenting on the 4-inch iPhone SE (16GB), Mr. White said that it comes at “a very attractive starting price of $399.” The analyst was shocked at this price, as he estimated the entry-level iPhone to fall within a $400-500 price range. As it turned out, the iPhone SE 64GB is priced at $499.

The analyst compared the smartphone with Apple’s higher-priced models, the iPhone 5s, 6, and 6s, while stating: “We believe this attractive price point for the iPhone SE could help Apple in developing countries, including the iPhone’s expansion in India and in Tier 3-5 cities (80-90% of China’s households) in China.”

Apple shares closed, down 0.01% though, at $105.91 yesterday. The stock traded 0.10% lower at $105.80 as of 6:10 AM EDT Tuesday. Drexel Hamilton stays with his Buy rating as well as a price target of $200, which reflects its estimated 89% upside potential for Apple shares for the next 12 months.

Investment firm Bank of America Merrill Lynch has issued a positive note for new and used cars retailer CarMax, following upbeat fourth quarter earnings

One of America’s largest new-and-used vehicles retailer and auto finance provider CarMax Inc (NYSE:KMX), shares for which have slumped 31.8% over the past one year, is still a good bet, according to investment firm Bank Of America Merrill Lynch (BOA).

Following the company’s fourth quarter earnings that surpassed analysts’ expectations, the firm believes the stock – near its 52-week lows – may promise as much as a 56% upside. Shares for CarMax rose 3% on Friday to close at $50.98.

Even though the company beat analysts’ earnings expectations when it reported fourth quarter results on April 7, stock slipped more than 7% that day, implying investors’ and analysts’ concerns about true organic growth.

For the fourth quarter, the company reported adjusted earnings per share (EPS) of $0.74, above the consensus Wall Street estimate of $0.71; as well as BOA’s own estimate. Same store sales for its core used vehicles business faced a tough year on year comparison (same store sales in fourth quarter last year had risen 7% over the prior year); still, the company reported 70 basis points improvement in the metric. Net income from Auto Finance arm of $92.3 million also came in better than BOA’s expectations.

Among the highly debated prospects of the US auto industry, which several analysts claim could be in a bubble, the strong performance of CarMax puts the company’s prospects in bright light, claims BOA. But other cautious analysts are looking deeper at CarMax’s organic growth – or rather the lack of it.

These analysts claim CarMax’s strong fourth quarter revenues that rose 5.5% over the comparable quarter last year, largely resulted out of new store additions instead of true organic growth from existing stores. CarMax said it added 14 new stores during the quarter, which takes its total store count to 158 stores.

CarMax has also been blamed for trying to drive top and bottom line metrics by leveraging its market share and benefiting from incremental pricing tactics that have worked well over the past few years, but could have capped out in potential for the company going forward – given how consumers can now access more information and comparable metrics through various platforms than ever before.

In fact, some analysts are already starting to see the cracks in CarMax’s financials – most notably the gross margins which dipped 1.8% and 3% for conventional and wholesale vehicles for the company during the quarter.

 

Apple has removed the legacy MacBook Pro models from its retail stores

According to a report published today by Apple Insider, Apple Inc. (NASDAQ:AAPL) is finally killing off the legacy MacBook Pro for good. The report stated that Apple Stores have now stopped displaying the 13-inch non-Retina MacBook Pro models, which is a strong indication that the company plans to phase out the only MacBook model that still uses a spinning optical disc drive. The model, however, is still in stock across all Apple retailers but it is no longer put out for buyers to try out the product in person.

There have been numerous reports that Apple finally plans to revamp the company’s flagship laptop as the new MacBook Pro is rumored to sport a ton of new features and improvements. For Apple to phase-out laptop that was last updated in 2012 makes sense, as the 13-inch MacBook Pro is the only model that does not sport a Retina Display.

Apple’s rumored MacBook Pro is expected to launch later this year and receive a major design overhaul that will make the device thinner and lighter. The new device is rumored to sport an OLED Touch bar at the top of the keyboard with capacitive buttons and built-in Touch ID Fingerprint. The device will also feature two USB-C ports with the addition of the new Thunderbolt 3 ports and will no longer support USB-A or MagSafe 2 Charging. It will also feature a Retina Display and will be powered by the latest MacOS Sierra which was unveiled at WWDC a few days ago.

There are also rumors that the newly designed product could see an end of the MacBook Air lineup as the new laptop is rumored to be extremely thin and light. Reports also indicate that it could feature Intel’s seventh generation Kaby Lake processors, which will significantly improve the performance and battery life.

Mi Electric Scooter will be available for RMB 1999

Today, Xiaomi has launched its second electric-powered vehicle called “Mi Electric Scooter” that will be available in China starting December 15.

Mi Electric Scooter is the second such product from the Xiaomi and MiJia product line since the launch of Mi QiCycle in June earlier this year that cost just RMB 2999, or $450. Just like the Qicycle before it, Mi Electric Scooter is also a foldable electric vehicle, made from aircraft-grade aluminum weighing about 12.5 kilograms or 27.5 Lbs.

Not only is the Mi Electric Bike foldable within seconds providing portability and convenience, it is fairly quick with a top speed of 25 km/h with a dual brake system that uses E-ABS anti-lock for the front and mechanical disk for the rear brakes. Moreover, Mi Electric Scooter is smart, and you can pair it with a smartphone to track all sorts of statistics, habits, and patterns.

While the Mi Qicycle costs around $450, the Mi Scooter costs only about $290, which, like the Mi Qicycle, is priced really competitively. Like other Xiaomi smart products before it, Mi Scooter offers a lot of punch for its price, and it could prove to be another useful addition to Xiaomi’s Mi ecosystem. The range has spawned water purifiers, drones, rice cookers, television sets, and vehicles, not to mention smartphones, and it doesn’t look like Xiaomi plans to stop anytime soon.

Goldman Sachs notifies investors to brace for a surge in the stock price after the streaming giant’s earnings report on January 18

Barron’s recently highlighted skepticism surrounding Netflix, Inc. (NASDAQ:NFLX) given its erratic performance throughout this year. The company has been largely defined by concerns relating to its ability to garner new subscribers to its ecosystem. In order to strengthen subscribers growth, the company is now creating original content, which is risky as well as expensive at the same time. However, amid the nail biting highs and lows of the company, the analysts are eagerly waiting for NFLX to report fourth quarter earnings report, which is largely speculated to be a miss despite an ideal stock pricing. 

According to GS, NFLX would move 10% this quarter, up from 8% in Q3, as implied by its pricing options. The stock’s historical median move for the past eight quarters has been 15%. Moreover, the firm highlighted that the 41% three-month volatility implied by NFLX is three points below the prior year’s average, which further strengthens investors’ skepticism. 

Heath Terry, Internet analyst at Goldman Sachs, thinks market mobility isn’t priced in Netflix’s Q4 earnings. In his view, the company will report a beat on Q4 estimates and show strong subscribers, profits, and revenue growth. If this comes out to be true, NFLX stock should surge sharply, possibly initiating a massive short-covering rally. Currently, short interest stands at about 27 million shares, which, to cover everything, would probably take 5 days. 

Meanwhile, Goldman Sachs’ derivatives strategists, John Marshall and Katie Fogertey wrote in his research note to clients: “With an incremental $1 billion plus in content spend next year and a larger addressable base, our analyst believes the potential for growth acceleration in subscribers, revenues, and profits remains high.” GS analysts expect the world’s leading subscription service to report earnings of 13 cents per share on $2.47 billion revenue. 

The firm maintains a $140 price target on NFLX stock, implying 11.47% upside over the closing price $125.59. While Netflix investors have mixed feelings on whether the stock would fall or rise despite the alluring pricing options, the top positions being bullish calls suggest the majority is looking for a bullish narrative to come true

Pages will load faster and look much better with AMP after the latest update to the Google for iOS app

Apple Inc.’s (NASDAQ:AAPL) iOS has received the latest version of Alphabet Inc.’s (NASDAQ:GOOGL) Google app which features support for Google’s Accelerated Mobile Pages format. Users searching for News through the Google for iOS app will now be able to reach AMP articles, as they will start showing up for the first time since the launch of the format by Google. Apart from AMP articles, the other major changes with the latest version of the app include more keyboard shortcuts for added convenience for iPad users and sports video highlights on Google Now cards.

Accelerated Mobile Pages format features articles that load much faster than usual articles, saving users’ data as well as time. Google’s AMP was launched for Google News articles in February this year, and for the first time users on iOS would be able to access those articles right from their iOS devices. In all its pomp, AMP is a format which seeks to remove the extraneous code that causes web page and articles to load slower even without extensive content, mainly due to the residue of cookies clogging up the transfer of information and data pathways.

Accelerated Mobile Pages are denoted by a green thunderbolt sign – the immediate sign that the website supports Google’s swift article format which translates to easy loading and reading. Similar to AMP is Facebook Inc.’s (NASDAQ:FB) “Instant Articles,” another format which is dedicated to bring more and more publishers on board so that all content under the social network could be streamlined to load faster and look better, and also saving data in the process. Also in the latest update, and just in time for the NHL and NBA playoffs as well as the Olympics this summer, is the new feature which means users will be able to access sports highlights right from the Google Now app.

We compare the two heavyweights of the smartphone market to see how they stack against each other

Apple Inc. (NASDAQ:AAPL) released the highly anticipated iPhone 7 last week amid much hype as the Cupertino-based giant looks to retain the top spot in the smartphone market. Apple’s main rival Samsung Electronics Co Ltd. (OTCMKTS:SSNLF) with the Galaxy S7 has undoubtedly been the leader of the smartphone market so far as the device comes with the best in class camera and revolutionary features. Today, we compare Apple’s latest flagship with the industry leader and see how these two devices stack up against each other.

Display

The Galaxy S7 comes with 5.1 inch Super AMOLED Quad HD display panel that produces a resolution of 2560 x 1440. The iPhone 7 on the other hand comes with a smaller 4.7 inch display that has a resolution of 1334 x 750. The S7 comes with a new Always on Display that the iPhone 7 lacks, however the iPhone 7’s display has 3D Touch sensitivity which is not present on the Galaxy S7.

Processor and Ram

The iPhone 7 comes with a new Apple A10 Fusion Chipset with a measly 2GB of RAM. The Galaxy S7 is powered by the Qualcomm Snapdragon 820 chipset and has a massive 4GB of RAM.

Storage

The Galaxy S7 comes in two storage options of 32GB and 64GB and there is also the option to expand storage via a Micro SD card slot.

The iPhone 7 comes with three storage options of 32GB, 128GB and 256GB however there is no option to expand storage.

Camera

The Galaxy S7’s camera has been rated as the best smartphone camera in the market. The device comes with 12MP rear camera with a f/1.7 aperture, OIS, Dual Led Two tone flash and dual pixel phase detection autofocus. There is also a front facing 5MP camera.

The iPhone 7 also has a 12MP rear camera with a f/1.8 aperture, OIS, quad LED flash, a new ISP and a new 6-element lens. There is a 7MP front camera for selfies.

Verdict

Both devices pack the latest and greatest specs and it is hard to determine a winner in this showdown. The iPhone 7 and Galaxy S7 are both capable of handling heavy tasks without a problem and also have the best in class cameras. At the end it is about preference, Android users will absolutely love the Galaxy S7 whereas Apple fans have never had a better iPhone.

Updated seasonal financial predictions for Procter Gamble and SunTrust Banks prior to their respective quarterly announcements tomorrow morning

Before the opening bell on Friday, January 19, Procter & Gamble Co (NYSE:PG) and SunTrust Banks, Inc. (NYSE:STI) are scheduled to post their financial results. Procter & Gamble will publish financial data for the second quarter of fiscal year 2017 (2QFY17) whereas SunTrust will announce 4QFY16 results. Given the two companies’ exceptional performances during previous quarters, investors once again look for top and bottom line beats, compared to Wall Street expectations.

Procter & Gamble

According to Wall Street critics, P&G is anticipated to give out $1.07 in earnings per share (EPS). The number suggests that the analysts continue to look forward to 2.88% year-over-year (YoY) and 3.88% quarter-over-quarter (QoQ) increase in profits per share for the season. On the contrary, Estimize.com expects Procter & Gamble to exceed the Street’s expectations by reporting $1.10 in profits per share.

In addition to per share earnings, Wall Street analysts also look forward to $16.84 billion net sales. However, Estimize.com believes that the $230.52 billion company’s top line will exceed Wall Street expectations and come in at $16.87 billion. 

SunTrust Banks

FactSet data suggests that SunTrust Banks have the potential to provide 88 cents in EPS this season. Earningswhispers.com is slightly more optimistic over its earnings potential and has shared 90 cents in EPS estimate. Interestingly, the Georgia-based company reported 91 cents in per share profits for both, the same quarter of last year and the previous earnings period.

SunTrust is also expected by various analysts to report $2.17 billion revenue for the season. Once again, Estimize.com predicts top line to expand further to $2.19 billion this quarter. During 4QFY15 and 3QFY16, the $25.68 billion company has managed to maintain roughly $2.1 billion and $2.3 billion revenues, respectively.

Gilead Sciences has lost more than 22% year to date

Gilead Sciences, Inc. (NASDAQ:GILD) coverage has been initiated at Berenberg, a financial services and research firm. The analyst has placed an initial rating of Buy on the stock, despite the fact that it has lost about 22% of its value year to date. According to Ms. Laura Sutcliffe, the HCV franchise has peaked faster than expected and is set to lose a part of its value in the coming days.

Gilead Sciences has played a very critical role in the development of treatments for Hepatitis C and has essentially revolutionized the process the way patients are dealt with. During the three year period, the company’s Hepatitis C franchise revenues have tripled; according to the analyst’s projection, however, they are expected to remain flat from here onwards.

Berenberg analyst Ms. Sutcliffe defended her initial buy rating by describing the investor reaction to flattening Hepatitis C growth as overdone. She believes that the company’s HCV franchise is likely to maintain its current volumes and there is little to no downside risk. The cash generation capabilities of Gilead’s HCV franchise is among the best in the industry and is likely to continue to perform satisfactorily in that regard.

Gilead first launched its HCV business back in 2012, which reported a revenue of more than $19 billion last year. Since the launch, a large number of patients have been treated and the analyst expects the number of patients to drop following successful treatments. However, it does not in any way spell doom for Gilead’s HCV Franchise as a large number of people still suffer from Hepatitis C and some new cases are reported every year. The analyst believes that despite the decline, HCV will still net $10 billion plus in terms of revenue in the year 2019.

The analyst has given the stock buy rating with a price target of $112. The analyst opinion for the stock has seven buy, eight outperform and 10 hold. Presently, the stock trades at $78.05 after having declined 0.83%.

Anger has elevated in Baghdad over the energy giant’s contracts with the Kurdish government

Around three years back, Exxon Mobil Corporation (NYSE:XOM) CEO, Rex Tillerson, flew to Baghdad to save the company’s business in the country. The trip came ahead of Exxon enraging Baghdad after it entered into an agreement with the Kurdish government over drilling in the minor—but financially viable—crude oil fields in the northern region of Iraq.

Times being changed now, marking Mr. Tillerson becoming the Secretary of State, has yet not calmed down the enraged Baghdad. Following the Tillerson’s selection, anger has elevated in Baghdad over the company’s contracts for the Kurdish fields, without losing out on the previous deals that Exxon signed in south Iraq.

The latest saga shows Mr. Tillerson’s strategy, making way for Exxon into a deal that almost jeopardized its work on the most lucrative crude oil fields for a risky venture. The move would be challenging for Mr. Tillerson in Iraq—a country striving amid sectarian disturbance. An Iraqi source close to the matter stated: “Exxon took a risk, got a little ahead of their headlights and then corrected and reached out to the people who had opposed them.”

It shall be noted that Iraq is a key member of the organization of oil exporting countries (OPEC) that plays an important role in managing global crude prices. The US President-elect, Donald Trump, has also shown an inclination toward the crude oil fields in Iraq. He has reiterated several times in his electoral speeches: “Take the oil.”

Former US ambassador in Baghdad, James Jeffrey, who was also a part of Exxon’s advisory body, stated: “In the end, the U.S. government, Kurdish Regional Government, with the assistance of the major oil companies … helped to avoid a full split between Erbil and Baghdad.”