Ad
Ad
Ad
Archive

November 2017

Browsing

The Country Caller takes a look at why SolarCity stock was up today

SolarCity Corp (NYSE:SCTY) stock has seen a lot of ups and down in the past few weeks. Analysts across the Street have mixed views regarding the stock; while some consider it to be a valuable stock with huge upside potential many consider it a failing stock.

In the most recent development on Thursday, analyst Ben Callo from Baird, had to say a lot of positives for the stock and upgraded the stock from a Neutral to an Outperform. The 12 month price target was maintained at $37 by Ben Kello. The sell side firm was impressed by the multiple financing transactions that the company has provided to its customers.  

SolarCity in the past has mostly offered limited financing schemes to its consumers. But following a lot of criticism from famous personality such as Jim Chanos, the company has decided to bring some additions to its model. The company recently made additions to its MyPower Solar last week and decided to launch the revised scheme in 14 US states.

The recent additions come after leasing started to lose its popularity in the solar space. In a recent sell side report, Credit Suisse has also appreciated the initiative taken by SolarCity and has provided numerous benefits that the solar loans can provide as opposed to a solar lease. Ben Kello believes that these solar loans will help strengthen the company’s balance sheet.

In addition to the new solar financing techniques Benn Kello has also mentioned that the company’s net metering concerns have been overdone.  The company to further support its balance sheet should issue equity. Ben Kello indicates that a module oversupply should also help reduce costs for the company.

Jim Chanos and others including Bank Of America Merrill Lynch have made a lot of criticisms over the company. While Chanos was unconvinced over the company’s business model, Bank of America was unimpressed with the recent financial results. The sell side firm also believed that the company’s policy of maintaining cost and growth side by side would pose a lot of problems.

But the recent loan announcement shows that the company is serious regarding turning over a new leaf. The loan as mentioned above is likely to support the company’s balance sheet and help address numerous other concerns. During pre-market trading today, the stock was up 4.51% at $23.07

Amazon Web Services (AWS) annual sales to reach $10 billion this year

The chief executive officer (CEO) of Amazon.com, Inc. (NASDAQ:AMZN) Jeff Bezos, is known for his optimistic and risk taking attitude, which is not going to fade away soon. This attitude has somehow benefited the company as Amazon is one of the companies which have increased its annual revenue to $100 billion. Moreover, Amazon Web Services’ (AWS) annual sales are predicted to be around $10 billion this year as per the management. This was the main highlight of CEO’s letter to shareholders along with the keynote that Amazon retail business and AWS can report higher growth rate while collectively operational.

Since the start of 2016, Amazon stock has lost market value of around 13.53% year-to-date (YTD) against a decline of 0.36% in S&P 500 Index while Dow Jones Index has gained 0.16% YTD. Amazon shares are trading at a price of $594.50 up 0.59% as of 9:28AM EDT which is away from 52 week range of $374.40-696.44. The company has a total float of 471.59 million shares with a market capitalization of $273.28 billion and an average daily trading volume of 4.04 million shares.

Camelot Portfolios LLC has cut off its holdings in Amazon by 12% as per recent filing with Security and Exchange Commission (SEC). The institutional investor sold off 295 shares of Amazon and is now left with 2,158 shares of the company which are worth $1,458,000. Conversely, Vanguard Group, Inc. has invested in the e-commerce giant further by buying 612,597 shares which has increased the total stake of the institutional investor to 22,010,802 shares in the company, worth around $14,876,881,000.

Amazon stock has a consensus rating of Outperform with a consensus 12-month price target of $726.48 as per Zacks Investment Research.  The most bearish price target suggested by analyst is $575 while the most bullish price target stands at $900. As per Thomson Reuters, 15 analysts suggest a Buy for Amazon stock, 24 analysts recommend Outperform whereas five analysts have rated company’s stock a Hold.

The evolution of cloud computing can adversely affect Cisco Systems

Cisco Systems, Inc. (NASDAQ:CSCO) thesis has been reviewed at UBS after the stock reached the 9 year peak price of $30.86 during yesterday’s session. UBS analyst Steve Milunovich sees Cisco in a very strong position compared to other legacy vendors but given the rapid rise of cloud computing, the company’s revenue could decelerate about 20 – 25%.

A large number of investors are on their feet and are watching the stock closely following the development. Mr. Mullinovich advises investors to buy Cisco even at current levels as it is currently the best placed stock in the network equipment industry and has plenty of room for growth and development. The rapid adoption of cloud computing is, however, one of the major downside catalysts for the entire network equipment industry as it greatly reduced organizations’ needs for network equipment products.

The analyst outlined SDN and white box as among the major concerns that could hinder Cisco’s growth. However, their evolution has been rather sluggish and has enabled Cisco the time and space to adapt to the developing situation, hence, cutting the degree of threat down to minimal.

Cisco has created a lot of goodwill among its customers and this relationship allows Cisco to thrive in a rather hostile environment where other stocks have struggled to keep their FCF positive. The company’s management is well aware of the fact that in order to maintain the trust of investors it needs to sustain a high level of routing and switching. Moreover, CEO Chuck Robbins is a strategically sound leader and his approach to Merger and Acquisition is well liked by the analyst.

The analyst reiterated his Buy rating and a price target of $32. There are total of 32 analysts covering the stock, the summary of which is; 11 Buy, 10 Outperform, 13 Hold and 1 Underperform. The stock closed at a value of $30.71 on Friday.

Aegis Capital’s Victor Anthony has come up with four points for his bullish thesis on Amazon

mazon.com, Inc. (NASDAQ:AMZN) has been dominating the online retail space for quite a while now, besides expanding into new territories like cloud series and video streaming. There are almost no analysts are Wall Street who have any doubt on the company’s ability to continue growing.

The tech giant is expected to report its fourth quarter of fiscal year 2016 (4QFY16) financial numbers on January 26, after achieving record-breaking Holiday Season sales once again. Ahead of that, research firm Aegis Capital started coverage on Amazon shares today, with a Buy rating and price target of $953.

The price target reflects a potential upside of about 18% over its last closing price. The stock edged up 0.41% to its 12-week high range of $812.34 in pre-market trade today, soon after this thesis came out.

Victor Anthony, the Aegis analyst who previously worked at Axiom Capital, expects Amazon shares to reach his price target by the end of this year. His investment thesis includes four major points:

First, he expects the company to continue growing its share of the online retail industry, as Amazon Prime continues to add more and more subscribers. He believes that retail revenue will grow within a range of high-teen to low-20%.

Second, Amazon Web Service (AWS), a cloud-services unit which is the fastest-growing segment of the company, is expected to keep up its “healthy” growth pace. Additionally, the equity research firm believes that the segment’s margins will continue expanding, despite an upsurge in competition.

Third, Mr. Anthony believes that Amazon’s overall margins will increase this year, despite continuous hefty investments in India, infrastructure, and digital content. For his final point, he expects the existing valuation to endure possible “macro shocks” and “quarterly various in earnings versus consensus.”

Aegis Capital concluded the report by saying that it is highly confident that Amazon would achieve the first three points over the next three years. For the last point, the analyst said that it would create more buying opportunities

Alphabet’s smartphones Pixel and Nexus have received security updates for November

Alphabet Inc. (NASDAQ:GOOGL) has kept its promise and has rolled out security updates for November, 7.0 and 7.1 Nougat. Nexus, Pixel, and Pixel XL are running on this latest Android software and this is why all these smartphones and tablets will receive the update. These updates will bring better security through latest patches saving users from exploitation, hacking, and other vulnerabilities.

Users who have been waiting for something new should buy the supported devices to get the November security update. It consists of essential bug fixes and security patches for almost 14 vulnerabilities, 10 fixes which were marked moderate, and 23 marked as high vulnerabilities.

Alphabet Inc. has promised customers a software update every month with security patches and different bug fixes in order to keep devices as safe as possible. Other tech companies are following the search engine giant, including Samsung.  

Google’s Update has been available for Nexus since November 7, receiving the 7.0 Nougat while the Pixel flagship received 7.1 Nougat. Google has not just offered security updates but also support for the new DayDream View virtual reality.

It seems that the claim by Google’s head of security, that Android is as safe as the iOS, was not wrong. The claim is being backed up now by these security updates which will be witnessed every month in order to give customers the best security possible. This update will make Nougat the most secure, latest and safest version of Android available ever. This month’s update should be installed by owners as soon as it arrives.  

Users who wish to get this update can see factory images or OTA updates zips. However, the Android 7.1 Nougat developer preview will not receive the OTA update. Google will roll out MR2 maintenance release for Nexus devices in the middle of this month. The Android 7.1 Nougat will be released for all devices by December.

Time Warner reiterated as Outperform by Wedbush

Stock rating for media and entertaining company, Time Warner Inc (NYSE:TWX), was maintained as Outperform along with reiteration in Price Target for the stock of $105.00 by analyst James Dix at Wedbush. The analyst stated that he doesn’t like the strategy of AT&T Inc. (NYSE:T), and moreover also believed that the deal is likely to be approved. The analyst further noted that the shares of Time Warner closed around 19% lower than the $107.50 of the deal on the back of the deal from AT&T.

Such substantial spread is from the investors who have battered the stock hard due to the recent busted deals, and also imply the odds of deal approval to be well below the 50% mark. While the investor has shown skepticism about the strategy of AT&T, the analyst focus has been towards the possible likelihood of getting an approval from the regulatory authority. The analyst foresees the likelihood of approval to be at 75%, and hence supporting its current Price Target for the stock, which presents an expectation of above 20% upside. The analyst stated that such an attractive reward for the risk taken for the shares, with the value of around $90 per share, could be attained when the deal closes, which is expected to be at year-end of 2017.

Last week on Saturday, the two companies announced possible deal where AT&T would pay around $107.50 per each share in cash and stock transaction to Time Warner. If the deal gets the nod from the regulatory authority, it would enable the company to reach much higher number of customers via AT&T mobile network. Moreover, AT&T in return would own the premium content from top providers such as CNN, HBO, etc. which are owned by Time Warner.

The deal appears to be a good one for both companies, but only time will be a good judge, whether the deal closes successfully or not.

Both the giants are awaiting approval since the technology is believed to interfere with Wi-Fi, which they plan to prove otherwise

QUALCOMM Inc. (NASDAQ:QCOM) and T-Mobile US Inc (NASDAQ:TMUS) are waiting for approval to hold small test for their LTE-U equipment in controlled environments. Qualcomm has applied for special temporary authority to the FCC to let it conduct the tests. Last year, the FCC sought information on the technology after its potential impact on Wi-Fi was highlighted but did grant Qualcomm and STA in January to conduct LTE-U equipment tests with Verizon, making it likely for the request for T-Mobile tests to be granted.

Qualcomm is seeking the STA to test LTE-U equipment for development purposes. The equipment is still pre-commercialization and is being tested in the field but in highly controlled environments. Qualcomm believes that the tests outside the lab and in the field are essential to fully develop LTE-U technology, which will ultimately benefit consumers in the future.

Qualcomm maintains that their LTE-U will not adversely affect Wi-Fi in any way. The company claims to have thoroughly tested the technology with partner companies like T-Mobile which have centered around allowing Wi-Fi and LTE-U technologies to coexistent without creating disruption to one or the other. 

This, however, has not silenced concerns, especially of the FCC which has been cautious in regards to the LTE-U technology and last year asked for information regarding its impact on Wi-Fi. In their STA application for the T-Mobile tests, Qualcomm assured the FCC that the test will be overseen by all members of the Wi-Fi Alliance who will provide technical collaboration and controlled field conditions to make sure that Wi-Fi and LTE-U coexistence reaches the appropriate standards. 

Qualcomm and T-Mobile will be trying out a range of different chipsets and radio infrastructures as well as working with a number of different partners for the trial, according to T-Mobile.

In truth, the FCC should not have any major objections since Qualcomm is currently only testing prototypes in controlled and heavily monitored settings. The FCC has already allowed Qualcomm to carry out a test earlier in January through an STA and unless new information has emerged regarding Wi-Fi and LTE-U coexistence, it has no reason to block the way for a new technology to be tested.

 

Pfizer has agreed to pay $81.50 per share of Medivation

Medivation Inc. (NASDAQ:MDVN) has been downgraded at Credit Suisse following the deal with Pfizer Inc. (NYSE:PFE). Both the companies have come to a mutual consensus regarding the merger which is expected to be closed someway down the line as no exact date has yet been divulged to the public. The analyst believes that the probability of this deal being successfully closed is quite high as according to his latest sum of the parts analysis, there is little upwards or downside movement expectancy and $81.50 seems to be the best suited value for Medivation shares.

The analyst believes that the worse has come to pass for Medivation and the management can now redirect its focus towards operational and execution activities. The analyst believes both companies to have great synergies following the merger and it will not only help in expanding the production capacity of Pfizer but will also provide benefit in terms of research and development. Pfizer is one of the biggest names in the pharmaceutical industry and is known for acquiring relatively newer pharma startups in order to boosts its product portfolio.

Pfizer’s management has no shortage of experience and expertise and the analyst expects the very same management to make viable integration plans in order to synergize with the newly acquired. Credit Suisse’s special situations desk has said that according to their research there is a very realistic chance of the deal closing successfully and there is little to no chance for a more competitive bid given the span of time the auction has already taken. Credit Suisse downgraded the stock to a Neutral from its Outperform rating with a price target of $81.50. The analyst expects the stock to remain flattish in the near and midterm. The analyst ratings for the stock are six Buy, four Outperform and seven Hold ratings. The stock currently trades at a price of $80.4 in the premarket.

The $125 million deal between the two companies is likely to benefit patients suffering from Alzheimer

In late trading hours on Tuesday, Allergan plc Ordinary Shares (NYSE:AGN) announced to have completed Chase Pharmaceuticals Corporation acquisition. Chase Pharma is a clinical-stage drug biopharmaceutical that focuses on the improvement and development of neurodegenerative disorders such as Alzheimer’s disease. Allergan paid $125 million in upfront payment to acquire Chase. However, the total amount excludes additional sales milestones and regulatory payments associated with Chase’s key drug, CPC-201, and a few backup compounds.

Alzheimer is one of the major and growing diseases that is affecting the public globally, for which, very few of the approved treatments are available in the market. Moreover, the societal cost of each of the available options surpasses billions of dollars. Consequently, there lies a paramount need for improved choices for Alzheimer treatment, said Allergan’s Chief Research and Development Officer, David Nicholson.

“This acquisition adds a new Phase 3 ready program for Alzheimer’s disease to our CNS portfolio and builds on our commitment to develop innovative approaches to improve the lives of millions of patients suffering from this devastating illness,” said Mr. Nicholson. Chase’s key compound drug, CPC-201 is a combination of donepezil and solifenacin. Donepezil (acetylcholinesterase inhibitor) has been known to improve cognition in Alzheimer patients. The currently approved donepezil is only slightly effective given side-effects such as vomiting, nausea, and diarrhea.

Chase Pharma recently had a meeting with the Food and Drug Administration over the completion of CPC-201 Phase II clinical trials. Following the positive feedback from FDA, Allergan aims to advance CPC-201 study into a single phase III registration study in 2017. Chase Pharmaceuticals’ co-founder and Chief Scientific Officer, Thomas Chase commented that his lead candidate drug, CPC-201 has the potential to advance over existing treatments of Alzheimer’s disease.

With the acquisition of Chase, Allergan is sure to benefit from its key candidate that offers advance treatment of the Alzheimer disease with the least possible side-effects. One neuro consultant at the Neurological Institute at Cleveland Clinic commented on the growth prospects of the drug, “When determining appropriate treatment for my patients with Alzheimer’s, I am looking for treatments that provide a beneficial effect with the lowest possible side effect profile.”

The console aims to deliver on the promise of native 4K gaming

Microsoft Corporation (NASDAQ:MSFT) has been touting the capabilities of its upcoming Project Scorpio console that is promised to deliver native 4K gaming experience. The company is certainly right in its optimism to boast about the system. The console has six teraflops worth of power under the hood and expected to ship with 12GB of RAM.

The industry is carving out a path for gaming and HDR, with both Microsoft and Sony Corp (ADR) (NYSE:SNE) at the helm with brand new consoles that leverage on the two buzzwords. Sony’s PlayStation 4 Pro takes the easy route to deliver 4K gaming. Instead of pushing native 3840×2160 resolution, the console relies on special rendering techniques that is reportedly a big upgrade over 1080p and close to the actual thing.

Microsoft’s box is coming out a year later than the competition only due to the pursuit of native 4K gaming, which is not possible with current technology according to Microsoft. In a recent interview with Famitsu magazine (via Play-Asia), Head of Xbox Phil Spencer expressed that the company wants to take time to understand the future and build a box “with a true sense of 4K gaming”.

“We want to sit down and get to know each and every component going into the console and how we can perfect it showing the best gaming can offer.”

When asked if the upcoming PlayStation 4 Pro pose as a threat to Scorpio’s sales, Phil Spencer replied by saying that he “has no worries at all”. The Head of Xbox is confident that by the next year, the company will be able to deliver Project Scorpio “without fail”. Microsoft has thus far remained confident in approach with Project Scorpio; only time will tell how the market reacts to a more expensive but native 4K gaming console in comparison to Sony’s cheaper option that has a year head start.