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December 2017

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GTM applauds Tesla for increasing energy capacity and improving aesthetics of second-gen Tesla Energy products, while adding in-house inverter

Last month, Tesla Motors Inc (NASDAQ:TSLA) launched its long-awaited, next-generation products for its stationary storage arm, Tesla Energy. We already know that the company doubled the energy capacity of both the Powerwall and Powerpack, while improving on the aesthetics and not doubling their price. Additionally, it has started offerings its own inverters.

Given the storage systems have the lowest cost per kWh, The Country Caller believes that Tesla’s new products could be revolutionary. Let’s see what Greentech Media (GTM), the renowned market analysis firm for renewable energy, has to say about the technologies.

While lithium-ion batteries costs are rapidly going down through economies of scales, GTM found it “striking” that to find the energy density of Powerwall and Powerpack have doubled in merely a year and a hour, after they were launched in May 2015. It believes that improvement in energy capacity is both quantifiable and essential to the technologies’ widespread adoption.

Tesla’s residential storage system offers 7kW of power capacity and 15kWh of energy storage, compared to average daily US household requirement of 30kWh. This suggests that two Powerwall units could fulfill the daily electricity requirements of a typical home in the US; therefore, the storage systems are eventually started to make economic sense.

The research firm expects that such continuous doubling of power capacity with little price increases should eventually lead to availability of systems with more energy than a household requires. This will probably be when the innovation will shift from lowering costs to streamlining the system’s services.

The most notable change in the new products is the addition of Tesla-made inverters deployed inside the batteries, according to GTM’s Julian Spector. This leads to lower space requirement for the system and better looks. Additionally, it also simplifies the installation process, and lowers installation time and labor required to deploy the technology.

The platform highlighted that Tesla manufactures its own inverters to send power from its vehicles’ battery pack to their drivetrain; but it used third-party inverters like Dynapower and SolarEdge for its storage products. The company finally realized that those inverters were more costly than they should be. The in-house-built inverter is a bad news for the existing third-party suppliers, GTM suggested.

Vertically integration makes a lot of sense here because the company can reduce the end price, while maintaining decent margins. Now, Tesla is different from other storage battery makers because they are dependent on inverter makers. For example, LG Chem partners with Eguana and Sonnen works with Outback. GTM was also impressed with Powerwall’s new designs, stating that it does not merely has looks; it also provides more space, makes it easy to handle, gives the ability to stand on its own, compared to the curved exterior of the version one.

Carousel-style ads will be displayed to users in the first part of the limited testing

Facebook Inc. (NASDAQ:FB) announced that it has started limited testing ads in its standalone messaging app, Messenger. The announcement was made by Stan Chudnovsky, head of product for Messenger.

The limited testing is being conducted in Australia and Thailand for now, before it heads out to other countries and regions. As part of the testing process, users on Apple Inc.’s (NASDAQ:AAPL) iOS with Messenger in Australia and Thailand would have to choose between ad cards from five different advertisers. The ads will appear on the Messenger homepage, and not inside chat windows, which should assure users that the ads are not displayed based on data from chat windows.

On Wednesday, CFO Dave Wehner announced during an earnings report that the total ad load per user was set to max out, and that the balance between organic and ad content on every user’s News Feed was about to be tipped out of balance. Therefore, Facebook had to think of another way to display more ads to user. Now, it seems the answer to that question is the Messenger homepage.

Homepage ads are certainly new for Messenger, as Facebook explores new avenues of revenue generation from ads. Chudnovsky is aware that user privacy could be affected negatively by these ads, but he feels “until you try, you are never going to find out” and so Facebook is set to start trying with a small group of users in Australia and Thailand.

A new report reveals that The Division is now the most popular game on Xbox One

Ubisoft Entertainment SA’s (OTCMKTS:UBSFY) The Division has been widely popular among RPG fans out there. The game has managed to break many records in the short span of time since its release and now it looks like the game has achieved yet another accolade in its already massive list.

According to recent reports, the Division has recently taken the number one spot in the popularity list on Microsoft Corporation’s (NASDAQ:MSFT) Xbox One. The game has managed to beat the previously most popular game, Activision Blizzard Inc.’s (NASDAQ:ATVI) Call of Duty: Black Ops 3. The Call of Duty series has been popular on Xbox Live in recent years and has been very popular among Xbox One users. However, it looks like that popularity might be dying down, and the Division overthrowing the game’s leading position might be the first sign of it.

The Division has been a massive hit since its release. The game has been able to get everything right, even attracting players from Activision Blizzard Inc.’s (NASDAQ:ATVI) Destiny as well. Destiny has been facing a drought of content in its year two and has not been able to give replay value to its players. However, it can be said that the game’s popularity right now might be because of the extreme hype that was built up around it since the game’s original announcement.

The game brings fresh new content for everyone but will it be able to retain players over the course of the year? Well, that remains to be seen and to be really honest, it all depends on the quality and the length of the game’s end-game content. This includes the first incursion, which is set to release sometime next month. Until then, it looks like Ubisoft is having a blast as players dive deep into post-apocalyptic Manhattan.

 

Piper Jaffray has raised its price target on 3D Systems stock to $10.50

3D Systems Corporation (NYSE:DDD) stock surged by more than 19% in trading today after the company reported its earnings results for the  second quarter of the current fiscal year. For the three months ended on June 30, 3D Systems earned a profit of 12 cents per share on revenue of $158.1 million compared to consensus estimates of 6 cents per share and $161 million respectively.

Investment firm Piper Jaffray, in an updated research note sent out to clients and investors today, weighed in on the matter. Analysts at the firm highlight that a tight discipline in expenses with significant cost cutting measures enables 3D Systems to report better than expected earnings. These analysts however, at the same time point out that 3D Systems’ topline still came in below consensus estimates. Total sales during the quarter fell by 30% on a year over year basis during the quarter.

The firm attributes the bullish run the company’s stock witnessed following the earnings call on several investors covering their short positions. Analysts at the firm are of the opinion that shares of the 3D printer manufacturer are overvalued and are exposed to great risk. The firm believes that 3D Systems top line would come under great pressure from increasing competition with the entry of HP and Carbon 3D in the space. Piper Jaffray currently has an Underweight rating on 3D Systems stock. The firm however has bumped its price target to $10.5 on the company.

3D Systems management expressed great contentment over the company’s earnings results. CEO Vyomesh Joshi said that he was especially ‘pleased’ with the positive response seen for the company’s healthcare solutions. We see clear opportunities for improvements in 3D printers and on demand manufacturing services as we drive operational excellence and focus on providing reliable end-to-end solutions. Mr. Joshi added that the company is in the midst of executing a detailed strategy to provide consumers with advanced solutions.

The Country Caller reviews Whole Foods Market and Wynn Resorts’ earnings forecasts, before their respective announcements today

Whole Foods Market, Inc. (NASDAQ:WFM) and Wynn Resorts, Limited (NASDAQ:WYNN) will present their earnings results after the closing bell today. Whole Foods will announce data for fourth quarter of fiscal year 2016, while Wynn Resorts will announce Q3FY16 financials. WFM and WYNN have shown mixed results in the past. Earnings forecasts suggest that Whole Foods will miss Street’s top and bottom line estimates while Wynn will beat them.

Whole Foods

The Texas-based company is expected by Wall Street to report 24 cents in profits per share today, meeting the higher end of the company’s guidance of 23-24 cents. Earningswhispers.com predicts that Whole Food will beat Street on EPS, and report 25 cents. If the Street estimate is met, profits per share will increase 50% year-over-year (YoY) over Q3FY15 EPS of 16 cents. For 2QFY16, it reported 37 cents in EPS.

Estimize and Wall Street forecast Whole Foods to announce about $3.51 billion in revenue for the quarter. The $8.99 billion company expects its net sales to go up 2% this season. The company reported $3.4 billion revenue for the same period of last year. In its last earnings call, it also announced net sales of $3.7 billion.

Wynn Resorts

Wall Street believes Wynn will report profits per share that amount to 79 cents this season. If it does, EPS will grow 8.22% YoY but decline 25.7% sequentially. It announced $1.09 EPS for last quarter and 73 cents for the same period last year. Earningswhispers.com predicts today’s EPS to come in at 78 cents.

Thomson Reuters’ data suggests the consensus revenue estimate stands at $1.13 billion for Q3FY16. Estimize expects the company to beat the Street on top line today, with revenue of $1.14 billion. Last quarter it reported revenue of $1.06 billion. In Q3FY15, revenue came in at $996.3 million, indicating a 13.42% YoY increase for Wall Street analysts this time.

Research firm RBC Capital explains why Apple is likely to keep iPhone 7 and 7 Plus sales figures for the weekend undisclosed

RBC Capital analyst Amit Daryanani reaffirmed his Outperform rating and $117 price target on Apple Inc. (NASDAQ:AAPL) shares today, reflecting 10.88% upside potential over its last close. The analyst believes Apple does not plan to reveal weekly sales numbers for the iPhone 7 and 7 Plus for a valid reason.

Mr. Daryanani said that there is a potential component shortage of the dual camera, due to which the iPhone maker is hesitating from revealing the sales data. However, he added that expectations for the iPhone 7 cycle are “tempered” at the moment, and the Street is more focused on the upcoming iPhone next year, as 2017 would mark the 10-year anniversary of the first iPhone; analysts therefore expect Apple to save major innovative features for its “anniversary update.” Due to this reason, the analyst believes “lack of weened update should not be a huge negative.” He also added that a number of analysts had already anticipated weak iPhone 7 sell through compared to the iPhone 6S sell through.

The Street, according to the data from FactSet, has 32 Buy, five Overweight, four Hold, one Underweight, and two Sell ratings on Apple stock. It also has a mean 12-month price target of $121.81 on the shares, reflecting 15.43% upside potential over the last close.

Tesla completes installation of a $5.3 million Powerpack project at College of Marin which will go online by the end of May

While Tesla Motors Inc (NASDAQ:TSLA) residential storage systems, the Powerwall, are increasingly being installed in global households, it is also providing its commercial batteries, the Powerpack, to clients with bigger electricity requirements.  

Electrek (via Marin Independent Journal) reported that Tesla recently completed installation of a Powerpack project in College of Marin in Marin County, CA, becoming the first community college in the state to join hands with the energy-innovation company.

College of Marin VP for Finance and Operation, Greg Nelson, stated: “This partnership between College of Marin and Tesla reduces the carbon footprint. It helps us, helps Tesla and it helps save taxpayer dollars.”

Tesla will be receiving $5.3 million in government incentives and rebates to cover the project cost, which includes installation of battery packs, liquid thermal control system, site preparation, and software which receives commands from the solar inverter. The company took roughly 18 months for the planning of the project, which will be operational by the end of this year and allow the school to save $10,000 per month. The Powerpack is developed to store and distribute power that will be produced via solar arrays at College of Marin.

The report described the installation as:

“The Kentfield campus will benefit from five 480-kilowatt batteries housed in 10-foot cabinets behind the Student Services Building. Another three will be near the Indian Valley campus’ main building.”

Electrek pointed out that the power output of the Powerwall should be 250kW, instead of 480kW and expects that the school installed eight blocks of two Powerpack towers having 4MWh of energy storage, based on the project cost.

During the first quarter, Tesla sold 100 Powerpack systems and gained at least $4.7 million in revenue. Tesla Energy should have contributed at least $12 million to the overall revenue in the period. Additionally, the company recently updated its Tesla Energy page, allowing customers to order up to 54 Powerpacks and unveiled its pricing and other information.

Tesla sends official invites to the referral program winners and creates a raffle for other owners to win invites to the Gigafactory Grand Opening

In May, Tesla Motors Inc. (NASDAQ:TSLA) started sending out invites for “Gigafactory Grand Opening” to Referral Program 2.0 winners. The company notified the event venue and date, and said that it will send an official email with all the details a few weeks ahead of the event.

Electrek reported over the weekend that the automaker has started sending out official invites to winners of the referral program, who referred at least four people to buy the Model S. Additionally, it is also sending out emails to Tesla owners and giving them the opportunity to attend the event via a raffle.

The launch of the Gigafactory, the final version of which would present the world’s largest building in terms of physical area, will take place at 1 Electric Ave, Sparks, VN at 6 PM July 29. Guests will be allowed test drives and factory tours before and after the “remarks” at 9 PM. However, Tesla has not mentioned the test-drive vehicles.

The RSVP of the winner will also include RSVP of the guest and both of them must arrive at the same time. The event invites are not transferable and the ID will be checked at the entrance. The event check-in will open at 5 PM. Children should be over eight years old and should have height of over 48 inches.

Between 6 to 9 PM, all the guests will be given test drives and factory tours on a first come, first served basis. Time slots will be assigned during check-in. “Remarks” or the presentation is scheduled to start at 9 PM, after which rides and tours will resume.

Refreshments will be provided soon after the event starts and free valet parking service will be given via Electric Ave. The company will also give transportation from downtown Reno to the venue.

Interestingly, Tesla owners who did not win tickets for the Gigafactory opening are also receiving invitation to participate in a drawing, which will take place on July 18, to get the opportunity to win an invite with a guest. As a token of appreciation, the company has kept “a few” invites for other Tesla owners as well. Earlier this month, we reported Tesla created 12 “Golden Tickets” raffle exclusively for Model 3 reservation holders, who reserved the compact sedan on the first day, to win an all-paid trip for the Gigafactory launch.

Analyst anticipates solid growth in EPS and operating margins as Oracle competes with cloud-database services

MKM Partners analyst Kevin Buttigieg has updated his thesis on Oracle Corporation (NYSE:ORCL) recently, as he believes the stock is fairly valued. Oracle is set to unveil its financial results for the fourth quarter of fiscal year 2016, after the closing bell on June 16. The analyst maintains a Neutral rating on the stock as he anticipates a strong fourth quarter ahead. The firm has a price target of $42 on the stock which is 15 times its FY17 earnings per share estimate. The price target reflects 8.41% upside potential over the last close of $38.74.  

Mr. Buttigieg expects 1QFY16 results to be in line with consensus estimates, reflecting solid annual growth in EPS and operating margins. Investors look forward to growth as the $159.5 billion company makes a smooth transition to the cloud. Based on the already low expectations, the analyst believes that license revenue income would not miss the Street, unlike previous quarters. Also, given that the prior promotions have expired, the analyst anticipates strong growth in cloud revenues. However, the company might face challenges in annual recurring revenue due to the sharp rise in software-as-a-service and platform-as-a-service, he noted.

Oracle’s current price-to-earnings ratio of 14 times is not only ahead of its own historical average of 13 times, but is also ahead of the peer group’s P/E of 12 times. Oracle shares appear “fairly valued” to the analyst, as he states: “Oracle’s stock likely won’t be able to command more of a premium from expectations of this impact flowing through the financial model in future years because of the offsetting effect from declining license revenue (and perhaps maintenance, although this hasn’t happened yet). So unless license and/or SaaS and PaaS revenue can exceed consensus and drive better EPS, the shares appear fairly valued in our view.”

Oracle missed licensing revenue expectations in past quarters, but for 4QFY16, MKM Partners believes the technology provider would report licensing revenue in line with the consensus estimate of $2.8 billion. Note that the consensus estimate has a 10% year-over-year decline factored in.

The analyst estimates $665 million in SaaS and PaaS revenues, ahead of the consensus estimate based on their continued strong growth. This should lead to EPS and revenue figures in line with the consensus estimate of 82 cents and $10.46 billion, respectively. Moreover, the consensus also expects first full year growth in EPS and operating margins for FY17 since FY14. This might be positive for investors as Oracle is completing its transition to the cloud business model.

Morgan Stanley believes that the company may be in position to provide increased confidence in its near-term earnings outlook

Morgan Stanley weighed in on Fiat Chrysler Automobiles NV (NYSE:FCAU) in its recent note to clients and rated the stock as a top pick. The firm analyzed a variety of the most successful upcoming products under Fiat Chrysler banner in order to better assess the scale of hidden value through possible changes.

Based on the firm’s and HIS production forecasts, Adam Jonas of Morgan Stanley estimated “Jeep models will comprise 44% of FCA revenues in 2017 and that RAM, minivans, and Maserati models will make up another 28%. “Other” FCA models (e.g. Dodge, Chrysler, Alfa Romeo, Fiat) will provide 28% of revenues.” However, the analyst believes Jeep, Maserati, RAM, and Minivan models will generate €7,483 million of operating profit in 2017, while other FCA models would generate negative profits of €689 million.

Fiat Chrysler’s business infrastructure may directly impact the firm’s ability to handle legacy liabilities in longer term. Mr. Jonas highlighted that FCA had around 234,000 employees at the end of 2015 with more than 90,000 in each of Europe and North America, 45,000 in Latin America and close to 10,000 in Asia. The Ferrari maker is the largest private employer in Italy. “If FCA were to put 0.5 turns of leverage on the Jeep brand (which we estimate has nearly €6bn of EBITDA), this could provide the parent company with around €3bn, or enough to offer voluntary buyouts for as many as 20k or 30k employees,” believes Mr. Jonas.

Morgan Stanley views FCAU to be ideally positioned to deliver increased confidence in the near-term earnings guidance. If margins remain flat, EPS forecast for 2017 could increase by 5% to €1.88 from €1.80. The firm noted if NAFTA margins rise by 100 basis points in 2017 versus 2016 guidance, Fiat Chrysler’s implied EPS would reach €2.05, up 14%.

According to Mr. Jonas, Fiat Chrysler may leverage the most from low fuel economy standards. The company has very little exposure in China and is the closest to a pure-play on the United States light truck market. The firm expects FCA 2017 outlook to be likely very supportive of the near-term earnings trajectory.