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December 2017

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Analysts at Bernstein slashed their rating on Qualcomm stock from Outperform to Market Perform based on recent valuation

Qualcomm, Inc. (NASDAQ:QCOM) stock slipped a little over 1.5% in today’s pre-market trading session, after analysts at Bernstein slashed its rating on the fabless semiconductor company from Outperform to Market Perform based on valuation. The chipmaker faced difficulty in finding its form at the start of fiscal year 2016 as its share price took a turn for the worst, carving its 52-week low of $42.24 on February 10.

However, shares of the semiconductor juggernaut managed to make a remarkable recovery from its record low levels and has since then, jumped more than 20%. The research firm downgraded Qualcomm stock as it believes that the company’s September estimates are too high, based on the unrealistic expectations from its licensing business. Analysts at Bernstein have maintained their $55 twelve-month price target on the stock, citing long term structural issues around the company.

Qualcomm has also faced increasing competitive pressures from its close rival Intel Corporation, as the company failed to retain its 100% share in the upcoming next-generation Apple iPhone 7. According to recent reports, Intel has managed to secure at least 30% share in the upcoming smartphone for its state-of-the art modem chips. However, several sources suggest that iPhones launched in the Chinese market will feature Qualcomm chips.

Earlier this month, analysts at BlueFin Research launched bullish comments about Qualcomm, citing significant share gain in GoPro Inc’s (NASDAQ:GPRO) low-end product offering. The research firm expects GoPro’s primary supplier of imaging chips, Ambarella to lose significant share in the adventure camera maker.

Additionally, the company has filed a lawsuit against Chinese Meizu for breaching its previously acquired patent which includes a wide range of features, tools and technologies used in the smartphones. According to recent developments, the fabless chipmaker has registered its complaint at Intellectual Property Courts in Shanghai and Beijing. Qualcomm stock has now surged a little over 4.5% since the start of calendar year 2016.

Kindle e-readers, Fire tablets, and e-books will be distributed as part of the program

In a bid to promote and encourage digital reading, Amazon.com, Inc. (NASDAQ:AMZN) has launched the “Kindle Reading Fund” to donate and distribute reading materials and equipment to schools, libraries, PTAs, and non-profit organizations around the world.

As part of the program to promote digital reading across the world, Amazon is also working in close collaboration with Worldreader; an organization involved in giving access to more than 4 million readers to e-readers, books, and libraries. Amazon has previously worked in tandem with Worldreader to provide more than 500,000 people in Kenya with reading material and equipment. As part of the Kindle Reading Fund, the two parties will once again work closely to extend their reach to more deserving students and teachers.

Amazon has been working on this front, and others, as part of its corporate social responsibility program to give back to the society, and the Kindle Reading Fund could be interpreted as the formalization of those efforts. Moreover, under Article 501(c) (3), organizations, schools, libraries, etc can also contact Amazon if they need assistance in the form of the hardware and software that Amazon can provide.

Advanced Micro Devices appears to be following a familiar naming scheme

Advanced Micro Devices, Inc.’s (NASDAQ:AMD) Zen-based family of microprocessors will use a familiar naming scheme, according to a new leak. The image that surfaced from Chiphell forums (via WCCFTECH) reveals that AMD will break the desktop Summit Ridge family into three tiers: SR3, SR5, and SR7.

The naming scheme sounds a lot like Intel Core i3, Core i5 and Core i7 series. We can go on a hunch and say that SR3 will be the entry-level tier, SR5 will be the mid-tier that offers hexa-core versions, and SR7 will be the high-end octa-core tier that targets the enthusiast segment. AMD has not revealed a price point for Zen but the leaked image tells us that all three SR tiers will be priced above RMB1500, which translates to around $220 USD. SR3, SR5 and SR7 are placed closely to each other, which possibly suggest that SR7 will cost $300-$320 at max.

AMD has confirmed that first Summit Ridge processors will be available in the first quarter of 2017. Details about the lineup and pricing are not yet in depth but AMD is expected to fully disclose Zen at CES 2017 in January. AMD will launch the high-end variant first and SR3 and SR5 segments will follow.

Intel will also launch seventh generation Kaby Lake processors during the same period. All eyes are currently on AMD as Zen is anticipated be a major turning point for the company. AMD has invested heavily in building Zen from the ground up and it is finally in a position to take on Intel in raw performance.

Cost-cutting initiatives are aimed at balancing technological investments with the potential revenue realization to provide better opportunities to enter new markets

Shares of Veeco Instruments Inc. (NASDAQ:VECO) rose approximately 5.76% in the market on Wednesday, October 5. This share momentum was driven by its announcement regarding its additional cost cutting initiatives in the upcoming quarters. Because of these plans, it was able to boost its outlook for the third quarter of fiscal year 2016. Following this, Needham & Company reiterated the shares of the company at Hold rating.

Under these cost-cutting initiatives, it has planned to significantly reduce its investments in Atomic Layer Deposition technology development in the future. This decline in investments has been organized to gain more balance between potential revenue realization from ALD technology and the investments that the business puts in its development. These reduction activities of the Town of Oyster Bay-based business are forecasted to complete before the end of FY16. These come in as an addition to its restructuring plans announced earlier whereby it aimed at saving $20 million annually. If these cost reduction activities were successful, it would be able to attain annualized savings amounting to $30 million, far above its target number.

The reduction in investments was in part due to management’s realization that while the development of ALD technology was progressing, the company would be able to realize the revenues after some time. Following these plan announcement, CEO John R. Peeler stated, “Consequently, we have made the difficult decision to lower investments in our ALD program.” By doing this, Mr. Peeler wants the equipment solutions processer to continue to retain its technology capabilities along with its intellectual property. This would in turn enable it to better assess its exposure to market opportunities available in the future.

Therefore, it aims at recording restructuring charges and asset impairment amounting to $56-62 million in the third quarter. This would equal to realizing $1.44-1.59 on per share basis. The majority of this amount is to be driven from intangible ALD asset impairment and would largely be recognized on non-cash basis. Roughly $2 million is expected to be driven from restructuring charges in cash. Because of this, it expects its 3Q revenues to be towards the higher end of its guided range announced earlier. The expected revenue range released by the $851.44 million business is $70-85 million. The higher revenue would also be a result of improvements in demand trends for its products and overall improvements in the LED industry.

Based on this, the firm believes that the company is gaining momentum in Metal-Organic Chemical Vapor Deposition space. However, it sees uneven recovery in the industry. This is because of the decline in LED prices that limit investments in newer capacities. The firm further stated that these cost-cutting initiatives represent the challenges that such companies incur in entering new market that has immense growth potential. Thus, it remains positive on 3Q outlook but waits for further news to take other steps. Following increased 3Q outlook, the investors of the LED developer largely shares positive sentiments. In addition, Veeco Instruments received six Buy, one Overweight, and five Hold ratings from FactSet Fundamentals analysts. It has achieved a one-year price target of $23.94, with 14.44% upside potential over last close.

Mark Zuckerberg recently denied helping Trump win the elections; now Trump says he owes his victory to Facebook, Twitter and Instagram

On Sunday, the 45th elected US president Donald Trump said that social media platforms have played a vital role for him in securing a historical electoral victory for him. However, he now plans to hold himself from the frequent use of the platforms.

In the wake of the presidential elections, recently, Facebook Inc.’s (NASDAQ:FB) co-founder and chief executive officer (CEO) Mark Zuckerberg addressed the worldwide concerns regarding the increasing abuse of the company’s ascendant power in impacting public perspective at Techonomy16. You can read all about the CEO’s denial here.

Unfortunately, the company will not be able to further cover the issues, as for now Mr. Trump himself has declared that he owes his presidential victory to giant social media platforms such as Facebook, Twitter Inc. (NYSE:TWTR) and Instagram. In an interview with CBS’ 60 minutes, the president-elect said: “The fact that I have such power in terms of numbers with Facebook, Twitter, Instagram, etc. I think it helped me win all of these races where they’re spending much more money than I spent.”

The newly-elected president cited that the aforementioned social media giants assisted him without spending as much as Hillary Clinton’s campaign, both, traditional and digital. Just prior to the elections, all social media privileges were reportedly taken away from the elected president (restored sometime later). The regular Tweeter seems to be aware of his huge following on social media platforms and said that these platforms are “great form(s) of communication,” and it does get “the word out.”

Mr. Trump stated that he has a huge fan following on various social media networks which totals to around 28 million followers. He also said that those numbers are increasing each day. Despite the power in numbers, the president-elect says he will hold himself from the usage of social media platforms. He said: “I’m going to do very restrained, if I use it at all.”

We expect that more brokerages would soon revise their price targets for the company, as more positive developments are reported

Redmond based tech. giant Microsoft Corporation’s (NASDAQ:MSFT) stock has remained in focus by investors ever since the company announced acquisition of LinkedIn Corp. The $454 billion company’s stock has risen over 10% since the development. The company’s impressive growth of its cloud computing operations is another positive development that may have added to investor confidence.

Although there was a significant decrease in its topline results, the bottom-line remained strong as the company reported strong profits than last year. Ever since the Brexit shock shook global markets, investors have persisted on their bullish stance, while we expect them to carry the momentum in the coming sessions. As we speak, shares of Bill Gates owned company are trading higher.

That being said, the share prices are trading very close to its 52-week high of $58.50. This indicates that a new 52-week high level is very much in sight. Microsoft’s recent developments have been positive as the company seeks to bring improvements within its existing offerings. Moreover, LinkedIn’s acquisition is also expected to open a new stream of revenues for the company by integrating with its existing offerings.

The leadership of Satya Nadella has been vital to its recent success. The company seems to be returning back to its golden era, when it was considered an unprecedented leader of its industry. Moreover, the company’s alliance with General Electric and initiatives related to China would be its strength in the future.

The Street has so far maintained a bullish stance on the company, as renowned brokerages such as Sanford C. Bernstein reckons a decent upside from the current levels. We expect that more brokerages would soon revise their price targets for the company, as more positive developments are reported. Let’s see if the bulls are able to take the stock to a new 52-week high level.

FBR Capital remains optimistic on CVS Health to deliver stronger results in future

CVS Health Corp (NYSE:CVS) announced financial results for 2QFY16 on Tuesday, August 2. The company succeeded in beating the Street on the bottom line, however it missed on the top line expectations. It reported earnings per share of $1.32 and revenues of $43.7 billion against the Street estimate of $1.30 in EPS and $44.2 billion in revenues. By reporting these figures, the company grew its revenues by 17.6% on year-over-year basis. Not only this, it also reported an increment of 8.3% YoY in EPS. Thus, FBR Capital analyst Steven Halper restated his Outperform rating on the stock.

The company further provided guidance for the third quarter of FY16 as well as the entire fiscal year. The pharma company expects its 3QFY16 EPS to be within the range of $1.55-1.58, depicting 17.4-19.7% sequential increase if it meets its expectations. It also raised FY16 EPS expectations from $5.73-5.88 to $5.81-5.89. The company also expects to raise FY16 cash flows from within the range of $7.6-7.9 billion to $8.8-9.1 billion.

Furthermore, CVS pharmacy services segment, largest contributor to the revenues of the company, reported $29.5 billion in revenues. This was an increase of 20.7% YoY. The revenue growth could be credited to growth in new pharmacy clients and increase in generic drug sales following the acquisition of Omnicare. Due to this, the segment’s operating income rose by 10.4% YoY.

Moreover, the company’s retail segment also did exceptionally well in this season. The revenues of the division came out to be $19.9 billion, marking an increase of 16% YoY. The division credits this increment to rise in same-store sales and acquisition of Omnicare and Target. Same-store sales rose by 2.1% YoY, translating into an increase in the segment’s operating income to $1.7 billion.

Based on these figures, FBR Capital analyst Steven Halper not only reiterated his Outperform rating on the stock but also maintained a price target of $120 on the shares. The firm was impressed by the performance of CVS Health this season, due to which it decided to stay as buyers of the stock.

Steven Halper further commented that he credits these results to the $106.19 billion company’s Pharmacy Benefit Management division. The division performed better than expected. Due to this, he believes that the company growth remains strong as the specialty revenue grew by 23%. Not only this, he believes that CVS Health FY17 selling season is going to be strong, as indicated by the company. This could be the reason why the company increased its EPS guidance and cash flow outlook for FY16.

Such results have encouraged FBR Capital analysts to remain hopeful on the shares of the company. They have confidence that the company would deliver strong results in quarters to come. They reiterated the Outperform rating on the stock. Other analysts at FactSet Fundamentals maintain 18 Buy, three Overweight, and five Hold ratings on the stock. They have set a 12-month median price target at $112.70, an increment of 14.93% over the last close. The company currently has 1.07 billion shares outstanding in the market.

Ethics and employee rights are two main drivers of a company’s success and its violation could lead to a protest

Oil & gas companies have been in a celebratory sentiment since OPEC meeting in Vienna last year; the results of the meeting led to a wave of optimism in the global energy market. Energy majors around the world are now looking to increase their exploration and production (E&P) activities.

The past couple of years have dented financial profiles of oil & gas companies, given the low crude environment and economic slowdown. However, the latest rally in the oil prices has come as a golden opportunity for energy giants to mitigate their losses.

Several employees at the Big Oil were laid off between 2014-2016 in the wake of low commodity prices. Although the companies, themselves being in a tough spot, cannot be blamed for the headcount reduction. A similar update has come from the Anglo-Dutch multinational Royal Dutch Shell plc (ADR) (NYSE:RDS.A).

According to CBC News, the integrated oil & gas major has been accused by the Canadian authorities for having denied the employees a small break off to vote in the federal election. The matter comes under the act of employee rights violation.

Shell has seized sacked-service tax breaks for terminated employees overseas. According to sources close to the matter, the company plans to give a tough time to its pensioners as well.

Furthermore, when laying off employees as part of its cost-cutting program, the company doesn’t consider the sentiments of its redundant workers as to how would they react when invited to apply back for the same positions that they previously worked at.

Ethics and employee rights are two main drivers of a company’s success and its violation could lead to protests at Shell; a trouble that the company would not welcome amid the oil price environment.

The Country Caller takes a look at the second quarter financial results of Chesapeake

Chesapeake Energy Corporation (NYSE:CHK) was down as much as 3.5% after reporting its financial results for the second quarter of the fiscal year 2016. Although the company managed to narrow its losses and beat the expectations laid out by the consensus, the investors still punished the company sending the stock down.

The company reported revenue of $3.57 billion beating the estimate of $1.96 billion. In the last quarter, the company reported revenue of $1.95 billion implying a substantial increase. On Year-over-Year (YoY) basis the company saw an increase in revenue from $3.03 billion.

The adjusted net loss for the company was $103 million coming above the consensus expectations of $106 million. The company managed to bring down its loss figure from last year where the figure came in at $126 million. In the last quarter, the company’s loss figure was around $120 million.

In addition to the improvements in revenues and adjusted net loss figures, the company was able to bring about improvements in other areas as well. Debt for the company has been a main source of concern amid a falling crude environment. However, the company, in in the latest quarter, managed to bring $1 billion reduction in debt on a YoY basis.

The company also managed to increase production. Production for the company came at 6.57 million barrels of oil equivalent per day. The company also managed to increase its production guidance for the year by 3%. Chesapeake also has managed to increase its asset divestitures from $1.2 billion to $1.7 billion to $2 billion.

The CEO of Chesapeake, Doug Lawler, regarding the earnings said that: “In 2016, we have made substantial progress on many fronts, including the reduction of more than $1 billion of debt.” He further added that: “Financial discipline remains our top priority, and we continue to work toward additional solutions to improve our liquidity, reduce our midstream commitments and enhance our margins.”Chesapeake Energy Corporation (NYSE:CHK) was down as much as 3.5% after reporting its financial results for the second quarter of the fiscal year 2016. Although the company managed to narrow its losses and beat the expectations laid out by the consensus, the investors still punished the company sending the stock down.

The company reported revenue of $3.57 billion beating the estimate of $1.96 billion. In the last quarter, the company reported revenue of $1.95 billion implying a substantial increase. On Year-over-Year (YoY) basis the company saw an increase in revenue from $3.03 billion.

The adjusted net loss for the company was $103 million coming above the consensus expectations of $106 million. The company managed to bring down its loss figure from last year where the figure came in at $126 million. In the last quarter, the company’s loss figure was around $120 million.

In addition to the improvements in revenues and adjusted net loss figures, the company was able to bring about improvements in other areas as well. Debt for the company has been a main source of concern amid a falling crude environment. However, the company, in in the latest quarter, managed to bring $1 billion reduction in debt on a YoY basis.

The company also managed to increase production. Production for the company came at 6.57 million barrels of oil equivalent per day. The company also managed to increase its production guidance for the year by 3%. Chesapeake also has managed to increase its asset divestitures from $1.2 billion to $1.7 billion to $2 billion.

The CEO of Chesapeake, Doug Lawler, regarding the earnings said that: “In 2016, we have made substantial progress on many fronts, including the reduction of more than $1 billion of debt.” He further added that: “Financial discipline remains our top priority, and we continue to work toward additional solutions to improve our liquidity, reduce our midstream commitments and enhance our margins.”

After posting smashing results in Q3, the Anglo Dutch company looks forward to expand in Canada

After posting smashing results in the third quarter of fiscal 2016 (3QFY16), energy giant Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is well positioned to enter new deals for its business growth.

Only recently, the Anglo Dutch company signed an agreement to divest more than 206 acres in western Canada. Potential buyer for the transaction includes Tourmaline Oil Corp. (TSX: TOU) and the value of the deal stands around $1 billion. The payment is expected to take place in the form of shares ($279 million) while the remainder of $758 million would paid in cash consideration.

The divestments include several oil & gas properties such as the 145,000 acres in the Deep Basin region of Alberta while above 60,000 acres in the Gundy region of British Columbia. Combined, the targeted acreage for sale pump roughly 24,850 barrels per day of natural gas and crude.

Emphasizing upon Tourmaline that many describe as the best oil & gas plays in North America, the company with its robust paced growth and effective cost controls seems quite attractive to investors. Ranging from production levels of 20,000 barrels per day, the company’s output has shown an increase every single year, by nearly 250,000 barrels per day. In addition, its reserves too, have grown by more than 800% per annum.

On the flip side, the energy giant’s cost structure has also improved with operating expenses declining persistently to around $4 per barrel today from $6.5 per barrel in 2009. Another advantage that the company has is producing at profits amid the energy rout. Although the gas prices continue to extend their declines, Tourmaline is so lean that it can manage profits even if gas prices hover below $2 and according to estimates, it can earn profits at $1.49 per Mcf.

Having mentioned the pros of Tourmaline, The Country Caller believes Shell is in a great position to benefit from its deal with the Canadian company.