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February 2018

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The stock rallied in the aftermath making the price target rise by more than 4.5%

Alphabet Inc. (NASDAQ:GOOGL) is back on track with a very solid Q2 earnings beat after having failed to meet consensus estimates during the quarter. The below par performance in the Q1 gave rise to a number of doom theories regarding Google, but yesterday’s earnings call has without a doubt thrashed all such rumors. Macquarie analyst Ben Schachter is out with his commentary on the solid earnings beat posted by Google following the close of market yesterday.

Google reported a revenue of $21.5 billion together with an EPS of $8.42. Both revenue and EPS were higher than the consensus and showcased the potential in Google’s core business. Given the size of Google’s core business, the revenue acceleration of 21.5% is very encouraging.

Among the key growth drivers, Mr. Schachter believes that mobile, YouTube and programmatic were at the very top. The revenue beat was driven by strong traffic growth and number of advertisers, while the EPS beat was depended on better cost controls and efficiency. The company’s adjusted operating margin also reached a four year high of 34.7%.

Google’s core business is gaining share despite its already enormous size, while on the other hand, the management is busy devising ways to minimize costs and create a more efficient and tech savvy platform for advertisers. Google’s other bets are a huge positive and given any of them gains traction, it can propel the stock to the next level. The strength in Google’s core business also allows the company to spend large on research and development projects and continue to innovate without much restrictions.

The analyst raised the price target to $975 and reiterated the outperform rating. The stock now trades at a value of about $800.40 after gaining 4.51% in the premarket.

Both Microsoft and Samsung are expected to incorporate important upgrades in their upcoming flagship hybrid devices

Ongoing speculation has strongly hinted that the 2-in-1 market could become the most competitive, as tech giants like Microsoft Corporation (NASDAQ:MSFT) and Samsung Electronics. Co. Ltd. (OTCMKTS:SSNLF) prepare to release their next-generation hybrid devices. The Microsoft Surface Pro 5 and the Samsung Galaxy Tab S3 might represent the most anticipated devices of 2017 but it’s largely unclear which hybrid has an advantage over one another. It is widely perceived that only a few shortcomings keep the current model of Surface Pro from being a perfect hybrid device.

However, the poor battery life of the Surface Pro 4 is a significant issue which has caused strong revolt from current users of the device. Fortunately, the recent mass-production of the seventh-generation Intel Kaby Lake processing chipset should mean that the upcoming Surface Pro 5 will be powered by a faster and more energy efficient processor. Also, Microsoft is strongly rumored to be contemplating sporting a 4K resolution display in its next-gen Surface Pro, which will be a huge welcome for heavy multimedia lovers.

Although Samsung has remained typically tight-lipped regarding upcoming Galaxy devices, the tech giant knows that it cannot afford to go all out with its next-generation Galaxy Tab if it wants to remain competitive in the market.

Popular rumors have backed the company to revert back to a 16:10 display screen for its upcoming Galaxy Gear S3, allowing the incorporation of Samsung’s trademark Super-AMOLED technology. If this is true, then it is likely that the upcoming 2-in-1 device’s display will offer 4k resolution, representing a significant upgrade compared to its predecessor version.

Also, recent speculation has suggested that Samsung has lined up its powerful Exynos 7 Octa 5433 processing chipset which is designed to deliver faster processing and more efficient consumption of power. Furthermore, there is a slight possibility that Samsung could incorporate its new artificial intelligence technology on the Galaxy Tab S3, which the company is also rumored to introduce on its next flagship smartphone devices

We compare the two high-end Android flagships of 2016

HTC released the eagerly anticipated HTC 10 smartphone earlier this month and so far, the company has received positive reviews for its new device. The HTC 10 follows the same design pattern as previously adopted by HTC for the M7 and M8, which made HTC a serious contender in the premium smartphones category.

LG Electronics Co. (NYSE:LPL), amidst much hype, also announced its latest flagship device in the form of the LG G5, which has taken the tech world by storm for of its innovative modular design. Today, we compare the two Android flagships and see which comes out on top.

Design

Both devices are made from a single piece of aluminum which gives them a premium feel. The HTC 10 measures in at 146mm x 72 mm x 9mm, whereas the LG G5 comes in at 149mm x 74mm x 7.7mm. The LG G5 is slightly bigger than the HTC 10, but it is about 14 percent thinner than the HTC 10.

Both devices are also similar in weight, with the HTC 10 weighing in at 161g whereas the LG G5 weighs 159g. The HTC 10 looks very similar to HTC flagships of the past, whereas LG has adopted a modular design which lets users add parts, such as Hi-Fi sound or an external battery. The HTC 10 can be bought in the US in silver or gray, while the G5 will be available in Titan, Gold, Silver and Pink.

Fingerprint recognition is also found on both devices with the HTC 10 integrating the fingerprint scanner in the home button, while the LG G5 placing the fingerprint scanner on the back of the device.

Display and Battery

Both devices sport an ultra-sharp Quad HD resolution which comes in at 2560 x 1440 pixels. This results in 564ppi for the HTC 10 and 554ppi for LG’s G5. Both devices also share a similar IPS LCD Panel which makes colors vibrant. The HTC 10 boasts a massive 3000 mAh battery which the company claims will last up to 2 days of normal use. The LG G5 employs a 2800 mAh battery, giving users the option to change batteries unlike the HTC 10. Both devices also make use of the Qualcomm Quick Charge 3.0 which promises to provide an 80 percent charge in 30 minutes.

Performance and Memory

As expected from flagship devices, the HTC 10 and G5 boast the latest Snapdragon 820 quad-core chipset that clocks in at a respectable 2.2GHz. Both smartphones also have 4GB of RAM, promising blazing fast performance and excellent multitasking capabilities.

USB-C is also the standard port on both devices for charging and data transfers, as manufacturers have started to transition to USB-C as their port of choice. Both devices also come with 32GB of on-board storage with available Micro SD cards that lets users expand storage up to 2 TB. The two devices will also come installed with the latest iteration of Android, 6.0 Marshmallow. HTC 10 employs the Sense UI on top of Android 6.0 Marshmallow whereas LG uses the Optimus UI skin on top of Android 6.0.

Camera, Price and Availability

The HTC 10 boasts a 12MP rear camera with a 5MP UltraPixel front camera whereas the LG G5 has a 16MP rear shooter with an 8MP camera on the front. Both devices come equipped with OIS that helps with taking pictures in shaky conditions. The cameras on devices also feature a f/1.8 aperture which results in crisp images even in low-light conditions. Both phones are now available across all major retailers in the US. The HTC 10 can be purchased for $640 whereas the G5 is available for $630.

Verdict

Both devices boast similar specs and so far, there is no clear winner. For users that want a device for customization, the G5 is the clear choice due to its modular capabilities. It gives users the options to replace the battery and add a camera module for better pictures.

The HTC 10 looks a promising device from HTC and looks to make up for the failure of its last two flagships.

 

Netflix shares take flight on a bullish report by MSCO focusing on its international opportunities

While most Street analysts are neutral or bearish on Netflix, Inc. (NASDAQ:NFLX) over the recent price hikes, there are others which remain bullish on the world’s leading video streaming platform. MSCO, a Rye Brook-based firm founded and led by Mar Stevens, issued a report named “From Rio to Rotterdam, why we remain bullish on Netflix’s international opportunity.”

As a result, Netflix shares opened the week on a high note, surging up 1.40% to $100.99 in merely 20 minutes after the opening bell.

MSCO noted that the streaming giant can create an international subscriber base of 100 million at maturity, even without the world’s most populous country China. The heading, from “Rio to Rotterdam” should imply all the overseas markets that come in between Rio de Janeiro, Brazil and Rotterdam, the Netherlands, including all the European and South American markets where Netflix operates.

The research firm had previously noted focus on Brazil and the Netherlands as “two markets that have scaled.” It believes that Netflix’s growth has accelerated in Brazil after growing modestly for some years.

“There is real concern in the market following 2Q16 net adds guidance, however, that Netflix has hit a wall, MSCO noted in the report. “We think this concern is unfounded for two reasons.”

Firstly, it believes that the company has “scaled and scaled to profitability,” leading to more than doubt-digit penetration and modest earnings in markets where it is operating for at least three years. Secondly, it highlighted that Netflix has attained this milestone in markets where household income levels, native languages, and pay-TV penetration vary a lot.

MSCO maintained its international subscriber net additions forecast of 12.5 million for 2016; though, it upped the estimate from 9 million to 10.3 million for 2017, with view of modest net addition increase during the period for post-2013 markets in aggregate.

Sell-side firm Piper Jaffray has reiterated its Outperform rating for salesforce with a price target of $95

According to news sources, there is expectation of a notable shift in world of software development, as salesforce.com, inc. (NYSE:CRM) is expected to build its new Internet of Things (IoT) offering on Amazon’s Web Services (AWS).

Alex J. Zukin, analyst at Piper Jaffray in his report stated his expectation that the salesforce.com’s deal with Amazon might prove to be just the tip of iceberg, and it appears to be on heels of large and strategic, but late in the quarter.

He further mentioned that over this year, we could further expect other part of Salesforce’s infrastructure to be moved to AWS too. He stated that the IoT cloud would utilize Amazon’s Aurora database, and it is the perfect fit for IoT. The reason he mentioned was that this database has the flexibility of AWS’ offering, which has the ability to scale up and down according to the uncontrolled exponential growth.

He expects that in the future, Salesforce might also shift its data centers towards certain geographies to AWS. This would be a win-win situation for both, would mean cost savings for the former while would be a marquee win for the latter.

He stated the deal is just the initiation of the newly evolved conversation between the two companies, and might result in a formal partnership in the future. He mentioned three potential possibilities. First, Amazon might acquire Salesforce in an outright transaction.

Other option is that Amazon might spin out its AWS segment, which later combines with Salesforce. The third option is that Amazon could be involved in a strategic sales partnership agreement with Salesforce for AWS.

He reiterated an Outperform rating for the stock, with a PT of $95.

The analyst expects Valeant to revise down its guidance for 2016

After Valeant Pharmaceuticals Intl. Inc. (NYSE:VRX) recently said that it would report first quarter results on June 7, RBC Capital analyst Douglas Miehm lowered his target price from $65 to $58 on the stock. Even the reduced price target reflects 94.69% upside potential over the last close of $29.79. However, the firm reiterated its Sector Perform rating on Valeant.

Due to the recent management changes and current prescriptions trends, the firm has revised its forecasts for Valeant’s financial results. The analyst expects a lowered guidance for 2016 based on “Xifaxan outlook, Nitropress & Isuprel discounts, and OUS business inventory work-downs/FX impact.”  RBC Capital cut its top-line estimate from $11.08 billion to $10.58, reflecting a 4.5% decline. The firm also lowered its adjusted earnings per share estimate by 8.1%, to $8.20 (from $8.92), while cutting adjusted earnings before interest taxes depreciation and amortization EBITDA by 6.5%, from $5.57 billion to $5.21 billion.

Mr. Miehm expects the Canadian pharmaceutical giant to revise its 2016 top line and EBITDA guidance range by an approximate 5-7%, which would generate $10.2-10.6 billion in revenue and $5.2-5.5 billion in adjusted EBITDA. The newly-appointed CEO, Joseph Papa might increase research and development as well as selling, general and administrative expenses in order to restructure the business, based on which the firm believes guidance revision could have a major impact on adjusted EBITDA rather than revenue.  

The analyst further added: “In our view, the shares could be weaker if guidance were to approach the $5B level in Adj. EBITDA given VRX’s new debt covenants (2.75x annual interest coverage) require Adj. EBITDA to be ~$4.8-4.9B. The shares could rally if guidance were >$5.3B.”

Valeant Pharmaceutical stock closed up 4.71% at $29.79 yesterday. The company has a 12-month consensus mean price target of $60.22, which suggests shares have 102.14% upside potential over the last closing price.

The game’s reveal has been a big moment for the publisher

Electronic Arts’ (NASDAQ:EA) Battlefield 1 was unveiled to the world earlier this month. While the game’s release was exciting for many, it’s post-reveal reception has been nothing short of extraordinary.

The publisher revealed during its Investor Day meeting that Battlefield 1 is the most watched trailer in EA’s history with 31 million views, which was also confirmed by EA Studio’s Executive Vice President, Patrick Soderlund. It is without a doubt an incredible achievement for the publisher that just a trailer has broken expectations and received so well by masses. The Battlefield franchise saw 9.4 million players during FQ4.

We can’t help but wonder if Activision Blizzard, Inc. (NASDAQ:ATVI) did something to aid in that milestone. The publisher revealed its next Call of Duty titled “Infinite Warfare” just days before Battlefield 1. While it has become normal for fans to show their apathy for a new Call of Dutyat this point and show their disregard for futuristic settings, the situation escalated way more than anyone could have imagined.

As it stands, Call of Duty: Infinite Warfare’s trailer is the second most disliked video on YouTube with more than 2 million thumbs down, putting the like to dislike ratio at 1:6. In comparison, Battlefield 1’s trailer has significantly more views and no such humiliating figure attached.

Battlefield and Call of Duty fans have been going at each other, but it turns out that even hardcore Call of Duty fans are displeased with the route taken by the franchise. Battlefield 1 has clearly earned the interest of gamers even before its release. It will be interesting if Call of Duty: Infinite Warfare’s sales reflect the same level of disinterest.

The Country Caller unveils much awaited figures of Under Armour and Eli Lilly ahead of their Q2 releases

Before the opening bell tomorrow, Under Armour Inc (NYSE:UA) and Eli Lilly and Co (NYSE:LLY) will release their second quarter earnings for the fiscal year 2016. Both the companies are expected to beat the Street on bottom lines according to earningswhispers.com, while Estimize says that Eli Lilly’s top line will be consistent with Street’s estimate. Further details of sales and earnings are discussed below.

The Street expects Under Armous to post one cent in EPS, while earningswhispers.com has suggested a bottom-line beat with its EPS estimate of three cents. For the same quarter last year, the company posted earnings of seven cents a share, and for its 1QFY16, it posted an EPS of $0.04. For the quarter ended June, the Street anticipates company’s EPS to decline by 85.71% on a year-on-year basis.

According to FactSet, the consensus revenue estimate for the sports clothing and accessories company is $999.9 million, while Estimize has a mean estimate of $1.008 billion, hinting toward a top line beat this time. The $17.5 billion company posted $1.05 billion in sales for 1QFY16, and $784 million in its year-ago quarter. Both the figures, in comparison to the Street, suggest that the company is about to post 27.53% YoY growth in revenue and 5.71% sequential decline in revenue.

As for Eli Lilly’s quarter that ended on June 30, the consensus anticipates $0.86 in EPS, one cent below the earningswhispers.com estimate. If the company meets the Street on bottom line, earnings will decline 4.44% YoY and rise 3.61% QoQ. For 1QFY16, Eli Lilly reported $0.83 in EPS, while for the year ago period, EPS came in at $0.90.

The drug maker is to report sales of $5.14 billion for the 2nd quarter. This anticipated figure reflects toward 3.42% YoY growth in sales. Sales reported for the year ago period were $4.97 billion. Estimize has issued an estimate of $5.1 billion, in line with consensus estimate.

FedEx reportedly grounded one of its aircrafts equipped with General Electric’s provided part similar to the one involved in American Airlines incident

Following American Airlines incident, General Electric Company (GE) announced plans to remove its problematic part from all other commercial jet engines yesterday to prevent any other potentially hazardous event. In the same perspective, FedEx Corp recently announced that it is grounding one of its freighter equipped with the same part.

FedEx Corporation (FDX) spokesman reported to Reuters that one of its planes is temporarily grounded as its engine is still operating the part manufactured by General Electric which is currently conducting an intensive investigation related to a small number of engine parts. The engine manufacturer reported after initial investigation that the part has “material anomaly,” which led to American Airlines Group Inc.’s (AAL) accident earlier last month.

The US investigators announced earlier last week that the engine part had a fatigue cracking within the part with material anomaly; however, the agency has not blamed any company for the non-fatal accident. Industry experts are of the opinion that the material anomaly may lead to a manufacturing defect.

FedEx further reported that after checking the parts, one of its MD11 aircraft engine was affected by a similar issue. Furthermore, the company’s spokesman said that the aircraft is grounded until the replacement of its engine and that safety is top priority for the company.

Along with FedEx, General Electric also confirmed that all parts linked to the anomaly were retired except one which is still operational in a few jets, including the one operated by FedEx. The engine manufacturer also reported that the part was retired not because it was defective, but because the part belonged to the same chain of materials that had the anomaly.

General Electric has been positive regarding the performance of the CF6 engines used in commercial aircrafts, while reporting that the engine had more than 400 million hours of successful airtime since its inception in fiscal year 1970. American Airlines’ recent incident was also rare in which the component spew out from the engine resulting in a fuel leak and eventually fire at the incident

Analyst offers commentary on Gilead Sciences after the announcement of recent GS9883 data

Leerink Partners analyst, Geoffrey Porges, weighed in on Gilead Sciences, Inc. (NASDAQ:GILD) after the company revealed significant data related to GS9883 bictegravir, its mythical second generation treatment of HIV-1 infection. The analyst remains convinced with Outperform rating and a price target of $120 on the stock. This figure reflects a potential upside of 46.71% over the last close of $81.79. Gilead disclosed that bictegravir integrase inhibitor, which has now entered phase III trials, exhibited favorable resistance profile and pharmacokinetics relative to other INSTIs available in the market.

Mr. Porges said, “This compound, which is designed to forestall the share erosion Gilead has suffered to VIIV’s dolutegravir (Tivicay/Triumeq) in their HIV franchise, was presented in four posters at this week’s American Society of Microbiology (ASM) Microbe meeting in Boston. Gilead distributed the posters to analysts and investors and here we summarize the posters and their key points.” He commented that the information is of significant importance to the firm as it has 2020 HIV revenue forecast of nearly $7 billion, which is 50% higher than that of consensus.

The analyst expects the introduction of bictegravir, in combination with tenofovir alafenamide (TAF), and Emtriva (emtricitabine) to be an ultimate move from the Gilead. He noted a few takeaways from this regimen which include, a very small pill size of about 310 mg, impressive efficacy treatment in naïve and experienced patients, one-pill-a-day convenience for patients, and an efficient barrier to viral resistance by proving activity in patients who have failed other INSTIs earlier. He further added, “To these advantages we hope we can also add excellent safety and tolerability, although these have yet to be proven, or at least presented and disclosed, by the company.”

For the GS9883 regimen that will launch in 2018, the analyst expects global sales to grow over $4 billion by 2020, on an adjusted point of sale, and further projects it to reach $7 billion by 2022. However, there remains a possibility of alterations in forecasts if bictegravir sales show any disappointments.