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June 2018

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Focus has increased on whether or not Perrigo Company could be pushed into a break-up situation with an ongoing strategic review

Soon after Reuters broke the news of potential sale of Tysabri royalties, RBC Capital analyst weighed in on Perrigo Company plc Ordinary Shares (NYSE:PRGO) and reaffirmed his $92 price target on the Sector Perform rated stock. The price target indicates 1.37% downside potential over the closing price of $93.28. RBC Capital analyst performed a breakup analysis and estimated a value of nearly $117 a share with a premium against modest dis-synergies.

Randall Stanicky, RBC Capital analyst noted investors’ focus has increased on whether or not Perrigo could push into a breakup situation given the ongoing strategic review. “Starboard has been pushing for the sale of non-core assets including the Tysabri royalties and Generics business and now Reuters is reporting that PRGO is exploring a sale of its Tysabri royalties. From here, the focus should be on management’s messaging around its willingness to sell the Generics business which will make a full break-up seem more likely,” said Mr. Stanicky.

Last week, Mr. Stanicky wrote in his research note to investors that the divestiture of royalties makes sense. He tagged Perrigo asset at approximately $2.8 billion. RBC Capital analyst figures Royalty Pharma as the most likely buyer of the asset. Mr. Stanicky expressed a possibility for 2017 earnings per share to increase from $6.47 to $8.04 if the company utilizes net proceeds from the sales to pay off its debt. Mr. Stanicky says the real question is whether Perrigo will obey another advice from Starboard, such as to sell-off generic business. If the company does so, full breakup would become more likely, he noted.

The Michigan-based pharmaceutical has a total market cap of $13.37 billion. Perrigo stock has a 52-week high price of $180.92 and a 52-week low price of $82.50. Out of the 21 analysts covering Perrigo stock, 15 rate it a Hold, four rate it a Buy, one rate it an Underweight, while one rate it a Sell.

Qualcomm will display 5G NR prototype system later this month at the Mobile World Congress

Qualcomm Inc (NASDAQ:QCOM) has significantly stepped up its game in the patent world. The semi conductor giant announced today that its subsidiary, Qualcomm Technologies, has secured over a 100 design wins. All these patent design wins range across 60 different original equipment manufacturers.

These designs are based on Qualcomm’s MDM9x07 chipset product line that includes Qualcomm Snapdragon X5 LTE modem and MDM9207-1 modem.  Additionally, the 5G NR is compatible wih Radio frequency bandwidths ranging above 100 mega hertz. This means that the system has the ability to deliver multi-gigabit per second data rates.

Among other things, the 5G NR also has subframe integration that is specifically designed for considerably low over the air latency, as compared to current 4G LTE networks. The announcement is a major milestone in Qualcomm project of making excessive innovations in 5G designs. 

The prototype model is said to go on public display at the Mobile World Congress Shanghai, which will be held later this month from June 29 to July 1. Shares of Qualcomm plunged by more than 2% in late trading hours as US equities continue to take a major hit from the Brexit scenario.

Pharmaceutical and biotechnology stocks have become attractive as Medicare costs are not rising this year

Biotechnology and pharmaceutical stocks soared higher in yesterday’s trading session, followed by the news that said Independent Payment Advisory Board will not trigger this year, something the investors feared. Along with this positive implication in biotechnology and pharmaceutical space, a lot of rumors have been under way about a possible mega deal that is likely to strike.

Rumor mill mentioned two specific deals yesterday that are likely to happen. Among the few named companies were Amgen, Inc. (NASDAQ:AMGN) and Pfizer Inc. (NYSE:PFE) that might seek a buyout or merger. In addition to these, rumor mill also mentioned the possibility of Gilead Sciences, Inc. (NASDAQ:GILD) merger with either Bristol-Myers Squibb Co (NYSE:BMY) or Celgene Corporation (NASDAQ:CELG).

Moreover, Baird analyst Brian Skorney believes Biogen Inc. (NASDAQ:BIIB) is ripe for merger and acquisition. He expressed that the company might be a possible acquisition target, while also hinted towards a possibility of Biogen acquiring another company.

In yesterday trading hours, Biogen shares were up 0.6% to close at $234.60. Gilead Sciences stock was up 0.8% to close at $82.45, while Bristol-Myers stock traded up 1.49% to close at $72.31. While Amgen stock gained 0.2% to close at $149.81, Pfizer stock closed down 0.8% at $34.47.

According to some analysts, the rebound in pharmaceutical stock was sufficient to counterbalance the earlier witnessed downward trend. The stocks have become attractive primarily over the news of IPAB not being triggered. Additionally, the news implies of brighter prospects for several pharmaceutical companies. The IPAB, consisting of 15 member panel, is a cost cutting mechanism of US government and will likely be triggered next year. “Investors had been watching nervously for news of the IPAB determination, fearing that it could have been triggered this year and setting in motion reductions in Medicare payments to biotech and pharmaceutical companies,” said Bernstein analyst.

Facebook stock fell more than 2.5% in today’s trading session, after Citron Research made a bearish bet against the social media giant

Several stocks in the social media space including the likes of Facebook Inc (NASDAQ:FB) and Twitter Inc (NASDAQ:TWTR) became active in today’s trading session, after Microsoft Corporation acquired the online professional platform, LinkedIn Corp (NASDAQ:LNKD) by splashing roughly $26.2 billion. The software giant expects to incrementally increase its total addressable market (TAM) with LinkedIn’s buyout and wishes to integrate the professional platform with its cloud offering.

The Global X Fund which tracks major movements in social media stock also jumped as much as 5% in today’s trading session, reflecting the improving investor sentiment on social media stocks. Microsoft has already announced to finance its aforementioned acquisition with cash and expects to close its takeover by the end of current year.

Twitter Inc

Shares of the microblogging platform, Twitter Inc (NASDAQ:TWTR) jumped more than 6% in today’s trading session, after the news pertaining to LinkedIn’s buyout came to light. Twitter has faced increasing pressure from its shareholders as the company struggled to attract users to its platform. Twitter stock has slumped roughly 35% since the start of current year, primarily because of its inability to increase its monthly active users.

Earlier this month, analyst at SunTrust reaffirmed a Buy rating on Twitter stock, while highlighting the company as the top candidate for M&A based on the existing conditions of the social media industry. The research firm shed more light on the recent reassignment of Twitter’s consumer product leader, Jeff Seibert. Analysts at SunTrust believe that the move to reassign Mr. Seibert will be viewed negatively by the investors and analysts on Wall Street as it indicates that the company is still facing problems with its “product innovations.”

Facebook Inc

Unlike Twitter, the social media giant Facebook Inc (NASDAQ:FB) responded completely opposite to LinkedIn-Microsoft’s deal as the company witnessed a decline of approximately 2.5% in its share price, today. Facebook stock came under fire as LinkedIn Corp increased its presence incrementally by joining force with the software juggernaut, Microsoft.

Citron Research made the situation worse after Andrew Left announced his short position on the world’s biggest social media platform. The activist short seller believes that Facebook is currently losing a lot of cash on relevancy which can hurt the company in the future.

Ford sold 126,834 vehicles in August in Asia Pacific region

Ford Motor Company (NYSE:F) today reported sales for the month of August for its Asia Pacific region, which clocked in at 126,834 units, rising 22% in comparison to the same month of 2015. More importantly, the Detroit-based carmaker has reached 1 million unit sales milestone in the region.

The upward trend for Ford in the region continues this year, which was backed by record demand over the past month. The carmaker’s market share in Asia Pacific also rose to 4.1%, which also marks the milestone of reporting the highest share ever for any single month.

The president of Ford’s Asia Pacific segment, Dave Schoch, said, “Reaching 1 million sales so quickly is a testament to the growing strength of our brand and products in Asia.” He further added that although the company faced immense competition and worked under challenging business conditions, Ford continued to grow and thrive under pressure while reaching to new customers in the region.

The growth in Ford’s Asia Pacific region sales was stimulated by the ever-growing Sports Utility Vehicle (SUV) line-up. The sales of SUVs have escalated about 17% year-to-date. In addition, the carmaker’s vehicle sales include 30% of SUV sales during this year. For instance, the new Ford Edge was well received by the motorists in China and has become a hot seller, as the year-to-date sales have surged by three-folds since the introduction of the vehicle last year.

In China, Australia, India and South Korea, Ford Mustang has been sensational, while the Ranger pickup has thrived well, generating solid sales trend in Asia Pacific and more specifically in Australia, New Zealand, Thailand, Vietnam and Taiwan.

Ford also recently announced its entry into the autonomous vehicle space, with plans to introduce a mass-market fleet of vehicles by 2021. The carmaker is working in full swing to give a thrust of competition to other carmakers in the industry like Tesla Motors Inc (NASDAQ:TSLA) along with tech heavyweights Apple Inc. (NASDAQ:AAPL) and Alphabet Inc’s (NASDAQ:GOOGL) Google.

Ford stock currently trades at $12.65, down about a meager 0.43% as of 10:53 AM EDT.

Mizuho Securities increases Price Target of NVIDIA Corporation to $66

Visual Computing Company, NVIDIA Corporation (NASDAQ:NVDA) stock rating was maintained by analyst Vijay Rakesh at Mizuho Securities. The analyst increased the Price Target for the stock from $60 to $66, a substantial increase of 10%.

The increase in Price Target came after the company reported strong performance in the quarter ending July, and presented its future guidance to be on much stronger side as compared to Consensus estimates for quarter ending in September.

The company, in its results, stated significant strength extracted from Pascal Gaming Graphics Processing Units (GPU) and also from Quadro workstation which lead to an increase in graphics revenue by around 11% on Quarter-over-Quarter (QoQ) basis. In addition, the data center also witnessed growth of around 6% on QoQ basis considering acceleration in its GPU, while the Auto represented a quarterly growth of 5% on sequential basis.

While presenting its guidance for the next quarter, the company mentioned that it eyes growth in all of its segments in October. The increase in Price Target is on basis of a 36.5 multiple on FY18 expected Earnings per Share (EPS.)

The stock performance for the year has been mouthwatering, as stock has soared by 86.91% Year-to-Date (YTD). Even in the past month of trading, stock has continued its positive momentum and has increased by 18.2%.

The highlight of company’s performance in 2Q was its bottom line, which increased by $313 million or about $0.53 per share, much higher than $190 million or EPS of $0.34 in last quarter. The YoY growth in earnings amounted to 64.7%. The revenues jumped by 24.3% to $1.43 billion on sequential basis.

Considering its positive results, and positive guidance for upcoming quarters, we believe the stock has the potential to trade in green and presents a good buying opportunity. Mizuho Securities reiterates the same bullish outlook for the stock.

NetApp reiterated as Outperform by Baird

Analyst Jayson Noland at Baird maintained his Outperform rating for the stock of NetApp Inc. (NASDAQ:NTAP) following company’s Insight conference in 2016. The company’s Chief Executive Officer (CEO) Mr. Kurian mentioned a Keynote address earlier on Monday’s evening and emphasized the shift to Flash from HDD, and also to scale out the silos.

The company’s CEO mentioned that it’s recent move up to No. 2 in All-Flash array market and stated it expects to move upward to No. 1 and hence, would require substantial gain in market share as compared to Dell and EMC.

The company had spent sufficient amount of time in discussion on Data Fabric. The company is essentially focusing on building a data management platform which would result in allowing the customer to manage the data on premise in the corporate data center, or at off-premise public cloud. The company is also adding on services which sit on Data Fabric, however, the management stated that determining pricing is of key importance.

The company also presented its optimism of the ongoing success of its All-Flash FAS and also its ramp of SolidFire. The company included some new product announcements, such as Ontap Cloud. NetApp announced its expanded support for deployments related to software-only related to its ONTAP operating system on its Amazon Web Service public cloud, which serves to be an addition to its existing Microsoft Azure Support.

Also, it included Flash Solutions. The company introduced several of its new arrays in its flash lineup which promises some radical improvements in its cost base and density, along with a 15 TB SSD support. Also, it results in a much higher performance throughout its hybrid NVMe caching. The new arrays from the company would provide support to its both, 40 GB Ethernet SAN Connectivity and 32 GB Fiber Channel.

Moreover, it also included amendments in Cloud Sync. The new Cloud Synced data management solution facilities from the company are expected to facilitate a much seamless synchronization between its Amazon Web Service Cloud storage and On-Prem Systems.

The analyst increased the Price Target for the stock from $32 to $37, on back of a 13x multiple of its FY17 Expected Earnings per Share (EPS) which gives NetApp a credit of 50% for its net cash position.

Meridian Funds is the only hedge fund which has bought a fresh stake in Twitter Inc.; The Country Caller discusses the details

The Country Caller, in its recent articles, has been reviewing positons taken by a number of hedge firms in various stocks according to their recent 13F filings. Today we will analyse the positions of Meridian Contrarian Fund which comes under the Meridian Funds. The total portfolio of the fund, according to Dataroma, was worth $507,588,000 at the end of the third quarter.

Meridian Contrarian Fund has, as mentioned in its September 30 13F filing, bought a stake in technology giant Apple Inc. (AAPL). The hedge fund bought 104,943 shares of the iPhone maker. The new bought stock made up 2.34% of its portfolio. The average price of these shares was $113.05. Apple shares closed up 0.10% at $110.06 Friday, which means that the hedge fund has lost around $3 per share of the value of these shares.

The investment firm also bought a fresh stake in social media company Twitter Inc. (TWTR). It is the only hedge fund mentioned on Dataroma which has bought a stake in the flailing company. Twitter has benefited from the recent elections as due to them the usage increased tremendously. It had been suffering from various blows recently. The company’s COO decided to resign along with the recent news of its high-profile accounts being compromised. Therefore, the news of the hedge fund buying 147,439 shares of the technology company was surprising. The shares make up 0.67% of the total volume of the hedge fund’s portfolio.

The stock in which the hedge fund has the most stake is of software giant Microsoft Corporation (MSFT). The investment firm holds 451,200 Microsoft shares after raising its stake by 31,000 shares. Meridian funds has raised its stake by 7.38%. The stock comprised 5.12% of total portfolio volume of Meridian funds at the end of the quarter.

The hedge fund has also changed its position in various other stocks. It has bought an additional 295,366 shares of Nomad Foods Ltd., raising its stake by 155.46%. The investment firm has also sold off its stake on Fortinet Inc. and Synchrony Financial, respectively.

The Country Caller discusses whisper numbers for both the companies ahead of their respective quarterly earnings

After the closing bell today, Palo Alto Networks Inc (NYSE:PANW) will report its fourth quarter results, while NCI Building Systems Inc (NYSE:NCS) will announce its third quarter earnings for fiscal year 2016. Earnings whispers suggest that Palo Alto will beat the Street on top line but NCI Building Systems will miss the Street on top line. The Country Caller looks into the numbers closely below.

Palo Alto

For 4QFY16, the consensus expects Palo Alto to report $0.49 in earnings per share, up 75% year-over-year. The security company reported $0.28 EPS for the same quarter a year ago, while in the third quarter of FY16, it reported $0.42 profits per share. Earningswhisper.com suggests that the company’s bottom line will remain in line with the Street’s estimate. Both the estimate are within the company’s EPS guidance range of $0.48-0.50.

According to Thomson Reuters, the consensus projects revenue to come in at $389.54 million, which means that a 37.21% growth in revenue is expected on a year on year basis as the company reported $283.9 million for the same quarter a year ago. For the preceding quarter, Palo Alto reported $345.8 million in revenue. This time, Estimize anticipates $390.49 million revenue, which implies that the company will beat the Street on top line this time. The company itself expects revenue to land in between $386-390 million.

NCI Building Systems

According to FactSet data, the consensus projects NCI to report profit of 28 cents per share. The company reported a profit of three cents per share in the preceding quarter, i.e. 2QFY16. The consensus estimate implies a 180% growth in EPS year-over-year as the company reported $0.10 EPS for the same quarter a year ago.

The Street’s estimate for NCS’ top line stands at $463 million against Estimize’s estimate of $447.59 million, which suggests that the company might beat the Street on top line this time. The consensus anticipates 10.02% YoY revenue growth this time. The company reported $420.8 million revenue for the same quarter last year. However, the previous quarter revenue of $372.2 million implies that the consensus is expecting revenue to rise 24.39% sequentially.

The Country Caller reviews why Chesapeake shares are trading unusually higher through today’s session

Chesapeake Energy Corporation (NYSE:CHK) was trading in the green today which rather comes as an anomaly in an environment marked by falling crude oil prices. The rise through today’s session is apparently associated with the latest debt-to-equity swap by the Oklahoma-based gas company.

This Monday, Chesapeake outlined in an SEC filing that it is entering into a privately-negotiated purchase and exchange agreement. The company, according to the document, is scheduled to exchange $0.01 per share of common stock with some of its senior outstanding notes.

As mentioned in the filing, the company has managed to issue a total of 37.08 million common shares from May 16, 2016 through May 23, 2016. The shares represent about 5.2% of the company’s entire common share float. The exchange would be against $81.5 million of aggregate principal amount of 2.5% contingent convertible senior notes due in 2037, $26.5 million of 6.5% senior notes maturing in 2017, $7.5 million of 2.25% contingent convertible senior notes due in 2038, and $50.5 million of principal amount of floating Rate Senior Notes due by 2019 Outstanding Senior Notes.

The company, after a major decline in oil and gas prices, now finds itself in a liquidity crisis and is trying hard to survive the downturn. The company, earlier between May 5-11 managed to exchange 28.1 million newly-issued shares with senior notes valued around $153 million.

The company has a massive debt load of $9 billion, and this technique of debt-to-equity swap can help cover the load. It has also sharply reduced its capital spending and hopes to divest assets to improve its position.

Another reason for the increase in stock price can also be associated with rising crude oil prices as the West Texas Intermediate (WTI) was up 0.73% at $48.43 while the Brent crude was up 0.39% at $48.54 per barrel today.