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December 2018

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The company may benefit the most this year

Arconic Inc. (NYSE:ARNC) declared a $0.06 per share quarterly dividend. This comes with a forward yield of 1.14%. The dividend is payable by February 25, 2017 to the holders of the record of the common stock of the company, at the close of the business on February 3, 2017.

Arconic Inc. and Alcoa Corporation split into two companies in late 2016. However, Arconic has proved to be a long term investment stock for many.

First it should be noted that the company started with a huge debt of $8.1 billion, which now has been reduced by $750 million. Although it has a huge debt, the company had a very strong capital position to start with. It finished the year with $1.8 billion in cash by the end of 2016.

This is why the stock was down for quite some time in 2016; it adopted a huge debt at the beginning of the year, and it is believed that in the long run it is going to benefit the most. This is mainly because of the cyclical nature of the business that Arconic deals with.

Arconic is mainly dealing with the aerospace and automotive. These two industries will benefit Arconic the most in the New Year. With respect to the North American auto industry, it reached its all-time high sales in 2016. As far as the aerospace sector is concerned, the orders are strong and expected to increase in the year 2017. This implies that in the long term, investors are going to benefit immensely if they invest in this company.

The stock traded at $21.13, climbing a massive 0.60% at Friday’s close and the stock traded in the 52-week range lying between $16.75–22.64. This suggests that the Friday’s close was near its 52-week high, which does imply positive movements for the stock.

Mizuho Securities believes outlook for First Solar remains challenging

First Solar, Inc. (NASDAQ:FSLR) stock rating was maintained as Neutral by analyst James von Riesemann at Mizuho Securities. The analyst believed that the company is facing tough challenges and industry headwinds, which could continue this year along with the next year, hence, the Neutral rating for the stock. The analyst also lowered First Solar’s price target to $46.

The analyst in a research note on the company mentioned that the challenges are because of substantial supply build-up ahead of Investment Tax Credits (ITC), roll-off of its high-margined legacy projects and also due to its switch-over in technologies as company heads towards higher-density Series 5 module.

As of now, it has become difficult for its investors to value First Solar, and also for the Sell-Side firms considering limited transparency of data. All of this has resulted in lowering the Price target for the stock, and has made analysts more cautious.

The company reported its 2Q results on August 3, in which it reported Earnings Per Share (EPS) of $0.87 which surpassed expectations by $0.32. Moreover, its revenues totaled to $934.38 million which also surpassed expectations by $71.7 million, and were around 4.3% higher on Year-over-Year (YoY) basis.

Despite of such results, the stock plunged by around 13% the next day. The main reason behind the decline in stock price was management’s poor outlook for the next year. Although First Solar is executing well on its plans, and the remaining performance in 2016 is expected to be good as its projects are inline to be completed by the year end, but the uncertainty regarding next year is overshadowing the stock’s potential.

In past five days of trading, stock has already lost 16.2% of its value. The recent decline has also resulted in Year-to-Date (YTD) stock decline of 41.6%. Despite of a recent sell-off, the stock could present a decent accumulation opportunity at a lower price.

Despite a slow start to the year, Tesla can become the world’s largest plug-in automaker this year

Tesla Motors Inc (NASDAQ:TSLA) Model S and Nissan Leaf, two of the most popular electric vehicles in the world, continue leading the global electric vehicle (EV) sales. During the first four months of the year, the global plug-in vehicles sales surpassed 182,000 units with 50,000 sales units in April alone, according to data compiled by EV Sales Blog.

With 19,428 sales over the time period, Nissan LEAF is the top selling plug-in vehicle for this year. While its new 30 kilo-watt hours (kWh) battery version has bumped up sales across the globe, the vehicle continues underperforming on American soil.

Tesla’s Model S, which was the best-selling luxury sedan in the US and the best-selling luxury car in Western European during 2015, continues its strong performance with 14,508 deliveries during the first four months of the year.

Thanks to strong government incentives, BYD Tang took the third spot with more than 12,300 sales and outperformed Mitsubishi Outlander PHEV. Renaults ZOE, which is only available in Europe, put on a good show and sold 7,875 units during the period. Other world’s top-10 selling plug-in vehicles from January to April include: BAIC E-Series EV, JAC i EV, Chevrolet Volt, BMW i3, and BYD e6.

In the list of top-10 plug-in automakers, BYD continued to be the largest player in the market with wide range of plug-ins for the Chinese market. The Shenzhen-based carmaker delivered more than 24,000 units during the first four month. As the Chinese industry for battery-powered vehicles grows, local players continue to take advantage and rapidly increase their sales.

With the worldwide presence of the LEAF, coupled with e-NV200 Nissan was the second largest automaker with about 20,500 units. Tesla took the third spot with 18,000 worldwide deliveries of its Model S and Model X. Other automobile companies include Mitsubishi, BMW, Volkswagen, Renault, BAIC, Chevrolet, and JAC.

EV Sales Blog doesn’t have complete data of the sales numbers for the month of May. Though, Tesla leads the American plug-in market with 12,655 estimated sales of both of its premium cars, the Model S (7,805 units) and Model X (4,850). The automaker has had a slow start to the year with just 15,000 deliveries during the first quarter and expectations to deliver about 17,000 during this quarter.

With improving production rate and alleviating Model X issues, Tesla will be looking to deliver more than 50,000 cars around the globe during the second half of 2016. Looking at the sales trends of other carmakers for the initial months, it looks like if the company successfully achieves full-year target of 80,000-90,000 deliveries, it will likely be the biggest EV maker in the world by the end of this year.

Despite upgrading the stock, the analyst sees no EPS upside potential in AMD

Advanced Micro Devices, Inc. (NASDAQ:AMD) has earned itself an upgrade at Morgan Stanley, as analyst Joseph Moore upgraded the stock to Equal Weight. The analyst was quite surprised to see AMD trading at such levels and believes that he still doesn’t see any upside potential. Given the short and long-term profitability profile of the company, the current price of the stock is very unexplainable and the investors might be in for a rude awakening.

AMD stock is selling for around $10.90 at the given moment, which is more than twice as much the analyst’s previous price target of $5. The EPS consensus estimate for AMD is 4 cents and 26 cents for the next two years, which the analyst believes does not justify the current trading levels at all. Furthermore, the analyst points out that AMD has not been able to sustain execution in the past and he fears that this might be the case this time around as well.

Mr. Moore is clearly not a fan of AMD and believes that the upcoming launch of 10 nm products from Intel Corporation will surely spell doom for the company’s Zen based products. For the fiscal year 2017, the analyst has an EPS estimate of 31 cents which is far higher than that of consensus, but the question remains whether AMD be able to sustain the execution and deliver long term benefits to its shareholders. Will it once again disappoint like it has in the past? The analyst is above consensus on AMD.

The analyst raised the price target to $11 from $5 and upgraded the stock to Equal Weight from Underweight. The analyst ratings for AMD are 6 Buy, 4 Outperform, 14 Hold, and 2 Sell. The stock currently trades at a price of $10.87 and has gained 3.08% since the open today.

UBS analyst Colin Langan continues to downplay Tesla due to over spending and possible market saturation

Despite being down 3.3% year-to-date (YTD), Tesla Motors Inc (NASDAQ:TSLA) stock has recovered roughly 21% in the last 30 days and 25% over the last 12-months. The Street has been electrifying as the Model X woes diminish, full-year targets appear reachable, and Model 3 unveiling nears.

Tackling major issues in recent months, the electric vehicle (EV) maker has got the Street back on its side with two key upgrades earlier this month. However, there are few Street analysts who are dubious over the still young, high-tech car manufacturer.

UBS analyst, Colin Lagan, appeared on CNBC’s “Closing Bell” on Monday, urging that Tesla’s unveiling $35,000 compact sedan will fail to wipe out the company’s existing issues. He believes that there are several reasons for investors to be “really cautious” over Tesla shares.

Mr. Langan rates Tesla as a Sell and expects the stock price to plummet roughly 48% to $120 over the next 12-months. The stock closed the market 1.10% higher at $230.26. He thinks that possible market saturation and massive capital spending will negatively effect the shares of the loss-making carmaker.

Tesla plans to spend $1.5 billion in 2016 on Gigafactory cell production, Model 3 production machinery installation, stores/service centers, and global Supercharger network. Since EVs account for less than 1% of overall global new-vehicle sales, Mr. Lagan’s anticipation of market saturation seems dubious. Nevertheless, the Tesla bear did admit that Tesla will continue to expand rapidly in high-end luxury space.

While UBS expects Tesla to face hard time in lower-end market, Stifel’s James Albertine and Global Equities Research’s Trip Chowdhry believes the company will prosper in both the segments. Mr. Albertine, who has assigned a Buy rating with $325 price target, feels that the Model 3 production volume will assist the company in maintaining growth. With an Overweight rating and $385 price target, Mr. Chowdhry expects the company to do wonders with Model 3 and achieve Q1 and FY16 delivery guidance comfortably.

Tesla has guided 16,000 deliveries for this quarter and 80,000-90,000 deliveries for the full-year. The company will unveil its more affordable EV day after tomorrow at its Design Studio in Hawthorne, California. Model 3 reservations, which are expected to surpass 100,000 by April Fools’ Day, will be opened in Tesla stores globally at 10 AM local time and on website at 8:30 PM on the same day.

 

Micron Technology, Inc. (MU) stock is expected to reach $20 in near term

Market analysts deem Samsung responsible for the deteriorated performance of Micron Technology, Inc. (NASDAQ:MU) and other companies in the sector. Samsung, due to its size, has managed to pressurize competitors in terms of production costs. Moreover, Samsung has also reduced the average selling price of DRAM which has squeezed the margins of other companies operational in the sector along with Micron Technology.

Micron Technology’s performance is getting weaker due to its direct link to DRAM prices, which has already affected the company’s performance in last quarter, leading to reported net loss. Moreover, there have been headwinds in the DRAM market already due to other factors such as softness in PC demand and weakness in mobile growth. However, market analysts believe that overall margin squeeze in the profitability of DRAM market will not sustain for long.

2016 hasn’t been generous for Micron Technology as the stock has tumbled around 23.8% year-to-date and there are no visible instances which suggest that it will rally anytime soon. Although the year has been really bitter for the overall stock market but as time is passing by, markets are recovering; Dow Jones is again trading in green with slight increase of 0.53% YTD whereas S&P 500 is only down by 0.12% YTD.

Micron Technology stock has a current price of $10.77 which is up 0.47% in terms of daily trading. The current stock price is near its 52-week low range $9.31-29.78. However, Wall Street analysts project that Micron Technology stock will reach $13.38 in upcoming 52-weeks. The company has a market capitalization of $11.42 billion with a total float of 1.04 billion shares. Micron Technology stock has an average daily trading volume of 23.12 million shares.

The most bullish analyst on the street sees Micron Technology stock reaching $20 in the near term, which suggests an 87% growth potential over the current stock price. Conversely, the most bearish analyst has a prediction that the stock will drop to $8 in near term. These stock price suggestions are according to Thomson Reuters’ poll of 27 analysts and may differ from Zacks Investment Research data

Microsoft aims to sustain growth by minimizing its dependence on Windows

Microsoft Corporation (NASDAQ:MSFT) announced back in March that Windows 10 had exceeded 300 million active users, calculating from when the operating system was launched in mid-2015, making it the company’s most successful operating system ever. Although Windows has been the key to Microsoft’s incredible success over the years, the software giant wants to expand its unique selling points and look at other ways to bank success. As a result, the company has plans to shift away from it’s over reliance on Windows operating system and seek new growth areas in conservational bots and artificial intelligence.

The company announced last Friday during the Build Tour in Pune, that it would be implementing new growth strategies to look to improve in areas of augmented reality, cognitive computing and conservational bots. Microsoft is practically out of the smartphone game, as Windows Phone continues to sink with little hope of resurfacing itself. Hence, the software giant is relying on its platforms like, Cortana Intelligence suite and cloud computing, in order to gain more growth verticals.  

Microsoft CEO Satya Nadella stated at the Build Tour that the company is aiming to empower every developer in the world by providing the appropriate tools to design and produce great applications for multi-platform implementation.

Microsoft wants its users and developers to utilize the company’s Windows, Azure and Office as intelligent platforms, that can be implemented together. The company’s cloud service has been on a roll of success and growth, as more than 50 per cent enterprises in India are currently relying on the platform to deploy their services and products. The company wants to further refine and improve its conversational bot ‘Cortana’ and make it proficient in completing tasks and understanding complex voice commands of its users.

In terms of artificial Intelligence, the company is seeking to design a common platform for multiple artificial intelligence developers rather than creating a product itself; it wants to invite developers to use its artificial intelligence software and create their own products. This is similar to the strategy of how Microsoft has acquired success through making its Windows platform available to external developers.

The software giant has realized that it has to look at other sources to generate its growth and relieve some of the pressure from its windows platform. With rivals like Google, Apple, etc. already working on artificial intelligence and conservational bot systems, Microsoft cannot afford to slack and fall behind in the race of a great opportunity. The company has stepped into the right direction and is looking to establish itself in the fields of artificial intelligence and conservational bots, like it has done in the software industry with its Windows platform.

The new patch adds Survival mode to the game along with general tweaks and fixes

Despite the initial hype, Bethesda’s Fallout 4 has been pretty much sidelined, for various reasons, since its release last year. That being said, the new game in the series is still a marvel to behold, with expansion packs filled to the brim with additional content. To further better the gameplay experience, the developer has released Patch 1.6 on Sony Corp.’s (NYSE:SNE) PlayStation 4 and Microsoft Corporation’s (NASDAQ:MSFT) Xbox One. Let us have a look at what this new patch brings in.

The most prominent addition in this update is the introduction of a new Survival mode that adds several new challenges to the game, including the removal of the fast travelling feature, game saves through sleeping only, an increase in the rate and the effects of all negative debuffs in the game including disease, lethality, fatigue, danger and other factors. Players will also find a new section which is dedicated to characters that are used to play the game’s Survival mode.

Other than the Survival mode addition, the update includes many different tweaks and fixes to the game including stability and performance improvements, crashes related to save issues, deployment of fixes for several specific issues with “The Nuclear Option”, “Defend The Castle”, “Appropriation” and other missions.

Along with the release of the patch, Bethesda has also sent out new Beta codes for Fan Harbor and players of the game can check their inboxes for codes. That being said, Fallout 4 continues to innovate and improve a game which is already near perfect. The survival mode should add a bit of a new challenge for those who are looking for replay value in the game and while the game already has plenty of stuff to do in the massive open world, Survival mode should add something more to your to-do list in Fallout 4.

Baidu Inc (ADR) (BIDU) in collaboration with Peel will be offering voice-enabled home products

Baidu Research, one of the divisions of Baidu Inc (ADR) (NASDQ: BIDU) announced that its collaborating with Peel in order to make next generation home products which will operate through voice commands. Peel is based in Mountain View, CA, and already has a successful app for smartphones and tablets, named as Peel Smart Remote which is used by 150 million customers around the world in 200 countries. Baidu stock is floating 1.51% up at $186.76 after the announcement on April 11.

Baidu is trying to bring driverless cars to Chinese roads by 2018. The driverless cars have already been tested on Chinese roads a year ago and are waiting for approval from US regulatory authorities to be tested on US roads. Market analysts are suggesting that Baidu stock is going to rally as soon as the driverless cars are on the road as they are the solution to traffic jams and ongoing increase in accidents. Alphabet Inc (NASDAQ:GOOGL) and Tesla Motors Inc (NASDAQ:TSLA) are also working on driverless cars. Which company succeeds in launching driverless cars first will be an interesting race to see.

Baidu stock performance is adversely affected by the softness in the Chinese economy. The company’s stock is down by 3.78% year-to-date (YTD). However, Baidu share price trend shows an upward movement and market analyst hopes that the company will maintain its momentum. There is betterment in Dow Jones Index as well, as it is finally up by 0.45% YTD and has overcome the loss it incurred at the beginning of 2016. However, the S&P 500 still needs a little push to get out of the red zone as its still down by 0.21% YTD.

As per recent sell side updates, out of 27 analysts providing coverage of Baidu stock, 22 have recommended a Buy while five analysts suggested a Hold and none has a Sell rating on the stock. Credit Suisse in the most recent research note maintained an Outperform rating over the company’s stock while slashing the price target to $234 from $248. Nomura downwardly revised its rating over Baidu stock to a Neutral from a Buy while reducing the price target to $180 from $200.

BlackBerry is not even worth $4 billion, says Kulbinder Garcha

BlackBerry Ltd (NASDAQ:BBRY) is trading down since the open, following some comments from Credit Suisse analyst Kulbinder Garcha. The stock is currently trading around 1% lower than yesterday, and Mr. Garcha has said that the valuation of the company is far lower than what it is assumed. The analyst dubbed BlackBerry as just another “software company”, which is definitely not worth $4 billion. Blackberry is currently making some major changes to the way it operates and is shifting focus towards software.

Blackberry has little to offer to its shareholders and investors as the company continues to struggle to find its place in the industry. It is now seeking for an exit from the hardware industry and has started to transform into a full blow services company. Mr. Garcha believes that the company will completely shut off its hardware business and the revenue from the segment will disappear in its entirety.

Furthermore, the analyst’s expectation of $850 million software revenue in the year FY19 is quite generous as he models for growth of about 13% and 12% during the next two years, which, at the given time, will be quite a feat to achieve. Apart from hardware and other structural issues, there lies significant risk even in the company’s mainstream software business. The analyst remains skeptical regarding the quality of software and the execution and believes that the company will need to put in some real effort in order to grow.

The long term EPS base case of the company is 24 cents and the multiple for the stock is 18 times the P/E. The analyst reaffirmed the underperform rating with a price target of $6. The analyst ratings for Blackberry are one buy, two outperform, 14 hold and six underperform. The stock currently trades at a price of $7.54 and has lost 1.05% since the open of the market.