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August 2019

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The Country Caller takes a look at Guess and Box before their earnings release today

Guess?, Inc. (NYSE:GES) and Box Inc. (NYSE:BOX) are expected to post their quarterly results after the closing bell on November 30. Both companies will announce their results for the third quarter of fiscal year 2017 (3QFY17). It appears that both companies will outperform Street expectations on top and bottom lines.

Guess

Guess is all-set to post its 3QFY17 results after the closing bell today. Wall Street analysts expect the company to post earnings per share (EPS) of 14 cents, representing an increase of 6.67% year-over-year (YoY). Moreover, analysts also predict earnings to remain flat on a quarter-over-quarter (QoQ) basis. Earningswhispers.com expects GES to post EPS of 16 cents, meeting the higher-end of the company’s EPS guidance of 11-16 cents.

Furthermore, revenue is expected to clock in at $551.16 million, which would represent an increase of 5.8% YoY, and would be in-line with the company’s revenue increase outlook of 5-8%. Estimize.com expects to company to post revenue of $552.79 million.

Box Inc.

Box Inc. is expected to post its results after market closes today. Analysts expect loss per share (LPS) of 19 cents. The company’s LPS outlook stands at 19-20 cents. Earningswhispers.com expects the company to further lower its loss to 17 cents. Additionally, the California-based company announced LPS of 14 cents in the preceding quarter.

Moreover, the consensus revenue estimate stands at $100.72 million. Analysts predict the cloud storage business to meet its revenue guidance of $100-101 million, and they expect revenue to rise about 28% YoY. Estimize.com revenue forecast stands at $101.35 million.

The Country Caller explains why this analyst remains skeptical on Valeant shares despite the announced credit amendment

After raising his price target on Valeant Pharmaceuticals Intl. Inc. (NYSE:VRX) shares to $22 last week, Piper Jaffray analyst David Amsellem has now reaffirmed his price target and Underweight rating on the stock. The analyst has updated his thesis on Valeant shares after the company announced an amendment to its credit facility yesterday.

The drug maker revealed yesterday that its creditors have allowed it more time to pay back the $31 billion debt it has on its shoulders. CEO Joseph Papa plans to sell non-core assets to make a large payment this year, as he revealed during the company’s second quarter earnings call last week.

While Morgan Stanley believes this news would be good for the company, the Street does not believe so. Valeant shares closed down 2.7% yesterday at $29.19. Piper Jaffray analyst acknowledged that this agreement does give the company “more breathing room” but he still believes the stock remains “uninvestable.”

Mr. Ansellem said that the stock trades at 8.4 times his enterprise value/earnings before interest taxes depreciation and amortization 2016 (EV/EBITDA 2016) estimate, based on the company’s $4.8-4.95 billion guidance it issued two months ago. Explaining his bearish outlook on the stock, the analyst said that expectations for Valeant’s recovery in the second half of 2016 remain “overly optimistic.” He also said that the non-core asset sale, even if the company goes through with one, would not stabilize shares, and that EBITDA is unlikely to stabilize beyond 2016.

In order to explain his cynical view on potential asset sales, the analyst said if the company sells the assets for $8 billion at 11 times approximate EBITDA, like it said it would in its earnings call, EBITDA would fall to $4.07 billion, taking Valeant’s overall debt down to $22.8 billion. That, according to the analyst, would translate into a pro forma debt/EBITDA ratio of 5.6 times, which would still be very high, and a pro forma EV/EBITDA ratio of 7.9 times, which would be unattractive owing to the overall pressure on the venture. Mr. Ansellem said: “Put another way, given these dynamics, why would the shares be rewarded for the execution on the potential divestitures that management already cited?”

The approval of the drug will bring a new window of opportunity for the companies, both geographically and therapeutically

Biogen Inc (NASDAQ:BIIB) and Ionis have been filling their mutual investigational molecule nusinersen for the New Drug Application (NDA) to the Food and Drug Administration (FDA).  The molecule is indicated for the management and treatment of type-1 spinal muscular atrophy (SMA).
 
In August 2016, both the drugmakers have published their ENDEAR clinical study results in relation to the SMA type 1 disease with achievement of the primary endpoints. With reference to the results, the companies have shifted patients in an Open Label Extension Study from clinical trial. The investigational molecule has shown drastic improvement in the motor symptoms of patients receiving the drug.  

Biogen has worldwide rights of the drug, for which it has paid $75 million to Ionis. The company has to pay other royalties for the clinical trials, regulatory approvals and marketing of the drug. In addition, Ionis is eligible to get $150 million in downstream payments in relation to the regulatory milestones.  

MDA has provided $750,000 to Adrian Krainer at Cold Spring Harbor Laboratory in New York for the clinical research on the early stage patients of SMS to vitalize the role of nusinersen. Otherwise, MDA has invested approximately $45 million to ascertain and develop the role of nusinersen to look for other pathological aliments.    

Moreover, the companies are planning for the submission of the drug to European Medicines Agency (EMA) in October 2016 and other geographical areas by the end of 2016. The EMA committee for Medicinal Products for Human Use (CHMP) has given approval for Accelerated Assessment reducing the standard protocol time. 

Spinal muscular atrophy (SMA) is a debilitating disease affecting the patients via muscle wasting due to nerve cell degeneration. Approximately one in 10,000 live births are affected by this disease. According to Biogen’s statistics, there are 35,000 infant patients suffering from the debilitating disease across US, Europe, and Japan. 

There is no treatment available till date for the disease and if approved, the drug can generate $1 billion on yearly basis. The molecule has already gained secured status due to its vitality in the US and Europe and is expected to gain approval from the regulatory agencies keeping in view of the important role it has to play.

There has been a recent shift in sentiments of Street analysts for GoPro Inc (GPRO) stock as it crashed more than 50% YTD

GoPro Inc (NASDAQ:GPRO) stock closed at $8.80 yesterday, down about 2.11% against the previous day’s close. The stock has crashed nearly 51.12% since the start of this year through May 18, 2016 and has massively underperformed the S&P 500 Index’s gain of about 0.18% during the same time span.

There has been a recent shift in the Wall Street analysts’ sentiments in the San Mateo, California based manufacturer of action cameras. The analysts’ buy ratings on the stock turned into hold ratings as they sensed factors which would hamper GoPro’s financial performance.

During the past week, GoPro’s video chip partner, Ambarella Inc’s (NASDAQ:AMBA) stock witnessed a cut in price target by the analysts at Pacific Crest. The analysts curbed the 12-month price target to $53 from $62, while maintaining an Overweight rating on the stock.

The cut in Ambarella’s price target at Pacific Crest came on the heels of GoPro’s inventory corrections which showed an inventory pile-up due to sluggish demand. Along with this, the action camera producer faces fierce competition from LG’s standalone action cameras. In addition to this, GoPro is Ambarella’s biggest buyer of video chips, and as both the company’s stock price movement is tied so closely, it will be vital to examine the action camera manufacturer’s move to get on track its failing business in attempts to broaden its stagnant customer base.

Out of a total of 18 analysts, five analysts believe the investors should long the stock. Another 11 analysts recommend to Hold, while the remaining two analysts rate the stock a Sell.

The 12-month consensus price target on the stock is $11.32, carrying an upside potential of almost 29%.

Stephen Turner of Hilliard Lyons – an investment firm at the Wall Street – has the most bullish stance on the stock. The analyst believes the investors should buy the stock for long term and his 12-month price target on the stock is $17.

In comparison to Mr. Turner, Piper Jaffray’s analyst Erinn E Murphy holds the most bearish sentiments in GoPro stock. He believes that stock will underperform the market and projects the stock price to tank to $6.5 during the 12-month period.

New Benchmark puts the upcoming Pixel XL smartphone to shame

If you already don’t know, Alphabet Inc. (NASDAQ:GOOGL) Pixel smartphones are the first ever devices to incorporate Qualcomm’s latest Snapdragon 821 processing chipsets. According to Qualcomm, its latest Snapdragon 821 processor is 10% faster than its previous generation Snapdragon 820 processing chipset. Technically, this should represent as a significant advantage for the newly announced Pixel smartphone devices compared to other smartphones powered by a Qualcomm Snapdragon 820 processor. However, in a new benchmark conducted by Geekbench, the performance of the Pixel XL is not much different to smartphone devices running on Qualcomm’s previous generation Snapdragon 820 processors. This might seem strange but it’s a clear indication that the upcoming Pixel smartphones might not be as fast as we originally believed.

According to the performance test conducted by Geekbench, the soon to release Pixel XL managed to score 1648 in its single-core test, while the smartphone scored 4121 in its multi-score test. Interestingly, leading smartphone devices which are powered by the previous generation Snapdragon 820 processors managed to gain very similar ratings compared to Pixel XL. This benchmark clearly indicates that the upcoming Pixel smartphone devices do not have a significant advantage over smartphones running on previous generation processing chipsets. The test conducted by Geekbench compares the performance of Pixel XL with leading smartphone devices running Snapdragon 820, such as; Samsung Galaxy S7, Galaxy Note 7, HTC 10, OnePlus 3 and LG G5.

However, this new benchmark should not raise significant doubts about the upcoming Pixel smartphones, as results gained by the latest Qualcomm Snapdragon 821 processor is still great but nothing extraordinary. Even though Qualcomm’s latest generation processors might not be significantly faster compared to its predecessor model but there is hope that the new processor could turn out to be more efficient. It is widely accepted that the previous generation Snapdragon 820 processors quickly heated up which contributes to faster battery drain. Hence, if Qualcomm has fixed this issue in its latest processing chipsets then it would represent a win for Qualcomm and Google’s upcoming smartphone devices.

The drug maker is optimistic that new CEO will bring back the company on the track of success

The appointment of Joseph Papa as a new Chairman and Chief Executive Officer (CEO) of Valeant Pharmaceutical Intl Inc (NYSE:VRX) is mainly to give a ray of hope to the investors along with increasing its credibility in the eyes of stakeholders. The company is in hot waters since August 2015 after a tweet from the presidential candidate Hillary Clinton in association with the price hike of the drugs.

Joseph Papa is a 56 years old pharmaceutical legend who has various credits to his name such as merger and acquisitions of multiple companies. Joseph has played a vital role in the development of multiple companies’ revenue generation with the introduction of strategic marketing and research and development plans. He led Perrigo for 10 years as CEO and with his efforts, the company generated revenue of $5 billion. He has ample experience in handling the Pharmacy Benefit Managers (PBM) and his appointment will definitely help Valeant to re-enter in new agreements with PBMs.

Valeant was aggressively looking to replace Mr. Pearson as his strategic policies pushed the company’s growth and stock on the sky, but in August 2015, the policies were hit by controversies. He also slashed heavily in the research and development (R&D) funding. Due to the Philidor scandal, the drugmaker has lost approximately $80 billion in its market capitalization. 

This change in the leadership is expected to bring a big change in the company. There is no question about the assets of Valeant that can definitely aid in bringing back the drugmaker on the track of success. 

Mr. Papa is very keen to pay off the huge debt of $31 billion on Valeant’s shoulders making the position of the company very problematic in the eyes of investors, but the recent approval from the Food and Drug Administration (FDA) of its gastrointestinal and dermatology drugs gives some sigh of relief to the investors. Both the drugs are expected to be the blockbusters in the near future – aiding in releasing the pressure of hefty debt from the company. 

Joseph Papa is confident that he can turn the company back in the pharmaceutical arena due to its robust and competitive drug pipeline, which consists of novel investigational molecules. He said that the drug pipeline has 10 new drugs that are expected to be launched in a year and a half. 

Valeant CEO Joseph Papa said: “We have an opportunity to move forward with a renewed focus on operating with integrity across all areas of the business and providing customers with safe and affordable products that improve their lives.”

Marvel’s Luke Cage surpasses Parrot Analytics Demand Rating of 90 and becomes the most in-demand TV series in the US

With plans to go big on content spending, Netflix, Inc. (NASDAQ:NFLX) wants to maintain its dominance with the topnotch content and collaboration with Marvel playing a key role in it. The success of the first two successful series, Marvel’s Daredevil and Jessica Jones, laid down strong foundation for the launch of Netflix’s latest series on Marvel’s character Luke Cage, which has become the most demanded TV series in the US.

Parrot Analytics, which finds demand expressions using various platforms, reported that after its first full week since the launch on September 30, the demand for Marvel’s Luke Cage more than doubled. This was sufficient to surpass Demand Rating of 90, and becoming the most in-demand TV show overall and digital originals in the country.

The analytics platform noted that the TV series also drove demand for its both sister marvel series. While demand for Jessica Jones impressions increased by 50%, the Daredevil entered the top 10 digital original series list for the week ending of October 8.

“The mention of these characters in Luke Cage seems to have resulted in a substantial increase in demand for their series,” Parrot Analytics noted in the weekly report.

 

With 51.3 million demand impression, the bulletproof Luke Cage remained at the top, while Jessica Jones and Daredevil came up at fourth and seventh spots in digital original list.

While the demand for Marvel series increased over the period, interest in older blockbuster shows, Stranger Things and Narcos, dropped by 23% and 40%, respectively. Nevertheless, both the original series remained in top three.

Demand for the recently launched series, Longmire Season 5 and The Ranch, also remains high during the week. Though, Fuller HouseHouse of Cards, and Orange is the New Black were named the steady performs.

For now, the only overall TV series that could outperform Luke Cage is the HBO’s new drama series Westworld that stood at the second spot with 37.2 million demand impressions.

After the search giant released its first quarter earnings, SunTrust Robinson lowered its price target on the stock to $850

Yesterday, Alphabet Inc. (NASDAQ:GOOGL) released its quarterly earnings report for the second quarter of fiscal year 2016. The $502 billion company missed the Street on both its top and bottom line numbers this time. Following the announcement, research firm SunTrust Robinson Humphrey cut its price target on the stock from $875 to $850.

For the March quarter, the search giant reported GAAP revenues of $20.26 billion, up 17% from last year, yet slightly below the consensus of $20.38 billion. Non-GAAP earnings per share totaled $7.50, missing the Street by an unpardonable 46 cents, while posting 15.92% year-on-year increase. The 46-cent difference can largely be attributed to investments and headwinds from mobile, increased traffic acquisition costs, and increased capital expenditure. While the revenue was mostly driven by advertisements and mobile search growth, aggressive investments on core and side bets led to the EPS miss. Management also lowered its EPS guidance for 2017 from $40.33 to $38.56.

On one hand, SunTrust analyst Robert Peck believes the stock remains well-positioned, but on the other hand, he also trimmed his 12-month price target for the stock, with his updated one reflecting a 20x multiple of the core EPS and a 13.5x enterprise value-to-earnings before income taxes depreciation and amortization (EV/EBITDA) ratio. The analyst maintained his Buy rating on the stock.

In contrast, Cowen analyst John Blackledge, was rather positive on the stock following the Q1 earnings report.  The operating income trumped Mr. Blackledge’s estimate by 2%, which, he believes, was largely owing to strong mobile search growth. Growth in paid clicks was slightly slower than the analyst’s expectation of 32%, as it turned out to be 29% YoY, still above a consensus of 27%. The analyst maintained his outperform rating and $940 price target on the stock.

The Street currently has 5 Strong Buys, 7 Buy, and one Hold rating on Alphabet stock. Class A Shares last traded at $731.42 as of 12:54 EDT Friday, down 6.23% from their previous close.

The Country Caller explains why investors should consider Cheniere Energy shares for the long term

Liquefied natural gas company Cheniere Energy, Inc. (NYSEMKT:LNG) reported a net loss of $298.4 million for its second quarter earnings, almost doubling the $118.5 million loss it reported for the same quarter last year. However, The Country Caller believes this would not drastically hamper investor confidence in the stock, as the company has finally yielded revenues from its commercial operations.

The company started burning cash at a fast pace, when it began developing export facilities at Louisiana, Sabina Pass and Corpus Christi, and had to report substantial losses. In addition, its debt also kept piling up as it had no commercial operations and was engaged in developing LNG trains.

However, earlier this year, the company began its LNG shipments from Sabine Pass, leading it to report its first commercial revenue of $110.7 million from LNG sales. Last year, the company had reported a net loss amounting to $706 million.

The revenue commencement marks a key milestone for the company, as it signals the hard times are finally over as the company has now entered into the earnings phase. In addition, revenues for the company are expected to grow over time.

Even in 3QFY16, investors can expect the revenues to be higher. This is because 2QFY16 reflected sales from only five weeks as the train began its operations on May 26. However, the company has plans to shut down Train-1 for maintenance later in September, which would ultimately improve revenues further.

Moreover, the company’s second LNG Train also commenced production in June. As per Cheniere’s expectations, revenue through shipments could be realized as early as next month. Hence, the 3QFY16 and 4QFY16 revenues have the chance to soar even higher.

In the long run, the company plans to build about five trains from the Sabine Pass which could produce around 4.5 million tons a year of LNG on a cumulative basis. Later in 2019, the company also expects two trains to be constructed at its Corpus Christi.

The demand for LNG is also secure, as the company stated that it has already made contracts for 87% of its overall capacity at two of its LNG terminals. Hence, The Country Caller continues to remain bullish on Cheniere Energy’s long-term growth prospects.

Tesla’s Elon Musk says those in denial of the climate change are real frauds; he has challenged Robert Murray to go zero-zero on subsidies

Tesla Motors Inc. (NASDAQ:TSLA) has not only been in a battle with traditional automakers and franchise dealers, but has also been offensive to those companies which are actively participating in one of the biggest global issues, i.e. global warming. On Monday, a coal-mining boss called the young automaker “fraud” for using taxpayers’ money and not making any money on it.

Murray Energy Corp CEO Robert Murray went on the CNBC on Monday and said that Tesla has received “too big in dollars” from the taxpayers, and yet it “has not made a penny in cash flow.” Being a Trump supporter, he mentioned that Presidential candidate Hillary Clinton went on record saying these companies require government assistance.

He added: “She was talking about Elon Musk, Warren Buffet, the Prtizkers, the Polskys, Steyer, the wealthiest family Podesta himself,” implying that Ms. Clinton is merely trying to help her friends and it has nothing to do with the climate change. He believes that even if every coal plant closes down in the US today, there will be no effect on global temperature.

Mr. Musk immediately took the issue to Twitter and responded to Mr. Murray that “real frauds” are those who deny the climate science. For subsidies, he wrote that his company receives “pennies” compared to the coal industry. He openly challenged the big coal chief to go toe-to-toe with zero subsidies.

 

 

Tesla chief previously revealed that the fossil fuel industry gets $5 trillion in subsidies per year, according to an IMF study. He claims that the industry is purposely trying to defame Tesla for its role in accelerating the transition to sustainable energy. He has been urging lawmakers to introduce carbon tax to ensure coal is priced fairly in the market, according to Electrek. Last year, he talked on the matter at the Paris Climate Change Conference.