Case Study: What Credible analysts are saying on Procter & Gamble (PG) stock
Procter and Gamble increased full-year 2023 guidance due to bullish data coming out of China.
Nobias Insights: 66% of recent articles published by credible authors focused on Procter and Gamble shares offer a “bullish” bias. Two out of the three credible Wall Street analysts who cover PG offer a “bullish” outlook. The average price target being applied to PG by these credible analysts is $157.00, which implies upside potential of approximately 9.8% relative to the stock’s current share price of $142.97.
Bullish Take: Robert Abbott, a Nobias 4-star rated author, said, “Procter & Gamble has been profitable for all 10 years of the past decade. That reflects its industry-leading operating and net margins of 22.03% and 18.11% respectively.”
Bearish Take: Shawn Johnson, a Nobias 4-star rated author, said, “At a roughly 15% premium compared to the 3% discount to the average consumer defensive sector, the consumer goods company is still one of the more highly valued stocks in the sector”
Key Points
Performance
Procter & Gamble (PG) shares fell by 5.69% this week. On a year-to-date basis, PG's shares are now down by 5.67%. This compares poorly to the S&P 500, which is up by 3.88% during 2023 thus far.
Event & Impact
Procter & Gamble announced fiscal 2023 Q2 earnings results this week, beating Wall Street’s estimates on the top line and meeting expectations on the bottom-line. PG posted $20.8 billion in revenue, which was down by 0.7% on a year-over-year basis, beating estimates by $50 million. The company posted non-GAAP earnings per share of $1.59.
Noteworthy News:
Procter & Gamble increased its full-year 2023 guidance due to bullish data coming out of China.
Nobias Insights
66% of recent articles published by credible authors focused on Procter & Gamble shares offer a “bullish” bias. 2 out of the three credible Wall Street analysts who cover PG offer a “bullish” outlook. The average price target being applied to PG by these credible analysts is $157.00, which implies upside potential of approximately 9.8% relative to the stock’s current share price of $142.97.
Bullish Take Robert Abbott, a Nobias 4-star rated author, said, “Procter & Gamble has been profitable for all 10 years of the past decade. That reflects its industry-leading operating and net margins of 22.03% and 18.11% respectively.”
Bearish Take Shawn Johnson, a Nobias 4-star rated author, said, “At a roughly 15% premium compared to the 3% discount to the average consumer defensive sector, the consumer goods company is still one of the more highly valued stocks in the sector”
PG Jan 2023
Consumer staple giant, Procter and Gamble (PG), announced its fiscal 2023 second quarter earnings results this week. The $347 billion company posted sales which beat Wall Street’s expectations and earnings-per-share which was in-line with consensus estimates coming into the quarter.
Yet, even with this top-line beat in mind, PG shares slumped by 5.69% this week. The company’s shares are now down by 5.67% on a year-to-date basis, underperforming the broader market by a wide margin (the S&P 500 is up by 3.88% during 2023 thus far).
Bullish Nobias Credible Analysts Opinions:
Credible authors and analysts remain bullish on shares, however. With P&G’s 2.56% dividend yield in mind, the average price target being applied to PG right now imply double digit total returns moving forward. Robert Abbott, a Nobias 4-star rated author, examined Proctor and Gamble’s business model in a recent report that he published at GuruFocus.
Abbott said, “Founded in 1837 in Cincinnati, Ohio, where it is still headquartered, the consumer products company has a market cap of $359.17 billion and had trailing 12-month revenue of $80.461 billion.”
Regarding the company’s brand portfolio, he wrote, “The company noted in its 10-K for fiscal year 2022 (which ended on June 30) that it has a portfolio of leading brands, 20 of which generate more than $1 billion dollars a year in global sales, such as Tide, Charmin, Pantene and Pampers.” “International sales accounted for about 55% of consolidated sales in fiscal 2022,” Abbott noted.
Looking at the company’s balance sheet, Abbott said, “Its interest coverage ratio is 39.14, which tells us the company generates $39.14 in operating income for every dollar of interest expense. Its hard to imagine the firm getting into trouble because it could not pay the interest on its debt.”
Looking at the company’s profitability metrics, he stated, “Procter & Gamble has been profitable for all 10 years of the past decade. That reflects its industry-leading operating and net margins of 22.03% and 18.11% respectively.”
Abbott noted that these reliable bottom-line results have translated directly into predictable shareholder returns. He said, “At 2.35%, the Procter & Gamble dividend yield is higher than the latest average for S&P 500 companies, though that's not saying much. But, the most important characteristic of its dividend situation is its status as a Dividend King. Having raised its dividend for 66 consecutive years, it is well above the Dividend King minimum of 50 years.”
Putting this into perspective, Abbott stated, “Only 41 of the many thousands of publicly traded stocks have reached this elite level.” Furthermore, he also mentioned that PG returns cash to shareholders in the form of stock buybacks as well. He said, “It also has bought back its own shares quite consistently over the past decade, reducing the number of shares outstanding by an average of 1.66% per year.”
Bearish Nobias Credible Analysts Opinions:
Shawn Johnson, a Nobias 4-star rated author, covered P&G’s fiscal 2023 Q2 results in an article published this week titled, “Procter & Gamble Shows Resilience But the Stock Is Overvalued”. Johnson highlighted the persistent reliability of Procter and Gamble, stating, “The results were largely in line with market expectations. Revenue fell about 1% year over year to $20.77 billion, which slightly missed FactSet’s consensus estimates of $20.75 billion. Earnings per share met expectations of $1.59.”
Johnson highlighted the company’s Q2 data, writing:
Revenue: $20.77 billion versus the FactSet average estimate of $20.75 billion.
Earnings per share: $1.59 versus average estimates of $1.59.
Guidance for organic sales growth increased to 4%-5% from 3%-4% on expectations of a recovery in the Greater China market.
Headwinds from unfavorable currency exchange rates and inflation have eased slightly with the firm forecasting a 5% decline in the after-effects.
Despite PG’s ability to meet Wall Street’s expectations, Johnson notes that the company’s stock appears to be expensive. He said, “At a roughly 15% premium compared to the 3% discount to the average consumer defensive sector, the consumer goods company is still one of the more highly valued stocks in the sector”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Overall, Johnson concluded, “Procter & Gamble’s PG fiscal second-quarter 2023 earnings showed the consumer goods giant is weathering macroeconomic and competitive headwinds well, but the stock is trading above Morningstar’s fair value estimates, meaning is [sic] that investors should keep their powder dry.”
Despite Johnson’s valuation concerns, 66% of recent articles published by credible authors that focused on PG stock expressed a “bullish” bias towards shares.
Overall bias of Nobias Credible Analysts and Bloggers:
Furthermore, 2 out of the 3 credible Wall Street analysts that Nobias tracks which have offered an opinion on Procter and Gamble believe that the company’s shares are likely to head higher.
Currently, the average price target being applied to P&G by credible Wall Street analysts is $157.00. Relative to PG’s current share price of $142.97 that represents upside potential of approximately 9.8%.
Disclosure: As of 1/21/2023, Nicholas Ward had no PG position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Netflix (NFLX) stock
After 2022, a year in which Netflix posted net subscriber losses for the first time, the company provided strong growth guidance for 2023.
Nobias Insights: 51% of recent articles published by credible authors focused on Netflix shares offer a “bearish” bias. while 4 out of the 6 credible credible Wall Street analysts who cover NFLX offer a “bullish” outlook. Yet, the average price target being applied to NFLX by these credible analysts is $361.17 which implies upside potential of less than 10% relative to the stock’s current share price of $342.50.
Bullish Take: Nobias 4-star rated author, Patrick Seitz, said, “The streaming video leader late Thursday said it added 7.66 million new subscribers worldwide in the December quarter, ending the year with 230.75 million total subscribers.
Bearish Take: Alex Sherman, a Nobias 4-star rated author said, “For the past three years, the global media and entertainment industry has been defined by the streaming wars. Each media company created a streaming service to compete. Only the strongest would survive, the narrative went. The losers would consolidate or die.”
Key Points
Performance
Netflix (NFLX) shares rose by nearly 5.5% this week. On a year-to-date basis, NFLX shares are now up by 16.12%. This compares favorably to both the S&P 500 and the Nasdaq Composite, which have risen by 3.88% and 7.25%, respectively, during 2023 thus far.
Event & Impact
Netflix announced Q4 results this week, causing the stock to soar. However, it appears that the post-earnings rally was based upon guidance, because during Q4 NFLX posted revenue that was in-line with Wall Street consensus and GAAP earnings-per-share of $0.12/share, which missed consensus estimates by $0.38/share.
Noteworthy News:
After 2022, a year in which Netflix posted net subscriber losses for the first time, the company provided strong growth guidance for 2023.
Nobias Insights
51% of recent articles published by credible authors focused on Netflix shares offer a “bearish” bias. while 4 out of the 6 credible credible Wall Street analysts who cover NFLX offer a “bullish” outlook. Yet, the average price target being applied to NFLX by these credible analysts is $361.17 which implies upside potential of less than 10% relative to the stock’s current share price of $342.50.
Bullish Take Nobias 4-star rated author, Patrick Seitz, said, “The streaming video leader late Thursday said it added 7.66 million new subscribers worldwide in the December quarter, ending the year with 230.75 million total subscribers.
Bearish Take Alex Sherman, a Nobias 4-star rated author said, “For the past three years, the global media and entertainment industry has been defined by the streaming wars. Each media company created a streaming service to compete. Only the strongest would survive, the narrative went. The losers would consolidate or die.”
NFLX Jan 2023
Netflix (NFLX) reported Q4 earnings this week, spending the stock soaring higher. NFLX shares rose by 5.5% during the week, pushing their year-to-date gains up to 16.12%. This compares favorably to both the S&P 500 and the Nasdaq Composite, which have risen by 3.88% and 7.25%, respectively, during 2023 thus far.
Bearish Nobias Credible Analysts Opinions:
Alex Sherman, a Nobias 4-star rated author, touched upon the stock’s recent struggles in a post-earnings report that he published at CNBC this week. Sherman said, “For the past three years, the global media and entertainment industry has been defined by the streaming wars. Each media company created a streaming service to compete. Only the strongest would survive, the narrative went. The losers would consolidate or die.”
During 2022, he noted, “For the first time ever, Netflix lost subscribers. Its shares fell more than 60%.”Yet, Sherman highlighted a positive momentum shift with regard to subscriber growth trends, that occurred during Q4. He said, “Netflix added 7.7 million streaming subscribers in the fourth quarter, blowing out analyst estimates, which were closer to 5 million. Netflix’s shares rose more than 6% after hours.” Sherman added, “Netflix’s big quarter doesn’t yet include results from forcing password sharers to pay, a process that will kick into gear soon.”
And regarding future growth prospects, Sherman concluded, “Netflix said it expects subscriber growth in the first quarter to be lower than the fourth quarter for general seasonality reasons, but it expects growth in the second quarter due to more customers signing up rather than losing the service as Netflix cracks down on sharing passwords.”
Shawn Johnson, a Nobias 4-star rated author, specifically covered Netflix’s password sharing crackdown plans in an article this week. Johnson wrote,”Netflix confirmed Thursday that it will crack down on account sharing “more broadly” in the coming months.” He continued, “This change will limit a Netflix account to users in a household instead of sharing it with multiple external users. Account holders who want to share with users outside the household can pay an additional fee to keep those profiles (though exact pricing hasn’t been released yet).”
Johnson highlighted a press release from the company’s Q4 earnings report, which stated, “Today’s widespread account sharing (100M+ households) undermines our long-term ability to invest in and improve Netflix, as well as build our business. While our Terms of Use limit use of Netflix to one household, we recognize that this is a change for members who share their accounts more widely.”
Lastly, he said, “The company warned that this would likely result in some customer cancellations in the short term, with Peters noting in the interview that it would not be a “universally popular move” but would lead to more revenue going forward.”
Bullish Nobias Credible Analysts Opinions:
Nobias 4-star rated author, Patrick Seitz, also covered Netflix’s Q4 results this week. In his article at Investors.com, Seitz also highlighted NFLX’s subscriber growth rebound, writing, “The streaming video leader late Thursday said it added 7.66 million new subscribers worldwide in the December quarter, ending the year with 230.75 million total subscribers.” Analysts polled by FactSet expected Netflix to add 4.57 million new subscribers.” “However,” he continued, “the Los Gatos, Calif.-based company missed Wall Street's sales and earnings targets for the fourth quarter.”
Seitz said, “Netflix earned 12 cents a share on revenue of $7.85 billion in the period. Wall Street had predicted earnings of 55 cents a share on sales of $7.86 billion. In the year-earlier period, Netflix earned $1.33 a share on sales of $7.71 billion.”
Regarding management’s future guidance, Seitz noted, “For the first quarter, Netflix expects to earn $2.82 a share on sales of $8.17 billion.” He continued, “Analysts were looking for earnings of $2.98 a share on sales of $8.15 billion in the March quarter. In the same quarter last year, Netflix earned $3.53 a share on sales of $7.87 billion.” “Wall Street cheered Netflix's free cash flow generation,” he wrote. Setiz noted, “The company reported $1.6 billion in free cash flow in 2022 and expects at least $3 billion in 2023. Analysts had been modeling $2.4 billion in free cash flow this year.”
Lastly, Seitz says that this strong cash flow generation is likely to result in shareholder returns. He concluded, “Also, Netflix said it plans to resume share repurchases in 2023. Another significant headline that broke alongside NFLX’s earnings results centered around a management shake-up at the company.
Dawn Chmielewski and Lisa Richwine covered this news in an article published at Yahoo Finance. Chmielewski is a Nobias 4-star rated author. The writers said, “Netflix co-founder Reed Hastings is stepping down as chief executive of the streaming video pioneer but will remain at the company as executive chairman, he announced on Thursday.” They continued, “Greg Peters, who was serving as chief operating officer and chief product officer, will become co-CEO alongside Ted Sarandos, Hastings said in a blog post.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
It’s often concerning to investors when a founder-led company loses that title. Yet, calming nerves, Chmielewski and Richwine reported, “Hastings, 62, said he planned to work with Sarandos and Hastings as executive chairman for "many years to come."’.
Overall bias of Nobias Credible Analysts and Bloggers:
Contrary to the stock’s post-earnings rally, 51% of recent articles published on NFLX shares by credible Nobias authors have expressed a “bearish” sentiment towards the stock. The credible Wall Street analysts who have offered opinions on NFLX shares are also bearish.
Currently, the average price target being attached to Netflix by these credible individuals is $361.17. NFLX closed the week trading for $342.50. Therefore, that average price target implies upside potential of less than 10%.
Disclosure: Nicholas Ward has no NFLX position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on JP Morgan (JPM) stock
JPMorgan’s quarterly data showed that a consumer slowdown hasn’t occurred yet, with credit card spending up 12% and overall loans on cards up 20% on a year-over-year basis.
Nobias Insights: 55% of recent articles published by credible authors focused on JPM shares offer a “Neutral” bias. 4 out of the 7 credible credible Wall Street analysts who cover JPMorgan believe shares are likely to fall in value. Yet, the average price target being applied to JPM by these credible analysts is $139.57, which implies upside potential of approximately 3.3% relative to the stock’s current share price of $135.08.
Bullish Take: Harrison Miller, a Nobias 4-star rated author, said, “JPMorgan earnings rose 7% to $3.57 per share and reported revenue grew 18% to $34.5 billion.”
Bearish Take: AJ Fabino, a Nobias 5-star rated author, said, “As interest rates rise, banks may also experience an increase in defaults on loans — this is why most of them are increasing provisions for defaults and delinquencies.”
Key Points
Performance
JPMorgan (JPM) shares sunk by nearly 4% this week. On a year-to-date basis, JPM shares are now down by -0.03%. This compares favorably to the S&P 500, which is up by approximately 3.88% during 2023 thus far.
Event & Impact
JPMorgan announced Q4 results last Friday, beating Wall Street’s expectations on the top and bottom lines. JPM posted Q4 revenue of $34.5 billion (up by 17.9% on a year-over-year basis), beating consensus estimates by $270 million. The company’s non-GAAP earnings-per-share came in at $3.56/share, beating Wall Street’s estimate by $0.46/share.
Noteworthy News:
JPMorgan’s quarterly data showed that a consumer slowdown hasn’t occurred yet, with credit card spending up 12% and overall loans on cards up 20% on a year-over-year basis.
Nobias Insights
55% of recent articles published by credible authors focused on JPM shares offer a “neutral” bias. 4 out of the 7 credible Wall Street analysts who cover JPMorgan believe shares are likely to fall in value. Yet, the average price target being applied to JPM by these credible analysts is $139.57, which implies upside potential of approximately 3.3% relative to the stock’s current share price of $135.08.
Bullish Take Harrison Miller, a Nobias 4-star rated author, said, “JPMorgan earnings rose 7% to $3.57 per share and reported revenue grew 18% to $34.5 billion.”
Bearish Take AJ Fabino, a Nobias 5-star rated author, said, “As interest rates rise, banks may also experience an increase in defaults on loans — this is why most of them are increasing provisions for defaults and delinquencies.”
JPM Jan 2023
In mid-October, JPMorgan (JPM) shares hit 52-week lows of $101.28. Since then, shares have rallied roughly 33.3%, closing the trading session of Friday at $135.08. In recent weeks, a slew of large-cap U.S. banks have announced fourth quarter earnings, including JPMorgan. JPM beat Wall Street estimates on both the top and bottom lines when it announced its Q4 results on January 13th. However, since then, shares have fallen, trading down by 3.96% this week, alone.
As credible authors and analysts have analyzed the company’s quarterly data, positive and negative reports have come out. The majority of credible Wall Street analysts that cover JPM shares believe that the stock is likely to head lower. Yet, the average price target being applied to JPM shares by the credible analysts community implies slight upside potential. In short, JPMorgan remains a battle stock as credible individuals attempt to decipher whether or not the stock’s recent rally is likely to continue.
Bullish Nobias Credible Analysts Opinions:
In early January, Nobias 5-star rated author, Gen Alpha, highlighted J.P. Morgan in a bullish report that was published on Seeking Alpha. They wrote, “JPMorgan Chase is one of the largest and most influential financial institutions, with a history dating back over two centuries. The company is a global leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management.”
Gen Alpha continued, “What differentiates JPM from the likes of Goldman Sachs (GS) and Morgan Stanley (MS) is its multi-cylinder business approach that's not overly reliant on deal-making, transactions, and IPOs. This has worked out well for JPM, especially over the last year, as M&A and IPO activity has substantially declined due primarily to higher interest rates and economic uncertainty.”
Regarding the company’s quality metrics, they stated, “Importantly, JPM maintains an A- credit rating from S&P and carries a common equity tier 1 ratio of 12.5% as of the last reported quarter, up 30 basis points sequentially. This sits well above the 4.5% requirement by the Federal Reserve for large banks. It's worth noting that management is targeting an even stronger CET1 ratio of 13% for the first quarter of 2023.”
Regarding shareholder returns, Gen Alpha wrote, “The strong operating fundamentals and balance sheet lends support to JPM's 3% dividend yield, which is well-supported by a 34% payout ratio. The dividend also comes with 8 years of consecutive annual growth and an impressive 5-year CAGR of 14.4%.”
Lastly, they concluded, “With a well-covered dividend yield, track record of growth, and low valuation, JPM could give investors potentially strong long-term returns from present levels.” Shares of JPM are essentially flat since this report was published; however, since then, the company has posted its Q4 earnings results.
Coming into the quarter, Nobias 4-star rated author, Mircea Vasiu, touched upon Wall Street’s consensus estimates for the JPM’s Q4 results. Vasiu wrote, “JPMorgan Chase reports its quarterly earnings on Friday, January 13, during pre-market hours. The market expects EPS of $3.12, and the annual revenue estimate for the fiscal period ending December 2023 is $140.36 billion.”
Bearish Nobias Credible Analysts Opinions:
Harrison Miller, a Nobias 4-star rated author, highlighted JPM’s Q4 results in an article that he published at Investors.com shortly after the results went public. Looking at JPMorgan’s top and bottom-line results, Miller said, “JPMorgan earnings rose 7% to $3.57 per share and reported revenue grew 18% to $34.5 billion.” He continued, “Net interest income spiked 48% to $20.3 billion, exceeding forecasts of 39% growth to $19.1 billion and marking the fifth straight quarterly gain. Consumer banking revenue increased 29% to $15.8 billion and just beat estimates of $15.6 billion. Meanwhile, JPMorgan's consumer and investment banking revenue dipped 9% to $10.5 billion, coming in lower than the expected $10.8 billion.”
AJ Fabino, a Nobias 5-star rated author, also covered JPMorgan’s Q4 results in an article published at Benzinga this week. Fabino put a spotlight on management’s macro economic outlook, writing, “During a call with reporters, Dimon said, “It may be a mild recession. It may not be,” according to the Wall Street Journal.”
And with that in mind, he continued, “It’s important to understand the ambivalent relationship between the Fed’s interest rates, and its effects on banks.” Fabino wrote, “When the Fed raises interest rates, banks are able to charge higher interest rates on loans, which can lead to higher revenue for the bank.”
“Additionally,” he said, “banks often invest a portion of their assets in Treasury bonds and other fixed-income securities.” As interest rates rise, the value of these investments increases, which can also contribute to an increase in bank profits."
But, there are potential risks in play as rates rise as well. Fabino said, “As interest rates rise, banks may also experience an increase in defaults on loans — this is why most of them are increasing provisions for defaults and delinquencies.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Thankfully, he notes, this slowdown isn’t appearing in the company’s reported data. Fabino noted, “JPMorgan said Friday that spending on credit cards rose 12% from a year ago and loans on cards were up 20%. It also said total loans rose 5% as big- and medium-size businesses borrowed more.”
Overall bias of Nobias Credible Analysts and Bloggers:
Despite JPMorgan’s sell-off this week, the majority of credible authors that the Nobias algorithm tracks offer tepid sentiment for shares. 55% of recent articles published on JPM have expressed a “neutral” sentiment. The credible Wall Street analysts that the Nobias algorithm tracks have expressed similar opinions.
4 out of the 7 credible analysts that Nobias tracks who have published reports on JPM believe that shares are likely to continue to decrease in value from here.
Yet, the average price target being applied to JPM shares by this group of credible analysts implies a slight upside. Currently, JPM shares trade for $135.08. The average price target that the credible analyst community has attached to JPMorgan is $139.57, which implies upside potential of approximately 3.3%. Therefore, although there are more credible bears than bulls on Wall Street, the bulls’ high fair value estimates outweigh the more prevalent negative sentiment expressed by the bears. All in all, it appears that both authors and analysts believe that JPMorgan’s recent 33.3% rally off of its recent lows was justified. However, they doubt significant near-term upside from here.
Disclosure: Nicholas Ward has no JPM position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Bank of America (BAC) stock
Strong net interest income (bolstered by higher rates) and Bank of America’s more diversified loan book have helped this stock to outperform its peers over the last 6 months.
Nobias Insights: 57% of recent articles published by credible authors focused on BAC shares offer a “Bullish” bias. Furthermore, the average price target being applied to Bank of America shares by the credible analysts that the Nobias algorithm tracks is $43.50 which implies upside potential of approximately 23.5% relative to the stock’s current share price of $35.23.
Bullish Take: Growth at a Good Price, a Nobias 4-star rated author, said: “I added heavily to my Bank of America position last year, and I have no plans to stop this year. Bank of America Corporation definitely is a solid pick to consider for 2023.”
Bearish Take: Chris Lau, a Nobias 4-star rated author said, “The FOMC cut its GDP growth targets for 2023. It expects the GDP will grow by only 0.5%, as shown below. The negligible growth forecast is as good as predicting a mild recession next year, followed by a rebound from 2024 to 2025.”
Key Points
Performance
Bank of America rose by 2.2% on Friday, pushing their year-to-date performance up to 5.1%. This compares favorably to the S&P 500, which is up by approximately 4.6% during 2023 thus far.
Event & Impact
Bank of America announced Q4 results this week, beating Wall Street’s expectations on both the top and bottom lines. The bank posted Q4 sales of $24.53 billion, which was up by 11.2% on a year-over-year basis, beating Wall Street’s estimates by $360 million, and GAAP EPS of $0.85/share, which beat consensus estimates by $0.08/share.
Noteworthy News:
Strong net interest income (bolstered by higher rates) and Bank of America’s more diversified loan book have helped this stock to outperform its peers over the last 6 months.
Nobias Insights
57% of recent articles published by credible authors focused on BAC shares offer a “Bullish” bias. Furthermore, the average price target being applied to Bank of America shares by the credible analysts that the Nobias algorithm tracks is $43.50 which implies upside potential of approximately 23.5% relative to the stock’s current share price of $35.23.
Bullish Take Growth at a Good Price, a Nobias 4-star rated author, said: “I added heavily to my Bank of America position last year, and I have no plans to stop this year. Bank of America Corporation definitely is a solid pick to consider for 2023.”
Bearish Take Chris Lau, a Nobias 4-star rated author said, “The FOMC cut its GDP growth targets for 2023. It expects the GDP will grow by only 0.5%, as shown below. The negligible growth forecast is as good as predicting a mild recession next year, followed by a rebound from 2024 to 2025.”
BAC Jan 2023
A slew of “big banks” reported earnings this week, giving investors a sense of how well the economics is performing and a glance at what to expect from the financial sector as we head into the fourth quarter earnings season.
Bank of America (BAC) was one such company; BAC reported Q4 results on Friday, beating Wall Street’s consensus estimates on both the top and bottom lines. This earnings data caused BAC shares to rally by 2.20% on Friday, pushing their year-to-date returns up to 5.13% (ahead of the S&P 500’s 4.6% year-to-date gains).
Several credible authors highlighted favorable macro conditions for the bank (highlighting the benefits associated with higher interest rates, bolstering net
Bearish Nobias Credible Analysts Opinions:
In a recent article. Chris Lau, a Nobias 4-star rated author, touched upon the Federal Reserves’ recent rate hike decision and his outlook for the U.S. economy, from a macroeconomic standpoint. He noted that after the December rate hike, “The benchmark interest rate is at the highest level in 15 years.” Lau continued, “Since rates are below that of inflation, investors should model a range of 4.9% to 5.6% in 2023.”
Looking forward, he wrote, “According to its, investors should expect sustained interest rates in 2023. The “pivot” will not start until 2024 when the lowest projected rate is still above 3.0%.”
Lau then went on to highlight some of the commentary provided in the December FOMC statement. He said, “The FOMC reaffirmed its attentiveness to inflation risks. It cited elevated inflation reflects the imbalance between supply and demand. Conversely, the economy is adding jobs. Unemployment rates remain low. Most importantly, it reaffirmed the bank’s objective of maximum employment and inflation at 2% in the long run.”
Regarding the potential for a recession, he stated, “The FOMC cut its GDP growth targets for 2023. It expects the GDP will grow by only 0.5%, as shown below. The negligible growth forecast is as good as predicting a mild recession next year, followed by a rebound from 2024 to 2025.”
Bearish Nobias Credible Analysts Opinions:
Dave Kovaleski, a Nobias 4-star rated author, published an article on Bank of America this week, highlighting the quality of its business heading into its Q4 earnings report. He said, “Bank of America Corp. actually finished the year on a high note, relatively speaking. Bank of America gained 6.39% in the second half of 2022, according to S&P Global Market Intelligence.”
Kovaleski continued, “Bank of America, the second largest U.S. bank, actually outperformed the average bank stock in the second half of 2022.” He noted, “For the entire year of 2022, the index [referring to the KBW Nasdaq Bank Index] was down 21.4%, while Bank of America fell slightly more, 23.8% in calendar year 2022.”
What caused this relative outperformance? Kovaleski stated, “Rising interest rates allowed the bank to generate high levels of net-interest income on its loans, which offset losses in other portions of its business, particularly investment banking and asset management.”
He also highlighted two other bullish factors which have been serving as tailwinds for the bank. Kovaleski wrote, “One, loan activity remained robust, as average loan balances were up 11% year over year to $1.0 trillion in Q3. The second key metric is credit quality. Bank of America was able to lower its net charge-off ratio in Q3 from the previous quarter and keep it on par with Q3 2021.”
Finally, he said, “Bank of America has benefited from a decade-plus long commitment to diversifying its loan mix. In 2009, 67% of its loans were consumer loans. In 2022, 56% of loans are commercial loans, with 44% consumer loans. This has helped lower the bank's credit risk.”
Kovaleski concluded, “Bank of America is in a good position to continue its positive momentum given high interest rates, its anticipated loan growth, and its good credit quality.” “Overall,” he said, “the worst should be over for Bank of America. This year remains fraught with uncertainty, but ultimately, the stock should have a better year in 2023.”
Growth at a Good Price, a Nobias 4-star rated author, covered Bank of America’s Q4 results in a report that they published at Seeking Alpha this week. The author said, “Bank of America Corporation (NYSE:BAC) just released its fourth quarter earnings and beat expectations.”
“In the quarter,” Growth at a Good Price, continued, “we saw a big jump in net interest income, likely due to the 7.2% increase in credit card spending that was reported by credit card companies prior to the release.” The author said, “Q4 was the second quarter in a row when NII went up more than 20%”.
Furthermore, Growth at a Good price highlighted Q4 fundamental data, writing, “ In the fourth quarter, Bank of America delivered:
$24.5 billion in revenue, up 11% (a beat).
$7 billion in net income, up 1.42%.
$0.85 in diluted EPS, up 3.65% (a beat).
$9 billion in pre-tax, pre-provision earnings, up 23%.
$1.1 billion in investment banking fees.”
They continued, “In the quarter, we saw Bank of America profit off of rising interest rates yet again, despite the yield curve inversion observed in the period.” “Generally speaking,” the author noted, “inverted yield curves are thought to be bad for banks, because they borrow on the short end and lend on the long end.”
Also, they said, “Bank of America itself expects the macroeconomic picture to be troubling. It raised PCLs (reserves set aside for underperforming loans) by $403 million and used the phrase "dampened macroeconomic outlook" five times in its press release. It appears that investors are betting on tough times for the big banks in 2023.”
However, Growth at a Good Price believes that this stock continues to benefit from long-term tailwinds. They wrote, “Looking ahead past 2023, we can see that Bank of America has several long-term advantages” Breaking down these bullish aspects, the author said, “It has strong brand recognition. It has a more than adequate 11.2% CET1 ratio. Finally, with a large investment banking division, it could benefit if the Fed finally pivots in 2024.”
Ultimately, they said that their “favorite aspect of Bank of America” is “the valuation.” Growth at a Good price said, “According to Seeking Alpha Quant, it trades at:
10.9 times earnings.
3 times sales.
2.92 times sales.
1.15 times book value.
37 times operating cash flow.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
They concluded, “The bottom line on Bank of America Corporation is that it is a highly profitable bank whose earnings just easily surpassed expectations.”
Growth at a Good price finished the report stating, “I added heavily to my Bank of America position last year, and I have no plans to stop this year. Bank of America Corporation definitely is a solid pick to consider for 2023.”
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, 57% of recent articles published by the credible authors that the Nobias algorithm tracks (only those individuals with 4 and 5-star Nobias ratings) expressed a “Bullish” bias towards Bank of America stock.
Furthermore, the average credible analyst price target being attached to BAC shares implies bullish price action as well.
Presently, the average price target being applied to BAC is $43.50 which implies upside potential of approximately 23.5% relative to the current stock’s share price of $35.23.
Disclosure: Nicholas Ward has no BAC position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Wells Fargo (WFC) stock
Wells Fargo continues to deal with the fallout from its scandalous past, with 5-star Nobias author, John Foley, noting that “the total notional cost of Wells Fargo’s misconduct” has not exceeded $100 billion.
Nobias Insights: 55% of recent articles published by credible authors focused on WFC shares offer a “bullish” bias. Furthermore, all three credible Wall Street analysts who recently covered Wells Fargo believe the share price is likely to rise. The average price target applied to WFC by credible analysts is $51.33, implying upside potential of approximately 16.1% relative to the stock’s current share price of $44.22.
Bullish Take: John Reosti, a Nobias 4-star rated author, said: “The firm pulled in a record $13.4 billion in net interest income in the quarter, surpassing analyst expectations. The 45% rise from a year earlier shows the dramatic impact of the Federal Reserve's interest rate hikes on Wells Fargo's bottom line.”
Bearish Take: Giles Gwinnett, a Nobias 4-star rated author, said, “In the three months to end-December, the US's fourth largest lender posted a profit of US$0.67 per share, compared to US$1.38 per share in the fourth quarter of 2021.”
Key Points
Performance
Wells Fargo (WFC) rose by 3.3% this week, pushing their year-to-date performance up to 5.81%. This compares favorably to the S&P 500, which is up by approximately 4.6% during 2023 thus far.
Event & Impact
Wells Fargo announced Q4 results this week, beating Wall Street’s expectations on the bottom-line, posting GAAP EPS of $0.67/share, which was $0.06/share above consensus estimates. However, the company’s Q4 revenue came in at $19.66 billion, which was $380 million below expectations.
Noteworthy News:
Wells Fargo continues to deal with the fallout from its scandalous past, with 5-star Nobias author, John Foley, noting that “the total notional cost of Wells Fargo’s misconduct” has not exceeded $100 billion.
Nobias Insights
55% of recent articles published by credible authors focused on WFC shares offer a “bullish” bias. Furthermore, all three credible Wall Street analysts who recently covered Wells Fargo believe the share price is likely to rise. The average price target applied to WFC by credible analysts is $51.33, implying upside potential of approximately 16.1% relative to the stock’s current share price of $44.22.
Bullish Take John Reosti, a Nobias 4-star rated author, said: “The firm pulled in a record $13.4 billion in net interest income in the quarter, surpassing analyst expectations. The 45% rise from a year earlier shows the dramatic impact of the Federal Reserve's interest rate hikes on Wells Fargo's bottom line.”
Bearish Take Giles Gwinnett, a Nobias 4-star rated author, said, “In the three months to end-December, the US's fourth largest lender posted a profit of US$0.67 per share, compared to US$1.38 per share in the fourth quarter of 2021.”
WFC Jan 2023
With big-banks beginning to post earnings this week, sentiment wise, there’s a tug-of-war going on between rising interest rates (which are generally bullish for bank earnings as net interest income rises) and the ongoing threat of an economic slowdown and recession on the horizon.
Harrison Miller, a Nobias 4-star rated author, recently touched upon analyst sentiment surrounding the banks in an article published at Investors.com, writing, “Barclays analyst Jason Goldberg thinks bank stocks are likely to show resilience, despite the recession concerns as loan growth slows and loan losses increase.”
Miller also wrote, “Oppenheimer analyst Chris Kotowski believes banks will remain "steadier than most think" in the fourth quarter and 2023, even as his models predict loan losses will nearly double as credit trends normalize.”
Wells Fargo (WFC) was one of the banks that reported earnings this week, and despite an initial sell-off following its results, WFC shares rallied into the end of the week, closing the week up 3.3%, pushing their year-to-date returns to up 5.8%. Wells Fargo is a bit of a battleground stock itself, as investors weigh its scandalous history and its poor relative performance over the past 5 years or so against its former glory as a potential contrarian bet.
With specific regard to Wells Fargo, Miller highlighted recent headwinds that the stock has overcome throughout 2023 thus far. He said, “In late December, the Consumer Financial Protection Bureau fined Wells Fargo $3.7 billion for engaging in numerous banking violations that harmed customers dating back to 2011.”
Also, Miller highlighted surprising news that WFC was planning to significantly alter its mortgage business. He noted, “Wells Fargo is the largest mortgage servicer in the U.S. with nearly $1 trillion in loans, or 7.3% of the market, as of Q3, CNBC reported.”
However, he said, “On Tuesday, Wells Fargo announced plans to dramatically shrink its mortgage business.” Harrison continued, “It will now only offer home loans to existing bank and wealth management customers, as well as borrowers in minority communities. The bank is also closing its correspondence business, which sells mortgages through third parties, and "significantly" reducing its mortgage servicing portfolio through asset sales.”
Reducing its exposure to mortgage lending, the company’s former cash cow business, caused some to question the bank’s growth potential. However, WFC’s 5.8% year-to-date gains are better than the broader market (the S&P 500 is up by 4.6% thus far throughout 2023), and it appears that many investors are looking past regulatory headwinds and towards the company’s strong net interest income results supported by the Federal Reserve's hawkish policies.
Bearish Nobias Credible Analysts Opinions:
Giles Gwinnett, a Nobias 4-star rated author, wrote an article focused on Wells Fargo’s earnings this week, stating, “The weaker numbers come as revenue fails to meet the bank's expectations and it has had to deal with 'one-off' costs related to litigation and regulatory and customer remediation as the company continues to deal with a six year old scandal over sales practices.”
Looking at WFC’s Q4 results, Gwinnett said, “In the three months to end-December, the US's fourth largest lender posted a profit of US$0.67 per share, compared to US$1.38 per share in the fourth quarter of 2021.” In other words, WFC’s bottom-line was slashed by approximately 50%. Gwinnett also said, “The bank's total revenue dropped in the quarter to US$19.7 billion versus US$20.9 billion in Q4, 2021.”
Bullish Nobias Credible Analysts Opinions:
John Reosti, a Nobias 4-star rated author, also covered Wells Fargo’s recent earnings report this week. He published an article which stated, “Wells Fargo posted higher-than-expected fourth-quarter expenses, even after the firm warned of a hefty loss tied to a regulatory sanction last month.”
Reosti continued, “The firm spent $16.2 billion in the last three months of the year [on regulatory sanctions], according to a statement Friday, exceeding analyst estimates. That included $3.3 billion in operating losses after Wells Fargo said last month it would book costs for a settlement with the Consumer Financial Protection Bureau and other legal issues.”
However, he also pointed out that without the regulatory headwinds, WFC’s quarter would have been quite impressive from an income perspective. Reosti said, “The firm pulled in a record $13.4 billion in net interest income in the quarter, surpassing analyst expectations. The 45% rise from a year earlier shows the dramatic impact of the Federal Reserve's interest rate hikes on Wells Fargo's bottom line.”
John Foley, a Nobias 5-star rated author, published an article at Reuters this week which put a spotlight on the long-term damage that Wells Fargo’s scandals have caused the bank, and more importantly, its shareholders. He wrote, “Serial mischief has cost Wells Fargo investors in three ways.”
“First,” Foley said, “there are penalties that show up in what the bank calls “operating losses.” It will have booked $25 billion of them since the beginning of 2017, the first full year after widespread fraudulent habits were uncovered in its consumer bank. Of that sum, it has paid $11.5 billion in fines, according to the Good Jobs First Violation Tracker. That is money diverted from stock buybacks and dividends, or which deprives the bank of earnings to fuel future lending.”
“Second,” he continued, “there are the expenses Wells Fargo has incurred from its internal deep clean. Those range from “professional services” to extra hires in its compliance and administrative teams. Before the fake-accounts scandal, Wells Fargo used to spend around $50 billion annually on expenses, excluding operating losses. Since then, it has laid out around $16 billion above that baseline. Together with the operating losses, it suggests over $40 billion of pre-tax earnings have been thrown on the bonfire.”
Lastly, he said, “Shareholders have suffered the biggest cost, however, in a less straightforward way: the balance sheet restrictions.”
Foley continued, “America’s top six banks as a group, over the past five years, have expanded their balance sheets by one-third. Had Wells Fargo been permitted to keep pace, it might have amassed an additional $650 billion in assets.” With that in mind, he noted, “Wells Fargo consistently generates earnings of about 1% from its assets. At that rate, it suggests $6.5 billion of forgone profit.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
And therefore, he said, “Since investors have tended to value Wells Fargo at 11 times its forecast year-ahead profit over the last decade, according to Refinitiv, it equates to some $70 billion of market capitalization that the Fed’s financial handcuffs have put out of reach, and takes the total notional cost of Wells Fargo’s misconduct to more than $100 billion.”
Overall bias of Nobias Credible Analysts and Bloggers:
55% of recent articles published by credible authors on Wells Fargo have expressed a “bullish” bias. Furthermore,, the credible analysts that the Nobias algorithm tracks are more bullish on WFC.
Their average price target for WFC shares is $51.33, which implies that the recent rally is likely to continue. Wells Fargo shares currently trade for $44.22, meaning that the credible analysts that Nobias tracks see upside potential of approximately 16.1%.
Disclosure: Nicholas Ward has no WFC position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Taiwan Semiconductor (TSM) stock
Taiwan Semiconductor continues to outperform its peers in the semiconductor industry and the company’s recent announcement for plans to produce 3nm chips points towards continued technological superiority.
Nobias Insights: 67% of recent articles published by credible authors focused on TSM shares offer a “Bullish” bias. Three out of the four credible Wall Street analysts who cover Taiwan Semiconductor believe shares are likely to rise in value. The average price target applied to TSM by credible analysts is $88.50, which implies a small upside potential of 3.0% relative to the current share price of $86.80.
Bullish Take: Patrick Seitz, a Nobias 4-star rated author, said: “TSMC is leading the race to make chips with ever smaller circuits.”
Bearish Take: Growth at a Good Price, a Nobias 4-star rated author, said, “If you choose to invest in Taiwan Semiconductor Manufacturing, there is one risk you'll want to watch out for: Geopolitical risk.”
Key Points
Performance
Taiwan Semiconductor (TSM) rose by 7.7% this week, pushing their year-to-date performance up to 17.5%. This compares favorably to the S&P 500, which is up by approximately 4.6% during 2023 thus far.
Event & Impact
Taiwan Semiconductor announced its Q4 earnings results this week, beating Wall Street’s estimates on the bottom line.
Noteworthy News:
Taiwan Semiconductor continues to outperform its peers in the semiconductor industry and the company’s recent announcement for plans to produce 3nm chips points towards continued technological superiority.
Nobias Insights
67% of recent articles published by credible authors focused on TSM shares offer a “Bullish” bias. Three out of the four credible Wall Street analysts who cover Taiwan Semiconductor believe shares are likely to rise in value. The average price target applied to TSM by credible analysts is $88.50, which implies a small upside potential of 3.0% relative to the current share price of $86.80.
Bullish Take Patrick Seitz, a Nobias 4-star rated author, said: “TSMC is leading the race to make chips with ever smaller circuits.”
Bearish Take Growth at a Good Price, a Nobias 4-star rated author, said, “If you choose to invest in Taiwan Semiconductor Manufacturing, there is one risk you'll want to watch out for: Geopolitical risk.”
TSM Jan 2023
One of the largest semiconductor companies in the world, Taiwan Semiconductor (TSM), reported earnings this week. Taiwan Semiconductor’s Q4 results have sparked a significant rally, with shares up by 17.50% on a year-to-date basis. This makes TSM one of the best performing stocks in the market throughout 2023 thus far and according to the credible authors and Wall Street analysts that the Nobias algorithm tracks, there is upside ahead.
Bullish Nobias Credible Analysts Opinions:
Patrick Seitz,a Nobias 4-star rated author, recently touched upon Taiwan Semiconductor’s innovative technology in an article published at Investors.com. He stated, “TSMC is leading the race to make chips with ever smaller circuits.”
Currently, Seitz notes, the company’s “state-of-the-art chips use 5-nanometer process technology”; however, Taiwan Semiconductor recently announced a ceremony “to celebrate the start of mass production using its 3-nanometer process technology.”
Regarding the importance of this advancement, Seitz wrote, “Circuit widths on chips are measured in nanometers, which are one-billionth of a meter. Smaller circuits translate to faster and more power-efficient semiconductors.” And, he states, there is significant demand for chips with the smaller nodes. Seitz said, “TSMC's customers include Apple (AAPL), Advanced Micro Devices (AMD), Nvidia (NVDA), and more.”
Shanthi Rexaline, a Nobias 4-star rated author, covered Taiwan Semiconductor’s recent earnings report in an article that she published at Benzinga. She said, “The Hsinchu, Taiwan-based company reported fourth-quarter earnings that beat expectations despite a revenue miss.”
During the fourth quarter, Taiwan Semiconductor generated $19.93 billion in sales, which missed Wall Street estimates by $990 million. However, despite the miss, this sales figure still represented 26.6% year-over-year growth. During Q4, TSMC’s GAAP earnings-per-share totaled $1.82, beating analyst estimates by $0.05/share.
During the company’s Q4 report, TSMC reported, “Gross margin for the quarter was 62.2%, operating margin was 52.0%, and net profit margin was 47.3%.The company also said, “In the fourth quarter, shipments of 5-nanometer accounted for 32% of total wafer revenue; 7- nanometer accounted for 22%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 54% of total wafer revenue.”
Rexaline continued, “More importantly, the company guided to below-consensus first-quarter revenue, citing continued end-market weakness and inventory correction.” She went on to quote a Wall Street analyst, stating, “Needham analyst Charles Shi noted that TSMC expects low-single-digit earnings growth for 2023, implying a revenue bottom in the second quarter.”
Rexaline wrote, “The company also reduced its 2023 Capex guidance to $32 billion-$36 billion and called for a narrowing of margins amid a rise in R&D expenses, the analyst said.” Lower capex implies stronger cash flows, even in the face of disappointing sales guidance.
Bearish Nobias Credible Analysts Opinions:
Nobias 4-star rated author, Growth at a Good Price, also covered TSMC’s Q4 results in an article that they published at Seeking Alpha this week. Regarding the quarter, Growth at a Good Price said, “It was a very strong release from a company that fell 40% in the 2022 tech crash, thanks mainly to the weakness of other semi names in the same period.” They too covered TSMC’s top and bottom-line results, before transitioning to the company’s cash flows. The author wrote, “Free cash flow was another standout metric in the quarter. At $4.93 billion, it improved by $110 million from the prior quarter. Total free cash flow for the year was $17.33 billion, a significant improvement over the previous year.”
Furthermore, Growth at a Good Price mentioned Taiwan Semiconductor’s strong relative performance compared to its industry peers. They said, “It's impressive that TSMC is still guiding for modest full year growth in this environment, as many similar companies are already seeing revenue decline in 2022.” The author continued, “In its most recent quarter, Micron's (MU) revenue declined 47% year over year. NVIDIA (NVDA), for its part, reported a 17% decline.”
“To know whether TSM's good results can continue,” Growth at a Good Price mentioned, “we need to understand why it is performing so much better than its competitors.” “First,” they continued, “its dominant market position gives it pricing power.” “Second,” the author said, “it is not a commodity vendor.” And lastly, Growth at a Good Price stated that TSMC “doesn't specialize in just one market segment.”
Overall, they were bullish on the stock; however, they did put a spotlight on a major risk that investors need to be aware of. Growth at a Good price said, “If you choose to invest in Taiwan Semiconductor Manufacturing, there is one risk you'll want to watch out for: Geopolitical risk.” Along these lines they continued, “Many people believe that China will someday invade Taiwan.”
“China's President Xi Jinping has indicated that he could use force as a "last resort" should foreign nations interfere with his planned unification with Taiwan. He has never said what his "red lines" are for determining that an invasion is necessary, which makes the China/Taiwan situation fairly ambiguous,” said the author. Regarding the potential fallout from a Chinese invasion, Growth at a Good Price said, “the effects of an invasion on Taiwan Semiconductor are not known.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
But, they did conclude, “Chinese companies would almost certainly be sanctioned, but Taiwan is aligned with the West, so as long as China doesn't directly attack semiconductor facilities then a war would not be fatal to TSM as a business. The stock market volatility in such a scenario would likely be extreme, though, so know your risk tolerance before buying Taiwan Semiconductor stock.” Overall, the author says that for investors who can stomach the geopolitical situation, “Taiwan semiconductor stock appears to be a good bet.”
Overall bias of Nobias Credible Analysts and Bloggers:
This bullish sentiment is shared by the majority of credible authors and Wall Street analysts who cover TSMC. 65% of recent articles published by credible Nobias authors have expressed a “Bullish” bias towards Taiwan Semiconductor shares.
Furthermore, 3 out of the 4 credible analysts who have offered an opinion on TSMC have an average price target of $88.50 attached to shares. Taiwan Semiconductor has rallied 17.5% since the start of 2023 alone; however, even after this rally, that average price target implies upside potential of 3% relative to TSMC’s current share price of $86.80.
Disclosure: Nicholas Ward has no TSM position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Intel (INTC) stock
Intel plans to open up the world's largest chip making facility in Ohio in the coming years, bringing back much needed domestic production of high-end semiconductors.
Nobias Insights: 47% of recent articles published by credible authors focused on INTC shares express a “Bearish” bias. 7 out of the 13 credible credible Wall Street analysts who cover Intel believe shares are likely to fall in value. However, amongst these 13 credible individuals, the average price target being applied to INTC is $37.25, which implies upside potential of approximately 29.7% relative to INTC’s current share price of $28.76.
Bullish Take: Lee Jackson, a Nobias 4-star rated author, said: “This legacy leader in semiconductors has been hammered, and while some feel it is a value trap, it is hard to count out the company that defined the semiconductor revolution.”
Bearish Take: Rob Starks Jr., a Nobias 5-star rated author, said, “Because Intel's management fumbled the ball the last several years, Advanced Micro Devices (AMD) caught up; AMD is now eating Intel's lunch in the data center space, and gaining market share.”
Key Points
Performance
Intel shares rallied by 7.48% this week, significantly outperforming the broader markets. However, on a trailing twelve month basis, Intel shares are still down by 46.81%, underperforming the S&P 500, which is down by just 17.06% during this same period of time.
Event & Impact
After several years of underperformance where Intel lost notable market share to peers such as Advanced Micro Devices, Taiwan Semiconductor, and Samsung, the company hopes that its new CEO’s restructuring plan will allow for it to make up lost ground by 2025.
Noteworthy News:
Intel plans to open up the world's largest chip making facility in Ohio in the coming years, bringing back much needed domestic production of high-end semiconductors.
Nobias Insights
47% of recent articles published by credible authors focused on INTC shares express a “Bearish” bias. 7 out of the 13 credible credible Wall Street analysts who cover Intel believe shares are likely to fall in value. However, amongst these 13 credible individuals, the average price target being applied to INTC is $37.25, which implies upside potential of approximately 29.7% relative to INTC’s current share price of $28.76.
Bullish Take Lee Jackson, a Nobias 4-star rated author, said: “This legacy leader in semiconductors has been hammered, and while some feel it is a value trap, it is hard to count out the company that defined the semiconductor revolution.”
Bearish Take Rob Starks Jr., a Nobias 5-star rated author, said, “Because Intel's management fumbled the ball the last several years, Advanced Micro Devices (AMD) caught up; AMD is now eating Intel's lunch in the data center space, and gaining market share.”
INTC Jan 2023
After a tumultuous 2022, where Intel (INTC) shares declined by approximately 48.1%, they’re off to the races thus far during 2023. On a year-to-date basis, Intel has rallied by 7.48%. Investors who subscribe to the Dogs of the Dow strategy aren’t surprised by this.
According to Investopedia, the, ‘"Dogs of the Dow" is an investment strategy that attempts to beat the Dow Jones Industrial Average (DJIA) each year by leaning portfolios toward high-yield investments. The general concept is to allocate money to the 10 highest dividend-yielding, blue-chip stocks among the 30 components of the DJIA. This strategy requires rebalancing at the beginning of each calendar year
Beginning the year with a 5.5% dividend yield, Intel was one of the highest yielding Dow stocks at the end of 2022. And, it appears that the credible analysts tracked by the Nobias algorithm agree with Intel’s rebound potential. Currently, their average price target for INTC shares implies potential of nearly 30%.
Bearish Nobias Credible Analysts Opinions:
Rob Starks Jr., a Nobias 5-star rated author, recently published a bullish article at the Motley Fool titled, “With Its Stock Near a 52-Week Low, Is Intel a Buy?” He began his report, highlighting Intel’s recent struggles, especially when it came to losing market share to its largest peers in the semiconductor industry.
Starks said , “Between the chip industry sinking into a cyclical downturn and competitors eating away at its market share, Intel had a disastrous 2022.” He continued, “Investors have soured on the stock, as Intel's two most significant revenue-generating segments, the client computing group (CCG) and datacenter and AI group (DCAI), have deteriorated significantly in 2022.”
Regarding Intel’s most recent quarterly data, Starks wrote, “In the third-quarter earnings report, CCG declined 17% from the previous year's comparable period to $8.1 billion, and DCAI dropped 27% to $4.2 billion.”
“Additionally,” he continued, “consolidated gross margin has shrunk from 56% in the third quarter of 2021 to only 42.6% in the third quarter of 2022. Worse, operating margin showed a loss of 1.1% -- a terrible result.”
Regarding competition, Starks said, “Because Intel's management fumbled the ball the last several years, Advanced Micro Devices (AMD) caught up; AMD is now eating Intel's lunch in the data center space, and gaining market share.” He also stated that Intel lost ground to Taiwan Semiconductor (TSM) when it comes to manufacturing high-end chips.
Yet, Starks says, there could be sunnier skies on the horizon. He stated, “Gelsinger [referring to Patrick Gelsinger Intel’s new CEO] said on the Q3 earnings call that he believes the company is now on track to regain transistor performance leadership by 2025.”
He also mentioned that Gelsinger turnaround plan included goals to take back lost leadership. “Intel's goal is to become the No. 2 contract chipmaker worldwide by the end of the decade -- an ambitious goal since it only started its contract operation in 2021,” he said.
The recently passed CHIPS act is expected to play a major role in Intel’s turnaround. Starks wrote, “This legislation provides $39 billion in manufacturing subsidies to construct semiconductor fabrication plants (fabs) and an additional $24 billion in tax credits for companies engaged in domestic chip production.”
Despite his expectations that the semiconductor space is likely to continue to experience growth headwinds throughout 2023, Starks concluded his piece stating, “Considering Intel's low valuation, now is a great time to buy the stock for the long term.”
Bullish Nobias Credible Analysts Opinions:
Lee Jackson, a Nobias 4-star rated author, also recently highlighted Intel in an bullish light as one of his picks in an article titled, “5 Dow Stocks With the Biggest Dividends Could Be Huge 2023 Winners”.
Currently, Intel shares trade for $28.74 and therefore, the stock’s $1.46/share annual dividend equates to a dividend yield of 5.30%. This is well above the 1.67% dividend yield that the S&P 500 SPDR Trust ETF (SPY) offers investors. It’s also multiple times larger than the 1.26% yield that the iShares Semiconductor ETF (SOXX) offers.
Regarding Intel, Jackson said, “This legacy leader in semiconductors has been hammered, and while some feel it is a value trap, it is hard to count out the company that defined the semiconductor revolution.”
He touched upon Intel’s operations, stating that its chip platforms “are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Like Starks, Jackson mentioned the CHIPS Act and Intel’s U.S. infrastructure buildout plans stating: “Intel announced almost a year ago that it would invest significantly to build potentially the world’s largest chip-making complex in Ohio, looking to boost capacity as a global shortage of semiconductors affects everything from smartphones to automobiles. Intel says the 1,000-acre “mega-site” northeast of Columbus has room for as many as eight plants, known as “fabs.” The company estimates it would require a $100-billion investment to fully build and equip those plants.” Jackson mentioned that Wall Street’s consensus price target for Intel shares is $31.13, and therefore, relative to the stock’s current share price, the stock has double digit upside potential.
Overall bias of Nobias Credible Analysts and Bloggers:
The analysts deemed credible by the Nobias algorithm are even more bullish on Intel shares. These analysts are mixed, with 7 out of the 13 reports regarding Intel containing “Bearish” sentiment; however, the average credible analyst price target for Intel currently sits at $37.25. Relative to Intel’s closing share price today of $28.73, that $37.25 average price target implies upside potential of approximately 29.7%.
It’s worth noting that 47% of recent articles published by credible authors (individuals with 4 and 5-star ratings by the Nobias algorithm) have expressed a “Bearish” sentiment. Therefore, it’s clear that not everyone believes that Intel is a great value as opposed to a value trap; yet, the average credible analyst price target implies an attractive risk/reward proposition.
Disclosure: Nicholas Ward has no INTC position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Walgreens Boots Alliance (WBA) stock
Nobias Insights: 50% of recent articles published by credible authors focused on WBA shares offer a “Bearish” bias. However, the average price target being applied to WBA shares by the credible analysts that the Nobias algorithm tracks is $40.67, which implies upside potential of approximately 12.2% relative to WBA’s current share price of $36.44.
Bullish Take: Gen Alpha, a Nobias 5-star rated author, said, “I continue to find WBA to be attractive at the current price of $39, with a forward PE of just 8.7, sitting well below its long-term normal P/E of 15.7.”
Bearish Take: Mark Roussin, a Nobias 4-star rated author, said, “2023 is expected to be a year of growth for WBA, as analysts expect the company to continue reinvesting in the business, and earnings are expected to fall.”
Key Points
Performance
Walgreens Boots Alliance (WBA) shares fell by approximately 6.6% after reporting their fiscal 2023 Q1 earnings this week. During the trailing 12 months, WBA shares are down by approximately 32.3%, underperforming the S&P 500, which is down by approximately 17.6% during this same period of time, by a wide margin. Amazon shares fell by 50.7% during 2022, underperforming the S&P 500 and the Nasdaq Composite Index, which were down by 19.4% and 33.1% during 2022, respectively, by a wide margin. Johnson & Johnson shares fell by 0.46% this week. However, they’re up by 2.98% on a year-to-date basis. This compares favorably to the S&P 500, which is down 19.4% in 2022 thus far.
Event & Impact
WBA posted Q1 results, beating Wall Street’s estimates on the top and bottom lines; however, the company took significant losses on a GAAP basis due to Opioid-related charges. Amazon shares hit 52-week lows this week as higher interest rates and persistent inflationary pressures continue to hurt the sentiment surrounding shares.
Noteworthy News:
Walgreens updated full-year guidance during Q1 and is now calling for adjusted earnings-per-share to fall by roughly 10% during 2023.
Nobias Insights
50% of recent articles published by credible authors focused on WBA shares offer a “Bearish” bias. However, the average price target being applied to WBA shares by the credible analysts that the Nobias algorithm tracks is $40.67, which implies upside potential of approximately 12.2% relative to WBA’s current share price of $36.44.
Bullish Take Gen Alpha, a Nobias 5-star rated author, said, “I continue to find WBA to be attractive at the current price of $39, with a forward PE of just 8.7, sitting well below its long-term normal P/E of 15.7.”
Bearish Take Mark Roussin, a Nobias 4-star rated author, said, “2023 is expected to be a year of growth for WBA, as analysts expect the company to continue reinvesting in the business, and earnings are expected to fall.”
WBA Jan 2023
Over the last year, Walgreens Boots Alliance (WBA) shares have fallen by 32.3%. During the last month alone, WBA shares have dropped by 11.4%. Both of these figures compare poorly to the S&P 500, which has fallen by approximately 17.6% during the trailing 12 months and by -2.5% during the past 30 days.
Walgreens’ poor relative performance has pushed its valuation far below its historical norms. WBA’s share price weakness has also resulted in its dividend yield rising up to the 5.5% area. The company posted fiscal 2023 Q1 results this week, beating consensus analyst estimates on both the top and bottom lines.
The average price target being applied to WBA shares by the credible analysts that the Nobias algorithm tracks implies upside potential north of 12% (and total returns nearing 18% with the dividend factored in). However, the credible author community remains bearish, with 50% of recent articles expressing a bearish bias. In short, there is a tug-of-war going on right now between the bears and the bulls when it comes to Walgreens shares.
Bearish Nobias Credible Analysts Opinions:
In November of 2022, Mark Roussin, a Nobias 4-star rated author, published an article on Walgreen Boots Alliance, titled, “Walgreens Boots Alliance: A Great Dividend, A Better Turnaround Story” which explains why.
Roussin described the company, stating, “Walgreens Boots Alliance is a leading retail pharmacy, with Walgreens locations here in the U.S. and Boots store locations in Europe and Asia. The company started back in 1901 as a small store in Chicago, Illinois.” He also highlighted its dividend, stating, “WBA pays an annual dividend of $1.92, which equates to a dividend yield of 4.65%. The company has a low payout ratio of only 38% and they have increased the dividend for 30 consecutive years and counting, making them a Dividend Aristocrat.”
It’s worth noting, when Roussin published his piece, WBA shares were trading above $40.00. Today, they’re trading in the $36.40 area, meaning that WBA’s dividend yield now sits at nearly 5.5%. Roussin also highlighted the stock’s recent struggles, stating that the company must embark upon a turnaround saga to change investor sentiment.
Roussin is basing his bullish turnaround thesis for Walgreens on its recent management change and his belief that the company’s CEO, Roz Brewer, has what it takes to revamp this drugstore’s growth prospects. Regarding WBA’s management, Roussin wrote, “CEO Roz Brewer took the helm back in March 2021, coming over as a successful executive at Starbucks (SBUX). In fact, many pointed to her as a potential successor to Kevin Johnson, but she was offered a position at WBA that she could not pass up.” He continued, “While operating as the COO of SBUX and during her stint as CEO of Sam's Club, Roz Brewer was touted for her strong leadership as well as her ability to innovate.”
Roussin noted a recent company presentation which laid out Brewer’s path forward for the company, stating, “Innovation is exactly what she is trying to do, both from a digital standpoint as well as trying to refocus the company to be more health-care focused.” Roussin broke down her plan, stating that Brewer hopes to: Transform the business to align it with its goals, focusing on health and wellness. Building the next growth driver will come via the adoption of technology and services both in the front of the store as well as back of the store, including within the supply chain. Focus on how to strengthen the portfolio by utilizing capital assets strategically. Finally, focus on building a winning culture, something Ms. Brewer has been praised for at her most recent stops. He acknowledged that these restructuring plans are likely to hurt Walgreen’s fundamentals in the near-term.
Roussin said, “2023 is expected to be a year of growth for WBA, as analysts expect the company to continue reinvesting in the business, and earnings are expected to fall.” Currently, the analyst consensus for 2023’s earnings-per-share growth rate is -11%. As such,” he continued, “shares do not look all that appealing from that perspective, but yesterday's Walgreens is not the Walgreens of the future, at least if Roz Brewer has anything to do with it.”
However, looking further out into the future, Roussin sees strong upside potential for WBA. He concluded his report, “I would not expect only sales to grow, but margins to increase nicely, leading to further margin expansion. That is where the opportunity for Walgreens lies, but you need to be willing to wait it out.”
Bullish Nobias Credible Analysts Opinions:
In late December, Gen Alpha, a Nobias 5-star rated author, published a bullish report on WBA on Seeking Alpha, titled, “Walgreens Is Cheap At 8.7x P/E And 5% Yield”. Gen Alpha said, “WBA enjoys a strong brand that's well-recognized and trusted by consumers, which has helped to drive customer loyalty and contribute to its success over its many years of operation.“ They continued, “Walgreens also has a strong online presence and a wide range of products and services that it offers through its website and mobile app, which has helped it to attract and retain customers in the digital age.”
And, highlighting the strength of the company’s physical retail portfolio, Gen Alpha noted, “Walgreens derives leg up against online competitors such as Amazon (AMZN) due to the fact that 75% of American households live within a 5 mile radius of a Walgreens store.”
Despite its strong market share presence in the drug store industry, Gen Alpha said, “WBA has seen headwinds in recent years, as gross margins have come under pressure due to the growing power of pharmacy benefit managers and their negotiating power. Yet, the author points out that recent M&A activity has the potential to spark future growth.
Gen Alpha wrote, “Looking ahead, I see potential for its recent $9 billion acquisition of Summit Health-City MD to be a solid revenue driver going forward, as it further solidifies WBA's ongoing transition into a more holistic healthcare company.” That author also noted that after this $9 billion deal, “WBA maintains a solid BBB rated balance sheet.”
”Lastly,” Gen Alpha wrote, “I continue to find WBA to be attractive at the current price of $39, with a forward PE of just 8.7, sitting well below its long-term normal P/E of 15.7.” Regarding this historically low valuation, the author said, “I see potential for the valuation gap to close with continued momentum around WBA's transformation efforts and cost management program.” “Meanwhile,” they concluded, “investors get paid to wait with a juicy dividend yield at the current low valuation from this dividend aristocrat.”
When Walgreens Boots Alliance posted its fiscal 2023 Q1 results this week, the company beat Wall Street’s consensus estimates on both the top and bottom lines. WBA’s Q1 revenue totaled $33.38 billion, beating estimates by $340 million. Walgreen’s Q1 non-GAAP EPS came in at $1.16, beating estimates by $0.02/share. During the Q1 report, WBA’s Chief Executive Officer, Rosalind Brewer said: "WBA delivered a solid start to the fiscal year, as we continue to accelerate our transformation to a consumer-centric healthcare company. We're making significant progress in driving our U.S. Healthcare segment to scale and profit, including the recent VillageMD acquisition of Summit Health. Our core retail pharmacy businesses in both the United States and United Kingdom remain resilient in challenging operating environments. Execution across segments reinforces our confidence in achieving full-year guidance, and our strategic actions are creating long-term shareholder value."
The company highlighted a significant operating loss during Q1, stating, “Operating loss was $6.2 billion in the first quarter compared to operating income of $1.3 billion in the year-ago quarter. Operating loss in the quarter reflects a $6.5 billion pre-tax charge for opioid-related claims and litigation.”
Regarding the bottom-line, WBA also stated, “Net loss in the first quarter was $3.7 billion compared to net income of $3.6 billion in the year-ago quarter. This decrease is driven by a $5.2 billion after-tax charge for opioid-related claims and litigation offset by a $0.9 billion after-tax gain from the partial sale of the Company's equity method investment in AmerisourceBergen during the first quarter”.
Finally, the company stated, “Loss per share in the first quarter was $4.31, compared to earnings per share of $4.13 in the year-ago quarter. Adjusted earnings per share decreased 30.8 percent to $1.16, reflecting a decrease of 29.9 percent on a constant currency basis.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Yet, it appears that these are one-time negative items, and looking forward, the company provided investors with an update on full-year guidance. The company said, “Maintaining full-year adjusted EPS guidance of $4.45 to $4.65 as strong core business growth is more than offset by lapping fiscal year 2022 COVID-19 execution, and currency headwinds”.
In fiscal 2022, WBA generated $5.04 in adjusted earnings-per-share, meaning that the $4.55 mid-point of this new guidance range represents growth of approximately -10% in 2023. They also stated, “Raising full-year sales guidance to $133.5 billion to $137.5 billion reflecting Summit Health acquisition, refreshed currency rates, and first quarter sales ahead of expectations”. During the quarter, management mentioned that the company “continues to achieve strong results across its business and strategic priorities”. However, as Roussin said, this turnaround process is going to take some time and therefore, bottom-line growth appears to be a fiscal 2024 story.
Overall bias of Nobias Credible Analysts and Bloggers:
Although WBA beat Q1 expectations, the credible author community appears to be torn on the stock. 50% of recent articles published by credible authors which focused on Walgreens expressed a “Bearish” bias. Yet, the average price target being applied to WBA shares right now by the credible analyst community shows upside ahead. Currently, WBA shares trade for $36.24 and the average credible analyst price target currently sits at $40.67. This implies upside potential of approximately 12.2%.
Disclosure: Nicholas Ward has no WBA position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Amazon (AMZN) stock
Nobias Insights: 59% of recent articles published by credible authors focused on Amazon shares offer a “Bullish” bias. 14 out of the 15 credible credible Wall Street analysts who cover AMZN believe shares are likely to rise in value. The average price target being applied to Amazon by these credible analysts is $171.21, which implies upside potential of approximately 103.8% relative to Amazon’s current share price of $84.00.
Bullish Take: Rob Starks Jr., a Nobias 5-star rated author, said: “Amazon sells for a price-to-sales (P/S) ratio of 1.7; the last time it traded at a P/S ratio this low was in 2015. As a result, many investors consider the stock undervalued, a holiday present for investors looking for a solid "buy the dip" opportunity.”
Bearish Take: Luc Olinga, a Nobias 4-star rated author, said, “The numbers speak for themselves: The Amazon stock closed the December 22 trading session at $83.79, which represents a 49.7% drop compared to December 31, 2021. This is the lowest closing level for the Amazon stock since March 12, 2019. Basically, the group, founded by Jeff Bezos, has completely erased all the gains during the two years when strict restrictions were put in place to limit the spread of COVID-19.
Key Points
Performance
Amazon shares fell by 50.7% during 2022, underperforming the S&P 500 and the Nasdaq Composite Index, which were down by 19.4% and 33.1% during 2022, respectively, by a wide margin. Johnson & Johnson shares fell by 0.46% this week. However, they’re up by 2.98% on a year-to-date basis. This compares favorably to the S&P 500, which is down 19.4% in 2022 thus far.
Event & Impact
Amazon shares hit 52-week lows this week as higher interest rates and persistent inflationary pressures continue to hurt the sentiment surrounding shares.
Noteworthy News:
Amazon’s eCommerce growth is expected to slow again in coming quarters; however, credible authors point out the big-data collection that Amazon Prime provides the company and the profitable growth that AMZN is generating, using this data to sell digital advertisements.
Nobias Insights
59% of recent articles published by credible authors focused on Amazon shares offer a “bullish” bias. 14 out of the 15 credible Wall Street analysts who cover AMZN believe shares are likely to rise in value. The average price target being applied to Amazon by these credible analysts is $171.21, which implies upside potential of approximately 103.8% relative to Amazon’s current share price of $84.00.
Bullish Take Rob Starks Jr., a Nobias 5-star rated author, said: “Amazon sells for a price-to-sales (P/S) ratio of 1.7; the last time it traded at a P/S ratio this low was in 2015. As a result, many investors consider the stock undervalued, a holiday present for investors looking for a solid "buy the dip" opportunity.”
Bearish Take Luc Olinga, a Nobias 4-star rated author, said, “The numbers speak for themselves: The Amazon stock closed the December 22 trading session at $83.79, which represents a 49.7% drop compared to December 31, 2021. This is the lowest closing level for the Amazon stock since March 12, 2019. Basically, the group, founded by Jeff Bezos, has completely erased all the gains during the two years when strict restrictions were put in place to limit the spread of COVID-19.”
AMZN Dec 2022
Amazon shares hit new 52-week lows this week. The stock fell to $81.69, which was 52.3% below its 52-week highs of $171.40. Amazon rallied a bit into the end of the week, ending 2022 trading for $84.00/share. This meant that AMZN posted losses of 50.7% during 2022, underperforming the S&P 500 and the tech-heavy Nasdaq, which were down by 19.4% and 33.1% during 2022, respectively, by a wide margin.
Bearish Nobias Credible Analysts Opinions:
Luc Olinga, a Nobias 4-star rated author, covered Amazon’s 2022 sell-off in a recent article that he published at The Street, stating, “It’s a dark year for Amazon.” Then, he broke down just how “dark” it was, stating: “The numbers speak for themselves: The Amazon stock closed the December 22 trading session at $83.79, which represents a 49.7% drop compared to December 31, 2021. This is the lowest closing level for the Amazon stock since March 12, 2019. Basically, the group, founded by Jeff Bezos, has completely erased all the gains during the two years when strict restrictions were put in place to limit the spread of COVID-19.”
Olinga noted that significant sell-offs like this have proven to be relatively rare for Amazon shares. He said, “The Amazon stock is thus about to experience the second bad year in its history after the year 2000, during which it had fallen by 79.6%.”
Because of its 2022 weakness, Olinga noted, “Amazon was kicked out of the trillion club last month, the inner circle of companies with a market value of at least $1 trillion.” On this note, he continued, “The Seattle, Washington-based firm's [Amazon] market capitalization is nearly $855 billion at the time of this writing versus $2.1 trillion for the iPhone maker [Apple], $1.82 trillion for the Saudi oil giant [Saudi Aramco], $1.78 trillion for the software juggernaut [Microsoft] and $1.14 trillion for the parent company of Google [Alphabet].”
Olinga highlighted rising interest rates and the deteriorating macro economic environment as a major reason for Amazon’s 2022 weakness. He wrote, “Consumers tend to spend on tech products and services when things are going well. But as soon as the economic situation deteriorates, they begin to be cautious, favoring necessary purchases, often to the detriment of tech.”
Furthermore, Amazon’s revenue slowdown has added to the negative sentiment surrounding shares on Wall Street. When Amazon reported its most recent earnings on October 27th, 2022, the company reported 14.7% revenue growth. This was below long-term averages. Furthermore, Amazon provided guidance for the fourth quarter which called for single digit top-line growth.
Regarding this guidance, Olinga said, “This forecast was particularly disappointing to investors, because it focused on the end-of-year holiday period, which is supposed to be a time when consumers tend to increase their spending.”
Bullish Nobias Credible Analysts Opinions:
Yet, with AMZN shares hovering near 52-week lows, a couple of credible authors published year-end reports this week which highlighted Amazon as one of their strongest buying opportunities looking ahead to 2023. Rob Starks Jr., a Nobias 5-star rated author, recently published an article at the Motley Fool titled, “Buy This Unstoppable E-Commerce Giant While It Sits Near a 52-Week Low”.
The ongoing growth and sticky retention provided by Amazon Prime and Amazon’s growing eCommerce business as a whole played a pivotal role in Starks’ bullish opinion. Regarding Prime, he wrote, “It quickly became the world's most incredible loyalty and retention subscription service. For instance, market research company Statista estimated that U.S.-based Prime members have a 93% retention rate after the first year and 98% after two years.”
Starks said, “You can see this in a 2019 Statista survey that shows U.S.-based Prime members spent an average of $1,400 on Amazon each year, compared to $600 spent by non-Prime members.” He continued, “While no one outside of Amazon is privy to whether Prime is profitable on paper, Prime generates tons of proprietary first-party data on its 200 million global subscribers, which the company monetizes in many fruitful ways, such as advertising.”
And, as Starks says, this is an underappreciated component of Amazon’s overall business. He noted, “While advertising only makes up 7.5% of Amazon's revenue, that revenue is growing at 30% year over year in a terrible ad market, compared to Amazon Web Services (AWS), its next fastest-growing segment, increasing revenue by only 28% at the end of the third quarter.”
“During times of a healthy ad market,” Starks continued, “these margins have risen as high as 40% -- very profitable growth.” Lastly, while the current rising rate environment isn’t conducive towards bullish sentiment surrounding long-duration assets, like a high growth stock such as AMZN, Starks points out that when the Fed pivots to a more dovish stance, Amazon is likely to rebound. He wrote, “Suppose you are an Amazon investor; you should only expect a revenue, profitability, and stock price rebound when the Federal Reserve changes from raising interest rates to reducing rates.”
Starks concluded, “Amazon sells for a price-to-sales (P/S) ratio of 1.7; the last time it traded at a P/S ratio this low was in 2015. As a result, many investors consider the stock undervalued, a holiday present for investors looking for a solid "buy the dip" opportunity.”
Harsh Chauhan, a Nobias 4-star rated author, also highlighted Amazon has a strong contrarian buy in a recent article published at The Motley Fool titled, “2 No-Brainer Warren Buffett Stocks to Buy Hand Over Fist for 2023”. Chauhan touched upon Amazon’s 2022 sell-off, stating, “The company's growth has lagged thanks to a slowdown in e-commerce sales on account of surging inflation.” “But,” he continued, “with inflation expected to cool down substantially in 2023, the e-commerce business can be expected to step on the gas once again.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
“More specifically,” Chauhan notes, “Amazon is expected to finish 2022 with a loss of $0.09 per share, compared with a profit of $3.24 per share in 2021, but the forecast for 2023 and 2024 shows major improvements are in the cards.” Looking ahead, he said, “It is estimated that global e-commerce spending could rise to $6.5 trillion in 2023 from $5.7 trillion in 2022. That would be a nice improvement over this year's estimated decline of nearly 10%.”
And, like Starks, Chauhan put the spotlight on Amazon’s fast growing digital advertising business, stating, “Amazon's entry into a lucrative market such as advertising should be another key catalyst for the company in 2023.” Chauhan said, “Amazon's 2022 ad revenue is expected to land at $38 billion. By 2026, this figure is expected to jump to $64 billion.” Overall, he concluded, “Throw in other growth drivers such as cloud computing, an area where Amazon dominates, and it is easy to see why the company is expected to clock 26% annual earnings growth for the next five years.”
Overall bias of Nobias Credible Analysts and Bloggers:
Looking at the broader data collected by the Nobias algorithm, 59% of recent articles published on Amazon by credible authors have included a “bullish” bias towards shares. What’s more, 14 out of the 15 Wall Street analysts who cover Amazon shares believe that they’re likely to head higher from here. Currently, the average price target being applied to Amazon by credible analysts is $171.21. Relative to Amazon’s current share price of $84.00, that represents upside potential of approximately 103.8%.
Disclosure: Nicholas Ward is long AMZN. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Johnson & Johnson (JNJ) stock
Nobias Insights: 67% of recent articles published by credible authors focused on JNJ shares offer a “Bullish” bias. 4 out of the 5 credible credible Wall Street analysts who cover Johnson and Johnson believe shares are likely to rise in value. The average price target being applied to JNJ by these credible analysts is $192.40, which implies upside potential of approximately 8.7% relative to JNJ’s current share price of $177.56.
Bullish Take: Mark Roussin, a Nobias 4-star rated author, said: “JNJ is a dividend king with strong portfolio of products and a rare AAA credit rating, making an investment in JNJ about as reliable as they come.”
Bearish Take: Jonathan Block, a Nobias 4-star rated author, said, “Johnson & Johnson (NYSE:JNJ) has had a modest year and is up just 3%.”
Key Points
Performance
Johnson & Johnson shares fell by 0.46% this week. However, they’re up by 2.98% on a year-to-date basis. This compares favorably to the S&P 500, which is down 19.4% in 2022 thus far.
Event & Impact
Although JNJ outperformed the broader market in 2023, it underperformed many of its large cap, pure-play biopharmaceutical peers. According to credible authors/analysts, this relative underperformance in 2022 is setting the stage for a positive year in 2023.
Noteworthy News:
Johnson & Johnson is a dividend king, with 60 consecutive years of annual dividend increases, and the company plans to spin off its Consumer Health segment in 2023, creating a growth catalyst for shares.
Nobias Insights
67% of recent articles published by credible authors focused on JNJ shares offer a “bullish” bias. 4 out of the 5 credible Wall Street analysts who cover Johnson & Johnson believe shares are likely to rise in value. The average price target being applied to JNJ by credible analysts is $192.40, which implies upside potential of approximately 8.7% relative to JNJ’s current share price of $177.56.
Bullish Take Mark Roussin, a Nobias 4-star rated author, said: “JNJ is a dividend king with strong portfolio of products and a rare AAA credit rating, making an investment in JNJ about as reliable as they come.”
Bearish Take Jonathan Block, a Nobias 4-star rated author, said, “Johnson & Johnson (NYSE:JNJ) has had a modest year and is up just 3%.”
JNJ Dec 2022
The health care sector was a big winner during 2022; outperforming the broader market, which fell by roughly 20% on the year, by a wide margin. The S&P 500 was down by 19.4% on the year. And yet, the healthcare sector posted losses of just 3.55%. What’s more, many of the world’s largest bio-pharmaceutical companies provided strong gains for investors during what was otherwise, a very negative year.
Bearish Nobias Credible Analysts Opinions:
Jonathan Block, a Nobias 4-star rated author, published a report at Seeking Alpha this week highlighting the relative outperformance of these large cap bio-pharma companies. He wrote, “Merck (MRK) shareholders have much to celebrate as the company is the best performing large US pharma of 2022 with a return of ~44% this year.”
Block said, “With a year-to-date return of 34%, Eli Lilly (LLY) had the second-best return of the year.” His litany continued, “AbbVie (ABBV) was the third-best performer of the group with an ~19% return.” He noted that Bristol Myers Squibb (BMY) posted a roughly 15% return for investors during 2022. And he wrapped up his list, noting that, “Johnson & Johnson (NYSE:JNJ) has had a modest year and is up just 3%.”
So, while JNJ shares outperformed the major average to the tune of 23%, they still underperformed many of their direct peers. However, it appears that this relative underperformance during 2022 is setting the stage for a strong 2023 for Johnson and Johson as the majority of both credible authors and analysts who cover the stock express a “Bullish” bias towards shares.
Bullish Nobias Credible Analysts Opinions:
Mark Roussin, a Nobias 4-star rated author, recently published a bullish article focused on Johnson and Johnson titled, “Johnson & Johnson: Time To Buy Before The Split”. He is referring to an upcoming spin-off that the company has announced: in late 2023, Johnson and Johnson plans to split off its Consumer Products segment into a separate company, meaning that the remaining Johnson and Johnson will be more heavily focused on the faster growing pharmaceutical side of the business.
Roussin wrote, “As it stands now, Johnson & Johnson operates within three segments:
Consumer Health
Pharmaceutical
Medical Devices (MedTech)”
He continued, “To give you an idea on the size of each segment, here is a look at the revenues for each segment through the first nine months of 2022:
Consumer Health = $11.2B
Pharmaceutical = $39.4B
MedTech = $20.7B”
Looking at the Consumer Health segment specifically, Roussin said, “The consumer health segment has been a staple for the business, as it includes items such as: Band-Aid, Listerine, Aveeno, Neutrogena, and Tylenol among other products. These are essential products that are required regardless of the economic backdrop.” He called this side of the business “stable”, but noted that it shouldn’t offer the same sort of growth and dividend growth that the Pharma/MedTech segments are likely to produce moving forward.
With regard to Johson and Johson’s dividend, Roussin said, “Right now there are 48 Dividend Kings in the US, and one of those happens to be Johnson & Johnson. This is a prestigious list for dividend stocks and in order to be on this list, you must pay a growing dividend for 50+ CONSECUTIVE years.” He went on to say that JNJ’s annual dividend growth streak currently sits at 60 consecutive years.
Lastly, he noted, “The new JNJ will now be a faster growing business, and I can see it playing out very similar to that of AbbVie (ABBV) when they spun-off from Abbott Labs (ABT) about a decade ago, and that would be very intriguing.” Since spinning off from Abbot, AbbVie, which is the more pharma-focused business of the two, has posted price gains of 389%. Roussin concluded, “JNJ is a dividend king with strong portfolio of products and a rare AAA credit rating, making an investment in JNJ about as reliable as they come.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Insider Monkey, a Nobias 4-star rated author, recently published an article titled, “Top 5 Stocks to Buy in 10 Different Sectors”. Insider Monkey tracks hedge fund activity and to see which stocks are popular amongst the major Wall Street funds. They included Johnson and Johnson in their healthcare picks, stating: “Johnson & Johnson (NYSE:JNJ) is a leader in pharmaceuticals, medtech, and consumer health that ranks as a top pick in the healthcare sector. In Q3 2022, the company’s worldwide revenue rose 8.2% year over year when excluding acquisitions and divestitures on an operational basis to $23.8 billion with its consumer health sales increasing 4.7% year over year operationally to $3.8 billion. Johnson & Johnson (NYSE:JNJ)’s worldwide pharmaceutical sales rose 9% year over year operationally to $13.2 billion and its MedTech sales rose 8.1% year over year operationally to $6.8 billion. 85 hedge funds in our database owned shares of Johnson & Johnson (NYSE:JNJ) at the end of Q3.”
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, 67% of recent articles published by credible authors tracked by the Nobias algorithm expressed a “bullish” bias towards JNJ shares. 4 out of the 5 credible Wall Street analysts that Nobias tracks who have also offered an opinion on Johnson & Johnson believe that the company’s shares are likely to increase in value. Currently, JNJ trades for $177.56, and the average price target being applied to shares by the credible analysts community is $192.40. That $192.40 target implies upside potential of approximately 8.4%.
Disclosure: Nicholas Ward is long JNJ. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Apple (AAPL) stock
Nobias Insights: 50% of recent articles published by credible authors focused on AAPL shares offer a “Neutral” bias. However, 11 out of the 13 credible credible Wall Street analysts who cover Apple believe shares are likely to rise in value. The average price target being applied to Apple by these credible analysts is $186.82, which implies upside potential of approximately 45.5% relative to Apple’s current share price of $128.42.
Bullish Take: Harsh Chauhan, a Nobias 4-star rated author, said: “In fiscal 2022 (which ended on Sept. 24, 2022), Apple reported services revenue of $78 billion. The segment's revenue jumped 14% year over year and accounted for nearly 20% of the company's top line.”
Bearish Take: Patrick Seitz, a Nobias 4-star rated author, said, “Apple's production and supply issues related to iPhone 14 Pro handsets led many analysts to slash their sales and earnings forecasts for the company's December quarter.”
Key Points
Performance
Apple (AAPL) shares fell by 0.21% this week. They’re down by 28.6% on a year-to-date basis. This compares poorly to the S&P 500, which is down by 19.4% during 2022 thus far. FedEx (FDX) shares have risen by 2.56% this week. However, on a year-to-date basis, they’re still down by 31.96%. This compares poorly to the S&P 500, which is down by 19.84% during 2022 thus far.
Event & Impact
Apple shares hit new 52-week lows this week, causing the stock to end the year surrounded by negative sentiment. FedEx posted its second quarter earnings this week, beating Wall Street’s estimates on the bottom line, but missing consensus revenue estimates. Persistent macroeconomic headwinds continue to hurt the company’s international air freight business, which posted -64% volume growth during the quarter.
Noteworthy News:
Although Apple posted record data during its Q4 earnings report, the stock has sold off in recent weeks because of fears surrounding COVID-19 lockdowns and iPhone production in Chinese facilities.
Nobias Insights
50% of recent articles published by credible authors focused on AAPL shares offer a “Neutral” bias.. However, 11 out of the 13 credible Wall Street analysts believe shares are likely to rise in value. The average price target being applied to Apple by these credible analysts is $186.82, which implies upside potential of approximately 45.5% relative to Apple’s current share price of $128.42.
Bullish Take Harsh Chauhan, a Nobias 4-star rated author, said: “In fiscal 2022 (which ended on Sept. 24, 2022), Apple reported services revenue of $78 billion. The segment's revenue jumped 14% year over year and accounted for nearly 20% of the company's top line.”
Bearish Take Patrick Seitz, a Nobias 4-star rated author, said, “Apple's production and supply issues related to iPhone 14 Pro handsets led many analysts to slash their sales and earnings forecasts for the company's December quarter.”
AAPL Dec 2022
Apple (AAPL) shares hit fresh 52-week lows this week. The stock rallied during Thursday’s and Friday’s trading sessions and ended up down just 0.21% during the week. However, on a year-to-date basis, Apple shares have fallen by 28.61%, making 2022 one of its worst years in recent memory.
Apple experienced significant weakness recently, which might be surprising to some, because the company set records during its last quarterly earnings report. However, ongoing supply chain issues and threats of a production slowdown in its Chinese manufacturing facilities have caused concern for investors when it comes to device sales during the coming quarters.
Bearish Nobias Credible Analysts Opinions:
Patrick Seitz, a Nobias 4-star rated author, recently wrote an article at Investors.com which discussed Apple’s recent share price weakness. He wrote, “Covid pandemic lockdowns and worker protests in China in November and December had slashed the availability of those popular iPhone 14 models.”
Seitz continued, “Apple's production and supply issues related to iPhone 14 Pro handsets led many analysts to slash their sales and earnings forecasts for the company's December quarter.” He also noted, “Analysts polled by FactSet now expect Apple to earn $1.98 a share on sales of $123.5 billion in its fiscal first quarter. That would translate to year-over-year declines of 6% in earnings and a fraction for sales.” However, he provided some bullish news for investors, stating, “JPMorgan analyst Samik Chatterjee said his firm's channel checks indicate an improved supply of premium models of the latest iPhones.”
Wesley Hilliard, a Nobias 4-star rated author, also recently covered Apple’s supply chain issues and its China market share in a report published at Apple Insider. He wrote, “The entire smartphone market in China is getting hit badly, but Apple is gaining marketshare with the iPhone 14 despite lower shipments than 2021.”
Hilliard continued, “Supply issues in China have greatly impacted iPhone 14 Pro availability since shortly after its release in September. Shipping times have improved since then, but Apple is still set to see a total decline in iPhone sales as a result.”
Regarding Apple’s Chinese market share, Hilliard said, “In 2021 it was at about 21% market share and is at 22% market share in 2022.” In other words, he concluded, “Since iPhone demand decreased at a slower rate, Apple was able to take more market share.”
Bullish Nobias Credible Analysts Opinions:
Harsh Chauhan, a Nobias 4-star rated author, recently published a bullish article on Apple at the Motley Fool, titled, “The Biggest Reason Apple Stock Is a Screaming Buy for 2023”. Throughout his piece, Chauhan highlighted Apple’s service segment as the primary bullish catalyst for shares moving forward. He wrote, “A forgettable year is drawing to a close for Apple investors, who have faced the broader stock market selloff despite the company's resilient performance amid a weak smartphone market. But 2023 could turn out to be a much better year for the tech giant, as one of its key businesses is likely to step on the gas.”
With specific regard to Apple’s services, Chauhan said, “In fiscal 2022 (which ended on Sept. 24, 2022), Apple reported services revenue of $78 billion. The segment's revenue jumped 14% year over year and accounted for nearly 20% of the company's top line.”
Chauhan noted that during the first quarter of 2021, Apple’s management highlighted “a massive installed base of 1.8 billion active devices”. Chauhan continued, saying that it wouldn’t “be surprising to see the company sitting on an installed base of 2 billion active devices, given the healthy demand for iPhones and other devices” when it reports its next quarter.
Looking forward, he wrote, “IDC estimates that 233.5 million iPhones may be shipped in 2023, which would be a slight increase over this year's estimated production target of 220 million units. This also suggests that the installed device base is set to increase once again next year.”
Chauhan added, “A bigger base of installed devices means that Apple can sell its services to more users.” And, as the company has shown in recent quarters, services growth supercharges the company’s bottom-line.
Chauhan said, “Apple's services business delivered a gross margin of 70.5% last quarter. He continued, “That's more than double the product gross margin of 34.6% and significantly higher than Apple's overall gross margin figure of 42.3% last quarter.”
Margin expansion can lead to earnings-per-share growth even as revenues stagnate, but that's not what Chauhan expects to see in 2023. Chauhan estimates that Apple could generate approximately “$100 billion in revenue in 2023”. And therefore, he concluded, “That could help Apple overwhelm Wall Street's expectations in the new year and send its shares soaring, which is why investors may want to take advantage of the 25% decline this tech stock has witnessed in 2022 and buy it before it breaks out.”
Shanthi Rexaline, a Nobias 4-star rated author, highlighted the extent of Apple’s share price weakness and the potential upside that shares offer contrarian investors now moving forward in an article published this week at Benzinga.
Rexaline said, “Apple’s stock peaked at $182.94 at the start of the year (Jan. 4 intraday high), thanks to strong uptake of the new iPhone 14 iterations, especially the high-margin Pro models. Since then, it has been tossed and turned by the macroeconomic vagaries and the COVID-19 recurrences in China.” She continued, “Apple shares fell to a fresh 52-week low of $125.87 on Wednesday, the lowest since the June 7, 2021, intraday low of $124.83.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Regarding AAPL’s upside potential, she wrote, “A $1,000 invested at Thursday’s closing price of $129.61 would fetch 7.7 Apple shares. If the stock charts another uptrend, as fundamentals improve and the broader market sentiment takes a turn for the better, there is all likelihood of it retesting its all-time high of $182.94. At that price point, the 7.7 stock holding would be worth $1,412, a return of 41%.”
And, looking at the consensus price target for Apple shares across the analyst community, it appears that such a rebound is possible. Rexaline concluded, “The average analysts’ price target for Apple stock is $179.10, according to TipRanks, is $179.10, suggesting a 38% upside from current levels.”
Overall bias of Nobias Credible Analysts and Bloggers:
Looking at the average price target that the credible analysts that the Nobias algorithm tracks have for Apple, there is even more upside potential. 11 out of the 13 credible analysts that Nobias tracks believe that AAPL shares are likely to increase in value. Right now, the average credible analyst price target is $186.82. Relative to Apple’s year-end share price of $128.42, that average price target represents upside potential of approximately 45.5%.
Disclosure: Nicholas Ward is long AAPL. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Fedex (FDX) stock
Nobias Insights: 50% of recent articles published by credible authors focused on FDX shares offer a “Neutral” bias. However, 5 out of the 7 credible credible Wall Street analysts who cover FedEx believe shares are likely to rise in value. The average price target being applied to FDX by these credible analysts is $198.57, which implies 12.2% upside potential compared to the stock’s current price of $176.95.
Bullish Take: Bascome Majors of Susquehanna, a Nobias 4-star rated analyst, said: “Its results and outlook more convincingly support a cycle EPS floor of at least $13.00, with investor focus gradually shifting from downside risk to cyclical opportunity deeper into 2023.”
Bearish Take: Mark Solomon, a Nobias 4-star rated author, said, “FedEx Express’ operating income plummeted to $186 million from $660 million in the fiscal 2022 first quarter.”
Key Points
Performance
FedEx (FDX) shares have risen by 2.56% this week. However, on a year-to-date basis, they’re still down by 31.96%. This compares poorly to the S&P 500, which is down by 19.84% during 2022 thus far.
Event & Impact
FedEx posted its second quarter earnings this week, beating Wall Street’s estimates on the bottom line, but missing consensus revenue estimates. Persistent macroeconomic headwinds continue to hurt the company’s international air freight business, which posted -64% volume growth during the quarter.
Noteworthy News:
FedEx’s Q2 revenue came in at $22.8 billion, representing -3.0% year-over-year growth, missing consensus estimates by $920 million. During the second quarter, FedEx posted $3.18 in non-GAAP earnings-per-share which was $0.36/share above Wall Street estimates.
Nobias Insights
55% of recent articles published by credible authors focused on FDX shares offer a “Neutral” bias. However, 5 out of the 7 credible credible Wall Street analysts who cover FedEx believe shares are likely to rise in value. The average price target being applied to FDX by these credible analysts is $198.57, which implies 12.2% upside potential compared to the stock’s current price of $176.95.
Bullish Take Bascome Majors of Susquehanna, a Nobias 4-star rated analyst, said: “Its results and outlook more convincingly support a cycle EPS floor of at least $13.00, with investor focus gradually shifting from downside risk to cyclical opportunity deeper into 2023.”
Bearish Take Mark Solomon, a Nobias 4-star rated author, said, “FedEx Express’ operating income plummeted to $186 million from $660 million in the fiscal 2022 first quarter.”
FDX Dec 2022
FedEx (FDX), a global leader in the logistics space, posted fiscal 2023 second quarter earnings this week. The company missed Wall Street consensus estimates on the top-line, but beat analyst estimates on the bottom-line. The company also provided an update on full-year earnings-per-share guidance, ultimately causing its stock to rally by 2.56% this week. However, even after this short-term share price bump, FDX shares are down by 31.96% on a year-to-date basis.
Credible authors tracked by the Nobias algorithm are “Neutral” on FDX shares moving forward; however, the credible analysts community sees double digit upside potential. Mark Solomon, a Nobias 4-star rated author, published a report at Freight Waves this week, breaking down FedEx’s recent quarterly results.
Bullish Nobias Credible Analysts Opinions:
Solomon said, “FedEx reported adjusted diluted earnings per share of $3.18, coming in above consensus estimates of $2.77. However, revenue came in about $700 million below the lower end of the company’s target range at $22.8 billion. It was als below the $23.5 billion revenue level in its fiscal 2022 second quarter.”
Looking at the company’s bottom-line, he said, “Adjusted operating income came in at $1.21 billion, down from $1.68 billion in the year-earlier quarter. Operating margin fell markedly to 5.3% from 7.1%. Net income dropped to $815 million from $1.3 billion.” He noted that FedEx Express, the company’s international air freight segment, continued to struggle, “especially out of Asia”, due to broader economic slowdowns in the region.
Regarding FedEx Express, Solomon wrote, “Operating income at the unit dropped 64% year over year (y/y) due to lower global volumes. Yield per-package rose 8% y/y.” He also said, “FedEx Express’ operating income plummeted to $186 million from $660 million in the fiscal 2022 first quarter.”
Solomon also mentioned that FedEx management said that they don’t expect a near-term rebound, largely due to persistent macroeconomic headwinds. Solomon continued, “In the second quarter, FedEx Ground, FedEx’s U.S. ground-delivery unit, posted a 24% year-on-year gain in operating income, primarily due to a 13% increase in package yields and cost-reduction actions.” And lastly, he said, “FedEx Freight, the company’s less-than-truckload unit, posted a 32% year-on-year gain in operating income due largely to an 18% increase in shipment yields.”
In an effort to combat inflationary pressures, Solomon said that FedEx is focused on cutting costs to bolster its bottom-line moving forward. He wrote, “FedEx said it identified an additional $1 billion in cost savings following a September announcement that it would shave $2.7 billion in expenses in the current fiscal year.”
“As a result,” Solomon said, “the company expects to cut $3.7 billion in costs for the fiscal year. It also said it would cut capital spending for the fiscal year by $400 million to $5.9 billion.” STAT Times, a Nobias 5-star rated author, also covered FedEx’s Q3 report, publishing a post-earnings article at Stattimes.com this week.
The author stated, “Revenue declined 3 percent to $22.8 billion and net operating margin was down to 5.2 percent from 6.8 percent in the same period last year.” They also put a spotlight on FedEx’s forward outlook, writing, “FedEx is expecting earnings per diluted share of $13-$14 before MTM retirement plans accounting adjustments and excluding estimated costs related to business optimisation initiatives and business realignment activities. Capital spending is likely to decline to $5.9 billion, down from the prior forecast of $6.3 billion.”
Regarding future guidance, STAT Times quoted Michael C. Lenz, FDX’s executive vice president and chief financial officer, who said, "Our teams have an unwavering focus on rapidly implementing cost savings to improve profitability. As we look to the second half of our fiscal year, we are accelerating our progress on cost actions, helping to offset continued global volume softness." And in general, it appears that the market is bullish on this commentary, because FDX shares have rallied by 2.8% this week.
Bearish Nobias Credible Analysts Opinions:
Although the market is bullish, we’ve seen differentiating viewpoints published by credible authors regarding FDX shares this week. Theflyonthewall.com reported that Jonathan Chappell of Evercore ISI, who is a Nobias 4-star rated analyst, “lowered the firm's price target on FedEx to $196 from $202 and keeps an Outperform rating on the shares.”
Theflyonthewall continued, “As he contemplates a slower volume recovery and a material slowing of yield expansion offsetting much of the new cost targets, he is lowering his FY23 and FY24 EPS estimates to $13.85 and $17.00, respectively.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Yet, 2 credible Nobias analysts, Bascome Majors of Susquehanna and Thomas Wadewitz of UBS, both 4-star rated Nobias analysts, raised their price targets for FDX shares in response to the company’s recent report. Majors raised Susquehanna’s price target from $165.00 to $170.00 and Wadewitz raised UBS’s price target from $215.00 to $225.00.
Theflyonthewall reported that Majors “said its results and outlook more convincingly support a cycle EPS floor of at least $13.00, with investor focus gradually shifting from downside risk to cyclical opportunity deeper into 2023.” Theflyonthewall also highlighted Wadewitz’s analyst note, noting that the analyst said, “The stabilization in Q2 EPS and full year guidance indicate FY23 is likely to be a trough for EPS, which should be supportive of the stock”.
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, 50% of recent articles published by credible authors on FedEx have expressed a “Neutral” bias. Yet, the credible Wall Street analysts that the Nobias algorithm tracks are much more bullish on FDX shares. 5 out of the 7 credible analysts that have expressed an opinion on FDX believe that its shares are likely to increase in value. Currently, the average price target being applied to FDX shares by the credible analysts community is $198.57. Today FedEx shares trade for $176.95. Therefore, the credible analyst average price target implies upside potential of approximately 12.2%.
Disclosure: Nicholas Ward has no FDX position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on NIKE (NKE) stock
Nobias Insights: 75% of recent articles published by credible authors focused on NKE shares offer a “Bullish” bias. 9 out of the 11 credible credible Wall Street analysts who cover Nike believe shares are likely to rise in value. The average price target being applied to Nike by these credible analysts is $115.27, which is in-line with Nike’s current share price of $116.38.
Bullish Take: Mathew Fox, a Nobias 4-star rated author, highlighted Nike’s big Wednesday rally saying: “Nike rallied 14% in Wednesday trades after the corporate stated footwear and attire gross sales rose 25% and 4% within the quarter, respectively. Gross sales in North America had been up 30%, and maybe extra encouragingly, the corporate raised its revenue-growth outlook.”
Bearish Take: Geoff Considine, a Nobias 5-star rated author put a spotlight on Nike’s big post-earnings rally; however, offered a more cautious take, stating, “Including the most recent quarter, NKE has beaten expectations on EPS for 10 successive quarters. Over this period, there's essentially no earnings growth, which has probably contributed to negative sentiment on the stock.”
Key Points
Nike (NKE) shares have risen by 11.2% this week. However, on a year-to-date basis, they’re still down by 29.2%. This compares poorly to the S&P 500, which is down by 19.9% during 2022 thus far.
Nike posted third quarter earnings this week, beating Wall Street’s estimates on both the top and bottom lines, sparking a double digit share price rally on Wednesday.
Nike’s Q3 revenue came in at $13.3 billion, representing 17.3% year-over-year growth, beating consensus estimates by $740 million. During the third quarter, Nike posted $0.85 in non-GAAP earnings-per-share which was $0.21/share above Wall Street estimates.
75% of recent articles published by credible authors focused on NKE shares offer a “Bullish” bias. 9 out of the 11 credible credible Wall Street analysts who cover Nike believe shares are likely to rise in value. The average price target being applied to Nike by these credible analysts is $115.27, which is in-line with Nike’s current share price of $116.38.
Mathew Fox, a Nobias 4-star rated author, highlighted Nike’s big Wednesday rally saying: “Nike rallied 14% in Wednesday trades after the corporate stated footwear and attire gross sales rose 25% and 4% within the quarter, respectively. Gross sales in North America had been up 30%, and maybe extra encouragingly, the corporate raised its revenue-growth outlook.”
Geoff Considine, a Nobias 5-star rated author put a spotlight on Nike’s big post-earnings rally; however, offered a more cautious take, stating, “Including the most recent quarter, NKE has beaten expectations on EPS for 10 successive quarters. Over this period, there's essentially no earnings growth, which has probably contributed to negative sentiment on the stock.”
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NKE Dec 2022
2022 has been a tough year for apparel stocks. Ongoing supply chain issues and inflationary pressures on labor and raw materials have resulted in bloated inventories and margin compression across the industry. Nike (NKE), with its $180 billion+ market cap is often considered a bellwether for the space, and the consumer at large.
This week, Nike posted its third quarter earnings, beating Wall Street’s estimates on both the top and bottom lines, resulting in a double digit rally. Nike shares have risen by 11.1% this week. Yet, on a year-to-date basis, they’re still down by 29.2%.
Since Nike reported its third quarter earnings, , Nobias sees significant bullish sentiment surrounding this stock, even with its recent double digit rally and premium valuation in mind.:
Kate Fitzsimons of Wells Fargo, a Nobias 5-star rated analyst, raised her price target on Nike to $135 from $130 and kept an Overweight rating on the shares.
John Kernan of Cowen, a Nobias 5-star rated analyst, raised his price target on Nike to $131 from $122 and kept an Outperform rating on the shares.
Lorraine Hutchinson of Bank of America, a Nobias 5-star rated analyst, raised her price target on Nike to $120 from $112, keeping a Neutral rating on the shares.
Rick Patel of Raymond James, a Nobias 5-star rated analyst, raised his price target on Nike to $130 from $99 and kept an Outperform rating on the shares.
Jay Sole of UBS, a Nobias 4-star rated analyst, raised his price target on Nike to $146 from $141, keeping a Buy rating on the shares.
Sole also named Nike his “top pick” for 2023.
Bullish Nobias credible authors:
Mathew Fox, a Nobias 4-star rated author, highlighted Nike’s big Wednesday rally in an article that he published at Raw News Finance, stating, “Nike rallied 14% in Wednesday trades after the corporate stated footwear and attire gross sales rose 25% and 4% within the quarter, respectively. Gross sales in North America had been up 30%, and maybe extra encouragingly, the corporate raised its revenue-growth outlook.”
Sophie Smith, a Nobias 5-star author, covered Nike’s third quarter earnings in a report that she published at The Industry .Fashion this week. Smith reported, “Nike, Inc. has reported a 17% increase in revenue to £10.9 billion ($13.3 billion) for the second quarter ending 30 November 2022.” She continued: “Nike brand revenue increased 18% to £10.4 billion ($12.7 billion), with growth across all geographies and channels. Converse brand revenue increased 5% to £483 million ($586 million), led by double-digit growth in North America, partially offset by declines in Asia.”
Touching upon the stock’s bottom-line, Smith said, “Gross profit rose 10% to £4.6 billion ($5.7 billion), but gross margin decreased 300 basis points to 42.9%.” Regarding the company’s margin compression, Smith wrote, “The decrease was due higher markdowns to liquidate inventory, continued unfavorable changes in net foreign currency exchange rates, elevated freight and logistics costs and increased product input costs, partially offset by strategic pricing actions.”
In Nike’s Q3 earnings report, the company took steps to highlight the continued growth of its eCommerce business. The company’s press release stated:
NIKE Direct sales were $5.4 billion, up 16 percent on a reported basis and up 25 percent on a currency-neutral basis
NIKE Brand Digital sales increased 25 percent on a reported basis, or 34 percent on a currency-neutral basis
Within the company’s Q3 report, Nike’s President and CEO, John Donahoe, was quoted saying, "NIKE’s results this quarter are a testament to our deep connection with consumers. Our growth was broad-based and was driven by our expanding digital leadership and brand strength. These results give us confidence in delivering the year as our competitive advantages continue to fuel our momentum."
Furthermore, Nike’s Executive Vice President and Chief Financial Officer, Matthew Friend, said, “"Consumer demand for NIKE's portfolio of brands continues to drive strong business momentum in a dynamic environment. We remain focused on what we can control, and we are on track to deliver on our operational and financial goals — setting the foundation for sustainable, profitable growth."
With specific regard to inventories, Nike’s report stated, “Inventories for NIKE, Inc. were $9.3 billion, up 43 percent compared to the prior year period, driven by an increase in units from lapping prior year supply chain disruption, as well as higher input costs.”
With regard to its balance sheet, Nike said, “Cash and equivalents and short-term investments were $10.6 billion, down approximately $4.5 billion from last year, as free cash flow was offset by share repurchases and cash dividends.”
Bearish Nobias credible authors:
Geoff Considine, a Nobias 5-star rated author, published a post-earnings article at Seeking Alpha this week titled, “Conflicting Indicators For Nike In 2023”. Considine put a spotlight on Nike’s big post-earnings rally; however, offered a more cautious take, stating, “Including the most recent quarter, NKE has beaten expectations on EPS for 10 successive quarters. Over this period, there's essentially no earnings growth, which has probably contributed to negative sentiment on the stock.”
“Earnings growth is a significant concern,” he continued, “and the consensus outlook is for a modest 7.49% compound annual EPS growth over the next three to five years.” Considine warned that the stock is carrying an expensive valuation, relative to these growth prospects, stating, “It's also notable that the forward P/E, 34.59, continues to be quite high.” Despite these valuation concerns, he notes that Wall Street remains bullish on Nike shares.
Considine looked at the data provided by 28 Wall Street analysts who cover NKE shares and said, “The consensus rating is a buy, as it has been for all of the past year, and the consensus 12-month price target is $125.81, 8.66% above the current share price.”
However, he went on to question the usefulness of this consensus estimate, stating, “It's also notable that the spread among the individual analyst price targets has increased substantially.” “Back in January,” Considine wrote, “the highest and lowest price targets were $202 and $170, from a group of 20 ranked analysts.” “Today,” he continued, “the highest and lowest price targets are $185 and $79, from a group of 28 ranked analysts.” Considine concluded, “The larger the spread among the individual price targets, the lower the predictive value.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
With regard to his personal buy/sell/hold rating, Considine stated, “As a rule of thumb for a buy rating, I want to see an expected total return that is at least ½ the expected volatility. NKE falls far short of this threshold.” And therefore, he said, “Even with the 12%-plus jump in the share price today, the market-implied outlooks are generally favorable for NKE over the next year, although more so for the first half. Because of the conflicting indications, I'm downgrading NKE to a hold.”
Overall bias of Nobias Credible Analysts and Bloggers:
Although Considine is cautious, the vast majority of credible authors and analysts that the Nobias algorithm tracks remain bullish on NKE shares. 75% of recent articles published on Nike by credible authors expressed a “Bullish” bias.
Furthermore, 9 out of the 11 credible Wall Street analysts that Nobias tracks who have provided an opinion on Nike shares believe that the stock is likely to increase in value. Yet, due to low price targets by the bearish analysts that Nobias follows, the average price target being applied to NKE shares by the credible analyst community overall is $115.27. This is slightly below Nike’s current share price of $116.38, pointing towards tepid growth prospects in the near-term.
However, it is important to note that we’ve seen several credible analysts raise their price targets for Nike after digesting the Q3 results and if this trend continues in the coming days/weeks, the average price target for Nike would rise.
Disclosure: Nicholas Ward is long NKE. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Adobe (ADBE) stock
Nobias Insights: 52% of recent articles published by credible authors focused on ADBE shares offer a “Neutral” bias. However, 6 out of the 10 credible credible Wall Street analysts who cover Adobe believe shares are likely to rise in value. The average price target being applied to Adobe by these credible analysts is $368.50, which implies upside potential of approximately 8.8% relative to ADBE’s current share price of $338.54.
Bullish Take: Geoff Considine, a Nobias 5-star rated author, said: The consensus outlook is for 14.3% annualized EPS growth over the next three to five years.”
Bearish Take: Jon Hopkins, a Nobias 4-star rated author, said, “Adobe is seeking to expand its user base to more casual consumers with the acquisition of Figma, announced in September. The deal would be one of the most expensive purchases ever of a private software maker.”
Key Points
Adobe (ADBE) shares rose by 1.5% this week. They’re down by 40.01% on a year-to-date basis. This compares poorly to the S&P 500 and the Nasdaq, which are down by 19.66 and 31.80% during 2022 thus far, respectively.
Adobe posted Q4 results which showed double digit growth; however, the high price that the company paid for its Figma acquisition continues to weigh on shares.
Adobe posted Q4 results this week, with revenues meeting Wall Street’s expectations and earnings-per-share beating consensus estimates. During the fourth quarter, Adobe posted $4.53 billion of sales and $3.60 of non-GAAP earnings-per-share which was $0.10/share above estimates.
52% of recent articles published by credible authors focused on ADBE shares offer a “Neutral” bias. However, 6 out of the 10 credible credible Wall Street analysts who cover Adobe believe shares are likely to rise in value. The average price target being applied to Adobe by these credible analysts is $368.50, whichimplies upside potential of approximately 8.8% relative to ADBE’s current share price of $338.54.
Geoff Considine, a Nobias 5-star rated author, said: The consensus outlook is for 14.3% annualized EPS growth over the next three to five years.”
Jon Hopkins, a Nobias 4-star rated author, said, “Adobe is seeking to expand its user base to more casual consumers with the acquisition of Figma, announced in September. The deal would be one of the most expensive purchases ever of a private software maker.”
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ADBE Dec 2022
Adobe (ADBE) shares have struggled throughout 2022, down by 40.01%. This compares poorly to the S&P 500 as well as the Nasdaq, which are down by 19.66% and 31.80% on a year-to date basis, respectively. However, more recently, Adobe has posted outperformance. During the prior month, the Nasdaq Composite Index is down by 3.68%. During this same period of time, ADBE shares are down by just 0.75%.
Adobe posted fiscal 2022 fourth quarter earnings this week, helping shares rise by 1.49% during the prior 5 trading sessions. Since Adobe’s Q4 report was published, 5 credible analysts have raised their price targets for shares. Today, the average price target being applied to ADBE shares is $368.50, which implies nearly 9% upside moving forward.
Bullish Nobias credible authors:
Reinhardt Krause, a Nobias 4-star rated author, covered Adobe’s fiscal 2022 Q4 results in an article published at Investors.com. Krause wrote, “Digital media and marketing software firm Adobe on Thursday topped Wall Street's earnings target while revenue met views for its fiscal fourth quarter.” He said, “Adobe said it earned an adjusted $3.60 per share on sales of $4.53 billion in the quarter ended Dec. 2. Also, analysts polled by FactSet expected Adobe earnings of $3.50 a share on sales of $4.53 billion.”
Krause continued, “On a year-over-year basis, earnings rose 12% while sales increased 10%.” Finally, Krause also noted that Adobe provided guidance for the upcoming quarter, stating, “For the current quarter, Adobe predicted adjusted earnings in a range of $3.65 to $3.70 per share on sales of $4.62 billion. Meanwhile, analysts were looking for earnings of $3.64 a share on sales of $4.63 billion in the fiscal first quarter.” Therefore, Adobe’s bottom-line guidance was bullish; however, the top-line projections provided by management missed Wall Street’s expectations.
Bearish Nobias credible authors
Geoff Considine, a Nobias 5-star rated author, recently posted an update on his buy/sell/hold opinion on ADBE shares after having analyzed the company’s recen Q4 report. Considine highlighted the stock’s recent sell-off, writing, “Adobe is a global leader in digital design and document management. The shares got very pricey in 2021, but have fallen 49% over the past 12 months.” He noted that much of the stock’s recent weakness was due to recent M&A activity, writing, “The magnitude and abruptness of the share decline following the announcement of the Figma acquisition can explain much of the decline that's not explained by the falling market for tech shares.”
Considine continued, “As is typically the case for large acquisitions, there are potential regulatory hurdles to the deal closing, but the most common critique that I read was that Adobe was substantially overpaying for Figma.” However, despite the M&A headwinds, he believes that the stock has attractive forward looking growth prospects.
Considine wrote, “The consensus outlook is for 14.3% annualized EPS growth over the next three to five years.” With near-term growth projections in mind, he moved onto the stock’s valuation, saying, “The current forward P/E of 24.3 looks quite reasonable to me.” Considine also mentioned that “The TTM P/E is 32.6, which is the lowest level since 2013.” He finished his report on a bullish note, concluding, “With the Wall Street consensus buy rating and the bullish market-implied outlook to the middle of next year, I'm maintaining my buy rating on ADBE as we approach the Q4 report.”
Jon Hopkins, a Nobias 4-star rated author, also covered Adobe's Q4 report this week, publishing an article at Proactive Investors which put a special emphasis on the pending Figma acquisition. Hopkins said that during its Q4 report, Adobe mentioned that it “expects to complete its $20 billion purchase of Figma next year, despite regulatory reviews in the US, UK and Europe.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Like Considine, Hopkins put a spotlight on the price that Adobe paid for Figma. He wrote, “Adobe is seeking to expand its user base to more casual consumers with the acquisition of Figma, announced in September. The deal would be one of the most expensive purchases ever of a private software maker.”
In his article, Hopkins also quoted Oppenheimer analyst, Brian Schwartz, who came out with a post-earnings report this week which said that although there are concerns about the price that Adobe paid, closing the Figma acquisition would support “Adobe’s leading position in digital creation and marketing”.
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, 52% of recent articles published by credible authored tracked by the Nobias algorithm have expressed a “Neutral” bias towards shares. However, the credible Wall Street analysts that Nobias tracks lean bullish. 6 out of the 10 credible analysts that Nobias tracks who have offered an opinion on Abode believe that shares are headed higher. The average price target for ADBE amongst these credible individuals is $368.50. Today ADBE shares trade for $338.54, meaning that the credible analysts’ average price target implies upside potential of 8.8%.
Disclosure: Nicholas Ward is long ADBE. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Tesla (TSLA) stock
Nobias Insights: 90% of recent articles published by credible authors focused on TSLA shares offer a “Bearish” bias. 6 out of the 8 credible credible Wall Street analysts who cover Tesla believe shares are likely to rise in value. The average price target being applied to Tesla by these credible analysts is $318.95, which implies upside potential of approximately 102% relative to TSLA’s current share price of $157.78.
Bullish Take: Harsh Chauhan, a Nobias 4-star rated author, said: “With Tesla now trading at 7.4 times sales, compared to its 2021 price-to-sales ratio of 25, savvy investors may want to capitalize on the stock's decline and buy it before it starts soaring.”
Bearish Take: Howard Smith, a Nobias 4-star rated author, said, “Musk has now sold about $23 billion worth of his Tesla shares in 2022. Most, if not all, has been related to his purchase of Twitter. While that may not have anything directly to do with Tesla's underlying business, it adds to anxiety that Musk isn't focused on Tesla right now.”
Key Points
TSLA shares rose by 8.99% this week. They’re down by 20.95% during the last month. On a year-to-date basis, Tesla is now down by 60.58%. This compares poorly to the S&P 500, which is down by 18.29% during 2022 thus far.
Elon Musk continues to sell his Tesla shares, putting negative pressure on the stock, exacerbating the company’s 2022 sell-off.
Elon Musk sold another $3.6 billion of his personal TSLA shares this week. Musk continues to reduce his TSLA stake to fund expenses at his recently acquired company, Twitter. Tesla shareholders have expressed concern that Musk is not focused on operations and growth at Tesla.
90% of recent articles published by credible authors focused on TSLA shares offer a “Bearish” bias. 6 out of the 8 credible credible Wall Street analysts who cover Tesla believe shares are likely to rise in value. The average price target being applied to Tesla by these credible analysts is $318.95, which implies upside potential of approximately 102% relative to TSLA’s current share price of $157.78.
Harsh Chauhan, a Nobias 4-star rated author, said: “With Tesla now trading at 7.4 times sales, compared to its 2021 price-to-sales ratio of 25, savvy investors may want to capitalize on the stock's decline and buy it before it starts soaring.”
Howard Smith, a Nobias 4-star rated author, said, “Musk has now sold about $23 billion worth of his Tesla shares in 2022. Most, if not all, has been related to his purchase of Twitter. While that may not have anything directly to do with Tesla's underlying business, it adds to anxiety that Musk isn't focused on Tesla right now.”
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TSLA Dec 2022
Tesla (TSLA) shares recently hit 52-week lows. The stock has fallen below the $500 million market cap threshold, meaning that its famous CEO, Elon Musk, is no longer the world’s richest man. TSLA is down by 60.58% on a year-to-date basis. They’re down by 20.95% during the last month alone. And yet, the credible analyst community that the Nobias algorithm tracks sees triple digit upside potential.
Bullish Nobias credible authors:
Shanthi Rexaline, a Nobias 4-star rated author, covered Tesla’s recent fall to 52-week lows in a report published at Benzinga. She wrote, “The weakness comes on the back of CEO Elon Musk’s disclosures late on Wednesday regarding the sale of 22 million Tesla shares worth about $3.58 billion at an average purchase price of around $163.”
Howard Smith, a Nobias 4-star rated author, also covered the recent Musk stock sales in an article that he published at The Motley Fool. Smith highlighted Musk’s decision to sell and said, “Those sales came as the stock was trading near a two-year low, further concerning investors. Musk has now sold about $23 billion worth of his Tesla shares in 2022. Most, if not all, has been related to his purchase of Twitter. While that may not have anything directly to do with Tesla's underlying business, it adds to anxiety that Musk isn't focused on Tesla right now.”
Tradevestor, a Nobias 5-star rated author, wrote an article at Seeking Alpha this week titled, “Robbing Tesla To Pay Twitter” which claimed that Musk’s Tesla stock sales likely aren’t over. Tradevestor wrote, “The short- to medium-term problem is that Musk is still the largest shareholder and Twitter is nowhere close to being on its own without Musk. That means only one thing. Expect more sales in the future.”
An insider selling billions worth of shares creates a bearish vacuum that is difficult for bulls to fill in the near-term. And therefore, Tradevestor said, “My long-term conviction in Tesla stays, but the short- to medium-term sentiment is extremely negative.” However, they continued, “And therein lies the opportunity for the long term. Stocks tend to overshoot in both directions. I did add a little to my position yesterday, but it is going to be bumpy.” They stated, “Using the forward multiple of 37 and the expected growth rate of 48, we arrive at PEG ratio of 0.77, which suggests Tesla stock undervaluation.”
Ultimately, the author concluded their piece with a bullish take, stating: ‘"Buy when there is blood on the street" is an adage frequently used in the investing world. But blood is not something all of us are comfortable with. Some faint on seeing blood. I don't. Tesla's stock has seen nothing but blood in the past year and unfortunately, the man who made Tesla what it is today has quite a lot of blood in his hands. Love him or hate him, you cannot ignore him or count him out. It'd be foolish to write Tesla's eulogy when things look so bleak. That's when Musk is at his best.”
In her article, Rexaline noted statements made by Daniel Ives of Wedbush, a Nobias 5-star rated analyst, who also provided bullish commentary while touching upon Tesla’s near-term issues. Rexaline wrote, “Tesla bull, Wedbush’s Daniel Ives, called the stock sale as fueling the black cloud around the EV maker’s growth story.”
Theflyonthewall.com covered Ives’ analyst note, stating, “Wedbush analyst Daniel Ives says "the Twitter nightmare" continues as Musk uses Tesla as his own ATM machine to keep funding the red ink at Twitter which gets worse by the day as more advertisers flee the platform with controversy increasing driven by Musk.”
The coverage continued, “While Ives remains bullish on the long-term thesis for Tesla and believes the stock is oversold, Musk continues to throw gasoline in the burning fire around the Tesla story by selling more stock and creating Tesla brand deterioration through his actions on Twitter.”
However, because of his long-term growth outlook, Ives continues to look past the near-term headwinds that Tesla faces, maintaining an “Outperform” rating on TSLA shares with a price target of $250.00.
Ives isn’t alone in his bullish stance. Despite Tesla’s recent sell-off, Harsh Chauhan, a Nobias 4-star rated author, included it in his list of “3 No-Brainer Growth Stocks to Buy Right Now” that he discussed in an article published this week at The Motley Fool.
Before getting into his bullish thesis, Chauhan mentioned the potential Musk/Twitter distraction, as well as near-term issues in the electronic vehicle space as potential growth headwinds for the stock. He said, “Reports suggest that Tesla may be cutting production in China thanks to weak demand. The company missed revenue expectations in the third quarter of 2022, and there were concerns that surging inflation and global economic weakness are negatively impacting its vehicle deliveries.” “However,” he continued, “investors should focus on the bigger picture, as Tesla is operating in a market that's built for long-term growth.”
Chauhan said, “Fortune Business Insights estimates that global EV sales could grow at an annual pace of 24% through 2028 and hit $1.3 trillion in annual revenue.” He also touched upon the company’s recent fundamentals, stating, “The company's total revenue shot up 56% year over year in the third quarter to $21.5 billion. Consensus estimates suggest that Tesla could finish 2022 with $83 billion in revenue, an increase of 55% over the prior year.”
“More importantly,” Chauhan noted, “Tesla is anticipated to sustain its remarkable revenue growth.” He concluded his piece by saying, “With Tesla now trading at 7.4 times sales, compared to its 2021 price-to-sales ratio of 25, savvy investors may want to capitalize on the stock's decline and buy it before it starts soaring.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Overall, there is a large sentiment gap between the credible author and credible analyst communities that the Nobias algorithm tracks when it comes to Tesla shares. 90% of recent articles penned by credible authors focused on Tesla stock have included a “Bearish” bias. Yet, 6 out of the 8 credible Wall Street analysts that Nobias tracks believe that TSLA shares are likely to increase in value from their current $157.78 level.
The average price target being applied to TSLA shares by credible analysts is $318.95. Relative to the stock’s current share price, that represents upside potential of approximately 102%. Therefore, TSLA remains one of the most polarizing stocks in the entire market.
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, 54% of recent articles published by credible authors which focused on COST shares expressed a “Neutral” bias. But, the credible Wall Street analysts that Nobias tracks are more bullish. 6 out of the 8 credible analysts that Nobias follows who have expressed an opinion on COST shares believe that they’re headed higher. The average price target being applied to COST shares by these credible individuals is $548.63, which implies upside potential of approximately 13.5% relative to Costco’s current share price of $483.02.
Disclosure: Nicholas Ward has no TSLA position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Costco (COST) stock
Nobias Insights: 54% of recent articles published by credible authors focused on COST shares offer a “Neutral” bias. 6 out of the 8 credible credible Wall Street analysts who cover Costco believe shares are likely to increase in value. The average price target being applied to Costco by these credible analysts is $548.63, which implies upside potential of approximately 13.5% relative to COST’s current share price of $483.02.
Bullish Take: Russell Redman, a Nobias 4-star rated author: “Overall comparable sales in the first quarter rose 6.6% year over year (+7.1% adjusted, excluding fuel and foreign exchange), reflecting upticks of 9.3% in the United States (+6.5% adjusted) and 2.4% in Canada (+8.3% adjusted) and a 3.1% decline internationally (+9.1% adjusted).”
Bearish Take: Howard Smith, a Nobias 4-star rated author: “The early slide came as the company reported net sales rising by 8.1% versus last year but said net income only grew 3% as expenses increased. Gross margin dropped year over year, but management noted a pretax charge of $93 million contributed to that drop.”
Key Points
Costco (COST) shares fell by 1.71% this week. On a year-to-date basis, COST is now down by 14.47%. This compares favorably to the S&P 500 which is down by 17.97% during 2022 thus far.
Costco’s strong membership fees and discounted prices allow the retailer to continue to grow its top-line.
Costco posted fiscal 2023 Q1 earnings this week, missing Wall Street’s expectations on the top and bottom lines. COST posted Q1 sales of $54.44 billion, which was $240 million below estimates, representing 8.1% year-over-year growth. COST’s Q1 non-GAAP earnings-per-share totaled $3.10, missing consensus by $0.16/share.
54% of recent articles published by credible authors focused on COST shares offer a “Neutral” bias. 6 out of the 8 credible credible Wall Street analysts who cover Costco believe shares are likely to increase in value. The average price target being applied to Costco by these credible analysts is $548.63, which implies upside potential of approximately 13.5% relative to COST’s current share price of $483.02.
Russell Redman, a Nobias 4-star rated author: “Overall comparable sales in the first quarter rose 6.6% year over year (+7.1% adjusted, excluding fuel and foreign exchange), reflecting upticks of 9.3% in the United States (+6.5% adjusted) and 2.4% in Canada (+8.3% adjusted) and a 3.1% decline internationally (+9.1% adjusted).”
Howard Smith, a Nobias 4-star rated author: “The early slide came as the company reported net sales rising by 8.1% versus last year but said net income only grew 3% as expenses increased. Gross margin dropped year over year, but management noted a pretax charge of $93 million contributed to that drop.”
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Costco reported its fiscal 2023 first quarter results this week, missing Wall Street’s estimates on both the top and bottom lines. COST shares were down 1.71% last week, pushing their year-to-date losses down to -14.77%. Yet, despite the year-to-date weakness, Costco continues to show its defensive nature, outperforming theS&P 500 by a wide margin (throughout 2022 thus far, the S&P 500 is down by 17.97%).
COST Dec 2022
At the end of November, COST shares were trading for approximately $539.00, meaning that today’s $483.00 share price equates to a roughly 10% month-to-date sell-off during December. But, despite this recent weakness, the credible Wall Street analysts that the Nobias algorithm tracks believe shares are headed higher with an average price target that implies upside potential of approximately 13.5%.
Bullish Nobias credible authors:
Angela Harmantas, a Nobias 4-star rated author, published a post-earnings report at Proactive Investors last week, highlighting Costco’s top-line results. She wrote, “The retail giant reported net sales of $19.17 billion for the four weeks ended November 27, 2022.”
Harmantas continued, “That represented a 5.7% increase over the $18.13 billion figure reported last year, a much slower rate than the 7.7% increase reported in October 2022 and far less than the 10.1% in September 2022.” Finally, Harmantas touched upon Costco’s digital sales trends, writing, “Its e-commerce sales dropped 10.1% from October levels.”
Howard Smith, a Nobias 4-star rated author, also covered Costco’s earnings in an article published at the Motley Fool last week, focusing his attention on the company’s bottom-line and shareholder returns. Smith noted COST’s post-earnings sell-off, writing, “The early slide came as the company reported net sales rising by 8.1% versus last year but said net income only grew 3% as expenses increased. Gross margin dropped year over year, but management noted a pretax charge of $93 million contributed to that drop.” He continued, “That charge was "primarily related to downsizing our charter shipping activities," according to Costco CFO Richard Galanti.”
Smith also said, “He [referring to Galanti] also noted that without that charge, and not including gasoline inflation, gross margin for the quarter would have been very close to the prior-year period.” Despite the margin issues, Costco continues to pay a shareholder dividend and increase its shareholder returns.
Smith said, “The company raised its base dividend earlier this year by 14%, but its dividend yield is still just about 0.7%.” That yield level may not be enticing to every investor, but Smith also said that Costco has bolstered its regular dividend with special dividends during four out of the last nine years.
With that in mind, he continued, “In the company's conference call with investors, Galanti also indicated a special dividend was more likely than not on the way.” Smith said that Costco’s most recent special dividend came in at “$10 per share payment in 2020.”
Lastly, Russell Redman, a Nobias 4-star rated author, also covered Costco’s earnings results in a report that he published at Winsight Grocery Business. Looking at top-line results, Redman said, “Overall comparable sales in the first quarter rose 6.6% year over year (+7.1% adjusted, excluding fuel and foreign exchange), reflecting upticks of 9.3% in the United States (+6.5% adjusted) and 2.4% in Canada (+8.3% adjusted) and a 3.1% decline internationally (+9.1% adjusted).”
Redman went on to quote Galanti, stating, ‘“In terms of first-quarter comp sales metrics, traffic or shopping frequency increased 3.9% worldwide and was up 2.2% in the U.S.,” Chief Financial Officer Richard Galanti told analysts in a conference call late Thursday, according to a Refinitiv transcript from financial services site Sentieo.”
Galanti continued, “Our average transaction size was up 2.6% worldwide and 6.9% in the U.S. during the first quarter. And foreign currencies relative to the U.S. dollar negatively impacted sales by a little over 3%, while gasoline price inflation positively impacted sales by approximately 2.5%.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Regarding quarterly sales trends, Redman broke down the varying segments of Costco’s retail business, stating, “Top-performing departments by comp sales included gift cards, tires, candy and health-and-beauty aids, while majors — the largest merchandise department by sales, ranging from consumer electronics to appliances — fell by high single digits in comp sales.”
Redman also highlighted a unique aspect of Costco’s business - the membership subscription sales model - stating, “Membership fee income grew 5.7% to $1 billion in the first quarter but excluding the impact of FX would have risen by slightly over 9%, compared with the prior-year gain of 9.9%. Total paid member households increased to 62.5 million and the total cardholder count to 113.1 million quarter to quarter, both up 7% versus a year ago.”
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, 54% of recent articles published by credible authors which focused on COST shares expressed a “Neutral” bias. But, the credible Wall Street analysts that Nobias tracks are more bullish. 6 out of the 8 credible analysts that Nobias follows who have expressed an opinion on COST shares believe that they’re headed higher. The average price target being applied to COST shares by these credible individuals is $548.63, which implies upside potential of approximately 13.5% relative to Costco’s current share price of $483.02.
Disclosure: Nicholas Ward has no COST position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Broadcom (AVGO) stock
Nobias Insights: 100% of recent articles published by credible authors focused on AVGO shares offer a “Bullish” bias. 4 out of the 4 credible credible Wall Street analysts who cover Broadcom believe shares are likely to rise in value. The average price target being applied to Broadcom by these credible analysts is $660.00, which implies upside potential of approximately 21.2% relative to AVGO’s current share price of $544.72
Bullish Take: Geoff Considine, a Nobias 5-star rated author, said: “The longer-term outlook is favorable, however, with a consensus estimate of 16.9% per year in EPS growth over the next 3 to 5 years.”
Bearish Take: Financially Free Investor, a Nobias 4-star rated author said, “AVGO definitely has more risk than the blue-chip MSFT but also offers much higher dividend yield and growth prospects. The risk comes from its aggressive acquisition strategy, which has worked well in the past. Its most recent acquisition (pending) of VMWare for $60 Billion will add quite a bit of additional debt but would diversify more heavily in the software business.”
Key Points
Broadcom (AVGO) shares rose by 1.22% this week. They popped 2.57% on Friday, during a post-Q4 earnings rally. On a year-to-date basis, AVGO is now down by 17.88%. This compares favorably to the S&P 500, which is down by 17.97% during 2022 thus far.
Broadcom continues to outperform many of its peers in the semiconductor industry, using its unique combination of hardware and software to weather today’s tough macro economic environment.
Broadcom posted Q4 earnings this week, beating Wall Street’s expectations on the top and bottom lines. AVGO posted Q4 sales of $8.93 billion, which was $30 million above estimates, representing 20.5% year-over-year growth. AVGO’s Q4 non-GAAP earnings-per-share totaled $10.45, beating consensus by $0.17/share, representing 33.8% growth relative to the $7.81/share non-GAAP EPS that AVGO generated during Q4 of 2021.
100% of recent articles published by credible authors focused on AVGO shares offer a “Bullish” bias. 4 out of the 4 credible credible Wall Street analysts who cover Broadcom believe shares are likely to rise in value. The average price target being applied to Broadcom by these credible analysts is $660.00, which implies upside potential of approximately 21.2% relative to AVGO’s current share price of $544.72
Geoff Considine, a Nobias 5-star rated author, said: “The longer-term outlook is favorable, however, with a consensus estimate of 16.9% per year in EPS growth over the next 3 to 5 years.”
Financially Free Investor, a Nobias 4-star rated author said, “AVGO definitely has more risk than the blue-chip MSFT but also offers much higher dividend yield and growth prospects. The risk comes from its aggressive acquisition strategy, which has worked well in the past. Its most recent acquisition (pending) of VMWare for $60 Billion will add quite a bit of additional debt but would diversify more heavily in the software business.”
Performance
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Nobias insights
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Bearish Take:
Broadcom (AVGO) posted Q4 earnings this week, beating Wall Street’s estimates on both the top and bottom lines. This news allowed the stock’s recent rally to continue. AVGO shares are now up by 14.65% during the last month. However, even with this near-term rally in mind, AVGO shares are down by 17.88% on a year-to-date basis. This means that they’ve slightly outperformed the S&P 500, which is down by 17.97% throughout 2022 thus far.
AVGO Dec 2022
However, the credible analysts that Nobias tracks who have expressed an opinion on AVGO shares believe that their run is just beginning, calling for upside potential north of 20% from the stock’s current share price of $544.72.
Bullish Nobias credible authors:
Financially Free Investor, a Nobias 4-star rated author, recently published a report titled “5 Relatively Safe And Cheap Dividend Stocks To Invest In - December 2022” which included Broadcom as one of the stocks on their list.
The author highlighted the process which they used to arrive at their highest rated dividend stocks for December of 2022, stating, “The S&P 500 currently yields roughly 1.60%. Since our goal is to find companies for a dividend income portfolio, we should logically look for companies that pay yields that are at least similar to or better than the S&P 500.”They continued, “We will limit our choices to companies that have a market cap of at least $10 billion and a daily trading volume of more than 100,000 shares.”
Also, Financially Free Investor said, “We also will check that dividend growth over the last five years is positive, but there can be some exceptions.”The author went on to mention that they were tracking data related to the following metrics: Current yield, Dividend growth history, Past five-year and 10-year dividend growth, Payout ratio, EPS growth, Chowder number, Debt/equity ratio, Debt/asset ratio, S&P's credit rating, PEG ratio, Distance from 52-week high, and lastly, Sales or Revenue growth.
And, with all of those data metrics in mind, they arrived at their final lists, which included Broadcom in the section labeled: “High Yield, Moderately Safe”. When breaking down Broadcom shares, Financially Free Investor wrote: AVGO (Broadcom): We have included AVGO as the technology company here in place of MSFT (in the A-List). AVGO definitely has more risk than the blue-chip MSFT but also offers much higher dividend yield and growth prospects. The risk comes from its aggressive acquisition strategy, which has worked well in the past. Its most recent acquisition (pending) of VMWare for $60 Billion will add quite a bit of additional debt but would diversify more heavily in the software business.”
Earlier this week, Geoff Considine, a Nobias 5-star rated author published an article on Broadcom, breaking down his outlook for shares coming into the stock’s recent fourth quarter fiscal 2022 results. Considine began his piece stating, “Broadcom, which will report Q4 FY 2022 results after market hours on December 8th, has been one of the few bright spots in the semiconductor industry over the past year.” He also mentioned that, “AVGO is the largest holding in SOXX [the iShares Semiconductor ETF]”
The SOXX has performed poorly over the trailing twelve months, down by 29.88%, which makes Broadcom’s relative outperformance all the more impressive. Considine highlighted the regulatory risks that Financially Free Investor brought up, writing, “Broadcom is in the midst of acquiring VMware (VMW) for $61 Billion and the deal is expected to close sometime in the next 12 months. The remaining hurdles are mainly regulatory.” However, he continued, “My own analysis suggests that the deal is likely to be completed.”
Looking ahead to the company’s Q4 report, Considine said, “The consensus expectation for Q4 EPS is $10.3 per share, as compared to $7.81 for the same quarter of last year. It is worth noting, however, that the outlook is for considerably slower earnings growth in the next year or two”.
But, looking further out into the future, Considine was even more bullish, stating, “The longer-term outlook is favorable, however, with a consensus estimate of 16.9% per year in EPS growth over the next 3 to 5 years.” He then moved onto the company’s dividend metrics, writing, “AVGO has a forward dividend yield of 3.03% and trailing 3-, 5-, and 10-year dividend growth rates of 15.7%, 32.1%, and 40.2% per year, respectively.”
Considine also noted that coming into the Q4 report, Broadcom had a dividend payout ratio of 46.9%. Regarding his rating on AVGO shares, Considine wrote, I raised my rating on AVGO from a neutral / hold to a bullish / buy on August 15, 2022 and reiterated the buy rating on September 13th, following the Q3 earnings report.” He continued, “AVGO’s earnings growth has been impressive, both in consistency and magnitude. The valuation looked reasonable, with a forward P/E of 15.1, well below the average P/E for the stock since mid-2019.”
Lastly, he highlighted the consensus view on shares, stating, “The Wall Street consensus rating was a buy and the consensus 12-month price target corresponded to an expected total return of about 25% for the next year.” Considine concluded his report by saying, “Broadcom has performed admirably so far in 2022 and the consensus expectation is that the company will be able to maintain its quarterly earnings at the high level achieved in Q3.” “Overall,” he said, “things look good approaching the Q4 earnings report. I am maintaining my buy rating on AVGO.”
Broadcom reported its Q4 results on 12/8/2022, beating Wall Street consensus estimates on both the top and bottom lines. AVGO posted Q4 sales of $8.93 billion, which was $30 million above estimates, representing 20.5% year-over-year growth. AVGO’s Q4 non-GAAP earnings-per-share totaled $10.45, beating consensus by $0.17/share, representing 33.8% growth relative to the $7.81/share non-GAAP EPS that AVGO generated during Q4 of 2021.
During Broadcom’s Q4 earnings report, its CEO, Hock Tan, was quoted saying: "Broadcom's fiscal year 2022 revenue grew 21% year-over-year to a record $33.2 billion, as a result of strong demand from hyperscale, service providers, and enterprise. This growth was driven by our strong partnerships with customers and accelerated adoption of our next generation technologies. As we look into fiscal 2023, our increased R&D investments during the preceding years position us to extend our leadership in next generation products within the end markets we address."
Furthermore, the company’s CFO, Kirsten Spears, was quoted saying: “In fiscal 2022 we achieved record adjusted EBITDA margin of 63%, generating $16.3 billion in free cash flow or 49% of revenue, demonstrating our stable and focused business model. Consistent with our commitment to return cash to shareholders, we will resume our authorized share repurchase programs for the remaining $13 billion, and we are increasing our quarterly common stock dividend by 12 percent to $4.60 per share for fiscal year 2023. The target fiscal 2023 annual common stock dividend of $18.40 per share is a record, and the twelfth consecutive increase in annual dividends since we initiated dividends in fiscal 2011."
Broadcom’s quarterly release also highlighted the strength its balance sheet, saying, “The Company's cash and cash equivalents at the end of the fiscal quarter were $12,416 million, compared to $9,977 million at the end of the prior quarter.”
Disclosure: Nicholas Ward is long AVGO.
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
The company also provided forward guidance for the upcoming quarter, stating: Based on current business trends and conditions, the outlook for the first quarter of fiscal year 2023, ending January 29, 2023, is expected to be as follows:
First quarter revenue guidance of approximately $8.9 billion; and
First quarter Adjusted EBITDA guidance of approximately 63 percent of projected revenue.”
Overall bias of Nobias Credible Analysts and Bloggers:
Broadcom shares rallied 2.57% during the trading session on Friday because of this earnings report. AVGO shares closed the week trading for $544.72. Over the last month, AVGO shares are now up by 14.65%. However, both the credible author and analyst communities that the Nobias algorithm tracks believe that this rally is just getting started. 100% of recent articles published by the credible author community of AVGO stock has expressed a “Bullish” sentiment.
Furthermore, 4 out of 4 credible Wall Street analysts that Nobias tracks who have expressed an opinion on AVGO shares believe that they’re headed higher. Right now the consensus price target amongst these credible analysts for AVGO shares is $660.00. Therefore, relative to the stock’s current share price, this consensus credible price target implies upside potential of approximately 21.2%.
Disclosure: Nicholas Ward has no DG position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Okta Inc (OKTA) stock
Nobias Insights: 65% of recent articles published by credible authors focused on Okta shares offer a “Bullish” bias. 7 out of the 11 credible credible Wall Street analysts who cover OKTA believe shares are likely to rise in value. The average price target being applied to Okta, Inc by these credible analysts is $100.10, which implies upside potential of approximately 53.8% relative to OKTA's current share price of $65.08.
Bullish Take: Angela Harmantas, a Nobias 4-star rated author: “Total revenue was $481 million versus consensus estimates of a little over $465 million, representing an increase of 37% year-over-year.”
Bearish Take: Bert Hochfeld, a Nobias 4-star rated author: “Miscues are punished severely, while strong execution merely slows declines. Sadly, Okta has had its share of miscues including a couple of data breach and a flawed sales force integration strategy.”
Key Points
Okta, Inc shares rose by 28.95% this week. However, even after this double digit really, OKTA is down by 70.8% on a year-to-date basis. This compares poorly against the S&P 500, which is down by approximately 15.1% during 2022 thus far.
Due to its leadership position in the digital security space, Okta is believed to have secular tailwinds; however, it needs to execute on its sales growth plans.
Okta posted Q3 earnings this week, beating Wall Street’s expectations on the top and bottom lines. OKTA reported sales of $481.04 million, beating Wall Street estimates by $15.67million, representing 37.2% year-over-year growth. The company’s GAAP EPS was $0.00, which was $0.24 above Wall Street’s consensus.
65% of recent articles published by credible authors focused on Okta shares offer a “Bullish” bias. 7 out of the 11 credible credible Wall Street analysts who cover OKTA believe shares are likely to rise in value. The average price target being applied to Okta, Inc by these credible analysts is $100.10, which implies upside potential of approximately 53.8% relative to OKTA's current share price of $65.08
Angela Harmantas, a Nobias 4-star rated author: “Total revenue was $481 million versus consensus estimates of a little over $465 million, representing an increase of 37% year-over-year.”
Bert Hochfeld, a Nobias 4-star rated author: “Miscues are punished severely, while strong execution merely slows declines. Sadly, Okta has had its share of miscues including a couple of data breach and a flawed sales force integration strategy.”
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OKTA Dec 2022
Bullish Nobias credible authors:
Okta, Inc, a leader in the digital security space, reported earnings last week. This stock has been beaten down in a major way throughout 2022 and prior to the results, Bert Hochfeld, a Nobias 4-star rated author, wrote about Okta in an article at Seeking Alpha, calling the stock an appealing “contrarian” opportunity for investors to consider.
Hochfeld began his report by stating, “Stocks have been cratering! IT stocks have been cratering more!” The ETFMG Prime Cyber Security ETF (HACK) is down by 23.47% on the year, underperforming the S&P 500, which is down by 15.1% on the year by a wide margin. “But,” he said, “Okta, the leader in the identity management category, has seen its shares fall far beyond average.”
Okta’s 2022 performance is much worse; OKTA shares are down by 70.77% on a year-to-date basis. Hochfeld noted one of the reasons that OKTA shares are down so far, saying, “The company executed a strategic merger, with AuthO and then basically fumbled the ball in terms of achieving sales synergies that were a key justification for the substantial purchase price.” But, moving forward, he likes the stock, in part, because “I have recommended the shares of the leading cyber-security vendors as “safe havens” in the coming recession.”
With specific regard to Okta, Hochfeld wrote, “Miscues are punished severely, while strong execution merely slows declines. Sadly, Okta has had its share of miscues including a couple of data breach and a flawed sales force integration strategy.” But, after the stocks -70% downfall, he’s became interested in shares again.
Hochfeld said, “My reason to revisit the investment thesis is simply that identity management is an enormous, and under-penetrated market, and Okta remains the leading participant in the space.” He continued, “It is infrequent that a software category leader also has the potential for really significant returns. But I think that Okta is one such company.”
Regarding Okta’s turnaround potential, Hochfeld said, “This is not a short-term project.” He continued, “Okta is not going to achieve a turn-around from its current condition in a quarter or two.” “But fortunately for Okta,” he wrote, “cyber-security and identity management will be less affected by recessionary headwinds than most other segments of the IT space.”
“The most significant issues for this company has essentially been that of sales force execution, and go-to-market messaging,” Hochfeld said. But, he points out, “One of the advantages that Okta has is that it is a platform neutral solution that offers enterprises the opportunity to optimize their identity management paradigm by standardizing on a single vendor.”
Hochfeld believes that this is a pitch that OKTA’s sales team can make to enterprise clients. He wrote, “The message is simple; it is desirable to partner with a vendor who can offer the whole range of identity management solutions on a multiplicity of cloud deployments and for many different use cases.”
Ultimately, he concluded, “The odds are that Okta will right its ship.” And therefore, he said, “As with most contrarian calls, timing is never exact or guaranteed, but my view is that by the time everyone agrees that the company’s problems are solved, its relative valuation will balloon. This is one case in which I would rather be early than late.”
Okta posted Q3 earnings this week, beating Wall Street consensus estimates on both the top and bottom lines. Angela Harmantas, a Nobias 4-star rated author, covered those results in an article published at Proactiveinvestors.com.
Harmantas highlighted Okta’s top-line results writing, “Total revenue was $481 million versus consensus estimates of a little over $465 million, representing an increase of 37% year-over-year.” She continued, “Subscription revenue was $466 million, an increase of 38% year-over-year.”
“Meanwhile,” Harmantas said, “the company’s fourth-quarter adjusted earnings (EBITDA) guidance of nearly $0.11 a share far surpassed analysts' estimates for a loss of $0.11 per share.” During Okta’s Q3 results the company provided investors with forward guidance, highlighting expectations for Q4 as well as for the full-year.
Okta’s earnings report said: “For the fourth quarter of fiscal 2023, the Company expects:
Total revenue of $488 million to $490 million, representing a growth rate of 27% to 28% year-over-year;
Current RPO of $1.63 billion to $1.64 billion, representing a growth rate of 21% year-over-year;
Non-GAAP operating income of $15 million to $17 million; and
Non-GAAP diluted net income per share of $0.09 to $0.10, assuming diluted weighted-average shares outstanding of approximately 175 million.”
The report continued: “For the full year fiscal 2023, the Company now expects:
Total revenue of $1.836 billion to $1.838 billion, representing a growth rate of 41% year-over-year;
Non-GAAP operating loss of $41 million to $39 million; and
Non-GAAP net loss per share of $0.27 to $0.26, assuming weighted-average shares outstanding of approximately 158 million.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
During Okta’s Q3 report, Todd McKinnon, Chief Executive Officer and co-founder of Okta, who quoted saying: “We’re pleased with our third quarter results and the early traction of our refined go-to-market strategy as identity continues to be a long-term, strategic investment for our customers. With our Workforce Identity and Customer Identity Clouds, the market’s leading identity cloud platforms, we are delivering the innovation and simplicity our customers need to solve their complex identity challenges. We remain focused on go-to-market execution, spend efficiency measures, and increasing profitability as we navigate an evolving macro environment.”
Overall bias of Nobias Credible Analysts and Bloggers:
Okta’s strong results, attractive guidance, and upbeat commentary by management inspired a strong double digit rally for OKTA shares. OKTA opened up the next trading day 21% higher than they closed pre-earnings. Overall, the stock rose by 28.95% last week. And according to the credible authors and analysts that the Nobias algorithm tracks, this could be the start of a sustained rally for shares.
65% of recent articles on Okta published by the credible authors that the Nobias algorithm tracks have expressed a “Bullish” bias towards shares. 7 out of the 11 credible Wall Street analysts that Nobias tracks believe that shares of Okta are likely to head higher from here. Currently, Okta shares trade for $65.08 and the average price target being applied to shares by these credible individuals is $100.10, which implies upside potential of approximately 53.8%.
Disclosure: Nicholas Ward has no OKTA position.
Disclosure: Nicholas Ward has no DG position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Dollar General (DG) stock
Nobias Insights: 65% of recent articles published by credible authors focused on DG shares offer a “Bullish” bias. 7 out of the 9 credible credible Wall Street analysts who cover Dollar General believe shares are likely to rise in value. The average price target being applied to Dollar General by these credible analysts is $274.11, which implies upside potential of approximately 12.4% relative to DG's current share price of $243.96
Bullish Take: Marianne Wilson, the Editor-in-Chief at Chain Store Age, who is a Nobias 4-star rated author: “The discounter remains committed to expanding its footprint, with plans to execute approximately 3,170 U.S. real estate projects in fiscal year 2023 (ending Feb.2, 2024), including 1,050 new stores, 2,000 remodels, and 120 store relocations.”
Bearish Take: Harrison Miller, a Nobias 4-star rated author: “The company reported difficulty acquiring warehouse space for its excess inventories, which caused higher-than-expected supply chain costs and will weigh on its Q4 and full-year results.”
Key Points
Dollar General shares fell by 4.97% this week. On a year-to-date basis, DG shares are up by 3.6%. This compares favorably to the S&P 500, which is down by approximately 15.1% during 2022 thus far.
Dollar General continues to see same-store sales and overall revenues increase; however, ongoing supply chain issues and high inflation are hurting its bottom-line.
Dollar General posted Q3 earnings this week, beating Wall Street’s expectations on the top line, but missing on the bottom. DG reported sales of $9.5 billion, beating Wall Street estimates by $70 million, representing 11.8% year-over-year growth. The company’s GAAP EPS was $2.33, which was $0.21 below Wall Street’s consensus.
65% of recent articles published by credible authors focused on DG shares offer a “Bullish” bias. 7 out of the 9 credible credible Wall Street analysts who cover Dollar General believe shares are likely to rise in value. The average price target being applied to Dollar General by these credible analysts is $274.11, which implies upside potential of approximately 12.4% relative to DG's current share price of $243.96
Marianne Wilson, the Editor-in-Chief at Chain Store Age, who is a Nobias 4-star rated author: “The discounter remains committed to expanding its footprint, with plans to execute approximately 3,170 U.S. real estate projects in fiscal year 2023 (ending Feb.2, 2024), including 1,050 new stores, 2,000 remodels, and 120 store relocations.”
Harrison Miller, a Nobias 4-star rated author: “The company reported difficulty acquiring warehouse space for its excess inventories, which caused higher-than-expected supply chain costs and will weigh on its Q4 and full-year results.”
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Bearish Take:
Dollar General (DG), the discount retailer, may seem like a boring stock pick at first glance; however, its historical results have been anything but boring. Over the last 5 years, DG shares have produced price returns of 169.96%.
Over the last 10 years, DG shares have seen their value increase by 421.28%. Both of these results beat the broader market by a wide margin; during the trailing 5 and 10-year periods, the S&P 500 has seen its value increase by 54.85% and 187.13%, respectively. Yet, this past week DG shares experienced a dip, on what a credible Wall Street analyst called a “rare miss” during its Q3 earnings report.
DG Dec 2022
Dollar General shares initially sank by roughly 9% after posting Q3 results on Thursday; however, after a Friday rally, they closed the week with a -4.97% performance. According to the consensus opinions of the credible authors and Wall Street analysts that the Nobias algorithm tracks, this recent weakness has opened up a buying opportunity with double digit upside.
Bearish Nobias credible authors:
Harrison Miller, a Nobias 4-star rated author, covered Dollar General’s Q3 earnings in a report that he published this week at Investors.com. Miller wrote, “Goodlettsville, Tenn.-based Dollar General's results improved over the year, but the discount chain wasn't able to beat analysts' earnings predictions.” He compared and contrasted the Wall Street consensus versus Dollar General’s actual results, stating: “Expectations: Analysts expected earnings to leap 22% to $2.54 per share on 10.7% revenue growth to $9.24 billion.
Results: Dollar General earnings climbed 12% to $2.33 per share. Sales rose 11.1% to $9.5 billion.”
Miller said, “Dollar General's same-store sales grew 6.8% for the period, driven by an increase in average transaction amounts and modest customer traffic growth.” But, he also highlighted ongoing supply chain issues which hurt the company’s profit margins, stating, “The company reported difficulty acquiring warehouse space for its excess inventories, which caused higher-than-expected supply chain costs and will weigh on its Q4 and full-year results.”
Looking ahead, Miller put a spotlight on management’s updated forward guidance. He said, “Dollar General expects EPS between $3.15 and $3.30 per share for the fourth quarter, which would translate to 7% to 8% earnings growth for fiscal 2022.”
“That's lower than its previous range of 12% to 14% growth,” Miller wrote. “However,” he continued, “DG still expects 11% sales growth for the year. And it sees same store sales growing 6% to 7% for Q4, which would be in the upper end of its anticipated 4% to 4.5% range for 2022.”
Marianne Wilson, the Editor-in-Chief at Chain Store Age, who is a Nobias 4-star rated author, also covered Dollar General’s Q3 results in an article this week. Like Miller, Wilson focused on rising costs and the supply chain issues that hurt Dollar General’s bottom-line. She said, “Dollar General’s third-quarter sales rose 11.1% but costs took a bite out of the company’s earnings.”
Regarding the company’s profit figures, Wilson wrote, “Net income rose to $526.17 million, or $2.33 a share, in the quarter ended Oct. 28, from $487.03 million, or $2.08 a share, in the year-ago period. Analysts had expected earnings of $2.54 a share.” She quoted Jeff Owen, who began his tenure as Dollar General’s CEO in November, who spoke about supply chain concerns during the company’s earnings report, stating:
“Despite the cost pressures we experienced during the quarter, as well as challenges within our internal supply chain resulting in higher-than-anticipated distribution and transportation costs, our team was resilient and worked hard to deliver double-digit diluted EPS growth. We believe the majority of these and other gross margin pressures are largely temporary, and we are confident in our plans to drive greater supply chain efficiencies moving forward."
Wilson continued, writing, “As of October 28, 2022, Dollar General’s total merchandise inventories, at cost, were $7.1 billion compared to $5.3 billion as of October 29, 2021, an increase of 28.4% on a per-store basis. This increase primarily reflects the impact of product cost inflation, as well as a greater mix of higher-value products, particularly in the home and seasonal categories, the company said.”
Yet, Wilson also noted that Dollar General still has aggressive plans to expand its physical footprint, providing growth opportunities to investors looking forward. She wrote, “The discounter remains committed to expanding its footprint, with plans to execute approximately 3,170 U.S. real estate projects in fiscal year 2023 (ending Feb.2, 2024), including 1,050 new stores, 2,000 remodels, and 120 store relocations.”
Overall, the majority of credible authors who have recently covered Dollar General shares in articles have expressed a bullish opinion. 65% of articles published by credible authors have expressed a “Bullish” bias. And we see similar data from the credible Wall Street analysts that Nobias tracks who have provided reports on Dollar General. 7 out of the 9 credible authors who follow DG shares believe that they’re likely to increase in value.
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Since Dollar General’s Q3 results Nobias has seen 2 credible analysts lower their price targets for DG shares. BMO Capital analyst Kelly Bania, a Nobias 4-star rated analyst, lowered her price target on Dollar General to $255 from $265. However, Bania kept a “Market Perform” rating on the shares, noting that Dollar General’s disappointing Q3 results were a "rare miss" and moving forward, the analyst continues to believe that the company is going to capture market share due to its relatively low cost goods in a tough macro environment for price sensitive consumers.
Truist analyst Scot Ciccarelli, a Nobias 4-star rated analyst, lowered his price target on Dollar General to $237 from $262. Ciccarelli maintained his “Hold” rating on the shares, noting that supply chain issues were an ongoing headwind, while expressing concern that lower-income individuals would see continued negative spending pressure as inflation eats away at their purchasing power at a high rate.
Overall bias of Nobias Credible Analysts and Bloggers:
However, despite these lower price targets, the average price target being attached to DG shares by these credible individuals is $274.11. Today DG shares trade for $243.96, which means that the credible analyst average price target implies upside potential of approximately 12.4%.
Disclosure: Nicholas Ward has no DG position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.
Case Study: What Credible analysts are saying on Salesforce (CRM) stock
Nobias Insights: 75% of recent articles published by credible authors focused on CRM shares offer a “Bullish” bias. 11 out of the 13 credible credible Wall Street analysts who cover Salesforce believe shares are likely to rise in value. The average price target being applied to Salesforce by these credible analysts is $216.38, which implies upside potential of approximately 49.7% relative to Salesforce's current share price of $144.56.
Bullish Take: Gen Alpha, a 5-star rated Nobias author, notes that Salesforce is a “a virtual "cash minting machine", as its positioning enables it to charge premium prices for its services, giving way to strong margins.”
Bearish Take: Vladimir Dimitrov, CFA, a Nobias 4-star rated author said, “Investors looking for a low entry point should be careful of further downside, even as valuation has already cooled off in 2022.”
Key Points
Salesforce shares fell by 6.7% this week. On a year-to-date basis, CRM is now down by 43.4%. This compares poorly to the S&P 500, which is down by approximately 15.1% during 2022 thus far
Slowing growth, deteriorating profit margins, and a poor macro sentiment surrounding high premium growth stocks continues to plague CRM shares.
Salesforce posted Q3 earnings this week, beating Wall Street’s expectations on the top and bottom lines. CRM reported sales of $7.84 billion, beating Wall Street estimates by 10 million, representing 14.3% year-over-year growth. The company’s non-GAAP EPS was $1.40, $0.18 ahead of Wall Street consensus. However, poor Q4 guidance, along with news that CRM’s co-CEO is leaving the company, resulted in a sell-off.
75% of recent articles published by credible authors focused on CRM shares offer a “Bullish” bias. 11 out of the 13 credible credible Wall Street analysts who cover Salesforce believe shares are likely to rise in value. The average price target being applied to Salesforce by these credible analysts is $216.38, which implies upside potential of approximately 49.7% relative to Salesforce's current share price of $144.56.
Gen Alpha, a 5-star rated Nobias author, notes that Salesforce is a “a virtual "cash minting machine", as its positioning enables it to charge premium prices for its services, giving way to strong margins.”
Vladimir Dimitrov, CFA, a Nobias 4-star rated author said, “Investors looking for a low entry point should be careful of further downside, even as valuation has already cooled off in 2022.”
Performance
Event & Impact
Noteworthy News:
Nobias insights
Bullish Take:
Bearish Take:
Salesforce (CRM) shares have performed poorly throughout 2022, falling by 43.4%. For comparison’s sake, the S&P 500 is now down by 15.1% on the year while the tech-heavy Nasdaq is down by 27.6%. This relative underperformance is rare for CRM investors; over the last 5 and 10-year periods, the stock has beaten the market by a wide margin.
The S&P 500 is up by 187.1% during the last decade. Salesforce, on the other hand, has seen its share price rise by 269% during this same period. Salesforce reported its third quarter earnings this week, yet the results did not change the negative sentiment surrounding CRM shares. Salesforce dropped another 6.7% this week due to disappointing guidance.
During Q3, CRM reported sales of 7.84 billion, beating Wall Street estimates by 10 million, representing 14.3% year-over-year growth. The company’s non-GAAP EPS was $1.40, $0.18 ahead of Wall Street consensus. However, despite the top and bottom-line beat during the third quarter, it appears that investors were unhappy with the forward guidance provided by management.
CRM Nov 2022
Seeking Alpha news editor Pranav Ghumatkar highlighted CRM’s forward guidance in a report this week, stating: “Q4: Revenue Guidance of $7.932 Billion to $8.032 Billion vs. consensus of $8.04B, up 8% to 10% Y/Y, 12% to 13% CC; Non-GAAP earnings per share $1.35 - $1.37 vs. consensus of $1.35.
2023 Outlook: Revenue Guidance of $30.9 Billion to $31.0 Billion vs. consensus of $31.01B, up 17% Y/Y, 20% CC; GAAP Operating Margin Guidance of ~3.8% and Non-GAAP Operating Margin Guidance of ~20.7%; Operating Cash Flow Guidance of ~16% growth Y/Y; Non-GAAP earnings per share $4.92 - $4.94 vs. consensus of $4.73.
Bearish Nobias credible authors:
Regarding these results, Vladimir Dimitrov, CFA, a Nobias 4-star rated author, published a bearish post-earnings article regarding Salesforce at Seeking Alpha this week. He began by saying, “December 1 was quite painful for Salesforce shareholders as shares fell by more than 8% during the trading session.”
Dimitrov highlighted unexpected news announced alongside the quarterly report that Salesforce’s relatively new co-CEO, Bret Taylor, is leaving the company and noted that CRM’s weak share price is likely going to make it difficult for the company to attract top talent because of its stock-based compensation policies. He wrote, “One major pillar of attracting and retaining talent for tech companies has been the amount of share-based compensation.”
Dimitrov noted that Salesforce takes its share-based compensation to “extreme levels” and continued, “The recent downturn in both equity and fixed income markets has the potential to make Salesforce's growth strategy obsolete. The reason why I am saying that is because CRM relies heavily on growing through ever-larger acquisitions, and it needs this topline growth to support its sky-high valuation, which in turn is key for the company's stock-based compensation.”
Regarding this M&A fueled growth cycle, he said, “Although topline growth remains high, without the boost of a new large acquisition, CRM's growth story begins to fade.” “Even more worrisome,” Dimitrov said, “is the pressure for the company to finally achieve acceptable levels of profitability.” He went on to quote Marc Benioff, Chair & Co-Chief Executive Officer of Salesforce, who highlighted the company’s bottom-line goals during its recent earnings report.
Benioff said, “We're raising our fiscal year 2023 non-GAAP operating margin guidance from 20.4% to 20.7%, an expansion of 200 basis points year-over-year, and I expect a lot more, especially with this increased focus we have on expanding our operating margin.” Yet, Dimitrov notes that this was “not enough to appease investors.”
Furthermore, when looking through CRM’s Q3 report, Dimitrov said, “The cash flow statement of Salesforce is also full of red flags for such a large enterprise that is currently a leader in the highly attractive software space.”
“To begin with,” he continued, “the already low operating profitability results in a razor-thin net income figure due to fading gains on strategic investments.” “The bigger issue,” he wrote, “is the skyrocketing amount of stock-based compensation, which is already more than half of the company's cash flow from operations for the past 12 months.”
While stock-based compensation may be necessary for Salesforce to attract top talent, it’s not good for shareholders. Stock-based compensation dilutes CRM’s outstanding share count and therefore, per-share metrics, such as earnings-per-share, are lowered as share counts move high.
Dimitrov highlighted this negative trend, stating that the company’s “$1,677m spend on share repurchases over the past fiscal year was not enough to fully offset dilution.” Ultimately, he concluded, “Even though Salesforce has created a very strong ecosystem of services, the means to achieve that are flawed.”
Due to issues with stock-based compensation and deteriorating margins, Dimitrov ended his report by saying, “Investors looking for a low entry point should be careful of further downside, even as valuation has already cooled off in 2022.”
Bullish Nobias credible authors:
Gen Alpha, a Nobias 5-star rated author, offered a more bullish take on the company after its recent earnings results. The author began by highlighting recent share price weakness, stating, “CRM stock is now trading at close to half of its 52-week high, losing well over $100 billion in equity market cap over the past 12 months.”
However, they remain very bullish on the company’s business operations. Regarding Salesforce’s business, Gen Alpha, said “Salesforce's flagship product, Sales Cloud, has been helping businesses of all sizes to manage their customers better for many years. It offers powerful features that enable users to track customer interactions and insights, create targeted campaigns, and close deals faster.” They continued, “Along with its CRM offering, Salesforce also provides an array of cloud-based services for enterprise apps such as marketing automation, analytics, customer service, and ecommerce.”
Furthermore, they stated, “Salesforce has also developed a suite of mobile apps that enable users to access their data on the go.”,“This makes it easier for businesses to stay connected with their customers wherever they may be,” Gen Alpha wrote. They believe that Salesforce has a clear leadership position in its industry and highlighted that by stating, ”This is reflected by industry analyst IDC recently ranking Salesforce number one in CRM for the ninth year in a row.”
Overall, Gel Alpha concludes, “This makes Salesforce a virtual "cash minting machine", as its positioning enables it to charge premium prices for its services, giving way to strong margins.” But, they also acknowledged risks. “Founder dependency” is a risk that Gen Alpha is concerned about with Brett Taylor leaving the company. They wrote, “While founder Marc Benioff is undoubtedly a visionary, it remains to be seen whether if another person is worthy of carrying forward the baton.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Also, like Dimitrov, Gen Alpha is concerned about the company’s buyback plans. Gen Alpha noted that CRM announced a new $10 billion buyback program during the quarterly report, but said, “While buybacks are an efficient return of capital from a tax perspective, I simply don't see how it would be very accretive to shareholders at the current price of $144.56 with a forward PE of 30. This equates to a low 3% earnings yield on every dollar spent on share repurchases, and implies that management is short of growth opportunities with which to deploy capital.”
But overall, the author remains bullish on the stock. “Lastly,” they wrote, “I view Salesforce as being undervalued at the current price of $145 with a forward PE of 30.” Gen Alpha concluded, “I would find Salesforce to be more attractive at a 25x PE, which translates to a price of $123. This price would bake in a more tempered level of growth going forward.”
Overall bias of Nobias Credible Analysts and Bloggers:
Overall, the vast majority of credible authors and analysts that the Nobias algorithm tracks express bullish sentiment towards CRM shares. 75% of recent articles published by credible authors have included a “Bullish” bias. 11 out of the 13 credible Wall Street analysts that Nobias tracks who cover CRM shares believe that the stock is likely to increase in value. Right now CRM shares trade for $144.56. The average price target being applied to CRM by the credible analyst community is $216.38. Therefore, credible analysts see upside potential of approximately 49.7%.
Disclosure: Nicholas Ward is long CRM. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.