Nobias 4/26/23 Nobias 4/26/23

Case Study: Microsoft (MSFT) stock according to high performing analysts

Coming into Q3 the market feared a major cloud slowdown from MSFT due to slowing enterprise spending; however, the company posted 16% year-over-year cloud growth, assuaging these fears.

Nobias Insights: 53% of recent articles published by credible authors focused on MSFT shares offer a “bullish” bias. One of the two credible Wall Street analysts covering MSFT believes that shares are likely to rise in value. The average price target being applied to Microsoft by these credible analysts is $248.50, implying a downside of approximately 19.1% relative to the stock’s current share price of $307.26.

Bullish Take: Dividend Sensei, a Nobias 4-star rated author, said, “Cloud computing is expected to grow 21% annually through 2028 to $222 billion.”

Bearish Take: Joe Toppe, a Nobias 4-star rated author, stated, “British regulators blocked Microsoft’s $69 billion purchase of video game maker Activision Blizzard on Wednesday, saying it would hurt competition in the cloud gaming market.”

Key Points

Performance

Microsoft shares rose by 8.24% this week, pushing their year-to-date gains up to 28.25%. This compares favorably to both the S&P 500 and the Nasdaq Composite Index, which are up by 9.03% and 17.71%, respectively, on a year-to-date basis.

Event & Impact

Microsoft posted its fiscal 2023 third quarter results this week, beating consensus estimates on both the top and bottom lines. During Q3, MSFT’s revenue totaled $52.86 billion, beating Wall Street’s consensus estimate by $1.85 billion. Microsoft’s Q3 non-GAAP earnings per share came in at $2.45, which was $0.22/share above consensus estimates.

Noteworthy News:

Coming into Q3 the market feared a major cloud slowdown from MSFT due to slowing enterprise spending; however, the company posted 16% year-over-year cloud growth, assuaging these fears.

Nobias Insights

53% of recent articles published by credible authors focused on MSFT shares offer a “bullish” bias. One of the two credible Wall Street analysts covering MSFT believes that shares are likely to rise in value. The average price target being applied to Microsoft by these credible analysts is $248.50, implying a downside of approximately 19.1% relative to the stock’s current share price of $307.26.

Bullish Take

 Dividend Sensei, a Nobias 4-star rated author, said, “Cloud computing is expected to grow 21% annually through 2028 to $222 billion.”

Bearish Take

   Joe Toppe, a Nobias 4-star rated author, stated, “British regulators blocked Microsoft’s $69 billion purchase of video game maker Activision Blizzard on Wednesday, saying it would hurt competition in the cloud gaming market.”

Microsoft posted its fiscal 2023 third quarter results this week, beating Wall Street’s consensus estimates on both the top and bottom lines.  These results inspired shares to rally; Microsoft closed the week up by 8.24%.  This rally pushed Microsoft’s year-to-date gains up to 28.25%.

During the trailing twelve month period, MSFT shares are now up by 6.09% and the company’s market capitalization currently sits at $2.27 trillion.

Bullish Nobias Credible Analysts Opinions:

Harsh Chauhan, a Nobias 4-star rated author, covered Microsoft’s Q3 results this week at the Motley Fool. Regarding Microsoft’s illustrious history, Chauhan said, “A $1,000 investment made in Microsoft five years ago is now worth almost $3,300, assuming the dividends were reinvested.”

“That translates into an average annual return of nearly 27%.” Investors can expect such solid returns from Microsoft in the future as well, thanks to the fast-growing markets the company is involved in such as cloud computing and generative artificial intelligence (AI),” he continued.

Looking at Microsoft’s third quarter results, Chauhan said, “Its revenue was up 7% year over year to $52.9 billion in the third quarter of fiscal 2023 (for the three months ended March 31). “Microsoft's non-GAAP (generally accepted accounting principles) earnings increased 10% year over year to $2.45 per share,” he added.

Chauhan also wrote, “Robust growth in the company's productivity and cloud businesses was enough to offset the 9% year-over-year revenue drop in the personal computing business, which produced a quarter of the company's top line last quarter.”

Chauhan maintains a bullish outlook on MSFT shares, in large part, because of its ongoing cloud growth.  He said, “Microsoft's 23% share of the cloud infrastructure services market puts it in position to make the most of this huge growth opportunity and help sustain the healthy pace at which its cloud business is growing.” He quoted a research report, stating, “Gartner estimates that $597 billion will be spent on public cloud services globally this year, up nearly 22% from last year's levels. The market research firm expects the impressive growth to continue in 2024 with another 21% increase in worldwide public cloud spending to $724.5 billion.”

Looking at another growth catalyst for Microsoft moving forward, Chauhan said, “With the generative AI market set to clock 34% annual growth through 2030, per Grand View Research, Microsoft is setting itself up to make the most out of this nascent technology. As such, it won't be surprising to see this potential AI winner continue soaring.”

Dividend Sensei, a Nobias 4-star rated author, also highlighted MSFT’s Q3 results in a report this week, once again focusing on the company’s enormous cloud growth potential.  Dividend Sensei said, “Azure revenue is expected to grow 33% this year and keep growing at solid [sic] 24% to 29% rate through 2028.” He continued, “Cloud computing is expected to grow 21% annually through 2028 to $222 billion. For context, MSFT is expected to generate $210 billion in revenue for the entire company this year.”

Then, the author went on to put a spotlight on Microsoft’s cash flows and its shareholder return prospects.   Dividend Sensei wrote, “Free cash flow is expected to be a record $90 billion this year and grow to $140 million by 2028.” And they expect Microsoft to use these profits to reward investors.   “Buybacks are expected to be $24 billion this year and grow to $34 billion by 2028,” Dividend Sensei said.  “MSFT is paying $20 billion per year dividend [sic] dividends, and that's expected to grow to $35 billion by 2028,” they continued.   “Despite $350 billion in buybacks and dividends,” the author concluded, “MSFT's net cash position is expected to grow to $217 billion (including deferred subscription revenue) by 2028.”

Bearish Nobias Credible Analysts Opinions:

Although Microsoft posted the top and bottom-line beat on Tuesday, not all of the headlines associated with the company with week were bullish.  On Wednesday, Joe Toppe, a Nobias 4-star rated author, highlighted bad news that Microsoft received regarding its record breaking acquisition of Activision Blizzard in an article that he published at Yahoo Finance.

Toppe wrote, “British regulators blocked Microsoft’s $69 billion purchase of video game maker Activision Blizzard on Wednesday, saying it would hurt competition in the cloud gaming market.” “Both Microsoft and Activision will appeal the decision, despite facing opposition to the all-cash deal from contemporaries like Sony and regulators in the U.S. and Europe concerned the consolidation would give Microsoft control of popular game franchises like Call of Duty, World of Warcraft and Candy Crush,” he continued.

However, Toppe noted that both parties are still trying to get this deal completed, writing, “Microsoft President Brad Smith said in a tweet Wednesday that the company remains fully committed to the acquisition and would appeal the decision.”

Dina Bass, a Nobias 4-star rated author, also touched upon the UK regulator headlines in an article that she published at BNN Bloomberg this week.  Bass wrote, “Microsoft Corp. executives sought to reassure workers in the Xbox gaming unit that there’s a way forward for the approval of the company’s planned $69 billion purchase of Activision Blizzard Inc., while emphasizing that its success in gaming isn’t solely dependent on the deal.”

Bass noted that Microsoft Gaming Chief Phil Spencer “told staffers that Microsoft President Brad Smith was up at 2 a.m. Seattle time Wednesday drafting a response to the UK Competition and Markets Authority. ”Chief Financial Officer Amy Hood, who oversees acquisitions, held a senior leadership meeting the same day,” she continued.

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.

According to her sources, Bass wrote, “The Xbox chief said the acquisition was intended to speed up Microsoft’s gaming plans, but doesn’t represent the entirety of the company’s gaming strategy, which would move ahead even without Activision”.

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 53% of recent articles written by credible Wall Street analysts have expressed a “bullish” bias towards MSFT shares. 50% of the credible Wall Street analysts that are tracked by the Nobias algorithm who have expressed an opinion on Microsoft believe that shares are headed higher.

Since Microsoft’s earnings report this week, Nobias 5-star analyst, John DiFucci of Guggenheim, raised his price target on MSFT shares.

According to the Fly of the Wall, “Guggenheim raised the firm's price target on Microsoft to $232 from $212 and keeps a Sell rating on the shares, noting that the company exceeded fiscal Q3 estimates set by guidance "on all pertinent line items" other than free cash flow, for which it had not given guidance. Microsoft management did a good job of managing expectations for the quarter, but while Office 365 is doing well and should continue to as tailwinds compound over time, "Azure and Windows are struggling," the analyst argues. The firm does not expect Microsoft to continue the free cash flow or revenue growth it's enjoyed for years, the analyst added.”

Currently, the average price target being applied to Microsoft by Nobias credible analysts is $248.50. After its 8.24% rally this week, Microsoft is trading for $307.26. Therefore, that average price target implies downside potential of approximately 19.1%.

Disclosure: Nicholas Ward is long MSFT. 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.

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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.

Nobias 4/21/23 Nobias 4/21/23

Case Study: Lockheed Martin (LMT) stock according to high performing analysts

During Q1, Lockheed continued to improve upon the supply chain headwinds that the company has experienced since the COVID-19 pandemic began. The company posted low single digit sales growth and reaffirmed full-year guidance, which calls for flat top-line growth. Management highlighted the company’s $145 billion sales backlog going forward.

Nobias Insights: 65% of recent articles published by credible authors focused on LMT shares offer a “Bullish” bias. 3 out of the 6 credible Wall Street analysts who cover Lockheed Martin believe that shares are likely to rise in value. The average price target being applied to LMT by these credible analysts is $480.67 which is essentially in-line with the stock’s current share price of $482.55.

Bullish Take: Harrison Miller, a Nobias 4-star rated author, said, “Shares are holding above their 50-day and 200-day moving averages and reclaimed their 10-day line Tuesday. The current buy zone for the pattern extends to 524.”

Bearish Take: Nobias 4-star rated analyst, Noah Poponak, said, ”The U.S. defense budget has grown significantly to an all-time high level, and with a large level of cumulative government debt, focus on slowing spending growth or reducing it outright could return in 2023.”

Key Points

Performance

Lockheed Martin shares fell by 1.42% this week, pushing their year-to-date gains down to 1.05%. This compares poorly to the S&P 500’s year-to-date returns. Thus far in 2023, the S&P 500 has posted gains of 8.09%.

Event & Impact

Lockheed Martin posted its first quarter results this week, beating Wall Street’s expectations on both the top and bottom lines. During Q1, LMT’s revenue totaled $15.1 billion, missing Wall Street’s consensus estimate by $90 million. Lockheed’s Q1 non-GAAP earnings-per-share came in at $6.43, beating the consensus estimate by $0.37/share.

Noteworthy News:

During Q1 Lockheed continued to improve upon the supply chain headwinds that the company has experienced since the COVID-19 pandemic began. The company posted low single digit sales growth and reaffirmed full-year guidance, which calls for flat top-line growth. Management highlighted the company’s $145 billion sales backlog going forward.

Nobias Insights

65% of recent articles published by credible authors focused on LMT shares offer a “bullish” bias. Three out of the six credible Wall Street analysts who cover Lockheed Martin believe that shares are likely to rise in value. The average price target being applied to LMT by these credible analysts is $480.67, which is essentially in-line with the stock’s current share price of $482.55.

Bullish Take

 Harrison Miller, a Nobias 4-star rated author, said, “Shares are holding above their 50-day and 200-day moving averages and reclaimed their 10-day line Tuesday. The current buy zone for the pattern extends to 524.”

Bearish Take

    Nobias 4-star rated analyst, Noah Poponak, said, ”The U.S. defense budget has grown significantly to an all-time high level, and with a large level of cumulative government debt, focus on slowing spending growth or reducing it outright could return in 2023.”

Lockheed Martin, the world’s largest defense contractor, posted its first quarter earnings this week.  After beating Wall Street’s estimates on the top and bottom lines, LMT shares hit new 52-week highs of $508.10 on Tuesday.

However, the market’s enthusiasm wore off throughout the remainder of the week, and LMT shares ultimately closed at $482.55. This price is in-line with the average price target that is currently being associated with shares by the credible Wall Street analysts that Nobias tracks.

Bullish Nobias Credible Analysts Opinions:

However, the credible author community is more bullish with 65% of recent reports expressing bullish sentiment. Ahmed Farhath, a Nobias 4-star rated author, posted a pre-earnings breakdown of what the market was expecting from Lockheed Martin coming into the stock’s Q1 report at Seeking Alpha this week.

Farhath wrote, “The consensus EPS Estimate is $6.06 and the consensus Revenue Estimate is $15.01B (+0.3% Y/Y).” “Over the last 1 year,” he continued, “LMT has beaten EPS estimates 75% of the time and has beaten revenue estimates 25% of the time.”

Looking at Wall Street’s sentiment gauge coming into the quarter, Farhath said, “Over the last 3 months, EPS estimates have seen four upward revisions and 1 downward. Revenue estimates have seen 1 upward revision and 4 downward.”

Harrison Miller, a Nobias 4-star rated author, covered Lockheed’s Q1 report in an article that he published at Investors.com this week.  Looking at the macro-environment surrounding this defense stock, Miller highlighted the Russia/Ukraine war as a tailwind for the company.

Regarding Lockheed he said, “The maker of the F-22 and F-35 fighter jets has been a heavy supplier of missiles and other military equipment in Ukraine's fight against Russia's invasion over the past year.” “Lockheed Martin provided High Mobility Artillery Rocket Systems (HMARS) and ammunition, Javelin and Stinger missiles early in the assault,” he added.

Moving onto Lockheed’s Q1 results, Miller wrote, “Lockheed Martin reported adjusted earnings of $6.43 per share, unchanged from last year. GAAP earnings, excluding mark-to-market investment gains, rose 2.6% to $6.61 per share.” “Net sales ticked up to $15.126 billion from $14.96 billion,” he added.  Both of these figures came in ahead of Wall Street consensus estimates.

Lockheed Martin beat consensus top-line estimates by $90 million and it beat consensus earnings-per-share estimates by $0.37.  Focusing on LMT’s bottom-line, Miller wrote, “Cash flow from operations were $1.56 billion with free cash flow of $1.27 billion.”

During Lockheed’s Q1 report the company’s CEO Jim Taiclet reaffirmed full-year guidance.  Taiclet said, “We remain on track to achieve our full year 2023 financial guidance and continue our robust approach to returning capital to shareholders, with $500 million in share repurchases and $784 million in dividends distributed in the first quarter.”

Miller touched upon these guidance figures, stating, “Lockheed guided full-year earnings between $26.60 per share and $26.90 per share on $65 billion to $66 billion in net sales.” Looking at Wall Street’s full-year estimates, Miller added, “For the year, analysts see earnings jumping 24% to $26.91 per share as revenue edges down 0.36% to $65.746 billion.” After its top and bottom-line beat, LMT shares hit new 52-week highs.

Miller touched upon the stock’s technical momentum, stating, “Shares are holding above their 50-day and 200-day moving averages and reclaimed their 10-day line Tuesday. The current buy zone for the pattern extends to 524.” However, after hitting highs of $508 on Tuesday, LMT shares trended downwards throughout the rest of the week.

Lockheed Martin closed the week trading for $482.55, meaning that they gave up their post-earnings gains and ended up falling by 1.42% during the last 5 trading sessions.  Rob Williams, a Nobias 4-star rated author, also highlighted Lockheed’s Q1 results in a Seeking Alpha report this week.

Williams focused on the Lockheed’s operating segment results, stating, “The company’s aeronautics revenue slipped 2% from the prior year to $6.27 billion. The drop was mostly attributed to a decline of $335 million for the F-35 fighter jet program on lower volume. The company has a growing backlog, having received an order from Canada for 88 of the fifth-generation aircraft during Q1.”

During the company’s Q1 report, Lockheed Martin stated that its total backlog stood at $145.09 billion, down slightly from the $149.99 billion backlog that it reported during the same quarter one year ago.  “Its missiles and fire control segment saw a 3% decline in net sales to $2.39 billion, including a drop of $60 million on lower output of the Guided Multiple Launch Rocket Systems (GMLRS), a long-range missile that the United States has supplied to Ukraine to defend itself against Russia’s invasion,” Williams added.

Regarding the Ukraine tailwinds, Williams stated, “Jay Malave, CFO of Lockheed Martin, said the company estimates it will see $1.5 billion in sales related to Ukraine this year, about the same as in 2022, and $6 billion by 2027, The Wall Street Journal reported Tuesday.”

Bearish Nobias Credible Analysts Opinions:

Not everyone is bullish on LMT shares, however.  After the company’s full-year results were published back in January, Nobias 4-star rated analyst, Noah Poponak, downgraded LMT shares.

According to the Fly on the Wall: “Goldman Sachs analyst Noah Poponak downgraded Lockheed Martin to Sell from Neutral with a price target of $332, down from $388. The U.S. defense budget has grown significantly to an all-time high level, and with a large level of cumulative government debt, focus on slowing spending growth or reducing it outright could return in 2023, Poponak tells investors in a research note. The analyst says Lockheed often grows at similar rates as the budget while it also has a number of program specific headwinds in the near-to-medium term, including F-35, Blackhawk, OPIR, and tough compares in missile and missile defense. This creates an "idiosyncratic growth headwind" on top of the overall budget pressures that could materialize, contends Poponak.”

And although Lockheed beat the market’s expectations during Q1 and reaffirmed full-year guidance, the macro headwinds regarding national debt that Poponak brings up remain in place.

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 3 out of the 6 opinions expressed by the credible Wall Street analysts tracked by the Nobias algorithm who cover LMT shares imply that shares are likely to rise in value.

The average price target being applied to Lockheed Martin by these 6 credible individuals is $480.67. LMT shares closed the week trading for $482.55. Therefore, the current price is essentially in-line with the average price target, implying a neutral stance by credible analysts.

Disclosure: Nicholas Ward is long LMT. 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.

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Nobias 4/21/23 Nobias 4/21/23

Case Study: Netflix (NFLX) stock according to high performing analysts

During Q1 Netflix saw its top-line growth slow and its margins compress. The company continues to work on its password sharing crackdown, which has the potential to drive paying subscriber growth over the long-term. During Q1, Netflix’s paid membership hit a record his of 235.5 million.

Nobias Insights: 47% of recent articles published by credible authors focused on NFLX shares offer a “Bullish” bias. 3 out of the 5 credible Wall Street analysts who cover Netflix believe that shares are likely to rise in value. The average price target being applied to NFLX by these credible analysts is $348.00, which implies upside potential of approximately 6.1% relative to the stock’s current share price of $$327.98.

Bullish Take: Royston Yang, a Nobias 4-star rated author, said, “Paid memberships continued to rise to a new record of 232.5 million, up 4.9% year on year, adding another 1.75 million members to Netflix’s database,”

Bearish Take: Nobias 5-star rated author, David Trainer, stated, “As we noted in our report Netflix: A Meme Stock Original, NFLX has historically moved more on narrative and sentiment than fundamentals. We think it's time investors wake up to the company's fundamentals and value it accordingly.”

Key Points

Performance

Netflix shares fell by 2.47% this week, pushing their year-to-date gains down to 11.20%. This means that Netflix has outperformed the S&P 500 on the year; however, its performance is lagging behind the tech-heavy Nasdaq. The S&P 500 and the Nasdaq Composite Index are up by 8.09% and 16.23%, respectively, during 2023 thus far.

Event & Impact

Netflix posted its first quarter results this week, missing top-line expectations and beating bottom-line estimates. During Q1, NFLX’s revenue totaled $8.16 billion, missing Wall Street’s consensus estimate by $20 million. Netflix’s Q1 GAAP earnings per share came in at $2.88, beating the consensus estimate by $0.01/share.

Noteworthy News:

Nobias Insights

47% of recent articles published by credible authors focused on NFLX shares offer a “bullish” bias. Three out of five credible Wall Street analysts who cover Netflix believe that shares are likely to rise in value. The average price target being applied to NFLX by these credible analysts is $348.00, which implies upside potential of approximately 6.1% relative to the stock’s current share price of $327.98.

Bullish Take

 Royston Yang, a Nobias 4-star rated author, said, “Paid memberships continued to rise to a new record of 232.5 million, up 4.9% year on year, adding another 1.75 million members to Netflix’s database,”

Bearish Take

    Nobias 5-star rated author, David Trainer, stated, “As we noted in our report Netflix: A Meme Stock Original, NFLX has historically moved more on narrative and sentiment than fundamentals. We think it's time investors wake up to the company's fundamentals and value it accordingly.” 

Netflix reported its first quarter earnings this week and posted mixed results. The company beat analyst estimates on the top-line, driven by a record number of paying subscribers. However, Netflix saw its margins compress, which caused its earnings-per-share results to lag consensus expectations.

The stock pulled back 10% on the earnings report initially, but ended up rallying on future guidance provided by management.  NFLX shares ended the week down by 2.47% and after this slight dip shares offer mid-single digit upside potential relative to the average price target being applied to shares by the credible analysts that the Nobias algorithm tracks.

Bullish Nobias Credible Analysts Opinions:

Luke Lango, a Nobias 4-star rated author, published a post-earnings report on Netflix this week at InvestorPlace. Lango began his article discussing the broader market’s valuation and the potential implication of upcoming tech-stock earnings.  He wrote, “At 19X forward earnings today, then, the stock market is trading at a very fair valuation.”

“P/E multiples have some, but not much, room to expand if Treasury yields fall (they are inversely related),” he continued.  “Therefore,” Lango concluded, “the next leg higher in stocks will need to be driven by higher earnings – not P/E multiple expansion.”

With that in mind, he is bullish on tech stocks moving forward; not because they’ve been out of favor of the last year or so, but because of the secular growth potential that they offer investors from a fundamental metric perspective.

Transitioning to Netflix’s first quarter results, Lango wrote, “Netflix’s earnings themselves weren’t great.” “Now, the company beat most first-quarter metrics, including subscribers, revenues, profit margins, and earnings. But management offered guidance to lighter-than-expected revenues, margins, earnings, and subscriber growth in the second quarter,” he added.

Lango noted that NFLX shares fell roughly 10% right after these results were published; however, the stock fought back up to the flatline area once the market digested the reason for the poor guidance.  “In short,” Lango said, “Netflix planned to expand its password-sharing crackdown efforts toward the end of the first quarter of 2023. That included a rollout of those efforts in the all-important U.S. market.”

“Instead,” he continued, “Netflix pushed back that expansion to the second quarter, which means the financial benefits of those efforts will be reflected in the third-quarter numbers, not the second-quarter numbers.” He pointed to the Canadian market as a bullish sign for investors.  “Canada is a good analog for the U.S.,” he stated.

In Canada,” Lango wrote, “where these efforts have already launched, the paid membership base is now larger than it was prior to the crackdown. And revenue has accelerated to above pre-password-sharing levels.” And therefore, regarding this thesis for strong fundamental growth moving forward, Lango concluded, “Q3 Netflix earnings should reflect the big growth acceleration investors were expecting in Q2.”

Regarding secular growth potential, Royston Yang, a Nobias 4-star rated author, published an article at Yahoo Finance this week titled, “4 US Growth Stocks Whose Share Prices Can Continue Climbing” Looking at NFLX’s Q1 results, Yang wrote, “The company is off to a slow start for the first quarter of 2023 (1Q 2023), with revenue growing 3.7% year on year to US$8.2 billion.”

“Operating margin rebounded strongly to 21%, up from the previous quarter’s 7%, but was down from 1Q 2022’s operating margin of 25.7%,” he said. “Consequently,” Yang continued, “net profit fell by 18.3% year on year to US$1.3 billion.” However, he believes that these growth headwinds are short-term in nature and that Netflix’s growing subscriber base points towards more long-term growth.

“Paid memberships continued to rise to a new record of 232.5 million, up 4.9% year on year, adding another 1.75 million members to Netflix’s database,” Yang stated.  Yang believes that Netflix can continue to grow rapidly in international markets.  He concluded his bullish outlook by writing, “Netflix also quoted figures from Nielsen that showed it had a market share of 2% to 4% in markets such as Brazil, Mexico and Poland, suggesting that it has plenty of opportunity to capture more market share.”

Bearish Nobias Credible Analysts Opinions:

David Trainer, a Nobias 5-star rated author, expressed a clearly bearish sentiment in his post-earnings write up on Netflix that was published at Forbes and Seeking Alpha this week.  Trainer wrote, “As we noted in our report Netflix: A Meme Stock Original, NFLX has historically moved more on narrative and sentiment than fundamentals. We think it's time investors wake up to the company's fundamentals and value it accordingly.”

“In 1Q23, Netflix's revenue grew just 3.7% YoY, which is well below the long-term goal to "sustain double-digit revenue growth" announced during the company's 4Q22 earnings release,” he said.  Looking at bottom-line results, Trainer said, “Profitability is heading in the wrong direction as well. Netflix's reported operating margin was 21% in 1Q23, which is down from 25.1% in 1Q22.”

“Expect further margin deterioration going forward, given that management forecasts operating margins of 19% in 2Q23, which would be down from 19.8% in 2Q22,” he added.  Trainer also wrote, “Netflix has generated negative free cash flow in 10 out of the past 12 years, and a cumulative -$7.6 billion in FCF over the past five years alone.”

After analyzing the company’s low growth during Q1 and management’s tepid Q2 guidance, Trainer said, “Warren Buffett believes "streaming isn't a very good business", and with Netflix, we agree.”  Trainer called Netflix “just another streamer” and said, “ While Netflix was once the dominant player in the streaming industry, its recent actions prove that its first-mover advantages are gone.”

After analyzing Netflx’s current fundamentals and adding in his own growth estimates, Trainer concluded that Netflix shares are worth $175.00/share. That implies nearly 50% downside, which is why he remains bearish on this stock.

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, looking at recent reports published by the credible authors that Nobias tracks, Trainer is in the majority when it comes to his bearish outlook on NFLX. Only 47% of recent articles have expressed a “Bullish” bias towards Netflix shares.

However, the credible Wall Street analysts that the Nobias algorithm tracks lean the other way. Three out of five credible analysts that Nobias tracks who have expressed an opinion on NFLX shares believe that they’re likely to increase in value.

We haven’t seen any credible analysts update their price targets for Netflix since the company published its Q1 results; however, after NFLX’s Q4 results, all 5 of them increased their price targets for shares.

After Q4:

Michael Morris of Guggenheim raised his price target from $305 to $375.
Mark Mahaney of Evercore ISI raised his price target from $340 to $400.
Peter Supino of Wolfe Research raised his price target from $366 to $417.
William Power of Robert Baird raised his price target from $275 to $325.
Mathew Harrigan of Benchmark raised his price target from $225 to $250.

Morris is a 5-star rated Nobias analyst and the rest of these men receive 4-star Nobias ratings.

Currently, the average price target being applied to NFLX by the credible analyst community is $348.00. Today Netflix trades for $327.98. Therefore, the average credible analyst price target implies upside potential of approximately 6.1%.

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.

Explore Nobias Finance

Nobias 4/20/23 Nobias 4/20/23

Case Study: Tesla (TSLA) stock according to high performing analysts

Tesla’s margins fell during Q1 on the heels of recent price cuts. While it’s true that this company continues to produce margins that are much higher than its legacy automotive peers; analysts fear that rising competition across the electronic vehicle space is going to cause ongoing bottom-line struggles for Tesla.

Nobias Insights: 92% of recent articles published by credible authors focused on TSLA shares offer a “Bearish” bias. 2 out of the 4 credible Wall Street analysts who cover TSLA believe that shares are likely to rise in value. The average price target being applied to Tesla by these credible analysts is $175.50, which implies upside potential of approximately 6.3% relative to the stock’s current share price of $165.08.

Bullish Take: Kit Norton, a Nobias 4-star rated author, said, “Wood's Ark Invest also predicted Thursday night Tesla will reach a $2,000 per share price in 2027. Wood's firm sees Tesla's autonomous "robotaxi business" as a "key driver" for this estimated valuation.”

Bearish Take: Nobias 5-star rated author, David Trainer, stated, “Tesla faces an increasingly uphill battle to secure its competitive position, which makes its current valuation look even more unrealistic.”

Key Points

Performance

Tesla shares fell by 12.06% this week, pushing their year-to-date gains down to 52.71%. Despite recent weakness, TSLA has still outperformed the S&P 500 and the Nasdaq Composite Index, which are up by 8.09% and 16.23%, respectively, on a year-to-date basis.

Event & Impact

Tesla posted its first quarter results this week, missing top-line expectations and meeting bottom-line estimates. During Q1, TSLA’s revenue totaled $23.3 billion, missing Wall Street’s consensus estimate by $60 million. Tesla’s Q1 non-GAAP earnings-per-share came in at $0.85, which was in-line with consensus estimates.

Noteworthy News:

Nobias Insights

92% of recent articles published by credible authors focused on TSLA shares offer a “Bearish” bias. 2 out of the 4 credible Wall Street analysts who cover TSLA believe that shares are likely to rise in value. The average price target being applied to Tesla by these credible analysts is $175.50, which implies upside potential of approximately 6.3% relative to the stock’s current share price of $165.08.

Bullish Take

 Kit Norton, a Nobias 4-star rated author, said, “Wood's Ark Invest also predicted Thursday night Tesla will reach a $2,000 per share price in 2027. Wood's firm sees Tesla's autonomous "robotaxi business" as a "key driver" for this estimated valuation.” 

Bearish Take

    Nobias 5-star rated author, David Trainer, stated, “Tesla faces an increasingly uphill battle to secure its competitive position, which makes its current valuation look even more unrealistic.”

Tesla reported its first quarter earnings this week, missing Wall Street’s revenue expectations and posting non-GAAP earnings per share that were in line with consensus estimates.  This report caused TSLA shares to fall by 12.06% during the week. However, even after this double digit sell-off, TSLA shares are up by 52.71% on a year-to-date basis.

2023 has been a great year for TSLA shareholders; however, these strong gains come after a tumultuous 2022 and on a trailing 12-month basis, Tesla shares are down by 50.91%.  In other words, Tesla shares continue to trade with extremely high volatility, making it clear that this is a battleground stock.

Bearish Nobias Credible Analysts Opinions:

Shanthi Rexaline, a Nobias 4-star rated author, put a spotlight on the negative impact that Tesla’s recent sell-off has had on its founder and CEO, Elon Musk’s, net worth in a recent article that she published at Benzina.   She said, “Musk, the world's second richest person, saw his net worth drop sharply on Thursday. At the end of the day, his net worth stood at $164 billion, down $12.6 billion from Wednesday, according to Bloomberg's Billionaires Index.”

Regarding Musk’s resume, Rexaline added, “The billionaire now owns four companies, including his flagship electric vehicle business, Tesla. He is also at the helm of SpaceX, Boring Company, Neuralink and Twitter. Looking at Tesla’s most recent quarter, Rexaline stated, “The negative reaction reflected investor worries over a further contraction in margins after auto gross margin, excluding regulatory credits, fell below the 20% threshold in the first quarter.” “To make matters worse,” she added, “Musk brought up the issue of Tesla's ability to sell at zero profit and make up for it long-term with the high-margin autonomy software.”

The Value Portfolio, a Nobias 5-star rated author, touched upon Tesla’s bottom-line struggles and attached a “Sell” rating to TSLA shares in their post-earnings report.  The Value Portfolio mentioned ongoing price cuts and apparent demand issues for Tesla products, stating, “Tesla cut prices on its Model 3 and Model Y vehicles in the United States on Wednesday, the 6th time YTD. Soon after, the company announced its earnings, showing a collapse in margins across the board, a trend that we expect to get markedly worst going into the rest of the year.”

The author continued, “It's worth noting that the company's prices have dropped by towards early-2021 levels, but they are still above starting launch prices. That means the company has seen demand drop substantially versus supply to prior levels that no longer enable the COVID-19 induced price raising.

“Additionally,” The Value Portfolio said, “it's worth noting that the company's production has increased much faster than deliveries, with lease accounting increasing the fastest, and the company now having a record 15 days of vehicle inventory.” “In our view, that's another sign of decreasing demand, and a particularly worrying number for the company's margins,” they continued.

With regard to rising competition in the EV market, The Value Portfolio wrote, “In some markets, where the competition is more robust, Tesla is no longer the largest EV manufacturer. Consistent price cuts show its struggles.” They also broke down struggles in other areas of Tesla’s business.

The Value Portfolio wrote, “We will once again state the company's solar business is irrelevant. Residential solar is ~$2k / kWh, meaning the company's most recent quarter of deployments earned roughly $130 million in revenue. We see the business as a non-starter to the company's long-term earnings where it has a minuscule market share and no competitive advantages.”

The Value Portfolio called Tesla’s energy storage segment a “bright spot” during the quarter.  “However,” the continued, “the company's margins are roughly 10% and it costs roughly $475 / KWh / megapack. Even at 100 GWh, which is years away, that's $50 billion in revenue or $5 billion in profit, nowhere near enough to justify the company's valuation.”

Overall, The Value Portfolio said, “The company saw gross profit decline 17% YoY and GAAP gross margins declined by almost 10% YoY.” “The company's GAAP net income dropped 24% YoY to $10 billion annualized, giving the company a P/E ratio of almost 60x, in an expensive and competitive business with minimum growth,” they added.

In conclusion, The Value Portfolio stated, “We expect the company's profits to continue to drop, pushing up its lofty valuation of 60x P/E and 1% FCF yield. The company exists in a difficult industry and it's clear that the industry expects a downturn from recent white-hot markets. As a result, at this time we recommend selling / shorting the stock.”

In a recent article that he published a Forbes, Nobias 5-star rated author, David Trainer, also highlighted his bearish outlook for Tesla shares.   fter 1Q23 earnings and another missed growth goal, I continue to see Tesla as one of the most overvalued stocks in the market. Even in an optimistic future cash flow scenario, shares could trade as low as $28/share.

Tesla’s latest earnings definitively show that it is not immune to competitive challenges and will likely see lower profitability in the future. Any investor doing due diligence needs to be aware of the disconnect between Tesla’s fundamentals and the future growth implied by its stock price, which I will quantify below.

Tesla has grown deliveries at less than the 50% year-over-year (YoY) “goal” in four straight quarters as well as for the full year 2022. Tesla’s price cuts more likely point to its lack of pricing power in the increasingly competitive affordable EV market.

Going forward, I would expect Tesla’s ASP to fall as further price cuts are needed as incumbent manufacturers scale up EVs at much lower entry prices. Such price cuts will directly undermine Tesla’s ability to grow profits at anywhere close to the rate implied by its valuation.

Over the past five years, Tesla has burned a cumulative $4.2 billion in free cash flow (FCF) and generated negative FCF in all but one year (2019) of its existence as a public company. New entrants into the EV space, as well as ongoing competition from legacy automakers who want to ensure their long-term survival by taking market share in the electronic vehicle market. “Tesla faces an increasingly uphill battle to secure its competitive position, which makes its current valuation look even more unrealistic.”

Bullish Nobias Credible Analysts Opinions:

Not everyone came away from Tesla’s recent results with bearish sentiment, however.  In an article published at Investors.com, Kit Norton, a Nobias 4-star rated author, noted that famed technology investor and long-term Tesla bull, Cathie Wood of Ark Invest, made bullish statements about Tesla and added to her fund’s position in the stock this week.

Norton said, “Wood's Ark Investment Management spent an estimated more than $40 million on 256,000 TSLA shares Thursday, after Tesla sank nearly 10% following the EV company's first 2023 financial announcement.”

“Along with the TSLA share purchases, Wood's Ark Invest also predicted Thursday night Tesla will reach a $2,000 per share price in 2027. Wood's firm see Tesla's autonomous "robotaxi business" as a "key driver" for this estimated valuation,” he wrote.

Lastly, Norton added, “Cathie Wood's Ark sees Tesla sales in 2027 between 10.3 million and 20.7 million, with massive revenue from autonomous driving. Ark has long made sky-high predictions about Tesla sales and robotaxis that haven't come to pass.”

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 92% of recent articles written by credible authors which focused on Tesla stock expressed a “Bearish” sentiment towards shares. However, the credible Wall Street analyst community that the Nobias algorithm tracks is more positive on the stock. Two out of the four credible analysts that have offered opinions on Tesla shares believe that they’re likely to increase in value.

The average price target being applied to TSLA shares by these credible individuals is $175.50. After TSLA’s -12.06% performance this week, shares trade for $165.08. Therefore, that average analyst price target implies upside potential of approximately 6.3%.

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.

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Nobias 4/14/23 Nobias 4/14/23

Case Study: Boeing (BA) stock according to high performing analysts

In early April, reports broke that Boeing had plans to increase 737 Max production up to levels that were well above what investors saw prior to the COVID-19 pandemic and the 737 Max crashes in Asia and Africa. This bolstered the bullish sentiment surrounding shares. But Friday, shares sold off by 5.56% with near-term growth in jeopardy.

Nobias Insights: 48% of recent articles published by credible authors focused on Boeing shares offer a “neutral” bias. However, 3 out of the 4 credible Wall Street analysts who cover Boeing believe shares are likely to rise in value. The average price target being applied to BA shares by these credible analysts is $236.25, which implies upside potential of approximately 17.1% relative to the stock’s current share price of $201.71.

Bullish Take: Noah Poponak, a Nobias 4-star rated analyst, stated, “Goldman Sachs raised the firm's price target on Boeing to $270 from $261 and keeps a Conviction Buy rating on the shares after the company reported its total delivery numbers for Q1.”

Bearish Take: Nobias 4-star author, Rob Williams stated, “Boeing on Thursday declined 4.2% in after-hours trading after the plane maker warned that deliveries of its best-selling 737 Max jet might be delayed because of issues with a part supplied by Spirit AeroSystems.”

Key Points

Performance

Boeing shares fell by 4.83% this week. On a year-to-date basis, Boeing shares are now up by 3.23%. This compares poorly to the S&P 500 which is up by 8.20% on a year-to-date basis thus far.

Event & Impact

After a strong Q1, in terms of 737 Max deliveries and production guidance, this week Boeing announced that it was having supply chain issues which would disrupt its growth outlook.

Noteworthy News:

Nobias Insights

48% of recent articles published by credible authors focused on Boeing shares offer a “neutral” bias. However, three out of the four credible Wall Street analysts who cover Boeing believe shares are likely to rise in value. The average price target applied to BA shares by these credible analysts is $236.25, implying upside potential of 17.1% relative to the stock’s current share price of $201.71.

Bullish Take

 Noah Poponak, a Nobias 4-star rated analyst, stated, “Goldman Sachs raised the firm's price target on Boeing to $270 from $261 and keeps a Conviction Buy rating on the shares after the company reported its total delivery numbers for Q1.”

Bearish Take

    Nobias 4-star author, Rob Williams stated, “Boeing on Thursday declined 4.2% in after-hours trading after the plane maker warned that deliveries of its best-selling 737 Max jet might be delayed because of issues with a part supplied by Spirit AeroSystems.”

Boeing shares have been on a nice run over the last year, rising by double digits, as the stock continues to bounce back from its post-pandemic sell-off inspired by the 737 Max catastrophes in Asia and Africa.   However, this week Boeing experienced a setback.  Its shares fell by 4.83% this week, underperforming the S&P 500 which was up by 1.51% this week.

On a year-to-date basis, BA shares are now up by 3.23%. Once again, this means that they’ve underperformed the broader market.  The S&P 500 is up by 8.20% during 2023 thus far.  However, despite Boeing’s recent setback, the credible analyst community that Nobias tracks believes that the stock offers double digit upside potential.

Bearish Nobias Credible Analysts Opinions:

Nobias 4-star author, Rob Williams, covers the Boeing beat at Seeking Alpha and in several recent reports he has highlighted the company’s success throughout 2023 thus far.  In an April 11th report, Williams said, “Boeing in March delivered 64 planes, the most since December, as the aircraft maker seeks to ramp up production.” “The deliveries included seven 787 Dreamliners and 52 of its best-selling 737 Max narrowbody planes,” he added.

Overall, looking at the company’s Q1 results, Williams said, “First-quarter deliveries of commercial jets rose 37% from a year earlier to 130 in total, beating the Wall Street consensus estimate of 120.” Looking at Boeing’s press release regarding Q1 deliveries, we see that 113 of these 130 deliveries during Q1 were 737 models.

Boeing’s 787 planes accounted for 11 Q1 sales, 777 planes represented 4 sales, and the company delivered 1 of each of the 747 and 767 models.  Williams also recently noted that Boeing planned to increase production of its 737 model - a move that analysts predicted would increase the company’s cash flows.  He wrote, “Boeing rose as much as 1.1% after the report from Bloomberg News said the company's goal is to deliver 38 of its 737s a month starting in the middle of the year. The delivery goal is earlier than analysts expected.”’

A recent report published by Valerie Insinna at Reuters noted that Boeing’s production increases are likely to continue for years to come.  Insinna wrote, “Boeing Co intends to restore production of its bestselling 737 MAX jet to its 2019 rate of 52 a month by January 2025 as it seeks to fully recover from two deadly crashes and the COVID-19 pandemic that curtailed output, two people familiar with the matter said.”

Joe Toppe, a Nobias 4-star rated author, recently highlighted a bullish catalyst for Boeing: the acceptance of its 737 narrow body planes in the Chinese market.  He wrote, ”The Boeing Company announced Tuesday that 11 Chinese airlines have returned the company’s maligned 737 MAX to service as of April 10.”

The 737 Max planes were grounded in response to the deadly crashes in Indonesia and Ethiopia; however, in recent years, the plane has re-entered service for most airlines across the world.  But, Toppe notes, “China is the last major market to resume flying the MAX amid ongoing trade tensions with the United States.”

Due to the potential size of China’s aerospace market, regaining traction there has been a top priority for Boeing management.  Toppe addressed this, stating, “To support the MAX's return to commercial service in China, Boeing is offering enhanced 737 MAX training following the company’s upgrade to a training device at the Shanghai Flight Training Campus.” All of this positive 737 news helped to bolster Boeing’s share price throughout the start of 2023.

Bullish Nobias Credible Analysts Opinions:

From January 1st to April 13th, Boeing shares were beating the market, up by 9.3%. Several credible Wall Street analysts that are tracked by the Nobias algorithm came out with bullish notes on BA shares after the Q1 delivery figures were updated.

According to the Fly on the Wall, “Goldman Sachs raised the firm's price target on Boeing to $270 from $261 and keeps a Conviction Buy rating on the shares after the company reported its total delivery numbers for Q1. The official reported orders for March were solid, and demand remains strong, with the ongoing recovery in air traffic and desire for more fuel efficient aircraft driving continued strength in new order demand moving ahead, the analyst tells investors in a research note.” The Goldman analyst, Noah Poponak, is a Nobias 4-star rated analyst.

Furthermore, the Fly on the Wall also recently reported that, “Susquehanna analyst Charles Minervino noted Boeing announced March 2023 aircraft deliveries of 64, led by 53 737's. Aircraft deliveries came in 21 above our estimate and significantly improved from 34 in March 2022. With demand picking up broadly across multiple international regions and Chinese demand still to turn the corner, we think there is still a multi-year runway for Boeing to grow its order book as well as deliveries. Susquehanna maintans [sic] its Positive rating and $260 price target on Boeing shares.” Minervino is a Nobias 4-star rated analyst.  However, that changed late in the week when a report broke that cited supply chain issues for the 737 Max planes which would hurt Boeing’s production schedule moving forward.

In an April 13th report, Williams wrote, “Boeing on Thursday declined 4.2% in after-hours trading after the plane maker warned that deliveries of its best-selling 737 Max jet might be delayed because of issues with a part supplied by Spirit AeroSystems.”

Williams said: “This is not an immediate safety of flight issue and the in-service fleet can continue operating safely,” Boeing said in a statement. “However, the issue will likely affect a significant number of undelivered 737 MAX airplanes, both in production and in storage.”

Williams wrote that Spirit Aerosystems (SPR), the supplier of jet fuselages issued its own statement, which read: “Spirit is working to develop an inspection and repair for the affected fuselages. We continue to coordinate closely with our customer to resolve this matter and minimize impacts while maintaining our focus on safety.”

Williams also said that Boeing stated, “We expect lower near-term 737 Max deliveries while this required work is completed." This has dampened the company’s growth outlook, causing shares to fall by 5.56% on Friday.

Overall bias of Nobias Credible Analysts and Bloggers:

Still, 3 out of the 4 credible Wall Street analysts that the Nobias algorithm tracks who have offered an opinion on BA shares maintain their bullish outlook. Currently, the average price target being applied to Boeing by these credible individuals is $236.25.

Today Boeing trades for $201.71, meaning that the credible analyst average price target implies upside potential of approximately 17.1%.

Disclosure: Nicholas Ward has no BA 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.

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Nobias 4/13/23 Nobias 4/13/23

Case Study: Amazon (AMZN) stock according to high performing analysts

Jassy’s focus on profits provided peace of mind to investors who are worried about poor macroeconomic conditions. Jassy’s 2022 compensation was also highlighted, which came in much lower than previous years, and much lower than other big-tech CEOs, which highlighted AMZN’s determination to cut costs.

Nobias Insights: 52% of recent articles published by credible authors focused on AMZN shares offer a “neutral” bias. However, 6 out of the 6 credible Wall Street analysts who cover Amazon believe shares are likely to rise in value. The average price target being applied to AMZN shares by these credible analysts is $148.17, which implies upside potential of approximately 44.5% relative to the stock’s current share price of $102.54.

Bullish Take: Nobias 4-star rated analyst, Mark Mahaney, stated, “The Amazon long thesis is "very much intact," with Amazon having a leading position in online retail, cloud computing and online advertising”.

Bearish Take: Harsh Chauhan, a Nobias 4-star rated author, stated, “Amazon had a forgettable 2022 thanks to a tepid e-commerce market and a slowdown in the cloud computing business, which eventually led the tech giant to slash jobs from lucrative areas of its business.”

Key Points

Performance

Amazon shares rose by 2.65% this week. On a year-to-date basis, Amazon shares are now up by 19.45%. This compares poorly to the S&P 500 which is up by 8.20% on a year-to-date basis thus far.

Event & Impact

Amazon’s CEO, Andy Jassy, published a letter to shareholders this week which focused on cost cutting, a return to strong profitability, and highlighted new growth plans in the artificial intelligence space.

Noteworthy News:

Nobias Insights

52% of recent articles published by credible authors focused on AMZN shares offer a “neutral” bias. However, six out of the six credible Wall Street analysts who cover Amazon believe shares are likely to rise in value. The average price target applied to AMZN shares by credible analysts is $148.17, implying upside potential of approximately 44.5% relative to the current share price of $102.54.

Bullish Take

 Nobias 4-star rated analyst, Mark Mahaney, stated, “The Amazon long thesis is "very much intact," with Amazon having a leading position in online retail, cloud computing and online advertising”. 

Bearish Take

    Harsh Chauhan, a Nobias 4-star rated author, stated, “Amazon had a forgettable 2022 thanks to a tepid e-commerce market and a slowdown in the cloud computing business, which eventually led the tech giant to slash jobs from lucrative areas of its business.”

For years, Amazon.com (AMZN) has been synonymous with successful big-tech growth.  AMZN shares have risen by 687.95% during the last decade.  This beats the broader performance posted by the S&P 500 and the tech-heavy Nasdaq Composite Index by a wide margin. In comparison, over the last 10-year period, these two indexes are up by 166.13% and 279.01%, respectively.  And yet, the trailing 12-month period has been a tough one for Amazon.

Shares are down by 32.42% during the last year. Amazon’s growth slowed during 2022 and the company struggled to generate profits.  However, the company’s CEO, Andy Jassy, published a letter to shareholders this week which addressed his plans to right the ship, which largely centered on cost cutting and profit generation.

Bearish Nobias Credible Analysts Opinions:

Nobias 4-star rated author, AJ Fabino, published an article at Benzinga this week which highlighted Jassy’s major talking points in his letter to shareholders.  Fabino wrote, “Amazon.com, Inc AMZN CEO Andy Jassy addressed the company's short-term headwinds, continued investment in growth areas, cost control measures and generative AI in his annual shareholder letter Thursday.”

Fabino stated, “Jassy reaffirmed Amazon's commitment to investing in growth areas including AI, chip development and advertising, despite the cost-cutting measures — including layoffs — the company has undertaken.” “He confirmed that Amazon would shutter businesses lacking long-term potential, while allocating resources to promising enterprises,” Fabino continued.

Jassy focused on Amazon’s logistics segment, which continues to be a costly part of its retail business (as it turns out, it’s difficult to make money offering free 2-day shipping).  In an effort to cut costs, Fabino said, “The company is transitioning from a national fulfillment network in the U.S. to a regional model to address rising costs and extended delivery times.”

Also, like so many other tech companies these days, Fabino noted that Jassy was bullish on artificial intelligence. Jassy made it clear that Amazon was competing in the AI market and it appears that shareholders were pleased.

Fabino said, “Jassy emphasized the transformative potential of large language models (LLMs) and generative AI in improving customer experiences across various applications.” “One of Amazon's LLMs, Titan, is already generating text for blog posts, emails and delivering search results on the company's website,” he added.

Overall, AMZN shares rose 2.65% this week, largely on the back of Jassy’s profit-centric letter.  Huileng Tan, a Nobias 4-star rated author, also published an article this week that focused on Jassy’s letter to shareholders and made it clear that Jassy was putting his money where his mouth is, so to speak, when it comes to cost cutting.

Tan wrote, “Jassy was paid $1.3 million in 2022, including a $317,500 base salary plus another $981,000 in 401(k) plan contributions and security costs, according to the company's annual-proxy statement filed on Thursday.” She continued, “It's a massive drop from the $212.7 million he received in 2021 when he got promoted to CEO. Jassy's total compensation was $35.8 million in 2020.”

“In comparison,” Tan added, “Apple CEO Tim Cook received $84 million in total compensation in 2022, including bonuses and a $3 million base salary — although this may fall to $49 million in 2023. Microsoft CEO Satya Nadella was paid a total compensation of $55 million in 2022.”

Tan noted that in his letter to shareholders, Jassy mentioned that 2022 was "one of the harder macroeconomic years in recent memory."“Like many other tech companies, Amazon has been dealing with a downturn in the industry after business boomed during the pandemic. However, earnings are weakening amid fears of an impending recession,” she said.

It appears that lower CEO compensation resonated well with shareholders who understand that Amazon needs to cut costs and focus on generating profits during times like this.  Harsh Chauhan, a Nobias 4-star rated author, mentioned Amazon is his bullish article titled, “2 Bargain Stocks on a Hot Rally to Buy Hand Over Fist Before They Soar Higher” that was published at the Motley Fool this week.

Chauhan said, “Amazon had a forgettable 2022 thanks to a tepid e-commerce market and a slowdown in the cloud computing business, which eventually led the tech giant to slash jobs from lucrative areas of its business.” He mentioned, “Revenue increased just 9% last year to $514 billion.” The company posted an adjusted loss of $0.27 per share as compared to a profit of $3.24 per share in the prior year,” he added.

“However,” Chauhan wrote, “2023 is expected to be a turnaround year for Amazon as far as its bottom line is concerned.” “The company's top-line growth is also expected to gather momentum, growing in the high single digits in 2023 and then in the double-digits from next year,” he said.

“For instance,” Chauhan added, “Amazon should benefit from easier comps in the e-commerce business in 2023.” “Meanwhile,” he continued, “global cloud infrastructure spending is anticipated to jump an impressive 23% this year, according to Canalys.”

Looking at the strength of Amazon’s cloud business, Chauhan said, “Amazon's 32% share of this market makes it the leader in the cloud infrastructure services space and puts the company on track to make the most of the solid growth opportunity available there.”

Furthermore, he noted that the company’s ongoing investments in the AI space have the potential to generate strong long-term growth for the company. “Mordor Intelligence estimates that the cloud AI market could grow at 22% a year through 2027, and Amazon's share of this market means that it could become a big beneficiary of this terrific growth,” Chauhan noted.  Overall, he highlighted the stock’s relatively cheap valuation as a reason to buy shares on the recent dip.

Chauhan concluded his report by stating, “The stock is trading at just 2 times sales, a discount to the S&P 500's price-to-sales ratio of 2.4. So, investors are getting a bargain on this tech stock right now, especially considering the potential acceleration in its top and bottom lines.”

Bullish Nobias Credible Analysts Opinions:

Looking at the credible analysts coverage of Amazon, we see that it’s not just the credible authors who are bullish on AMZN shares. The most recent update that a Nobias credible analyst has provided on AMZN called for significant upside.

According to The Fly on the Wall, “Evercore ISI analyst Mark Mahaney lowered the firm's price target on Amazon.com to $155 from $160 based on a more conservative approach to the AWS segment and keeps an Outperform rating on the shares. The Amazon long thesis is "very much intact," with Amazon having a leading position in online retail, cloud computing and online advertising, but the firm's recent channel checks and forensic financial analysis suggest that AWS growth and margin stabilization "are not likely first half developments," the analyst tells investors.” Mahaney is a Nobias 4-star rated analyst.

According to The Fly on the Wall, “Evercore ISI analyst Mark Mahaney lowered the firm's price target on Amazon.com to $155 from $160 based on a more conservative approach to the AWS segment and keeps an Outperform rating on the shares. The Amazon long thesis is "very much intact," with Amazon having a leading position in online retail, cloud computing and online advertising, but the firm's recent channel checks and forensic financial analysis suggest that AWS growth and margin stabilization "are not likely first half developments," the analyst tells investors.” Mahaney is a Nobias 4-star rated analyst.

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 52% of recent articles published by credible authors on Amazon have predicted that the stock will rise in value. This relatively neutral outlook differs significantly from the credible analyst outlook.

Currently 6 out of 6 credible Wall Street analysts that Nobias tracks who have offered an opinion on AMZN shares believe that they’re likely to rise in value.

Currently the average price target being applied to AMZN by these credible individuals is $148.17. Amazon shares currently trade for $102.54. Therefore, that credible analyst average price target implies upside potential of approximately 44.5%.

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.

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Nobias 4/12/23 Nobias 4/12/23

Case Study: JPMorgan (JPM) stock according to high performing analysts

JPMorgan appears to have performed well throughout the banking crisis period. The company’s CEO, Jamie Dimon, recently said that the crisis isn’t over and will have long-term ramifications for banks; however, the company continues to show financial strength as its deposits and net interest income continue to climb.

Nobias Insights: 59% of recent articles published by credible authors focused on JPM shares offer a “Bullish” bias. 4 out of the 6 credible Wall Street analysts who cover JPM believe that shares are likely to rise in value. The average price target being applied to JPMorgan by these credible analysts is $148.00, which implies upside potential of approximately 6.7% relative to the stock’s current share price of $138.73.

Bullish Take: Harrison Miller, a Nobias 4-star rated author, said, “Deposits were slightly higher at the end of the quarter compared to the end of 2022, up 2% to $2.37 trillion, as depositors poured into the well-capitalized giant,”

Bearish Take: Rob Starks Jr., a Nobias 4-star rated author,stated, “Although JPMorgan Chase is by far the largest bank in the U.S., even it wasn't immune from the fallout that resulted from last month's collapses of Silicon Valley Bank and Signature Bank, the second- and third-largest bank failures in U.S. history, respectively.”

Key Points

Performance

JPMorgan shares rose by 9.35% this week, pushing their year-to-date gains up to 2.67%. Despite this week’s strong gains, JPM has underperformed the S&P 500, which is up 8.20% on a year-to-date basis thus far.

Event & Impact

JPM posted its first quarter results this week, beating Wall Street estimates on both the top and bottom lines. During Q1, JPM’s revenue totaled $38.3 billion, beating Wall Street’s consensus estimate by $2.53 billion. JPMorgan’s Q1 GAAP earnings-per-share came in at $4.10, beating Wall Street’s consensus estimate by $0.69/share.

Noteworthy News:

Nobias Insights

59% of recent articles published by credible authors focused on JPM shares offer a “bullish” bias. Four out of the six credible Wall Street analysts who cover JPM believe that shares are likely to rise in value. The average price target applied to JPMorgan is $148.00, which implies upside potential of approximately 6.7% relative to the stock’s current share price of $138.73.

Bullish Take

 Harrison Miller, a Nobias 4-star rated author, said, “Deposits were slightly higher at the end of the quarter compared to the end of 2022, up 2% to $2.37 trillion, as depositors poured into the well-capitalized giant,

Bearish Take

    Rob Starks Jr., a Nobias 4-star rated author, stated, “Although JPMorgan Chase is by far the largest bank in the U.S., even it wasn't immune from the fallout that resulted from last month's collapses of Silicon Valley Bank and Signature Bank, the second- and third-largest bank failures in U.S. history, respectively.”

Every earnings season is kicked off with the big banks reporting their results. This week we saw a slew of big-bank earnings, including the largest: JPMorgan. This earnings cycle is especially intriguing for investors because it's the first since the banking crisis that played out in recent months.

Bearish Nobias Credible Analysts Opinions:

Jon Hopkins, a Nobias 4-star rated author, recently penned an article which put a spotlight on JPMorgan CEO, Jamie Dimon’s thoughts about the banking crisis.  Regarding the crisis, Hopkins wrote, “The recent banking issues in the US began with the collapse of Silicon Valley Bank (SVB), which was closed by regulators on March 10 as depositors pulled tens of billions of dollars from the bank. The smaller Signature Bank was closed two days later. And in Europe, Swiss regulators brokered a purchase of Credit Suisse by UBS.”

“JPMorgan and other large banks stepped in to make $30 billion of deposits at First Republic, another regional lender that investors feared could become the next SVB,” he added.  Looking for possible contagion, Hopkins noted, “The stress on the regional banks has led investors and analysts to suggest that the “too big to fail” institutions would be a beneficiary of the crisis, but Dimon said JPMorgan wants to strengthen the smaller banks for the benefit of the whole financial system.”

Hopkins quoted Dimon, who recently published a letter to shareholders, that said, "Any crisis that damages Americans' trust in their banks damages all banks - a fact that was known even before this crisis. While it is true that this bank crisis 'benefited' larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd.”

“As I write this letter, the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” Dimon said. This rhetoric established a somber mood in the market surrounding JPM shares. Dimon made these comments in early April and at the time, the stock was down approximately 5.5% on a year-to-date basis. Yet, Rob Starks Jr., a Nobias 4-star rated author, recently highlighted JPMorgan’s performance during the recent banking crisis in a Motley Fool article and called the stock a compelling long-term opportunity after its recent weakness.

He wrote, “Although JPMorgan Chase is by far the largest bank in the U.S., even it wasn't immune from the fallout that resulted from last month's collapses of Silicon Valley Bank and Signature Bank, the second- and third-largest bank failures in U.S. history, respectively.” Starks Jr. continued, “The company began March trading at $142.10 but ended it down 9% to $129.30.”

With that sell-off in mind, he asks, is the bank too big to fail?  Starks Jr. highlighted the U.S. government’s regulation which is meant to prohibit large financial institutions from failing.  He said, “The U.S. government enacted the Dodd-Frank Act in 2010 to prevent banks from taking the same type of ill-considered risks that led to the Great Recession and required taxpayer-funded bailouts. Under the original Dodd-Frank rules, financial institutions holding $50 billion or more in assets were deemed "systemically important."’

“Unfortunately,” he added, “the Trump administration rolled back parts of Dodd-Frank, and boosted the SIFI demarcation line from $50 billion to $250 billion.”Starks Jr. noted that, “Signature Bank had assets of $110.4 billion on the books when it failed, while SVB Financial had total assets of $211.8 billion when it failed”.   “In comparison,” he stated, “JPMorgan holds $3.66 trillion in assets -- well above the new SIFI threshold.”

With this in mind, he says that a bank like JPMorgan is under heightened regulatory scrutiny and therefore, less likely to face catastrophic issues. With regulation in mind, he notes that JPMorgan was forced to stop stock buybacks in late 2022 because of financial safety ratios that needed improvement.

“The good news, however, is that it only took a short period for the bank to ramp up its capital reserves to its target Common Equity Tier 1 capital (CET1) of 13% (a level above the Federal Reserve's requirement of 12%),” he added.  With all of this in mind, Starks Jr. concluded, “As the fifth-largest bank in the world by total assets, it is literally too big to fail, even though no one in the federal government wants to admit that fact.”

“If JPMorgan came close to collapsing, Washington would likely bail it out rather than risk the damage to the global financial system that would result from its collapse,” he continued.  “As a result,” Starks Jr. said, “while its stock price might fall off a cliff during an existential crisis, JPMorgan shareholders would be unlikely to take a total loss, unlike SVB and Signature's shareholders.”  Overall, he said, “If you are a buy-and-hold value investor looking for a solid bank stock that offers an attractive dividend, now would be an excellent time to buy this safe-haven stock.”

Bullish Nobias Credible Analysts Opinions:

This week, JPM shares rose by 9.35%, largely due to Friday’s 7.55% rally in response to the company’s Q1 earnings report.  Harrison Miller, a Nobias 4-star rated author, covered JPMorgan’s first quarter results in an article that he published this week at Investors.com. In his introduction, Miller stated, “Banks are expected to report strong net interest income and solid lending.” “But,” he asked, “what will they forecast for these key metrics going forward, in the wake of recent turmoil?”

As it turns out, JPMorgan had bullish things to say about its operations.  Regarding the company’s earnings results, Miller said, “JPMorgan earnings bolted 55% to $4.10 per share on a 25% leap in revenue to a quarterly record $38.35 billion.”

These numbers soundly beat Wall Street’s expectations for the quarter.  Miller wrote, “For Friday's report, analysts expected earnings to jump 29% to $3.41 per share on 17.7% revenue growth to $36.13 billion.”Not only did JPMorgan post strong top and bottom-line growth, but the company showed that it remains strong, from a financial perspective, in the aftermath of the recent regional bank crisis.

Deposits were slightly higher at the end of the quarter compared to the end of 2022, up 2% to $2.37 trillion, as depositors poured into the well-capitalized giant,” Miller said.  Higher deposits combined with rising interest rates helped the bank to generate such strong profits.

According to Miller, JPMorgan’s “Net interest income spiked 49% to $20.9 billion, and it raised its net interest income forecast to $81 billion for the full year.”

Nobias hasn’t seen any of the credible Wall Street analysts that it tracks update their opinions on JPM shares since its Q1 report was published on Friday morning; however, coming into the report 4 out of the 6 credible analysts who follow the stock believed that shares were likely to rise in value.

Overall bias of Nobias Credible Analysts and Bloggers:

The most recent credible analyst upgrade was posted on March 13, 2023 by Mike Mayo, a Nobias 5-star rated analyst from Wells Fargo, who upgraded the stock from “Equal Weight” to “Overweight”, raising his price target from $148.00 to $155.00.

Currently, the average price target being applied to JPM shares is $148.00. After the stock’s 9%+ rally this week, JPM shares trade for $138.73. Therefore, the credible analyst community believes that there is more room for shares to run; their $148.00 price target implies upside potential of approximately 6.7%. The credible author community is also bullish on JPM shares; 59% of recent articles published by credible authors have expressed a “Bullish” bias towards JPMorgan.

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.

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Nobias 4/7/23 Nobias 4/7/23

Case Study: Charles Scwhab (SCHW) stock according to high performing analysts

Charles Schwab carries a significant amount of unrealized losses on its balance sheet, which has damaged the sentiment surrounding its shares. Investors worry that SCHW shares will follow a similar path to the two regional banks that have failed recently; however, this week several credible authors/analysts pointed out that SCHW’s liquidity is much higher and the comparison to regional banks is not a fair apples-to-apples situation.

Nobias Insights: 63% of recent articles published by credible authors focused on SCHW shares offer a “Bullish” bias. 1 out of the 1 credible Wall Street analysts who cover Schwab believe shares are likely to fall in value. The price target being applied to SCHW shares by this credible analyst is $65.00, which implies upside potential of approximately 31.7% relative to the stock’s current share price of $49.35

Bullish Take: Dividend Sensei, a Nobias 4-star rated author, stated, “Anyone who tells you, Schwab, is the next Lehman is either ignorant of the facts, a fool (who knows the facts but ignores them), or trying to sell you something (possibly all three).”

Bearish Take: Growth at a Good Price, a Nobias 4-star rated author, stated, “Recently, OPEC decided to cut output, which caused oil futures to spike 5% in a single day. This naturally got investors worried about more rate hikes, which in Schwab's case would be troubling, as it is sitting on a massive amount of unrealized securities losses.”

Key Points

Performance

Charles Scwhab shares fell by 7.36% this week. This pushed their year-to-date performance down to -39.77%. This compares poorly to the S&P 500 which is up by 7.34% on a year-to-date basis thus far.

Event & Impact

Higher interest rates and a slowing economy continue to damage financial stocks. The unprecedented pace of rising rates has resulted in billions of unrealized losses on the balance sheets of financial institutions like Charles Schwab. Furthermore, investors moving money from bank accounts into money market funds (a process referred to as “money sorting”) is hurting banks like SCHW’s ability to produce high margins and profits.

Noteworthy News:

Nobias Insights

63% of recent articles published by credible authors focused on SCHW shares offer a “Bullish” bias. 1 out of the 1 credible Wall Street analysts who cover Schwab believe shares are likely to fall in value. The price target being applied to SCHW shares by this credible analyst is $65.00, which implies upside potential of approximately 31.7% relative to the stock’s current share price of $49.35.

Bullish Take

 Dividend Sensei, a Nobias 4-star rated author, stated, “Anyone who tells you, Schwab, is the next Lehman is either ignorant of the facts, a fool (who knows the facts but ignores them), or trying to sell you something (possibly all three).”

Bearish Take

    Growth at a Good Price, a Nobias 4-star rated author, stated, “Recently, OPEC decided to cut output, which caused oil futures to spike 5% in a single day. This naturally got investors worried about more rate hikes, which in Schwab's case would be troubling, as it is sitting on a massive amount of unrealized securities losses.”

Regional bank failures have spooked investors in 2023. The S&P 500 is up 7.3% on the year; however, the financial sector is the biggest laggard, down by 6.66% during this same period of time. And within the sector there are stocks that have plummeted much further, largely due to fears of higher interest rates, unrealized losses on their balance sheets, the threat of more bank runs, and ultimately, fear of further failures.

One such stock is Charles Schwab (SCHW) which is down by 39.8% thus far during 2023. For years, this was a top performer for investors. Even with the stock’s -40% returns during recent months in mind, over the last decade, SCHW shares have provided investors with price returns of 185.6%. And, looking at recent reports published by credible authors and analysts, it appears that this long-term bullish sentiment remains intact.

Bearish Nobias Credible Analysts Opinions:

Growth at a Good Price, a Nobias 4-star rated author, put a spotlight on the stock’s most recent downward move in a Seeking Alpha article, stating, “Recently, OPEC decided to cut output, which caused oil futures to spike 5% in a single day. This naturally got investors worried about more rate hikes, which in Schwab's case would be troubling, as it is sitting on a massive amount of unrealized securities losses.”

Regarding Schwab’s business operations, the author said, “It reports $12.3 billion in losses in its financial statements, an amount that gets counted as equity. It also discloses $15 billion in losses on held to maturity securities; those aren't considered part of equity, but do affect liquidity. Further, Schwab has been reclassifying securities from available for sale ("AFS") to held to maturity ("HFS") in recent quarters, a behavior typical of the banks that failed in March.”

“Basically,” they continued, “Schwab actually has $27.3 billion in losses rather than the claimed $12.3 billion. The AFS securities are already reported at fair value, but the HTM losses aren't. If those securities were reported at fair value they'd reduce Schwab's $36 billion in shareholder's equity to $21 billion.”

“These figures all look pretty alarming,” Growth at a Good Price stated.  “However,” they added, “the way the "unrealized losses" discourse played out in the media after Silicon Valley Bank collapsed was a little misleading.”

The author went on to describe the mechanics of a bank run, writing, “Basically, when a bank run happens, you have to start selling securities, because your cash position gets whittled down to $0. Once you start selling, unrealized losses transform into realized losses. If your unrealized loss is big enough, it can result in you failing to pay off your depositors.”

Looking at the chances of this happening to Schwab, the author wrote, “Schwab has $346.1 billion in very liquid assets if everything is adjusted down to fair value. Against this, we have $515.1 billion in liabilities. So, Schwab's liquidity covers 67% of all liabilities. It also covers a whopping 94.6% of deposits, which is an unheard of figure for more conventional banks.”

With this in mind, the author concluded, “The bottom line about Charles Schwab is that it's a fine company that has great liquidity. It's a buy at some price, it's just not clear that the current price is there just yet. Most likely, Schwab's excellent 2022 earnings growth won't continue into 2023.” “For me it's just a hold,” Growth at a Good Price said.

Bullish Nobias Credible Analysts Opinions:

Dividend Sensei, a Nobias 4-star rated author, offered a more bullish opinion on SCHW shares in a recent article,, calling it a stock that could “triple in 3 years”.  Regarding the rumors of Schwab’s failure and the company being grouped up with smaller regional banks that have struggled as of late, Dividend Sensei wrote, “Anyone who tells you, Schwab, is the next Lehman is either ignorant of the facts, a fool (who knows the facts but ignores them), or trying to sell you something (possibly all three).”They continued, “Schwab's collapse isn't because Wall Street is worried about a run on Schwab. It has $71 billion in cash and $152 billion in liquidity vs. $392 billion in deposits.”

Like Growth at a Good Price, Dividend Sensei broke down Scwhab’s balance sheet and came to the conclusion that the company’s liquidity position is strong.  Looking at Schwab’s financial metrics, the author focused on SCHW’s liquidity, stating that the company has:

$71 billion in cash
$16 billion short-term credit revolver
$65 billion long-term credit revolver
$200 billion in bonds it can borrow against from the Fed
$352 billion in total liquidity

Furthermore, they said, “So if 90% of people with a Schwab bank account wanted their money today, Schwab could give it to them. Schwab is NOT going to go bust like SVB or Signature. [referring to the two regional banks that have failed in recent weeks]”

Driving home their point, Dividend Sensei said: “Rating agencies estimate the chance of Schwab failing in the next 30 years at about 1 in 152. For context, Goldman [Sachs] estimates that the chance of nuclear war with Russia is about 2.5% or 1 in 40.

In other words, the chance of Schwab failing is about 4X smaller than a nuclear apocalypse.”

But, they did mention a specific headwind that the company faces. Dividend Sensei wrote, “Rather the trouble for Schwab is what management calls "money sorting."’They continued, “Money sorting just means that Schwab customers are moving money from checking accounts or other low-interest-rate accounts to higher-yielding savings, money market, or CD accounts.”

“Schwab generates about 67% of its income from net interest income on deposits, so cash sorting is a real potential headwind for it,” Dividend Sensei said. “Schwab faces a new headwind of higher costs of capital in the future, at least compared to the last 15 years,” they added. But, overall, the author was clear that the stock’s valuation looks attractive. They wrote, “Those higher deposit costs are expected to be no worse than what it faced from 2000 to 2008 when it was growing at 28% and trading at an average PE of 28.”

“Today,” Dividend Sensei said, “SCHW trades at 12.5X, a 50% discount.” And with that discount in mind, they believe shares are a bargain. “There is no question that Schwab will survive and grow in the future, the only question is how fast,” the author stated.

“But,” they concluded, “unless you think that Schwab will grow slower than 2% in the future, buying it today is likely a prudent decision.”

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 63% of recent articles written by the credible authors that Nobias tracks have expressed a “Bullish” bias towards SCHW shares. We’re seeing this same bullish lean by the credible analysts that we track when it comes to Schwab.

According to the Fly of the Wall, “Keefe Bruyette analyst Kyle Voigt lowered the firm's price target on Charles Schwab to $65 from $89 and keeps an outperform rating on the shares. The analyst acknowledges the "real risks" to Schwab's near-term earnings outlook and visibility, but thinks the selloff is now overdone. Consensus estimates need to decline significantly, but the stock "has now become compelling at current levels," the analyst tells investors in a research note. ” Voigt is a Nobias 4-star rated Wall Street analyst.

Voigt is the only credible analyst that Nobias tracks who covers SCHW shares, and despite his recent downgrade, his $65.00 share price target still represents significant upside to the stock’s current share price of $49.35.  If Voigt’s valuation is accurate, SCHW shares offer investors an upside potential of approximately 31.7%.

Disclosure: As of 4/8/2023, Nicholas Ward has no SCHW 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.

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Nobias 4/7/23 Nobias 4/7/23

Case Study: World Wrestling Entertainment (WWE) stock according to high performing analysts

Historically, WWE has been one of the biggest winners in the media/entertainment industry posting nearly 1000% gains during the last decade. However, several of its major shows are facing media rights negotiations in 2024 and therefore, its management team was looking to sell, in an attempt to broaden its scope, and potentially enhance its value before entering into those negotiations with major media distributors.

Nobias Insights: 56% of recent articles published by credible authors focused on WWE shares offer a “bullish” bias. One of the three credible Wall Street analysts who cover World Wrestling Entertainment believes shares are likely to fall in value. The average price target applied to WWE shares by credible analysts is $69.00, implying a downside potential of 31% relative to the stock’s current share price $100.38. .

Bullish Take: Andrew Kessel, a Nobias 5-star rated author, “The company claims there are synergies in the range of $50 million to $100 million, primarily through back-office consolidation.”

Bearish Take: Margaret Moran, a Nobias 4-star rated author, stated, “We will have to wait and see what changes the combined company plans to make before it is safe to speculate on how said changes could drive growth.”

Key Points

Performance

World Wrestling Entertainment shares rose by 19.32% this week, pushing their year-to-date price gains up to 46.37%. This compares favorably to the S&P 500 which is up by 7.34% on a year-to-date basis thus far.

Event & Impact

World Wrestling Entertainment and UFC partent Endeavor agreed to a $21.4 billion merger this week, creating a potential powerhouse in the combat sports industry.

Noteworthy News:

Nobias Insights

56% of recent articles published by credible authors focused on WWE shares offer a “bullish” bias. One of the three credible Wall Street analysts who cover World Wrestling Entertainment believes shares are likely to fall in value. The average price target applied to WWE shares by credible analysts is $69.00, implying a downside potential of 31% relative to the stock’s current share price $100.38.

Bullish Take

 Andrew Kessel, a Nobias 5-star rated author, “The company claims there are synergies in the range of $50 million to $100 million, primarily through back-office consolidation.”

Bearish Take

    Margaret Moran, a Nobias 4-star rated author, stated, “We will have to wait and see what changes the combined company plans to make before it is safe to speculate on how said changes could drive growth.” 

A major merger occurred in the media/entertainment industry this week.  On Monday, April 3rd, 2023, a press release announced that World Wrestling Entertainment (WWE) and Endeavor Group, which owns the UFC mixed martial arts promotional company, were coming together as one.

These are two leaders in the combat sports industry and both management teams highlighted their belief in significant synergies moving forward.  WWE, in particular, has been a big winner for its shareholders, historically.

During the last 5 and 10-year periods, WWE shares have produced price returns of 171.08% and 999.34%, respectively.  Both of these figures beat the S&P 500, which was up by 57.09% and 158.36% during the same periods, by a wide margin.  Yet, WWE had media rights expirations coming up on the horizon, inspiring its management team to sell.

Bearish Nobias Credible Analysts Opinions:

Harrison Miller, a Nobias 4-star rated author broke down the deal in a report that he published at Investors.com this week.  Miller wrote, “Ultimate Fighter Championship parent Endeavor Group announced it will buy a 51% majority stake in WWE early Monday.” He continued, “The deal creates a "live sports and entertainment powerhouse" valued at $21.4 billion, Endeavor said in its announcement.”

Looking at the structure of the deal, Miller said, “WWE shareholders will roll all existing equity into a new entity that will serve as the parent of UFC and WWE. The new company will be named at a later date and intends to list on the New York Stock Exchange under the ticker "TKO" after the deal is finalized. UFC and WWE will each contribute cash to the new company so it holds approximately $150 million.” He also highlighted the fact that there are a lot of big names in the entertainment industry involved in this deal from a leadership perspective.

Here’s how the post-merger leadership ladder will look like, according to Miller, “Endeavor CEO Ariel Emanuel will continue in his role and lead the new company. WWE Executive Chairman Vince McMahon will serve as executive chairman of the board, which will consist of six Endeavor appointees and five WWE nominees. Mark Shapiro will serve as president and COO of Endeavor and the new company. And Dana White and Nick Khan will continue in their roles as CEO of UFC and WWE, respectively.”

Margaret Moran, a Nobias 4-star rated author, also covered the deal in an article at Guru Focus this week. She wrote, “World Wrestling Entertainment Inc. (WWE, Financial) has been seeking a buyer for months as executive chairman and majority shareholder Vince McMahon looks to get the best deal before the company’s media rights for "Raw" and "Smackdown" expire in October 2024.” She notes that McMahon was enthusiastic about the deal; however, investors were not.

“Even though the deal values WWE at a significant premium to its share price as of the time of the announcement, shares took a hit of 4% on Monday, while Endeavor dove over 6%,” she said.  It’s important to note; however, that throughout the rest of the week, WWE shares did rally as the market became more bullish on this deal’s prospects.

However, Moran’s article was published on Monday, before this rally began and one issue, she points out, is the valuations involved.  Moran said, “The merger will create a sports and entertainment powerhouse from WWE and UFC that should be able to take advantage of key synergies to up the number of fights and expand original content, but the media rights for "Raw" and "Smackdown" will need to be renegotiated amid an unfavorable macroeconomic environment, and the valuation ratios for both companies are arguably overheated already.”

Looking at WWE’s fundamentals growth, she stated, “Over the past three years, it has grown its revenue per share at an annual rate of 11.2% and its earnings per share at an annual rate of 39.1%.”And moving onto valuation metrics for WWE, Moran said, “This solid growth has spurred a price-earnings ratio of 38.17, which is a little on the high side but still lower than the company’s historical median of 51.24. According to the GuruFocus reverse discounted cash flow model, the company will need to continue growing its earnings per share by 21.52% for the next decade to be worth its current valuation, meaning it would need to book even faster growth to justify the $9.3 billion valuation the merger deal puts on it.”

Regarding Endeavor’s fundamental metrics, she said, “Endeavor’s current price-earnings ratio is on the high side at 45.04. However, its forward price-earnings ratio is just 15.48, based on 2023 earnings estimates from Morningstar. If the company can meet expectations, it may be fairly valued based on the merger’s estimates.”

“In a statement on Monday, McMahon highlighted some of company’s expected growth synergies going forward, including maximizing the value of combined media rights, enhancing sponsorship monetization, developing new forms of content and looking for further value-added acquisitions,” Moran wrote.  But, she concluded her piece with a cautious, wait-and-see, tone regarding McMahon’s growth plans, writing, “We will have to wait and see what changes the combined company plans to make before it is safe to speculate on how said changes could drive growth.”

Bullish Nobias Credible Analysts Opinions:

Andrew Kessel, a Nobias 5-star rated author, touched upon the possible synergies of the deal in an article that he published at ProactiveInvestors this week.  Kessel said, “The company claims there are synergies in the range of $50 million to $100 million, primarily through back-office consolidation. And, he notes, this is why the two parties agreed to a merger which involved such a high premium for WWE’s business.

Kessel noted, “The merger between WWE and UFC-owner Endeavor values the companies at a combined total of more than $21 billion. Notably, it values WWE at $9.3 billion, a more than 33% premium over the company’s market cap on Friday.”

Overall bias of Nobias Credible Analysts and Bloggers:

Currently three of the credible Wall Street analysts that the Nobias algorithm tracks offer opinions on WWE shares. None of these individuals have published updated reports this week regarding the merger; however, coming into the week, 2 out of the 3 credible individuals were bearish on WWE shares. The average price target being applied to WWE by these credible Wall Street analysts is $69.00/share. That represents downside potential of approximately 31% relative to the stock’s current share price of $100.38.

However, the credible author community is more bullish on WWE’s prospects moving forward, with 56% of recent articles published on shares expressing a “Bullish” bias.

Disclosure: Nicholas Ward has no position in either WWE or EDR. 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.

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Nobias 4/5/23 Nobias 4/5/23

Case Study: Johnson & Johnson (JNJ) stock according to high performing analysts

This week, JNJ announced an $8.9 billion settlement offer in an attempt to resolve thousands of lawsuits. Wall Street analysts noted that this figure was less than expected.

Nobias Insights: 62% of recent articles published by credible authors focused on JNJ shares offer a “Bullish” bias. Three out of six credible Wall Street analysts covering Johnson & Johnson believe shares are likely to fall in value. The average price target applied to JNJ shares by these credible analysts is $190.40, implying upside potential of 15.3% relative to the stock’s current share price of $165.15.

Bullish Take: Wells Fargo analyst Larry Biegelsen, who carries a Nobias 4-star rating, published a report this week which stated, “The firm left the call "confident" that the updated plan is "reasonable" and should ultimately allow for the situation to be resolved.”

Bearish Take: Hunting Alpha, a Nobias 4-star rated author, stated, “JNJ has been subject to over 40,000 lawsuits over its talcum baby powder product over the last decade. According to Neal Katyal, the legal liabilities are estimated to be as much as $61 billion, which would eat up more than the last 3 years of the company's free cash flows.”

Key Points

Performance

Johnson & Johnson shares rose by 6.87% this week. Even after this rally, JNJ is down by 7.32% on a year-to-date basis. This compares poorly to the S&P 500, which is up by 7.34% on a year-to-date basis thus far. Yet, the credible analysts that Nobias tracks see double digit upside potential ahead.

Event & Impact

Johnson & Johnson has been dealing with legal issues regarding its talcum powder sales; the company continues to face civil lawsuits that have the potential to cost it billions of dollars. This headwind continues to weigh on shares.

Noteworthy News:

This week, JNJ announced an $8.9 billion settlement offer in an attempt to resolve thousands of lawsuits. Wall Street analysts noted that this figure was less than expected.

Nobias Insights

62% of recent articles published by credible authors focused on JNJ shares offer a “Bullish” bias. Three out of six credible Wall Street analysts covering Johnson & Johnson believe shares are likely to fall in value. The average price target applied to JNJ shares by these credible analysts is $190.40, implying upside potential of 15.3% relative to the stock’s current share price of $165.15.

Bullish Take

 Wells Fargo analyst Larry Biegelsen, who carries a Nobias 4-star rating, published a report this week which stated, “The firm left the call "confident" that the updated plan is "reasonable" and should ultimately allow for the situation to be resolved.”

Bearish Take

    Hunting Alpha, a Nobias 4-star rated author, stated, “JNJ has been subject to over 40,000 lawsuits over its talcum baby powder product over the last decade. According to Neal Katyal, the legal liabilities are estimated to be as much as $61 billion, which would eat up more than the last 3 years of the company's free cash flows.”

Johnson & Johnson (JNJ) has become known as a low beta, defensive healthcare stock that investors have flocked to during volatile market periods for decades.  This company is a dividend aristocrat with a 60-year streak of dividend increases.

J&J currently has a $431.6 billion market capitalization. Although this company is often considered an income oriented stock, Johnson and Johnson has generated a significant amount of wealth for long-term shareholders.

Over the last 30 years, JNJ shares have risen by more than 1,550%.  And, that’s just price gains. It doesn’t factor in all of the dividends that shareholders have received over the years.  But, despite the stock’s illustrious history, JNJ shares have struggled throughout 2023. They’re down by 7.32% on a year-to-date basis.  This is largely due to looming legal headwinds that the company faces due to concerns that its talcum powder products caused cancer in thousands of consumers.  This week, there was news on the talc-powder front, which caused J&J shares to rally by nearly 7%.

Bearish Nobias Credible Analysts Opinions:

Hunting Alpha, a Nobias 4-star rated author, recently published an article at Seeking Alpha which laid out Johnson & Johnson’s current legal and operational headwinds.  The author wrote, “JNJ has been subject to over 40,000 lawsuits over its talcum baby powder product over the last decade. According to Neal Katyal, the legal liabilities are estimated to be as much as $61 billion, which would eat up more than the last 3 years of the company's free cash flows. “That's a big risk.”

Hunting Alpha continued, “On October 14 2021, the company tried to minimize its legal liabilities by creating a separate subsidiary that housed the legal liabilities and filing for Chapter 11 bankruptcy protection. This strategy started to work in early 2022, until in January 2023, the courts ruled that the subsidiary JNJ created in this strategy was not eligible for bankruptcy protection.”

Lastly, regarding JNJ’s legal woes, they stated, “The recent update in March 2023 is that JNJ failed to win the support of the Federal Appeals Court. Now, the company seeks to bring the case to the Supreme Court.” But, as the author points out, court room issues aren’t the only headwinds that Johnson & Johnson faces.  They wrote, “Compounding the legal attacks, I think JNJ is due for some operational challenges too. Stelara - - an anti-inflammation drug with a wide variety of uses, including the treatment of Crohn's disease - makes up 18.1% of JNJ's pharmaceutical revenues and 10.1% of overall revenues. This makes it the leading revenue contributor to JNJ's pharmaceutical line. In FY22, $9.7 billion worth of revenues came from Stelara. The problem is it is due to lose its loss of exclusivity (LOE) status as patents for the drug expire in late 2023.”

Overall, they concluded their piece with a bearish ending.  Hunting Alpha finished their report by stating, “Taking into account the read of the technicals, I am confident that JNJ will underperform the S&P 500 over the next few months and quarters.” “But I do not have the same level of confidence in having a negative total shareholder return expectation on the stock. Hence, I rate JNJ stock neutral/hold, albeit with a bearish slant.”

Bullish Nobias Credible Analysts Opinions:

Brett Ashcroft Green, a Nobias 4-star rated author, also recently published an article on JNJ at Seeking Alpha; however, unlike Hunting Alpha, Green’s takeaway was bullish.  Green highlighted J&J’s strong dividend history, stating that his investment strategy revolves around accumulating shares of dividend aristocrats.

Regarding U.S. dividend aristocrats, Green said, “There are currently 66 names on the list of stocks that have paid and raised dividends for at least 25 years.” He continued, “Two of my current favorites, Coca-Cola (KO) and Johnson and Johnson (JNJ) have been paying and raising dividends longer than that at more than 50 years each.”

“Based on their low beta and consistent growth, these are two stocks that are worth locking up in the compound interest safe for generations. I'm buying both of these stocks currently in outsized portions for my income portfolio,” Green added.

Looking at JNJ’s return potential, specifically, Green wrote, “Johnson and Johnson has the highest 10-year growth rate of the two at 6.36%. We are also assuming that the stock appreciates modestly just by tracking the dividend growth rate. Even under these conservative assumptions, an average annual return of 17.13% turns $1,000 into $2713 after 10 years.”

He concluded, “I am buying both of these stocks right now and they continue to grow into larger and larger positions in my portfolio. Both are buys with low betas and amazing records of returning capital to investors. Controlling our beta brain waves with low beta stocks should have satisfactory results.”

Josh Lamb, a Nobias 4-star rated author, highlighted the most recent chapter of JNJ’s talc-powder saga in an article at ProactiveInvestors this week.  Lamb wrote, “Johnson & Johnson (J&J) has offered nearly US$9bn to settle thousands of lawsuits alleging its baby powder and talc products cause cancer.”

He continued, “It had initially proposed a US$2bn pay-out, attempting to quash some 40,000 lawsuits, but raised the figure almost five-fold to US$8.9bn, suggesting that 60,000 claimants already supported the new offer.” This $8.9 billion figure caused JNJ shares to rally by 6.9% this week.

A couple of Nobias credible Wall Street analysts published reports on JNJ’s newest offer in the negotiation process this week.  According to The Fly on the Wall, “Wells Fargo analyst Larry Biegelsen notes Johnson & Johnson announced that it re-filed for chapter 11 bankruptcy to settle for $8.9B about 60K talc claims, which is slightly better than the firm's expectation of a $10B settlement. However, Wells notes that its legal expert sees the odds this goes through at 50/50. The firm has an Overweight rating on the shares with a price target of $195.”Biegelsen is a Nobias 4-star rated analyst.

Also this week, The Fly on the Wall published a note which stated, “Guggenheim analyst Vamil Divan made no change to the firm's neutral rating on Johnson & Johnson after participating in the conference call management hosted to discuss the company's updated plan to settle all current and future talc litigation claims.

The firm left the call "confident" that the updated plan is "reasonable" and should ultimately allow for the situation to be resolved. The resolution of the talc litigation would remove an important overhang on J&J shares and allow investors to focus on the Consumer Health separation, as well as important upcoming data, Guggenheim says.” Divan is a Nobias 5-star rated analyst.

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, the credible analyst community is split on JNJ’s prospects after its nearly 7% rally this week. 3 out of the 6 credible individuals that Nobias tracks who cover Johnson & Johnson believe that shares are likely to increase in value.

The credible author community is slightly more bullish, with 62% of recent articles published on JNJ expressing a “Bullish” bias. The average credible analyst price target that is currently being applied to JNJ shares is $190.40. Today, Johnson and Johnson shares trade for $165.15. Therefore, the average credible analyst price target represents upside potential of approximately 15.3%.

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.

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Nobias 4/1/23 Nobias 4/1/23

Case Study: Alibaba (BABA) stock according to high performing analysts

BABA’s famous founder, Jack Ma, was sighted in mainland China for the first time in a year this week as well. Ma left China amidst regulatory crackdowns on private tech companies and his return is being viewed as a bullish signal for private business in the near-term.

Nobias Insights: 55% of recent articles published by credible authors focused on BABA shares offer a “bullish” bias. The credible Wall Street analyst who covers Alibaba believes shares are likely to fall in value. The average price target being applied to BABA by this credible analyst is $155.00, which implies upside potential of approximately 51.7% relative to the stock’s current share price of $102.18.

Bullish Take: Huileng Tan, a Nobias 4-star rated author, said, “Alibaba's massive restructuring plan announced Tuesday is boosting hopes that China's crackdown on the tech sector is finally ending — and this sent shares of the e-commerce giant surging,”

Bearish Take: Josh Horwitz, a Nobias 4-star rated analyst, said, “The restructuring is among the biggest corporate moves by a major Chinese tech company in recent years, as the industry cowered under tighter regulatory oversight, causing deals to dry up and dampening risk appetite among businesses.”

Key Points

Performance

Alibaba shares rose by 16.94% this week, pushing their year-to-date gains up to 11.09%. This compares favorably to the S&P 500 which is up by 7.46% on a year-to-date basis thus far.

Event & Impact

WAlibaba announced that it was splitting its business up into 6 operating segments this week. Analysts believe that this move will enhance the growth potential of each individual segment, unlocking value for shareholders moving forward.

Noteworthy News:

Nobias Insights

55% of recent articles published by credible authors focused on BABA shares offer a “bullish” bias. The credible Wall Street analyst who covers Alibaba believes shares are likely to fall in value. The average price target being applied to BABA by this credible analyst is $155.00, which implies upside potential of approximately 51.7% relative to the stock’s current share price of $102.18.

Bullish Take

Huileng Tan, a Nobias 4-star rated author, said, “Alibaba's massive restructuring plan announced Tuesday is boosting hopes that China's crackdown on the tech sector is finally ending — and this sent shares of the e-commerce giant surging,”

Bearish Take

    Josh Horwitz, a Nobias 4-star rated analyst, said, “The restructuring is among the biggest corporate moves by a major Chinese tech company in recent years, as the industry cowered under tighter regulatory oversight, causing deals to dry up and dampening risk appetite among businesses.”

After becoming one of the largest companies in the world, Alibaba shares have struggled in recent years, in light of tough regulation on the Chinese tech sector by its government. During late 2020, BABA hit all-time highs in the $320/share area. Today, they trade for a fraction of that price, at $102.18. But, despite the stock’s long-term downtrend, BABA experienced a strong rally this week.

Shares rose by 16.94% during the last 5 trading sessions, pushing BABA’s year-to-date performance into positive territory. BABA is now up by 11.09% during 2023 thus far, meaning that the shares have outperformed the S&P 500, which is up by 7.46% on the year.

This week’s rally was inspired by news that Alibaba plans to restructure its business, splitting into 6 separate entities, potentially unlocking value for shareholders moving forward.

Bullish Nobias Credible Analysts Opinions:

Huileng Tan, a Nobias 4-star rated author, published an article at Business Insider this week which highlighted BABA’s recent rally and shed a light on the possible inspiration for the company’s split. “Alibaba's massive restructuring plan announced Tuesday is boosting hopes that China's crackdown on the tech sector is finally ending — and this sent shares of the e-commerce giant surging,” Tan said.  She continued, “The Hong Kong Stock Exchange-listed shares rose as much as 16% on Tuesday, closing 12% higher at 94.55 Hong Kong dollars, or about $12.”

Tan put a spotlight on a Bank of America report on the news, stating, ‘"Baba's breakup may be an important experiment," Bank of America analysts wrote in a Tuesday note seen by Insider, referring to Alibaba's stock symbol on the New York Stock Exchange.”

As China has "always required its biggest sectors and firms to 'contribute to the society,'" Alibaba's split could address various concerns including anti-trust and policy risks, the bank suggested,” she added.

Bearish Nobias Credible Analysts Opinions:

Josh Horwitz, a Nobias 4-star rated analyst, published an article at Reuters this week, which not only focused on Alibaba’s restructuring, but the return of Jack Ma to mainland China, which he says is a bullish signal for Chinese business.

Regarding the company’s decision to restructure, Horwitz wrote, “Alibaba said the biggest restructuring in its 24-year history would see it split into six units - Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group.”

“The restructuring is among the biggest corporate moves by a major Chinese tech company in recent years, as the industry cowered under tighter regulatory oversight, causing deals to dry up and dampening risk appetite among businesses,” he said.

Horwitz then highlighted the recent regulatory headwinds that private business has faced in China in recent years, writing, “Lately, authorities have been softening their tone towards the private sector as leaders try to shore up an economy battered by three years of strict COVID-19 curbs.” However, he noted, “Alibaba's shares had received a boost on Monday after founder Ma returned to China as his overseas stay was viewed by the industry as a reflection of the sober mood of its private businesses.”

“The revamp comes a day after Alibaba founder Jack Ma returned home from a year-long stay abroad, a move that dovetailed with Beijing's effort to spur growth in the private sector after two years of crackdown,” Horwitz added.

This isn’t a coincidence.  Horwitz said, “China's new premier, Li Qiang, had recognised Ma's return to the mainland could help boost business confidence among entrepreneurs and since late last year had begun asking him to come back, five sources with knowledge of the matter told Reuters.”

Shanthi Rexaline, a Nobias 4-star rated author, published an article at Benzinga this week which put a spotlight on a bullish analyst report that related to Alibaba’s restructuring plans. Rexaline wrote, “Alibaba’s reorganization will help unlock value, said Thomas Hayes, founder of Hedge Funds Tips.” “This is a huge move for shareholders, enabling 'sum of the parts' valuation to be realized on a much faster timeline,” he added.

Piotr Kasprzyk, a Nobias 4-star rated author, highlighted what each of Alibaba’s operating segments does in an article published at Seeking Alpha this week.  Regarding the company’s Cloud segment, he said, “Alibaba is considered the biggest infrastructure-as-a-service provider in the Asia Pacific and the third largest in the world by revenue. In addition, the company is the biggest provider of public cloud services in China. Alibaba Cloud offers various cloud services, including servers, computing, storage, network, security, database, and IoT services.”

Kasprzyk broke down the company’s small business segment, stating, “Alibaba's Taobao Tmall Business Group, currently known as China Commerce retail businesses primarily include Taobao and Tmall, which together constitute the world's largest digital retail business in terms of GMV as of March 31, 2022. Additionally, Taobao Deals offers consumers value-for-money products, Taocaicai provides next-day pick-up services for groceries and fresh goods at neighborhood pick-up points, and the company's direct sales businesses offer upgraded consumer experiences with integrated online and offline capabilities, including Tmall Supermarket, Freshippo, and Sun Art.”

Moving onto its Local Services segment, Kasprzyk said, “The company utilizes online and mobile technology to improve consumer services in two distinct scenarios: "To-Home" and "To-Destination". The "To-Home" businesses, such as Ele.me and Taoxianda, allow consumers to access merchant services from home, including food and beverage delivery, groceries, and pharmaceutical products. The "To-Destination" businesses, including Amap, Fliggy, and Koubei, provide consumers with convenient access to quality services at their destinations, such as navigation, travel services, and local services.”

Looking at BABA’s Glocal Business Media Group, Kasprzyk wrote, “Alibaba's future Global Digital Business Group operates both retail and wholesale businesses to connect buyers and sellers across the globe. The International Commerce Retail businesses include Lazada, AliExpress, Trendyol, and Daraz. Lazada is a fast-growing e-commerce platform in Southeast Asia that provides access to a wide range of products. It also operates a reliable logistics network for its consumers and merchants. AliExpress enables global consumers to purchase directly from manufacturers and distributors around the world. Trendyol is a leading e-commerce platform in Turkey that offers a broad selection of products and services, including instant delivery services for food and groceries, leveraging its product sourcing capabilities and supply chain advantages in Turkey. Daraz is a leading e-commerce platform across South Asia, with key markets in Pakistan and Bangladesh. Besides that, the International Commerce Wholesale business operates Alibaba.com, China's largest integrated international online wholesale marketplace, connecting buyers and sellers across more than 190 countries in the fiscal year 2022.”

He then highlighted the company’s Smart Logistics segment, stating, “Cainiao provides one-stop-shop logistics services and supply chain management solutions to merchants and consumers using its self-developed logistics capacities and capabilities. It also digitizes the entire logistics process using data insights and technology to enhance consumer experience and efficiency.”

Regarding BABA’s Digital Media and Entertainment Group, he wrote, “Youku and Quark are key platforms for digital media and entertainment content distribution, while Alibaba Pictures offers an integrated platform for content production, promotion, and distribution. Our other platforms, including newsfeed and literature platforms, allow users to discover and consume content and interact with each other. We also develop, operate, and distribute mobile games through Lingxi Games.”

Finally, regarding the Ant Group, Kasprzyk said, “Ant Group is a financial technology company 1/3 of which is owned by Alibaba. The company operates Alipay, a mobile and online payment platform with over a billion users in China. In addition to payments, Ant Group also offers a range of financial services, including wealth management, micro-lending, insurance, and credit scoring.”

Lastly, he highlighted the potential for this deal to unlock significant value for shareholders, stating, “The final value of Alibaba Group calculated as a sum of individual parts equals $382.97 billion which translates to $143.5 a share. This number shows that the company is severely undervalued which aligns with valuations presented in previous articles.”

Today Alibaba shares trade for $102.18. Kasprzyk’s $143.50 value estimate represents similar upside potential to the price target that is currently being applied to BABA by the credible Wall Street analyst that the Nobias algorithm tracks.

Overall bias of Nobias Credible Analysts and Bloggers:

According to the Fly on the Wall, last year, “BofA analyst Eddie Leung lowered the firm's price target on Alibaba to $155 from $162 and kept a Buy rating on the shares ahead of the company's Q2 results on August 4. The analyst estimates revenue declining 3% year-over-year to RMB 199.5B, mainly to reflect the China lockdown impact on multiple businesses. The delisting news in the U.S. remains a source of stock volatility, Leung tells investors in a research note. The conversion of Alibaba's secondary listing in Hong Kong to a primary listing will mitigate liquidity risk, but related news could remain a source of stock volatility as some American depository receipt investors may not be able to own non-U.S. stocks, says the analyst. ” Leung’s $155 price target implies upside potential of approximately 51.7%.

The credible author community that the Nobias algorithm tracks is also bullish on BABA shares. 55% of recent articles published by these individuals on Alibaba note that BABA shares are likely to rise in value.

Disclosure: Nicholas Ward has no BABA 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.

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Nobias 3/30/23 Nobias 3/30/23

Case Study: Walgreens Boots Alliance (WBA) stock according to high performing analysts

Despite beating Wall Street’s expectations and posting full-year guidance which was in-line with previous expectations set by the company, 3 credible Wall Street analysts that Nobias tracks lowered their price targets for WBA shares.

Nobias Insights: 44% of recent articles published by credible authors focused on WBA shares offer a “Bearish” bias. 2 out of the 4 credible Wall Street analysts who cover Walgreens believe shares are likely to fall in value. The average price target being applied to WBA by these credible analysts is $42.00, which implies upside potential of approximately 21.5% relative to the stock’s current share price of $34.58.

Bullish Take: Marianne Wilson, a Nobias 4-star rated author, said, “Walgreens Boots reported second-quarter earnings and sales that beat estimates even amid a sharp volume decline in COVID vaccines and testing, and sales of COVID tests.”

Bearish Take: Spencer Kimbal, a Nobias 4-star rated author, said, “California will not renew a $54 million contract with Walgreens over the drugstore chain’s decision not to sell the abortion pill mifepristone in some states due to legal restrictions.”

Key Points

Performance

Walgreens Boots Alliance (WBA) shares rose by 4.44% this week; however, on a year-to-date basis, WBA is still down by 7.02%.This compares poorly to the S&P 500 which is up by 7.46% on a year-to-date basis thus far.

Event & Impact

Walgreens posted its 2023 second quarter results this week, beating Wall Street estimates on both the top and bottom lines. During Q2, WBA’s revenue totaled $34.9 billion, beating Wall Street’s consensus estimate by $1.34 billion. Walgreens Q2 non-GAAP earnings-per-share came in at $1.16, beating Wall Street’s consensus estimate by $0.04/share.

Noteworthy News:

Nobias Insights

44% of recent articles published by credible authors focused on WBA shares offer a “Bearish” bias. 2 out of the 4 credible Wall Street analysts who cover Walgreens believe shares are likely to fall in value. The average price target being applied to WBA by these credible analysts is $42.00, which implies upside potential of approximately 21.5% relative to the stock’s current share price of $34.58.

Bullish Take

Marianne Wilson, a Nobias 4-star rated author, said, “Walgreens Boots reported second-quarter earnings and sales that beat estimates even amid a sharp volume decline in COVID vaccines and testing, and sales of COVID tests.”

Bearish Take

    Spencer Kimbal, a Nobias 4-star rated author, said, “California will not renew a $54 million contract with Walgreens over the drugstore chain’s decision not to sell the abortion pill mifepristone in some states due to legal restrictions.”

2023 has been a tough year for Walgreens Boots Alliance shareholders. The stock is down by more than 7% on a year-to-date basis, pushing its trailing 12 month results down to -22.76%. Recent headlines haven’t helped the company’s cause.

Bearish Nobias Credible Analysts Opinions:

Spencer Kimbal, a Nobias 4-star rated author, covered Walgreens recent negativity that WBA shares have faced in an article published at CNBC on March 9th, 2023.  He wrote, “California will not renew a $54 million contract with Walgreens over the drugstore chain’s decision not to sell the abortion pill mifepristone in some states due to legal restrictions.” “California used the contract to buy specialty prescription drugs for the prison system. The state is reviewing all its business contracts with Walgreens,” he noted.

Kimbal quoted California Governor Gavin Newsom who said, “California will not stand by as corporations cave to extremists and cut off critical access to reproductive care and freedom.” “California is on track to be the fourth largest economy in the world and we will leverage our market power to defend the right to choose,” Newsome continued.

Despite these near-term headwinds, Walgreens beat Wall Street’s estimates on both the top and bottom lines when it reported earnings on March 28th.  Coming into the company’s fiscal 2023 Q2 report, Amhed Farhath, a Nobias 4-star rated author, broke down Wall Street’s expectations in a report published at Seeking Alpha.   He wrote, “The consensus EPS Estimate is $1.11 (-30.2% Y/Y) and the consensus Revenue Estimate is $33.56B (-0.6% Y/Y).”  However, he continued, “Over the last 2 years, WBA has beaten EPS estimates 100% of the time and has beaten revenue estimates 88% of the time.”

Lastly, he put a spotlight on the divergence between top and bottom-line expectations during the recent quarter.  Farhath wrote, “Over the last 3 months, EPS estimates have seen 1 upward revision and 12 downward. Revenue estimates have seen 9 upward revisions and 0 downward.”

Bullish Nobias Credible Analysts Opinions:

Marianne Wilson, a Nobias 4-star rated author, covered WBA’s Q2 results in a report that she published at Chain Store Age this week.  Wilson started by highlighting WBA’s bottom-line results, stating, “Walgreens Boots reported second-quarter earnings and sales that beat estimates even amid a sharp volume decline in COVID vaccines and testing, and sales of COVID tests.”

“Walgreens reported a net profit of $703 million, or $0.81 a share, in the quarter ended Feb. 28, compared to $883 million, or $1.02 a share, in the year-ago quarter. Adjusted earnings came to $1.16 a share, topping analysts’ forecasts of $1.10 a share,” she continued.

Looking at Walgreens top-line results, Wilson said, “Sales rose 3.3% to $34.86 billion, easily topping estimates $33.53 billion, boosted by an “acceleration” in February.”

Wilson broke down Walgreens operating segment results, stating: “U.S. retail pharmacy sales inched down 0.3% to $27.6 billion, beating estimates of $26.5 billion. Comparable pharmacy prescription sales increased 4.9%, driven by higher prices on brand name drugs.” “Comparable retail sales at Boots UK increased 16% from the previous year marking the eighth consecutive quarter of gains.” “U.S. health care unit revenue jumped to approximately $1.6 billion from $500 billion, with primary care services growing 30% at VillageMD (majority owned by Walgreens), including Summit Health.”

“Home care at CareCentrix was up 25%.” Lastly, she highlighted the company’s updated guidance for 2023, stating, “The company reaffirmed its full-year earnings guidance of $4.45 to $4.65 per share, projecting adjusted earnings growth of mid-20% over the next two quarters.” This confidence shown by management helped to inspire a 4.44% rally this week.

However, even with this rally in mind, WBA shares have posted significant underperformance thus far during 2023.  On a year-to-date basis, the S&P 500 is up by 7.46%. WBA shares, on the other hand, are down by 7.02%.

And while the market seemed happy with WBA’s results, the credible analysts that Nobias tracks who cover WBA shares weren’t singing the same bullish tune.  3 credible analysts lowered their price targets for WBA this week.

According to The Fly on the Wall, “Truist analyst David MacDonald lowered the firm's price target on Walgreens Boots Alliance to $40 from $42 and keeps a Hold rating on the shares. The company's Q2 results were "solid" on the top and bottom lines, with Pharmacy and Retail trends remaining solid despite a lingering COVID headwind, the analyst tells investors in a research note. Truist remains neutral on Walgreens to reflect market multiples however, though its model is "under review".” MacDonald is a Nobias 4-star rated analyst.

The Fly on the Wall also stated, “UBS analyst Kevin Caliendo lowered the firm's price target on Walgreens Boots Alliance to $37 from $39 and keeps a Neutral rating on the shares. The firm's biggest takeaway from Walgreens' print was the ambiguity around the company's earnings in VillageMD/Summit, and found management's explanation of Summit's financials not accounting for the annualized impact of Westmed and NJU lacked detail, the analyst tells investors in a research note. UBS believes the company's EPS guidance for the year is achievable, but needs to see improved free cash flow and transparent organic growth in the Healthcare segment before becoming more constructive on the stock.” Caliendo is a Nobias 4-star rated analyst.

Lastly, according to the Fly on the Wall, “Deutsche Bank lowered the firm's price target on Walgreens Boots Alliance to $46 from $47 and keeps a Buy rating on the shares. The company's core fiscal Q2 results "were mixed," the analyst tells investors in a research note. Walgreens maintained its guidance for 2023, with the company now needing to deliver on the promised inflection both in the U.S. pharmacy business as well as the "rapidly maturing" Health segment to deliver on its second half promises, the analyst tells investors in a research note.” Deutsche Bank analyst George Hill is a Nobias 4-star rated analyst.

Overall bias of Nobias Credible Analysts and Bloggers:

Currently, 2 out of the 4 credible analysts who cover WBA shares believe that they’re likely to rise in value. The average price target that these individuals have applied to Walgreens shares is $42.00.

Currently, WBA trades for $34.58; therefore, that average price target implies upside potential of approximately 21.5%.  The credible authors that the Nobias algorithm tracks who have recently written reports on WBA are less bullish.

44% of recent articles published on WBA by credible authors have expressed a “bearish” bias with only 38% of credible authors stating the WBA is likely to rise in value.

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.

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Nobias 3/29/23 Nobias 3/29/23

Case Study: Lululemon (LULU) stock according to high performing analysts

Lululemon posted strong demand figures, highlighting double digit sales growth amongst key demographics, including its high margin direct-to-consumer segment. Also, according to Placer.ai, LULU saw a 23.2% increase in year-over-year foot traffic during January, setting the stage for a strong 2023 in the face of inflationary headwinds.

Nobias Insights: 75% of recent articles published by credible authors focused on LULU shares offer a “Bullish” bias. 4 out of the 5 credible Wall Street analysts who cover LULU believe shares are likely to fall in value. The average price target being applied to Lululemon by these credible analysts is $430.00, which implies upside potential of approximately 18.1% relative to the stock’s current share price of $364.19.

Bullish Take: Salman Ahmad, a Nobias 5-star rated author, said, “As stubbornly high prices for essential goods are forcing customers to cut down on discretionary purchases such as apparel, wealthy shoppers continue to spend on Lululemon’s tops, yoga pants, and shorts, bolstering both their online and in-store traffic both as a result of stubbornly high prices.”

Bearish Take: Julia Waldow, a Nobias 4-star rated author, highlighted the company’s Q4 inventory levels, stating, “Lululemon had $1.4 billion in product, a 50% increase from the same time a year ago.”

Key Points

Performance

Lululemon shares rose by 15.75% this week, pushing their year-to-date gains up to 12.62%. This compares favorably to the S&P 500 which is up by 7.46% on a year-to-date basis thus far.

Event & Impact

LULU posted its 2022 fourth quarter results this week, beating Wall Street estimates on both the top and bottom lines. During Q4, LULU’s revenue totaled $2.8 billion, beating Wall Street’s consensus estimate by $100 million. Lululemons Q4 non-GAAP earnings-per-share came in at $4.40, beating Wall Street’s consensus estimate by $0.14/share.

Noteworthy News:

Nobias Insights

75% of recent articles published by credible authors focused on LULU shares offer a “bullish” bias. 4 out of the 5 credible Wall Street analysts who cover LULU believe shares are likely to fall in value. The average price target applied to LULU by these credible analysts is $430.00, which implies upside potential of approximately 18.1% relative to the stock’s current share price of $364.19.

Bullish Take

Salman Ahmad, a Nobias 5-star rated author, said, “As stubbornly high prices for essential goods are forcing customers to cut down on discretionary purchases such as apparel, wealthy shoppers continue to spend on Lululemon’s tops, yoga pants, and shorts, bolstering both their online and in-store traffic both as a result of stubbornly high prices.”

Bearish Take

    Julia Waldow, a Nobias 4-star rated author, highlighted the company’s Q4 inventory levels, stating, “Lululemon had $1.4 billion in product, a 50% increase from the same time a year ago.”

Lululemon (LULU) posted Q4 earnings this week, beating Wall Street’s expectations on both the top and bottom lines. These strong results caused shares to rally by 15.75% this week.  This outsized weekly rally pushed LULU’s year-to-date returns into positive territory. Now, thus far through 2023, the apparel name has produced price gains of 12.62%.  This beats the broader market by a wide margin; on a year-to-date basis the S&P 500 is now up by 7.46%.

Bullish Nobias Credible Analysts Opinions:

Nobias 4-star rated author, Marianne Wilson, wrote an earnings recap article this week and in her piece, she provided more color on the company’s sales breakdown.  Wilson said, “Total comparable sales increased 27%. Comparable store sales rose 15%, while direct-to-consumer net revenue increased 37%.”

Julia Waldow, a Nobias 4-star rated author, covered LULU’s Q4 earnings results in an article that she published at Modern Retail this week Looking at the company’s top-line results, Waldow said, “On Tuesday, the company reported yet another strong batch of earnings, clocking $2.8 billion in fourth-quarter net revenue, a 30% increase over the same time a year ago.” “Its full-year revenue — which covers the 12 months ending Jan. 29, 2023 — also jumped 30% year-over-year to hit $8.1 billion,” she continued.

In her piece, Waldow touched upon LULU’s relatively strong execution figures during a quarter where other significant names in the apparel industry struggled.  She wrote, “While its rivals like Adidas have issued profit warnings or less rosy results, Lululemon has enjoyed several quarters of solid growth, in large part due to its product strategy.”

Regarding that product strategy, Waldow stated, “In 2021, Lululemon concentrated on building out its men’s offerings, such as workout apparel and accessories, and last March, it expanded into footwear with Blissfeel, a women’s sneaker collection.”

Salman Ahmad, a Nobias 5-star rated author, continued along these lines in his post-earnings report at CTN News this week, stating, “As stubbornly high prices for essential goods are forcing customers to cut down on discretionary purchases such as apparel, wealthy shoppers continue to spend on Lululemon’s tops, yoga pants, and shorts, bolstering both their online and in-store traffic both as a result of stubbornly high prices.”

Ahmad highlighted LULU’s forward guidance, which points towards continued growth ahead.  “In a statement, the company said it expects revenue for its fiscal 2023 to be between $9.30 billion and $9.41 billion, compared to the average estimate of analysts of $9.14 billion, according to data from Refinitiv IBES,” Ahmad wrote.   He continued, “A full-year profit estimate for Lululemon is expected to range from $11.50 to $11.72 per share, compared with analysts’ estimates of $11.26 per share for the full year.”

Both of these forward guidance levels represent double digit growth compared to 2022’s $8.1 billion sales result and LULU’s 2022 EPS of $10.07.  Since LULU’s Q4 earnings results three credible analysts have raised their price targets for the company’s shares.

According to The Fly on the Wall, “Stifel analyst Jim Duffy raised the firm's price target on Lululemon to $460 from $450 and keeps a Buy rating on the shares. The company's "strong" FY23 outlook topped consensus and fiscal Q1 guidance endorses brand momentum and suggests potential for upside as the year unfolds, the analyst tells investors. "Bearish discourse around slowing growth and promotional risk to margin has been silenced," contends the firm, which reaffirms its conviction in Lululemon as a core growth holding.”  Duffy carries a 4-star Nobias rating.

The Fly on the Wall also stated, “TD Cowen raised the firm's price target on Lululemon to $500 from $470 and keeps an Outperform rating on the shares. The analyst said markdown fears should be allayed as lululemon reported upside to Q4 and management's 2023 guidance suggests above consensus modeling of sales, gross margin and EPS.” John Kernan is the analyst who published this report and he is a Nobias 4-star rated analyst.

Lastly, The Fly on the Wall notes, “Guggenheim raised the firm's price target on Lululemon to $440 from $400 and keeps a Buy rating on the shares following the company's Q4 beat. Guggenheim continue [sic] to believe that China holds significant growth potential for Lululemon as the region reopens. The firm also believes demand for Lululemon's merchandise, along with its brand, remains "healthy and strong" as competitive pressures from emerging athletic brands are overestimated.” The Guggenheim analyst who covers LULU is Robert Drbul and is a Nobias 5-star rated analyst.

Bearish Nobias Credible Analysts Opinions:

While Julia Waldow’s coverage of LULU’s Q4 earnings results in the article was overall bullish, she added “Lululemon’s latest earnings also shed light on how the company is progressing on its “Power of Three x2” growth plan, which calls for the business to double overall revenue, double men’s sales, double DTC sales and quadruple international net revenue from 2021 to 2026,”

Looking at 2022 results, Waldow points out that, “Fifty-two percent of Lululemon’s fourth-quarter revenue came from online, direct-to-consumer sales”.  “Lululemon’s international revenue increased 35% during the fourth quarter,” she noted.

Like its peers, Lululemon continues to struggle with high inventory levels created by post-pandemic supply chain inefficiencies.

“At the end of its fourth quarter,” she said, “Lululemon had $1.4 billion in product, a 50% increase from the same time a year ago. This is, however, an improvement from the third quarter, when Lululemon reported $1.7 billion in product, an 85% increase from a year before.” But, as Waldow points out, demand for its products continues to rise. “Lululemon had 655 stores at the end of its fourth quarter and, according to data from Placer.ai, saw a 23.2% increase in year-over-year foot traffic during January,” she said.

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 4 out of the 5 credible analysts who cover LULU shares believe that they’re likely to increase in value. Currently, the average price target being applied to LULU shares by these analysts is $430.00. Relative to the stock’s current share price of $364.19, that price target implies upside potential of approximately 18.1%.

The credible author community that Nobias tracks has expressed similarly bullish sentiment. 75% of recent articles published by credible authors on Lululemon have expressed a “Bullish” bias.

Disclosure: Nicholas Ward has no LULU 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.

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Nobias 3/24/23 Nobias 3/24/23

Case Study: Accenture (ACN) stock according to high performing analysts

Accenture beat Wall Street's estimates during Q2, but lowered its full-year sales growth guidance. However, the company announced that it was cutting 19,000 jobs, representing approximately 2.5% of its workforce, which has the potential to bolster profits. Also, ACN announced its newest acquisition this week; a small artificial intelligence firm which expands the company’s growth pipeline.

Nobias Insights: 61% of recent articles published by credible authors focused on Accenture shares offer a “Bullish” bias. 1 out of the 2 credible Wall Street analysts who cover ACN believe shares are likely to rise in value. The average price target being applied to Accenture by these credible analysts is $287.00, which implies upside potential of approximately 5.5% relative to the stock’s current share price of $272.00.

Bullish Take: Shivandi Shinde, a Nobias 4-star rated author, said, “Flutura [ACN’s Q2 acquisition] will strengthen Accenture’s industrial AI services to increase the performance of industrial plants, refineries, and supply chains while also enabling clients to accomplish their net zero goals faster.”

Bearish Take: Reinhardt Krause, a Nobias 5-star rated author, said, “Accenture lowered its fiscal 2023 revenue growth outlook to a range of 8% to 10% in local currency, compared with 8% to 11% previously.”

Key Points

Performance

Accenture shares rose by 7.43% this week, pushing their year-to-date gains up into positive territory. Now ACN’s year-to-date returns are 0.64%. This compares poorly to the S&P 500 which is up by 3.84% during 2023 thus far.

Event & Impact

Accenture posted fiscal 2023 second quarter earnings results this week, beating Wall Street estimates on both the top and bottom lines. During Q2, ACN’s revenue totaled $15.81 billion, beating Wall Street’s consensus estimate by $220 million. Accenture’s Q2 non-GAAP earnings-per-share came in at $2.69, beating Wall Street’s consensus estimate by $0.19/share.

Noteworthy News:

Nobias Insights

61% of recent articles published by credible authors focused on Accenture shares offer a “bullish” bias. One of the two credible Wall Street analysts covering ACN believes shares are likely to rise in value. The average price target applied to ACN by these credible analysts is $287.00, which implies upside potential of approximately 5.5% relative to the stock’s current share price of $272.00.

Bullish Take

Shivandi Shinde, a Nobias 4-star rated author, said, “Flutura [ACN’s Q2 acquisition] will strengthen Accenture’s industrial AI services to increase the performance of industrial plants, refineries, and supply chains while also enabling clients to accomplish their net zero goals faster.”

Bearish Take

    Reinhardt Krause, a Nobias 5-star rated author, said, “Accenture lowered its fiscal 2023 revenue growth outlook to a range of 8% to 10% in local currency, compared with 8% to 11% previously.”

Historically, Accenture (ACN) has been a market beating stock that often flies under the radar in terms of investor name recognition.  ACN shares have posted 5 and 10-year price gains of 82.72% and 258.04%, respectively.  Both of these figures compare favorably to the S&P 500 which has posted gains of 51.99% and 151.64% over those same two periods of time. What’s more, Accenture has a generous dividend growth policy which adds to its total return potential.  ACN shares currently yield 1.65% and have a 5-year dividend growth rate of 10.48%.

This double digit dividend growth is supported by reliable fundamental growth; over the last 20 years, Accenture has posted negative year-over-year earnings per share growth just 2 times (both of which were -1% results, in 2003 and 2010).  And yet, with all of this being said, ACN shares have underperformed recently.

During the trailing 12-month period, ACN is down by 16.38%, which is worse than the S&P 500’s -12.15% performance.  Furthermore, on a year-to-date basis, Accenture shares are only up by 0.64%, which is worse than the S&P 500’s 3.84% gains.  But, after a strong earnings report this week ACN shares rallied by 7.43% and according to the credible authors and analysts that the Nobias algorithm tracks, this positive trajectory could be here to stay.

Bearish Nobias Credible Analysts Opinions:

After Accenture’s last quarter, Surinder Thind, a Nobias 4-star rated analyst, lowered his price target on ACN shares due to question marks regarding the macro environment that Accenture was operating in.   According to The Fly on the Wall, “Jefferies analyst Surinder Thind lowered the firm's price target on Accenture to $279 from $290 and keeps a Hold rating on the shares, telling investors that he is "slightly more cautious" following the company's fiscal Q1 earnings report. The reiteration of FY23 constant currency revenue growth is "an important positive," as it suggests there has not been a meaningful shift in overall client demand since last quarter, said Thind, who adds that the guidance "should be viewed with some caution" with clients yet to finalize 2023 budgets.” When reporting its Q2 results, Accenture appears to have allayed those fears, posting results that beat Wall Street’s estimates on both the top and bottom lines.

Reinhardt Krause, a Nobias 5-star rated author, broke down ACN’s Q2 results in an article that he published at Investors.com this week, writing, “Accenture earnings for the quarter ended Feb. 28 rose 6% to $2.69 per share on an adjusted basis, said the Dublin-based global tech services and consulting firm.” Krause continued, “Including acquisitions, revenue climbed 5% to $15.8 billion, Accenture said.” Looking at Wall Street’s expectations coming into the quarterly results, Kruase wrote, “Analysts expected Accenture earnings of $2.49 a share on sales of $15.59 billion.”

Looking at the forward guidance that the company provided, Krause wrote, “For its fiscal third quarter, which ends in May, Accenture said it expects revenue of $16.4 billion at the mid-point of guidance. Analysts had projected revenue of $16.6 billion.” “As expected,” he noted, “Accenture lowered its fiscal 2023 revenue growth outlook to a range of 8% to 10% in local currency, compared with 8% to 11% previously.”

Although management lowered sales expectations, they also took steps to lower capital expenditures with hopes to bolster profits, namely in the form of layoffs.  Amit Mudgill, a Nobias 4-star rated author, put a spotlight on this decision in an article that he published at MSN.com, stating, “In numbers, 19,000 employees accounted for 2.5 per cent of Accenture's workforce, equally split between billable and corporate resources.”

“The Accenture management indicated that this is part of a proactive rationalisation [sic] exercise to correct the structurally higher cost base due to compounding wage inflation witnessed over the past two years,” Mudgill continued.   Lastly, he stated, “Importantly, it said that this does not reflect demand weakness.”

Although Accenture is reducing its workforce, the company continues to invest in high growth areas via mergers and acquisitions.

Bullish Nobias Credible Analysts Opinions:

This week the company announced its latest acquisition and Shivandi Shinde, a Nobias 4-star rated author, covered the news.  In an article published at The Business Standard, Shinde wrote, “NYSE-listed IT firm Accenture on Tuesday announced acquiring industrial artificial intelligence (AI) company Flutura, which is headquartered in Bengaluru. The deal’s financial details were not disclosed.”

“This will be Accenture’s third acquisition in the data and AI space in India as it builds data and AI capabilities. It acquired India-headquartered Bridgei2i and Byte Prophecy in 2021 and 2020,” she wrote.

Although there are still macroeconomic uncertainties surrounding broader IT spending with interest rates still on the rise, it appears that the company’s growth guidance has renewed the market’s confidence in ACN shares.

Shinde continued, “Flutura will strengthen Accenture’s industrial AI services to increase the performance of industrial plants, refineries, and supply chains while also enabling clients to accomplish their net zero goals faster.” She added, “Accenture plans to bring Flutura’s capabilities to clients in the energy, chemicals, metals, mining, and pharmaceutical industries, said the company.”

Overall bias of Nobias Credible Analysts and Bloggers:

Even after this week’s rally from the $253 level to $272, the credible Wall Street analysts that the Nobias algorithm tracks signal further upside ahead. Currently, the average price target being applied to ACN shares by these credible individuals is $287, which represents upside potential of 5.5%. Furthermore, 61% of recent articles published by credible authors have expressed a “bullish” bias towards shares.

Disclosure: Nicholas Ward is long ACN. 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.

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Nobias 3/23/23 Nobias 3/23/23

Case Study: GameStop (GME) stock according to high performing analysts

GameStop posted a surprise profit during Q4, inspiring a short-squeeze rally late in the week. As of the market close on Friday, 21.3% of GME’s float was made up on short interest and therefore, we saw an analyst predict that the short-squeeze rally may not be over.

Nobias Insights: 70% of recent articles published by credible authors focused on GameStop shares offer a “Bearish” bias. 0 out of the 2 credible Wall Street analysts who cover GME believe shares are likely to rise in value. The average price target being applied to GameStop by these credible analysts is $15.65, which implies downside potential of approximately 34.7% relative to the stock’s current share price of $23.98.

Bullish Take: Dan Berthiaume, a Nobias 4-star rated author, said, “GameStop Corp. posted its first quarterly profit in two years even as its sales slipped.”

Bearish Take: Bernard Zambonin, a Nobias 4-star rated author, said, “Long-time bear Michael Pachter of Wedbush wrote before the earnings announcement that he expected "long-term headwinds [to] include potential liquidity challenges and changing gamer preferences, with greater appetites for cloud, digital mobile, and subscription."’

Key Points

Performance

GameStop shares rose by 46.90% this week, pushing their year-to-date gains up to 39.42%. This compares favorably to the S&P 500, which is up by 3.84% on a year-to-date basis thus far.

Event & Impact

GameStop posted fourth quarter earnings results this week, beating Wall Street estimates on both the top and bottom lines. During Q4, GME’s revenue totaled $2.23 billion, beating Wall Street’s consensus estimate by $50 million. GameStop’s Q4 non-GAAP earnings-per-share came in at $0.16, beating Wall Street’s consensus estimate by $0.29/share.

Noteworthy News:

Nobias Insights

70% of recent articles published by credible authors focused on GameStop shares offer a “bearish” bias. Neither of the two credible Wall Street analysts covering GME believe shares are likely to rise in value. The average price target being applied by these credible analysts is $15.65 ,implying downside of approximately 34.7% relative to the stock’s current share price of $23.98

Bullish Take

Dan Berthiaume, a Nobias 4-star rated author, said, “GameStop Corp. posted its first quarterly profit in two years even as its sales slipped.”

Bearish Take

    Bernard Zambonin, a Nobias 4-star rated author, said, “Long-time bear Michael Pachter of Wedbush wrote before the earnings announcement that he expected "long-term headwinds [to] include potential liquidity challenges and changing gamer preferences, with greater appetites for cloud, digital mobile, and subscription."’

GameStop (GME), a company famous for being the posterboy of the “meme stock” craze of 2020/2021, posted its Q4 earnings this week, surprising Wall Street in a major way. GameStop posted a positive earnings-per-share figure during a quarter where Wall Street expected to see more losses.

GME’s Q4 non-GAAP EPS came in at $0.16/share, beating Wall Street’s consensus estimate of -$0.13/share by $0.29/share. These surprise profits sparked a 46.9% rally this week. Even after this massive bounce, GameStop shares are down by 32.64% during the trailing 12 month period. But, with the potential for another large short-squeeze rally in place, investors are wondering, is this meme stock back on the menu?

Bullish Nobias Credible Analysts Opinions:

Dan Berthiaume, a Nobias 4-star rated author, highlighted GameStop’s Q4 earnings results in an article that he published at Chain Store Age this week.  He wrote, “GameStop Corp. posted its first quarterly profit in two years even as its sales slipped.”

“The video game and electronics retailer reported net income of $48.2 million for the quarter ending Jan. 28, 2023, compared to a net loss of $2.25 billion in the same quarter a year earlier,” said Berthiaume.  He continued, “Earnings per share were $0.16, compared to a loss per share of $0.49. GameStop achieved this turnaround in profitability as net sales slipped year-over-year to $2.22 billion from $2.25 billion.”

Berthiaume also broke down the company’s full-year results.  He said, “GameStop also reported results for the full fiscal year 2022, ending Jan. 28, 2023. The retailer was able to reduce its net loss year-over-year to $313.1 million from $381.3 million. Loss per share dropped to $1.03 from $1.31.”

“However,” Berthiaume added, “net sales also dropped 1% to $5.92 billion from $6.01 billion the prior fiscal year.” Lastly, Berthiaume added, “GameStop said it also completed the majority of implementations and upgrades related to its infrastructure, systems, shipping capabilities, and online and mobile platforms; and initiated cost-cutting initiatives and headcount reductions over the course of the year in an effort to increase operational efficiency.”

Bearish Nobias Credible Analysts Opinions:

Bernard Zambonin, a Nobias 4-star rated author, also covered GME’s Q4 results this week in an article published at Newsbreak.com. Zambonin took an in-depth look at the company’s fundamental results.

Looking at GME’s top-line, Zambonin said, “About $1.24 billion came from the company's main revenue driver — hardware and accessories — versus $1.19 billion reported in the same period last year. Collectibles revenues came in at $313.2 million, up about 12% year over year.” He went on to highlight management’s effective cost cutting moves, stating, “GameStop executed well on reducing selling, general, and administrative costs, where the company went from 23.9% of sales to 20.4% — a key to profitability.” Also, he mentioned that like other retailers, GME is working through its post pandemic inventory gluts nicely.

Zambonin wrote, “Inventories were much less bloated compared to the same period last year. GameStop reported $682.9 million in inventory versus $915 million a year earlier.” In his piece Zambonin also put a spotlight on Wall Street’s reaction to GameStop’s surprise profits. He said, “Long-time bear Michael Pachter of Wedbush wrote before the earnings announcement that he expected "long-term headwinds [to] include potential liquidity challenges and changing gamer preferences, with greater appetites for cloud, digital mobile, and subscription."’

“Furthermore,” Zambonin continued, “Pachter added that GameStop shares "remain at trading levels that are disconnected from the fundamentals of the business due to irrational support from some retail investors."’ However, Zambonin noted that even the long-term bear could appreciate GME’s quarter, writing, “While maintaining his "underperform" recommendation on the video game retailer's shares, the analyst raised his price target from $5.30 to $6.50.”

Speaking of Wall Street analysts who appreciated GME’s quarter, in an article that she published this week at Benzinga, Shanthi Rexaline, a Nobias 4-star rated author, highlighted a post-earnings tweet from S3 Partners analyst, Ihor Dusaniwsky.

Regarding GME’s past volatility and the stock’s notoriety as a “meme stock”, Rexaline wrote, “When asked whether GameStop’s stock price is disconnected from fundamentals, Dusaniwsky said the stock price is not much of a function of what the value or earnings are but is what the Street thinks where the price needs to be.”

And, it appears that GME’s profits are pushing those expectations higher.  Rexaline noted that Dusaniwsky tweeted, “Release the hounds, let the short squeeze begin,” late Tuesday evening.  “He noted that short interest in GameStop — a retailer of video games, consumer electronics and gaming merchandise — is about $946 million, with 56.05 million shares shorted,” she said.

“The short interest as a percent of the float is 21.79%,” Rexaline added. She also noted that because of the size of this overall short position, Dusaniwsky predicted that GME’s recent rally would continue. “Expect a wave of short covering tomorrow,” in this Thursday tweet.

Overall bias of Nobias Credible Analysts and Bloggers:

Coming into this week, GME’s share price was in-line with the average price target that credible Nobias analysts had assigned to shares. When the market opened on Monday GME shares were trading for $16.31, which was only a slight premium to the stock’s credible analyst price target of $15.65.

However, after the stock’s 46.90% rally this week, GME’s $23.98 share price now represents a 53.2% premium to that $15.65 figure. In other words, according to credible analysts, GME’s rally this week was irrational. The broader sentiment of the credible author community that Nobias tracks reflects this apparent overvaluation. 70% of recent articles published by credible authors with a focus on GME shares expressed a “Bearish” bias.

Disclosure: Nicholas Ward has no GME 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.

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Nobias 3/21/23 Nobias 3/21/23

Case Study: Nike (NKE) stock according to high performing analysts

Nike posted strong regional sales, with direct-to-consumer and wholesale initiatives working. The company continued to work through its post-pandemic inventories during the quarter, which weighted on margins. But, management is bullish moving forward, raising full-year sales guidance during the Q3 report.

Nobias Insights: 70% of recent articles published by credible authors focused on Nike shares offer a “Bullish” bias. 4 out of the 6 credible Wall Street analysts who cover NKE believe shares are likely to rise in value. The average price target being applied to Nike by these credible analysts is $129.50, which implies upside potential of approximately 3.1% relative to the stock’s current share price of $125.61.

Bullish Take: Shoshy Ciment, a Nobias 4-star rated author, said, “The athletic giant reported Q3 revenues of $12.4 billion, up 14% from the same time last year and ahead of expectations from analysts surveyed by Yahoo.”
Bearish Take: Ananya Mariam Rajesh, a Nobias 4-star rated author,said, “Nike's shares fell 2% in extended trading on Tuesday after the company said it expects 2023 gross margin to decline about 250 basis points, at the low end of its previous forecast range.”

Key Points

Performance

Nike shares have risen by 7.00% during the last week, pushing their year-to-date gains up to 5.78%.. This compares favorably to the S&P 500 which is up by 4.34% on a year-to-date basis thus far.

Event & Impact

Nike posted fiscal 2023 third quarter results this week, beating Wall Street estimates on both the top and bottom lines. During Q3, NKE’s revenue totaled $12.39 billion, beating Wall Street’s consensus estimate by $910 million. Nike’s Q3 GAAP earnings-per-share came in at $0.79, beating Wall Street’s consensus estimate by $0.25/share.

Noteworthy News:

Nobias Insights

70% of recent articles published by credible authors focused on Nike shares offer a “Bullish” bias. 4 out of the 6 credible Wall Street analysts who cover NKE believe shares are likely to rise in value. The average price target being applied to Nike by these credible analysts is $129.50, which implies upside potential of approximately 3.1% relative to the stock’s current share price of $125.61.

Bullish Take

Shoshy Ciment, a Nobias 4-star rated author, said, “​​The athletic giant reported Q3 revenues of $12.4 billion, up 14% from the same time last year and ahead of expectations from analysts surveyed by Yahoo.”

Bearish Take

    Ananya Mariam Rajesh, a Nobias 4-star rated author, said, “Nike's shares fell 2% in extended trading on Tuesday after the company said it expects 2023 gross margin to decline about 250 basis points, at the low end of its previous forecast range.”

Nike (NKE) reported its fiscal 2023 third quarter results on Tuesday, beating Wall Street estimates on both the top and bottom lines. Also, Nike management raised full-year sales guidance, resulting in a beat and raise quarter. Yet, Nike’s share price is falling in the after hours on Tuesday evening, seemingly due to margin headwinds.

Looking at the sentiment being expressed towards NKE shares by both the credible authors and the credible Wall Street analysts that the Nobias algorithm follows, this post-earnings dip appears to represent a buying opportunity.  Both groups of credible individuals are collectively bullish on Nike shares moving forward.

Bullish Nobias Credible Analysts Opinions:

Shoshy Ciment, a Nobias 4-star rated author, published a review of Nike’s third quarter results at newsbreak.com.  She said , “The athletic giant reported Q3 revenues of $12.4 billion, up 14% from the same time last year and ahead of expectations from analysts surveyed by Yahoo.”

Ciment continued, “Net income was $1.2 billion, down 11% compared to the prior year.” She also noted, “Diluted earnings per share were $0.79, down 9% over the same time last year, but also ahead of analysts’ expectations for the quarter.” She mentioned the company’s wholesale segment as a particular bright spot during the quarter, with sales rising by 18% on a year-over-year basis, and she showed that this strength could continue as Nike continues to invest in wholesale partnerships alongside its direct-to-consumer ambitions.

“And just yesterday,” Ciment added, “Foot Locker said it has reignited a strong partnership with Nike , which previously indicated a move to limit the amount of product it would sell to the retailer. Nike will remain the standout brand in the retailer’s portfolio and will make up between 55% and 60% of Foot Locker’s total sales mix by 2026.”

SGB Media, a Nobias 4-star rated author, touched upon Nike’s operating segment results in the post-earnings report that they published on Tuesday afternoon.  The author wrote, “Nike Brand revenues were $11.8 billion, up 14 percent on a reported basis and up 19 percent on a currency-neutral basis, with double-digit growth in North America, the EMEA and APLA. Greater China grew 1 percent on a currency-neutral basis “despite a challenging December following the shift in the country’s COVID-19 policies.”’

They continued, “Converse revenues were $612 million, up 8 percent on a reported basis and up 12 percent on a currency-neutral basis, led by double-digit growth across all channels in North America, partially offset by declines in Asia.” “Nike Direct sales were $5.3 billion, up 17 percent on a reported basis and up 22 percent on a currency-neutral basis,” they wrote.

SGB Media also noted, “Nike Brand Digital sales increased 20 percent on a reported basis or 24 percent on a currency-neutral basis.” Lastly, they said, “Wholesale revenues grew 12 percent on a reported basis and 18 percent on a currency-neutral basis.”

Bearish Nobias Credible Analysts Opinions:

Despite Nike’s strong sales growth, shares dipped in the after hours trading season as the market digested the firm’s results and Ananya Mariam Rajesh, a Nobias 4-star rated author, explained why in the article that she published at Reuters on Tuesday.

Rajesh wrote, “Nike's shares fell 2% in extended trading on Tuesday after the company said it expects 2023 gross margin to decline about 250 basis points, at the low end of its previous forecast range.” She continued, “The company's margins remain pressured by a strong U.S. dollar, higher freight costs and Nike's efforts to offer steeper discounts in an attempt to get rid of excess inventory, Chief Financial Officer Matthew Friend said.” Yet, she went on to note that the company raised its full-year top-line growth estimate, implying that larger than expected sales, even with lower margins, could bolster Nike’s full-year bottom-line.  “Nike now expects reported revenue for the full year to increase in the high-single-digit range, compared with its previous forecast of growth in the mid single digits,” Rajesh said.

The credible analysts that the Nobias algorithm tracks have been bullish on Nike shares throughout 2023.   Kate Fitzsimons, who is a Nobias 5-star rated analyst, recently raised her firm’s price target on shares.   According to The Fly on the Wall, “Wells Fargo analyst Kate Fitzsimons raised the firm's price target on Nike to $146 from $135. The firm keeps an Overweight rating on the shares following its global sports apparel & footwear market share analysis given market dominance especially across footwear, and top-line and margin visibility looking to 2024.”

Two 4-star rated analysts also recently raised their price targets on Nike shares.  According to The Fly on the Wall, “HSBC analyst Erwan Rambourg raised the firm's price target on Nike to $125 from $100 and keeps a Hold rating on the shares. The analyst remains cautious on sporting goods names but sees "light at the end of the tunnel.”

Also, “Cowen analyst John Kernan raised the firm's price target on Nike to $141 from $131 and keeps an Outperform rating on the shares. The analyst raised his estimates and price target post the holiday period as promotions likely drove incremental top-line upside in N. America.”

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 4 out of the 6 credible analyst the Nobias tracks who have expressed opinions on NKE shares believe that they’re likely to increase in value. Currently the average price target being applied to Nike by these analysts is $129.50.

Compared to NKE’s closing price on Tuesday, March 21st, 2023, of $125.61, that represents upside potential of approximately 3.1%. Furthermore, 70% of recent articles written on Nike by the credible authors that the Nobias algorithm follows have expressed a “bullish” bias.

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.

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Nobias 3/17/23 Nobias 3/17/23

Case Study: Adobe (ADBE) stock according to high performing analysts

Not only did Adobe beat Q1 consensus estimates, but the company posted bullish guidance for its current quarter and raised its full-year 2023 guidance above Wall Street’s consensus.

Nobias Insights: 58% of recent articles published by credible authors focused on Adobe shares offer a “Bullish” bias. However, after the stock’s nearly 10% rally this week, all three credible Wall Street analysts who cover ADBE believe shares are likely to fall in value. The average price target being applied to Adobe by these credible analysts is $352.00, which implies downside potential of approximately 1.7% relative to the stock’s current share price of $358.14.

Bullish Take: Patrick Seitz, a Nobias 4-star rated author, said, “For its fiscal 2023, Adobe projected adjusted earnings per share of $15.30 to $15.60. The midpoint of $15.45 topped Wall Street's goal of $15.29. Adobe's previous earnings outlook called for $15.15 to $15.45 a share.””

Bearish Take: Vladimir Dimitrov, a Nobias 4-star rated author, said, “Adobe was late in its efforts to develop cloud-based collaboration platforms and had to play catch-up in many of its verticals.”

Key Points

Performance

Adobe shares rose by 9.75% this week, pushing their year-to-date gains down to 6.30. This compares favorably to the S&P 500 which is up by 2.92% on a year-to-date basis thus far.

Event & Impact

Adobe posted fiscal 2023 first quarter results this week, beating Wall Street estimates on both the top and bottom lines. During Q1, ADBE’s revenue totaled $4.66 billion, beating Wall Street’s consensus estimate by $40million. Adobe’s Q1 non-GAAP earnings-per-share came in at $3.80, beating Wall Street’s consensus estimate by $0.12/share.

Noteworthy News:

Not only did Adobe beat Q1 consensus estimates, but the company posted bullish guidance for its current quarter and raised its full-year 2023 guidance above Wall Street’s consensus.

Nobias Insights

58% of recent articles published by credible authors focused on Adobe shares offer a “bullish” bias. However, after the stock’s nearly 10% rally this week, all three credible Wall Street analysts covering ADBE believe shares are likely to fall in value. The average price target applied to Adobe is $352.00, implying a downside of approximately 1.7% relative to the stock’s current share price of $358.14.

Bullish Take

Patrick Seitz, a Nobias 4-star rated author, said, “For its fiscal 2023, Adobe projected adjusted earnings per share of $15.30 to $15.60. The midpoint of $15.45 topped Wall Street's goal of $15.29. Adobe's previous earnings outlook called for $15.15 to $15.45 a share.””

Bearish Take

    Vladimir Dimitrov, a Nobias 4-star rated author, said, “Adobe was late in its efforts to develop cloud-based collaboration platforms and had to play catch-up in many of its verticals.

Software-as-a-service (SaaS) companies have struggled over the past 12-18 months due to fears ignited by higher interest rates revolving around a slowing economy and less corporate capital expenditures being allocated towards enterprise software solutions. Adobe (ADBE) is one of the companies that have struggled, down by 19.40% during the trailing 12-month period.

However, during 2023, sentiment has shifted when it comes to the technology sector, the SaaS industry, and Adobe, in particular. The tech-heavy Nasdaq is up by 11.97% during 2023 thus far. The iShares Expanded Tech-Software Sector ETF (IGV) is up by 11.60% on a year-to-date basis.

Adobe shares are up by 6.3%, which lags its industry, but still outperforms the broader market (the S&P 500 is up by 2.92% on the year). ADBE shares experienced a significant rally this week, rising 9.75%, after the company reported a beat and raise quarter.

Bullish Nobias Credible Analysts Opinions:

Patrick Seitz, a Nobias 4-star rated author, covered Adobe’s first quarter earnings results in an article that he published at Investors.com this week. Seitz wrote, “Adobe stock rose Thursday after the digital media and marketing software firm beat Wall Street's targets for its fiscal first quarter and guided higher for the full year.” He said, “The San Jose, Calif.-based company late Wednesday said it earned an adjusted $3.80 a share on sales of $4.66 billion in the quarter ended March 3.”

Seitz highlighted the company’s top and bottom-line beats, stating, “Analysts polled by FactSet had expected Adobe to earn $3.68 a share on sales of $4.62 billion.” Looking at fundamental growth, Seitz said, “On a year-over-year basis, Adobe earnings rose 13% while sales climbed 9%.”

Regarding forward guidance, Seitz stated, “For the current quarter, Adobe predicted adjusted earnings of $3.78 a share on sales of $4.77 billion. That's based on the midpoint of its guidance. Analysts had expected earnings of $3.76 a share on sales of $4.75 billion in the fiscal second quarter.” “Also,” he added, “for its fiscal 2023, Adobe projected adjusted earnings per share of $15.30 to $15.60. The midpoint of $15.45 topped Wall Street's goal of $15.29. Adobe's previous earnings outlook called for $15.15 to $15.45 a share.”

AJ Fabino, a Nobias 5-star rated author, also covered Adobe’s earnings results in an article this week. Looking at Adobe’s operational success, Fabino wrote, “Its growth can be attributed to a 10% increase in digital media and a 14% surge in digital experience units. The digital media segment saw an 8% rise in creative cloud, with a 16% boost in the document cloud sub-segment.” He also highlighted Wall Street’s response to earnings, putting a spotlight on recent post-earnings analyst reports.

Fabino stated:

BMO Capital's Keith Bachman maintains a Market Perform rating and raised the price target from $390 to $395.
Wolfe Research's Alex Zukin reiterated an Outperform rating, raising the price target from $400 to $440.
UBS analyst Karl Keirstead maintains a Neutral rating, increasing the price target from $350 to $400.

None of these analysts is considered credible by the Nobias algorithm (they are not 4 or 5-star rated analysts); however, Sami Badri, who carries a Nobias 4-star rating, also came out with a post-earnings update this week, raising their firm's price target on ABDE shares.

According to The Fly on the Wall, “Credit Suisse analyst Sami Badri raised the firm's price target on Adobe to $350 from $325 and keeps a Neutral rating on the shares following the solid beat and raise quarter. Despite the solid print, the firm remains on the sidelines until it becomes clear the strong momentum will continue under macroeconomic uncertainties, the analyst tells investors in a research note.”

After their beat and raise quarter, ADBE shares rallied by 9.75% this week.  And, with that in mind, even though Badri raised their price target on shares, Adobe is now trading above their new $350 target, implying that the stock is no longer trading with an attractive valuation.

Bearish Nobias Credible Analysts Opinions:

Vladimir Dimitrov, a Nobias 4-star rated author, agrees that Adobe is trading near fair value at today’s levels, yet despite this, he is still cautious on shares.  In a recent article, Dimitrov highlighted Adobe’s strong business model and its industry leading margins.  “The business' unique positioning that caters to many small content creators, freelancers and small to medium businesses also results in the highest gross margins within the broader peer group of large cap software and cloud players,” he said.

Dimitrov continued, “Only Microsoft (MSFT), Alphabet (GOOG) and Oracle (ORCL) come anywhere close to Adobe when it comes to net income margins.” But, he said, “As we dig deeper into Adobe's strategy and capital allocation, some major problems begin to surface.”

“It is no secret to anyone that Adobe has been on an acquisition spree over the past decade or so,” wrote Dimitrov.   He stated, “Adobe has been following this strategy to support its sales growth by adding a number of platforms to its portfolio - from video collaboration to marketing, commerce and project management.” However, he said that this points to the fact “that Adobe was late in its efforts to develop cloud-based collaboration platforms and had to play catch-up in many of its verticals.”

Looking at Adobe’s most recent M&A activity, Dimitrov is worried.  “The most recent deal for Figma, however, is orders of magnitude larger than Adobe's previous deals,” he said.  He mentioned that the size of this deal “significantly increases integration risk” for Adobe and also points towards the idea that the firm overpaid for its target.

Dimitrov highlighted Adobe’s capital allocation strategy regarding stock buybacks and share based compensation as the cause for his concern.  He states that Adobe spends nearly all of its free cash flows to buy back shares.  “In and of itself, this is concerning to me,” Dimitrov wrote, “but we should also consider that this massive amount spent on share repurchases - more than $23bn since 2012, did little good to existing shareholders.” He noted that Adobe’s outstanding share count only fell by 8% over the last decade and signaled that the cash spent on these buybacks could have been more productively used elsewhere.

Dimitrov concluded his report by stating, “On the surface, Adobe appears as a very attractive long-term opportunity - a highly profitable and sticky business model that also appears to be trading near fair value.” But, he continued, “I am still having a hard time rating ADBE as a buy”.

Overall bias of Nobias Credible Analysts and Bloggers:

In terms of the credible authors that the Nobia algorithm tracks, Dimitrov is in the minority with his cautious stance. 58% of recent articles published on ADBE shares by credible authors have expressed a “Bullish” bias. Yet, when it comes to the credible Wall Street analysts that the Nobias algorithm follows who have expressed an opinion on Adobe, all price targets are bearish.

Currently, all three credible analysts have price targets that signal a falling share price and their average price target is $352.00. Today, ADBE shares closed at $358.14 and therefore, that credible analyst average price target implies downside potential of approximately 1.7%.

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.

Explore Nobias Finance

Nobias 3/17/23 Nobias 3/17/23

Case Study: First Republic Bank (FRC) stock according to high performing analysts

First Republic is known for having a high net worth clientele, which has caused fears of a bank run (since FDIC insurance only covers the first $250,000.00 of deposits). FRC has received $70 billion in funding this week from rival firms to help support its liquidity. Yet, its shares fell by 32.80% on Friday as fears about its survival remained.

Nobias Insights: 63% of recent articles published by credible authors focused on First Republic Bank shares offer a “Bullish” bias. One credible Wall Street analyst covering FRC believes shares are likely to rise in value. The average price target being applied to FRC by this credible analyst is $131.00, which implies upside potential of approximately 470% relative to the stock’s current share price of $22.97%.

Bullish Take: Bill Carcache of Wolfe Research, a 4-star Nobias rated analyst, said, “Wolfe Research analyst Bill Carcache lowered the firm's price target on First Republic to $131 from $133 and keeps an Outperform rating on the shares.

Bearish Take: Harrison Miller, a Nobias 4-star rated author, said, “S&P lowered FRC stock to a speculative-grade BB+ from its previous A- rating. Fitch gave First Republic a BB grade, down from A-, and put the bank on negative rating watch.”

Key Points

Performance

First Republic Bank shares fell by 19.40% this week, pushing their year-to-date gains down to -76.42%. This compares poorly to the S&P 500 which is up by 2.92% on a year-to-date basis thus far.

Event & Impact

First Republic Bank is under scrutiny by investors and analysts alike as another regional bank that could potentially fail in the near-term. Thus far, in recent weeks, there have been 2 regional bank failures, resulting in significant share price losses. Investors have been fleeing the financial sector in recent weeks as fears of contagion rise.

Noteworthy News:

Nobias Insights

63% of recent articles published by credible authors focused on First Republic Bank shares offer a “bullish” bias. The credible Wall Street analyst covering FRC believes shares are likely to rise in value. The average price target applied to FRC by this credible analyst is $131.00, which implies upside potential of approximately 470% relative to the stock’s current share price of $22.97%.

Bullish Take

Bill Carcache of Wolfe Research, a 4-star Nobias rated analyst, said, “Wolfe Research analyst Bill Carcache lowered the firm's price target on First Republic to $131 from $133 and keeps an Outperform rating on the shares. 

Bearish Take

    Harrison Miller, a Nobias 4-star rated author,  said, “S&P lowered FRC stock to a speculative-grade BB+ from its previous A- rating. Fitch gave First Republic a BB grade, down from A-, and put the bank on negative rating watch.”  

In the wake of the Silicon Valley Bank and Signature Bank failures this week, there has been enormous negative volatility across the financial sector.  Investors are running for the hills, hoping to avoid the next regional bank that goes under.

There has been speculation that First Republic Bank (FRC) is potentially in trouble in that regard; however, it also bears noting that FRC has received roughly $70 billion in emergency funding this week and the company’s CEO continues to harp upon his operation’s high quality.  Regardless, FRC shares are down by 76.42% on a year-to-date basis.  They’re down by 19.40% this week, alone.

Yet, despite this weakness, the credible authors and analysts that the Nobias algorithm tracks remain bullish on this embattled stock.

Bearish Nobias Credible Analysts Opinions:

Luc Olinga, a Nobias 4-star rated author, broke down First Republic’s business operations in an article published at The Tribune this week.  He said, “Founded in 1985, the bank offers private personal banking, private business banking and private wealth management. It's present in eight states: California, Oregon, Massachusetts, Florida, Connecticut, New York, Wyoming and Washington.”

“FRC has said that its client base is more diverse than that of Silicon Valley Bank, which relied heavily on startups and venture-capital firms in its client base,” Olinga continued.  “As of Dec. 31, 2022,” he said, “First Republic Bank had $212.6 billion in assets, according to a news release. Its 2022 revenue was $5.9 billion, up 16.5% from 2021, while the bank recorded 2022 net income of $1.7 billion, up 12.7%.”

But, despite this fundamental growth, Olinga highlighted concerns that First Republic, which is known for catering towards wealthy clientele, faces outsized risks of client withdrawals due to the large mount of high net worth individuals that it has as depositors.

“The two credit-rating companies are concerned about First Republic Bank's amount of uninsured deposits, those accounts that exceed the $250,000 FDIC limit. Holders of these accounts might become concerned and decide to withdraw their money, creating a run on the bank,” Olinga said.

Jim Hoft, a Nobias 4-star rated author, published an article at The Gateway Pundit this week showing pictures of clients lined up at a First Republic Bank location in Brentwood, a wealthy suburb of Los Angeles, signaling yet another bank run.

Harrison Miller, a Nobias 4-star rated author, covered FRC’s incredible volatility in an article that he published at Investors.com this week.  On Friday morning, Miller wrote, “First Republic Bank tumbled in early trade, dragging regional banks down, after suspending its dividend late Thursday. The San Francisco-based outfit received a $30 billion rescue deposit from America's 11 largest banks on Thursday.” He said, “The company says it plans tp [sic] focus on reducing borrowings and evaluating the composition and size of its balance sheet.”

Looking at recent share price moment, Miller stated, “Shares bolted 10% higher Thursday afternoon on news of a $30 billion rescue plan to bolster Federal Republic's liquidity.” But, after news of the dividend cut, shares of FRC opened up down 18% on Friday morning.

Regarding the $30 billion rescue deposit, Miller said, “Per the plan, Citigroup (C), Bank of America (BAC), Wells Fargo (WFC) and JPMorgan (JPM) will each make a $5 billion uninsured deposit to First Republic. Goldman Sachs and Morgan Stanley will both make a $2.5 billion uninsured deposit. And BNY Mellon (BK), U.S. Bancorp (USB), PNC Financial (PNC), Truist (TFC) and State Street (STT) will each make an uninsured deposit of $1 billion.”

‘"This action by America's largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities," the institutions wrote in the joint release,” Miller added.  He also quoted FRC’s CEO, Jim Herbert, who said,"First Republic's capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks," in the funding announcement.

Miller went on to highlight First Republic’s balance sheet and credit rating concerns, stating, “On Wednesday, ratings agencies S&P Global and Fitch downgraded First Republic, citing liquidity and funding risks.” “S&P lowered FRC stock to a speculative-grade BB+ from its previous A- rating. Fitch gave First Republic a BB grade, down from A-, and put the bank on negative rating watch,” he continued.

Miller also said, “On Monday, Moody's announced it was reviewing First Republic and five other regional banks for potential downgrades.” Lastly, he put a spotlight on Treasury Secretary Janet Yellen’s testimony to Congress regarding the strength of the U.S. financial system this week.   He wrote, “In her testimony, Yellen told Congress "that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them," according to prepared remarks.”

Huileng Tan, a Nobias 4-star rated author, published a report this week focused on S&P Global’s rating cut and commentary on First Republic in light of recent headlines surrounding a potential run on the bank and the firm’s outlook for FRC moving forward.

Tan quoted S&P Global Ratings analysts Nicholas Wetzel and Rian Pressman who said, "We believe the risk of deposit outflows is elevated at First Republic Bank despite the actions of federal banking regulators and the bank actively increasing its borrowing availability to mitigate risk associated with the bank failures over the last week.”

Bullish Nobias Credible Analysts Opinions:

Shanti Rexaline, a Nobias 4-star rated author, published a report this week which highlighted bullish tweets by Jim Cramer centered around First Republic Bank.  Rexaline wrote, “Celebrity stock picker and CNBC host Jim Cramer tweeted early Tuesday that First Republic is a bargain buy and he was surprised that a big broker wasn't interested in it.”

"Fear is so palpable that no one seems to want to step up and buy a very good bank like First Republic which can probably be had for one fourth of what it was worth three months ago," Cramer said "It has an amazing client base. Surprised a big broker isn't interested,” the CNBC host added.

In a separate article published on Friday morning, Rexaline highlighted commentary provided by hedge fund manager, Bill Ackman, who also weighed in on the First Republic Bank saga.  “Ackman noted that First Republic is a well-managed, well-capitalized, high-service bank with good assets and it is loved by its clients. First Republic is no SVB, he said, referring to the just-collapsed Silicon Valley Bank,” Rexaline wrote.  “It is caught up in a bank run due to no fault of its own. It does not deserve to fail,” he added.

Rexaline said, “He (Ackman) also reiterated that he has no long or short positions in the banking sector. He suggested that his interest in the issue stemmed from his extreme concern about the financial contagion risk spiraling out of control and causing severe economic damage and hardship.”

FRC shares are down by 82.06% during the last month.  And with this in mind, investors are wondering whether or not the risk is worth the reward when it comes to these beaten down shares.

There is only 1 credible Wall Street analyst who covered FRC shares recently; however, that individual is bullish on the stock.  That analyst is Bill Carcache of Wolfe Research, a 4-star Nobias rated analyst, who has a $131.00/share price target on FRC shares.

According to a recent report published by The Fly on the Wall, “Wolfe Research analyst Bill Carcache lowered the firm's price target on First Republic to $131 from $133 and keeps an Outperform rating on the shares. The analyst sees "meaningful opportunities" for generating alpha through stock selection across mid-cap banks and consumer finance. Carcache sees value in pairing bank names with higher earning asset betas better earning asset repricing profiles, lower deposit betas, greater liquidity, and more excess capital against those at the other end of the spectrum. However, it is "too early to turn bullish" on card issuers, says Carcache, who expects further relative underperformance given their outsized exposure to the low-end consumer.” This is his most recent FRC update (as of 3/17/2023).

Overall bias of Nobias Credible Analysts and Bloggers:

63% of recent articles published on FRC shares by the credible authors that the Nobias algorithm tracks have expressed a “bullish” bias towards shares.

Currently FRC shares trade for $22.97. Therefore, Carcache’s price target represents potential upside of approximately 470%.

Disclosure: Nicholas Ward has no FRC 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.

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Nobias 3/16/23 Nobias 3/16/23

Case Study: Pfizer (PFE) stock according to high performing analysts

In an attempt to generate growth, Pfizer announced a $43 billion acquisition this week. The company is attempting to buy Seagen, which is a powerhouse in the oncology industry. Also, Pfizer recently received approval for its RSV vaccine, which has the potential to generate an estimated $10 billion in annual sales.

Nobias Insights: 57 of recent articles published by credible authors focused on Pfizer shares offer a “Bullish” bias. Only two out of six credible Wall Street analysts who cover PFE believe shares are likely to rise in value. However, the average price target being applied to Pfizer by these credible analysts is $49.84, which implies upside potential of approximately 23.4% relative to the stock’s current share price of $40.37.

Bullish Take: Spencer Kimball, a Nobias 4-star rated author, said, “The Food and Drug Administration’s independent advisors on Tuesday recommended what would be the world’s first RSV vaccine, a shot from Pfizer for adults ages 60 and older, despite safety concerns after two trial participants developed a rare neurological disorder.”

Bearish Take: Ned Pagliarulo, a Nobias 4-star rated author,said, “Pfizer is under pressure to make up for declining revenue from its COVID vaccine and antiviral treatment, sales of which are forecast to drop significantly this year and stay lower in the future.”

Key Points

Performance

Pfizer shares rose by 1.89% this week; however, on a year-to-date basis, PFE shares are still down by 21.24%. This compares poorly to the S&P 500, which is up by 3.15% on a year-to-date basis thus far.

Event & Impact

Pfizer continues to struggle to find growth in the post-COVID-19 era. This company saw massive sales and earnings growth throughout 2021 and 2022 due to its COVID-19 vaccine success, but now the company must generate growth elsewhere.

Noteworthy News:

Nobias Insights

57% of recent articles published by credible authors focused on Pfizer shares offer a “Bullish” bias. Only two out of six credible Wall Street analysts covering PFE believe shares are likely to rise in value. However, the average price target applied to Pfizer by credible analysts is $49.84, implying upside potential of approximately 23.4% relative to the stock’s current share price of $40.37.

Bullish Take

Spencer Kimball, a Nobias 4-star rated author, said, “The Food and Drug Administration’s independent advisors on Tuesday recommended what would be the world’s first RSV vaccine, a shot from Pfizer for adults ages 60 and older, despite safety concerns after two trial participants developed a rare neurological disorder.”

Bearish Take

    Ned Pagliarulo, a Nobias 4-star rated author, said, “Pfizer is under pressure to make up for declining revenue from its COVID vaccine and antiviral treatment, sales of which are forecast to drop significantly this year and stay lower in the future.”

The healthcare sector continues to be one of the worst performing areas of the market throughout 2023. The S&P 500 average is up by 3.15% on a year-to-date basis; however, the Health Care sector is down by 6.56%. One of the worst performing large-cap biopharmaceutical stocks on the year is Pfizer, which is down by more than 21% on a year-to-date basis. During the trailing 12-month period, PFE shares are down by 23.72%.

This weakness comes on the heels of its massive COVID-19 success. During 2021 and 2022, Pfizer saw its earnings per share rise by 99% and 49%, respectively, due to the COVID-19 vaccine that it helped to develop with Moderna.

However, in 2023, PFE’s bottom-line is expected to fall by nearly 50% and the credible analysts that Nobias tracks are questioning where the company’s future growth will come from?

Bullish Nobias Credible Analysts Opinions:

With regard to pivoting away from COVID-19 sales and looking for growth from other drugs, Spencer Kimball, a Nobias 4-star rated author, published an article at CNBC this week that highlighted Pfizer’s break through in the RSV vaccine market.

Kimball wrote, “The Food and Drug Administration’s independent advisors on Tuesday recommended what would be the world’s first RSV vaccine, a shot from Pfizer for adults ages 60 and older, despite safety concerns after two trial participants developed a rare neurological disorder.” He continued, “A majority of the FDA committee members backed the vaccine, but they wrestled with separate votes on whether the safety and efficacy data are adequate to support an approval by the agency. The FDA is expected to make its decision in May.”

Taking a look at the safety concerns surrounding the vaccine, Kimball said, “The vote followed concerns at the FDA and among advisory committee members about two cases of Guillain-Barre syndrome in about 20,000 vaccine recipients.” Regarding Guillain-Barre, Kimball wrote, “Symptoms can range from brief weakness to paralysis. Most patients, even those with severe cases, recover.”

Looking at Pfizer’s RSV vaccine data, Kimball said, “The shot was about 86% protective against lower respiratory tract illness with three or more symptoms, and 66.7% effective against the same condition with two or more symptoms, according to an FDA review of Pfizer’s data.”

“Pfizer estimates that if 50% of people ages 60 and older receive the shot, the vaccine could prevent more than 5,000 deaths, 68,000 hospitalizations, 51,000 emergency department visits and more than 422,000 outpatient visits,” he concluded.

Ian Lyall, a Nobias 4-star rated author, also covered the breaking RSV vaccine news in a report that he published at Proactive Investors this week, noting that, “The panel voted 7-4 in favour of the new drug, citing data from the company's study which showed the shot was effective and safe in preventing lower respiratory tract disease caused by RSV in people aged 60 years and older.”

Lyall mentioned that other drug makers such as GSK PLC, Johnson & Johnson, Moderna, and Merck are also racing for final approval.  Looking at the financial implications of this potential approval, Lyall said, “The RSV vaccine market is estimated to be worth US$5bn to US$10bn.”

In even bigger news regarding Pfizer’s drug pipeline and future growth plans, on Monday, March 13th, 2023, news broke that Pfizer had agreed to acquire Seagen (SGEN) in a $43 billion M&A (mergers and acquisitions) deal. Plans surrounding this deal were discussed in a press release that Pfizer published titled, “Pfizer Invests $43 Billion to Battle Cancer”

Bearish Nobias Credible Analysts Opinions:

Ned Pagliarulo, a Nobias 4-star rated author, covered this M&A move in an article published at BioPharma Dive this week.  Pagliarulo said, “Pfizer is under pressure to make up for declining revenue from its COVID vaccine and antiviral treatment, sales of which are forecast to drop significantly this year and stay lower in the future.” To do so, he said, “Pfizer has agreed to buy Seattle-based Seagen for $43 billion in a blockbuster deal that would unite the pharmaceutical giant with a biotechnology company that pioneered a new type of tumor-killing medicine.”

Pagliarulo noted that, “Seagen specializes in a type of cancer therapy known as an antibody-drug conjugate, and has steadily improved on the technology since its founding in 1997.” Looking at the size and scale of this deal, Pagliarulo wrote, “The acquisition is the largest Pfizer has attempted since its 2009 purchase of Wyeth, and is the most sizable in the drug industry by value since AbbVie’s $63 billion buyout of Allergan in 2019.”

“Pfizer’s acquisition offer of $229 per share values Seagen at a 33% premium to the stock’s closing price Friday,” he said, touching upon the M&A premium that Pfizer management decided to pay.  “Pfizer described the deal, for which it will take out $31 billion in new debt, as an opportunity to replicate its COVID-19 success in cancer, an area it has increasingly prioritized,” Pagliarulo added.

Pagliarulo noted that this deal has the potential to double Pfizer’s early stage drug pipeline while still resulting in increased profitability in the near-term.  “Pfizer expects the deal will boost its revenue immediately and be neutral to slightly accretive to earnings per share by the third or fourth full year after the deal’s completion,” he wrote.   “Together,” Pagliarulo said, ‘Seagen’s four medicines are expected to earn an estimated $2.2 billion this year, a figure Pfizer anticipates will increase to greater than $10 billion annually by 2030.”

Alex Philippidis, a Nobias 4-star rated author, wrote an article this week highlighting one of the primary reasons why he believes Pfizer made this deal: upcoming patent cliffs.  In the pharmaceutical industry, limited duration patent protections mean that companies must continually re-invest themselves as generic competition eventually eats away at drug sales and profits.  And, as Philippidis points out, Pfizer is about to face a major patent cliff issue with its oncology portfolio.

Taking a look at Seagen’s portfolio of drugs, Philippidis wrote, “Seagen currently markets four drugs that generated a combined $1.707 billion in net product sales last year, up 23% from $1.386 billion in 2021. Three are ADCs—Adcetris, indicated for some forms of large cell lymphoma as well as Hodgkin’s lymphoma; the urothelial cancer drug Padcev® (enfortumab vedotin‐ejfv); and the cervical cancer treatment Tivdak® (tisotumab vedotin-tftv). Seagen’s fourth drug, Tukysa® (tucatinib) is a tyrosine kinase inhibitor indicated for some forms of breast and colorectal cancer.” He continued, “Adcetris finished 2022 with near-blockbuster net product sales of $839 million (up 19% from $706 million in 2021); followed by Pacdev, $451 million (up 33% from $340 million); Tukysa, 353 million (up 6% from $334 million); and Tivdak, $63 million (up more than 10-fold from $6 million).”

And, as Pagliarulo also mentioned, there are high expectations for these drug sales to grow over the next decade.  “By 2030, Berens has estimated, Seagen’s four marketed drugs will rack up a combined $8 billion-plus in revenues: Adcetris will more than double in sales to $2.2 billion, Pacdev will balloon nearly 10-fold to $4.1 billion, Tukysa to $1.6 billion, and Tivdak to $560 million,” Philippidis wrote.

This is important because Pfizer has significant near-term patent cliffs which will negative impact its current slate of oncology drugs.  “By 2027,” Philippidis said, “Pfizer can also expect to lose the alliance revenue it collects from having co-developed prostate cancer drug Xtandi® (enzalutamide) with Astellas Pharma (an estimated $1.4 billion in 2024). And in 2028, Pfizer will lose patent protection for breast cancer treatment Ibrance® (palbociclib), projected to generate $5 billion in 2024. Those three drugs account for a combined $7.5 billion or 60% of the $12.5 billion in oncology revenue that Pfizer is projected to make in 2024.”

Solving this issue is of utmost importance for the company which is already seeing sales headwinds in its COVID-19 vaccine division.  After Pfizer’s recent Q4 earnings report, we saw several credible Wall Street analyst rescue their price targets on PFE shares.

According to The Fly on the Wall, “Barclays analyst Carter Gould lowered the firm's price target on Pfizer to $44 from $49 and keeps an Equal Weight rating on the shares post the Q4 results. The analyst reduced COVID-19 2023 sales expectations and says the greater risk is still to the downside with the end of the public health emergency on the horizon. The firm sees a difficult setup to underwrite rising demand versus current levels. “ Gould is a Nobias 5-star rated analyst.

The Fly on the Wall also noted that,“Wells Fargo analyst Mohit Bansal downgraded Pfizer to Equal Weight from Overweight with a price target of $50, down from $54. Bansal thinks an earnings down-revision cycle is coming in the near-term and sees margin pressure on the core business due to increased investments in new launches. While he thinks the company could have an attractive long-term profile, the analyst thinks a "COVID reset" may be needed before the stock could work again.” Bansal is a Nobias 4-star rated analyst. It appears that Pfizer’s $43 billion Seagen deal is a part of that “reset” .

Overall bias of Nobias Credible Analysts and Bloggers:

And, despite the negative commentary provided by credible analysts after Pfizer’s most recent quarter, the stock’s -21.24% year-to-date performance has pushed shares well below the average price target that these same credible individuals have applied to shares. Currently, PFE shares trade for $40.37 which implies 23.4% upside potential relative to the average credible analyst price target of $49.83%.

Furthermore, 57% of recent articles published on PFE shares by the credible authors are Nobias tracks have expressed a “Bullish” bias towards shares, signaling a buy-the-dip mentally into the stock’s double digit sell-off.

Disclosure: Nicholas Ward has no PFE 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.

Explore Nobias Finance

Nobias 3/11/23 Nobias 3/11/23

Case Study: JD.com (JD) stock according to high performing analysts

JD.com beat Q4 estimates; however, the company provided full-year 2023 growth guidance which disappointed investors. The company’s sales growth trajectory has slowed from the 20% mark to the mid-single digits. But, management did initiate a shareholder dividend for 2023, which could appease investors looking for more shareholder returns.

Nobias Insights: 53% of recent articles published by credible authors focused on JD.com shares offer a “Neutral” bias. There are zero credible Nobias analysts who track JD.com shares. However 6 out of the last 6 articles published by credible authors have expressed “Bullish” sentiment towards shares throughout its recent sell-off.

Bullish Take: Cavenagh Research, a Nobias 5-star rated author, said, “While I acknowledge investors' disappointment that JD's short-term outlook may be more challenging than anticipated, I maintain a positive outlook on the e-commerce giant's long-term potential. And reflecting on a competitive business model, paired with a cheap valuation, I reiterate a "Buy" recommendation.”

Bearish Take: Vidhi Choudhary, a Nobias 4-star rated author, said, “Consumer spending in the country has slowed after years of stringent restrictions meant to mitigate the coronavirus pandemic. While most of these restrictions lifted in December, that hasn’t yet translated to shoppers spending a lot more money. In turn, China reported just 3% economic growth in 2022 — one of the lowest numbers reported in decades.”

Key Points

Performance

JD.com shares fell by 14.58% this week, pushing their year-to-date losses down to -29.72%. This compares poorly to the S&P 500 which is up by 0.98% on a year-to-date basis thus far and the Nasdaq Composite Index, which is up by 7.24% on the year.

Event & Impact

JD.com posted fourth quarter results this week, beating Wall Street estimates on both the top and bottom lines. During Q4, JD.com’s revenue totaled $42.8 billion, beating estimates by $190 million. JD’s Q4 non-GAAP earnings-per-share came in at $0.70, beating Wall Street’s consensus estimate by $0.20/share.

Noteworthy News:

Nobias Insights

53% of recent articles published by credible authors focused on JD.com shares offer a “Neutral” bias. There are zero credible Nobias analysts who track JD.com shares. However 6 out of the last 6 articles published by credible authors have expressed “Bullish” sentiment towards shares throughout its recent sell-off.

Bullish Take

Cavenagh Research, a Nobias 5-star rated author, said, “While I acknowledge investors' disappointment that JD's short-term outlook may be more challenging than anticipated, I maintain a positive outlook on the e-commerce giant's long-term potential. And reflecting on a competitive business model, paired with a cheap valuation, I reiterate a "Buy" recommendation.”

Bearish Take

    Vidhi Choudhary, a Nobias 4-star rated author, said, “Consumer spending in the country has slowed after years of stringent restrictions meant to mitigate the coronavirus pandemic. While most of these restrictions lifted in December, that hasn’t yet translated to shoppers spending a lot more money. In turn, China reported just 3% economic growth in 2022 — one of the lowest numbers reported in decades.”

JD.com (JD), one of the largest eCommerce companies from China, reported its fourth quarter earnings results this week, sparking a double digit sell-off. JD.com shares fell by 14.58% this week, pushing their year-to-date losses down to 29.79%. After this recent weakness, JD.com’s market capitalization sits at $63.3 billion, meaning that it’s still one of the largest publicly traded Chinese stocks in the world.

There are no credible Wall Street analysts that Nobias tracks who cover this stock; however, according to Yahoo Finance there are 38 analysts who have provided price targets for JD shares. Currently, the average price target for JD across Wall Street is $78.07, which implies upside potential of approximately 93%.

Although there are no Nobias credible analysts who track JD.com, there are credible authors who have recently published articles on the stock and its recent earnings report.

Bearish Nobias Credible Analysts Opinions:

Vidhi Choudhary, a Nobias 4-star rated author, covered JD.com’s latest earnings report in an article that she published at Modern Retail this week. Choudhary highlighted JD’s top-line results, stating, “JD.com’s revenue in the fourth quarter was $42.8 billion, a 7% year-over-year increase.” “In comparison,” she noted, “the Beijing-based company reported a 23% rise in revenue during last year’s fourth-quarter earnings.”

“The company’s slowing revenue growth is indicative of the challenging economic environment many Chinese companies are facing,” Choudhary said.  Looking at the tough macro environment that JD continues to face, Choudhary wrote, “Consumer spending in the country has slowed after years of stringent restrictions meant to mitigate the coronavirus pandemic. While most of these restrictions were lifted in December, that hasn’t yet translated to shoppers spending a lot more money. In turn, China reported just 3% economic growth in 2022 — one of the lowest numbers reported in decades.”

Moving on, Choudhary highlighted the company’s new forward guidance, stating, “For the full year, JD.com’s revenue was $151.7 billion, a 9.9% increase compared to 2021. Meanwhile, the e-commerce giant swung to a profit of $400 million from a loss of $810 million at the end of the fourth quarter last year.”

“According to Neil Saunders, managing director for retail at consulting firm GlobalData, the fact that JD is still pumping out growth is very positive,” she added. Choudhary quoted Saunders, who said, “I also take quite a lot of comfort in some of the things that JD is doing with its marketplaces and with its sites. I think there’s a lot of innovation there, especially trying to grow third-party merchants, trying to grow the number of brands, bringing a lot more products, partner with Western companies and I think their partnership with Tiffany to sell more in China.”

It appears that JD.com’s guidance is what sparked this week’s sell-off.

Bullish Nobias Credible Analysts Opinions:

Cavenagh Research, a Nobias 5-star rated author, published a post-earnings report this week at Seeking Alpha which stated, “Although the Chinese e-commerce giant posted a solid/mixed performance in the December quarter, investors were arguably disappointed about somewhat softer than expected FY 2023 guidance.”

Like Choudhary, Cavenagh Research focused on JD.com’s top-line results, stating, “During the period from September to end of December, China's largest e-commerce platform generated sales of about $42.43 billion, as compared to approximately $42.2 billion expected by analysts (according to data collected by Bloomberg).”

The author continued, “In addition, although JD materialized a 7% year-over-year expansion versus the same period one year earlier, the company's growth slowed down sharply compared to a rolling 5-year CAGR of greater than 20%.”

Despite this top-line slowdown, Cavenagh Research was bullish on the company’s profit-related results.  They wrote, “With regard to profitability, JD's operating income increased from about $0.76 billion in Q4 2021 to $1.14 billion in Q4 2022 - driven by a slight topline expansion as discussed, paired with a 90 basis point jump in the operating income margin.”

“On a similar note,” Cavenagh Research said, “JD's non-GAAP net income attributable to shareholders increased to $1.1 billion, doubling as compared to $500 million during the same period in the previous year, and beating consensus estimates by close to $150 million (according to data collected by Bloomberg).”

Cavenagh Research touched upon the macro issues that JD.com faces in China right now, but concluded that the stock’s long-term growth potential remained intact. They stated, “JD's Q4 2022 results were not too bad - certainly not bad enough to justify an 11% sell-off -- in my opinion.”

Summing up their report, Cavenagh Research said, “While I acknowledge investors' disappointment that JD's short-term outlook may be more challenging than anticipated, I maintain a positive outlook on the e-commerce giant's long-term potential.” And reflecting on a competitive business model, paired with a cheap valuation, I reiterate a "Buy" recommendation.”

With JD.com’s bottom-line growth in mind, it’s important to acknowledge that the company’s board of directors approved a shareholder dividend for the first time.  This was announced during the company’s official Q4 report.

Sandy Xu, Chief Financial Officer of JD.com, said: "We achieved profitable growth and strong cash flow for the quarter and full-year. While we explore new growth opportunities, we will continue our focus on financial discipline and technology-driven operational efficiency to build a solid foundation for JD.com’s future high-quality growth. Reflecting our healthy profitability and balance sheet and commitment to shareholder value, we are also pleased to continue to return value to shareholders in the form of a cash dividend."

Seeking Alpha reported that JD declared a $0.62/share dividend, which will be paid on May 4th, 2023 to shareholders of record on April 6th, 2023. Moving forward, with regard to future dividend payments, JD.com stated: “In addition, the company plans to adopt an annual dividend policy, under which the company may choose to declare and distribute a cash dividend each year, starting from 2023, at an amount determined in relation to the company’s financial performance in the previous fiscal year, among other factors.”

Overall bias of Nobias Credible Analysts and Bloggers:

Overall, 53% of recent articles published by credible authors on JD.com expressed opinions that the stock will rise in value, resulting in an overall “Neutral” bias rating.

However, 6 out of the last 6 articles published by credible authors on JD have expressed “Bullish” sentiment, signaling that the stock’s recent sell-off is presenting a compelling contrarian opportunity.

Disclosure: Nicholas Ward has no JD 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.

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