ETSY with Nobias technology: Down 29% From All-Time Highs, Is Etsy A Buy?

Etsy (ETSY) has been one of the best stocks to own over the last 5 years. After a shaky post-IPO period (Etsy IPOed in 2015), the stock has posted total returns of more than 1,758% during the trailing 5-year period.  The company was a big winner during the 2020 COVID-19 pandemic period, due to the unique nature of the stay-at-home economy that developed (specifically related to an increase in online shopping and the ongoing development of the side-hustle/gig economy).  However, during 2021, Etsy underperformed the markets.  The S&P 500 was up approximately 27% last year; however, Etsy shares were only up 23.06%.  This underperformance is due to Etsy’s Q4 sell-off.  After hitting 52-week highs of $307.75 in late November, Etsy shares sold off precipitously throughout the month of December, falling nearly 29% from the highs.  So, with this strong double digit sell-off in mind, we wanted to take a look at what the credible analysts that are tracked and rated by the Nobias algorithm have had to say about the stock recently and see if this is a dip worth buying.  

Nobias 5-star rated analyst, Shrilekha Pethe, recently explored Etsy’s competition position in a report which was focused on the health of the eCommerce industry as we head into 2022 and came to the conclusion that Etsy’s recent sell-off represents a relatively attractive buying opportunity.  First of all, Pethe highlighted Etsy’s recent Q3 results writing, “When it comes to revenues, Etsy posted revenues of $532.4 million in Q3, an increase of 17.9% year-over-year. However, diluted earnings came in at $0.62 per share versus $0.70 per share in the same period last year.”

This negative year-over-year bottom-line growth has certainly factored into Etsy’s recent weakness; however, Pethe points out that Guggenheim analyst Oliver Hu recently said that Etsy is “one of the best positioned companies this holiday” and therefore, she believes that the Q3 disappointment may not last.  Hu’s bullish opinion is based, in part, on data from website data analytics firm Apptopia which points towards Etsy app sessions being up 54% on a year-over-year basis during the early Q4 period.  Hu also says that Etsy’s website and app performance is improving with a lower bounce rate, which presents the percentage of users who leave the website after visiting just one page. 

ETSY Dec 2021

Furthermore, Pethe, says “the TipRanks Website Traffic data supports this view”, indicating that “total unique visitors on all devices to the company's website year-to-date are up 19.39% in comparison to the same period last year.”  All in all, the holiday season analytics point towards a lucrative Q4 for Etsy.  

Neil Patel, a Nobias 5-star rated author, also recently published a bullish article focused on Etsy titled, “Here's Why You Should Buy Etsy Stock and Hold for the Next Decade”.  In this piece, Patel highlights the increasing benefits that Etsy is able to experience as its online scale continues to expand.  

Patel wrote, “Over the first nine months of 2021, the company's net profit margin was a stellar 20.6%. Etsy has shown it benefits greatly from operating leverage. In other words, net income rises faster than sales thanks to a largely fixed cost structure. In 2015, the business wasn't even profitable (annual loss of $54 million), which shows you just how quickly management has been able to boost the bottom line.”

Patel notes that Etsy has recently seen its active buyers and sellers increase significantly.  In a separate article which Patel published on December 11st, 2021, he wrote, “As of Sept. 30, Etsy had 96.0 million active buyers (up 37.8% year over year) and 7.5 million active sellers (up 102.7% year over year) on its platform.”  And, he says, this increasing scale doesn’t only result in increased cash flows via sales (due to the company’s increasing take rate when it comes to the foods sold).  

Patel wrote, “In addition to charging mandatory fees for listing, transaction, and payments services, Etsy offers ads and shipping features.”  Lastly, he says that the “most important” thing that investors need to remember when it comes to Etsy is that this is a highly profitable, asset light business model.  Patel said, “Because Etsy's marketplace simply connects buyers and sellers, it holds no inventory, freeing up capital that would otherwise be tied up. Over the past 12 months, the business produced $584.4 million of free cash flow on revenue of $2.2 billion.”  

In recent quarters, Etsy has seen its market share of eCommerce sales fall.  This has factored into its recent sell-off as investors and analysts alike wonder if the 2020 pandemic period will represent peak interest in Etsy from consumers.  However, Patel believes that the secular growth trends that continue to push the entire eCommerce industry’s annual sales volumes higher will benefit Etsy as well.  He wrote, “Although e-commerce's share of overall retail sales fell to 13% in the third quarter, down from nearly 16% during the height of the pandemic last year, the ongoing shift away from brick-and-mortar retail is undeniable.”  This is clearly shown by the company’s continued sales growth.  

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.

Patel points out that “Management expects full-year 2021 revenue to jump 32.5%, an impressive gain when compared to the monster 111% growth registered in 2020.” Furthermore, Patel notes that Etsy has plans to capture international market share in the fast growing eCommerce space.  He said, “Looking ahead, Etsy has a huge opportunity in markets outside the U.S. India, for example, can meaningfully expand the company's already massive $1.7 trillion addressable market. The South Asian nation was recently added as a core geography for Etsy (the others being the U.S., U.K., Canada, Germany, Australia, and France), a sign management views the country as extremely promising long term.”  He concludes his bullish report saying, “Etsy is still a great business with the financial base and growth to help lift your portfolio. Use the recent market volatility to your advantage, and consider buying the stock at these levels.  I plan on owning this business for a very long time.”  

When looking at the data collected by the Nobias algorithm, it appears that the credible authors and credible Wall Street analysts alike, share Patel’s bullish outlook.  89% of the recent articles that we’ve tracked which have been published by credible authors focused on Etsy recently have expressed a “Bullish” opinion on shares.  Looking at the 4 and 5-star rated analysts that we track, the average price target for ETSY shares is currently $278.22.  Today, ETSY trades for $218.94. This means that the average price target provided by credible analysts represents upside potential of approximately 27%.  

Disclosure:  Nicholas Ward has no ETSY position.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

LOW with Nobias technology: After 61% Gains in 2021, Is Lowe’s Still A Buy?

The home improvement section has been on an absolute tear during the last couple of years, due to the strong housing market and the stay-at-home economy created by the COVID-19 pandemic (millions of people had to build home offices and even if you didn’t, if you’ve been stuck at home because of COVID protocols, a renovation might have been top of mind).  The home improvement space is largely dominated by two retailers: Lowe’s (LOW) and Home Depot (HD).  

Both of these stocks were big winners during 2020, with Home Depot posting gains of 22.2% and Lowe’s posting gains of 33.7%.  Both companies saw that bullish momentum pour into 2021 as well, with Home Depot rising another 56.2% and Lowe’s gaining 61.04%.  Both companies are highly sought after because of their market-beating returns (for comparison’s sake, the S&P 500 was up approximately 16% in 2020 and 27% in 2021); however, during the last couple of years, it’s clear that Lowe’s in the top performer.  

Since LOW recently posted its Q3 earnings data, we wanted to take a look at this stock to see whether or not the credible authors and analysts tracked by the Nobias algorithm believe that the stock’s positive trajectory is likely to remain in place as we head into the new year.  In short, according to the Nobias community, is LOW a buy here trading near all-time highs? Let’s find out. 

LOW Dec 2021

In a recent Motley Fool podcast, Nobias 5-star rated author, Brian Withers and Nobias 3-star rated analyst, Parkev Tatevosian had a discussion regarding LOW’s recent earnings report. Tatevosian highlighted the top and bottom line results saying, “This morning, Lowe's reported Q3 revenue came in at $22.9 billion, which handily beat estimates of $21.7 billion, up about 3% year over year. Earnings per share $2.73, also beating estimates of $2.30, and up almost 40% year over year.” He continued, “The results were good enough to get management to raise the outlook for the rest of the year. They now expect revenue of $95 billion, that's up from the previously expected $92 billion.”  

Withers touched upon the year-over-year same-store-sales comparison growth that Lowe’s posted, saying, “Yeah, I looked up the same-store comps. They weren't as high as Home Depot's. They came in at 2.2%. But as I remember this same quarter last year, their comps were astounding. They had U.S. sales comps of 30%, so that 2% is on top of a 30% from a year ago. Even though it doesn't sound super-impressive, it's building on the momentum from last year, and I think investors should be excited about that.”   Tatevosian concluded the conversation, echoing Withers’ bullish point, “For this year to be growing on top of that is what's really impressive for Lowe's.”  

Madeleine Johnson, a Nobias 4-star rated analyst, also recently highlighted her bullish outlook on Lowe’s in an article at Zack’s.   She began by touching upon the same store sales growth as well, saying, “Comparable store sales increased 2.2% year-over-year, with inflation and big-ticket sales (like appliances and flooring) resulting in a 9.7% increase in the average ticket.” But, as she points out, it wasn’t just revenues that were increasing, but also operational efficiency as well.  Johnson wrote, “Operating margin expanded 240 basis points to 12.2%”.  

Johnson quoted Lowe’s CEO, Marvin Ellison, who touched upon the increased demand for home renovation projects during the pandemic period in the Q3 conference call when he said, “After Labor Day, we saw an increase in DIY demand on the weekends as travel activity slowed down and children returned to school. As a result, consumers were once again spending more time on projects in their homes.”  Johnson added, “Management expects these sales trends to continue into Q4 now that the weather is getting colder and people are spending more time at home.”  

Looking ahead to Q4 and therefore, full-year 2021 results, Johnson said, “For fiscal 2021, 12 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 62 cents to $11.91 per share. Earnings are expected to jump more than 34% compared to the prior year period.” She continued, touching upon the increasingly bullish sentiment surrounding Lowe’s looking into the new year as well, saying, “Fiscal 2022 looks strong too; 12 analysts have upped their outlook as well, and our consensus estimate has increased 78 cents to $12.60 per share.”

Johnson shed light on the fact that Lowe’s isn’t just providing shareholders with strong capital gains, but also, reliably increasing passive income.  She wrote, “Plus, Lowe’s is a Dividend King, having raised its dividend for 59 straight years.” She concluded her report by doubling down on the idea that the pandemic has created a new-normal environment, centered around the consumer’s home, saying, “Even throughout this year’s economic reopening, it’s become clear that the home is now an even more essential place for people; we're still choosing to exercise at home, entertain at home, and work from home, and this kind of consumer behavior will only continue to benefit companies like Lowe’s.” 

Nobias 4-star rated author, Kody Kester, recently provided his take on the Q3 report at The Motley Fool.  In his bullish piece, Kester highted not only Lowe’s dividend growth results (also noting that it is a Dividend King) but also the company’s strong stock buyback as well.  He wrote, “Management has been aggressively repurchasing shares too, which explains the staggering 8.2% year-over-year reduction in its weighted-average share count. When factoring in the company's higher revenue base, improved margins, and lower share count, it makes sense Lowe's was able to grow its non-GAAP diluted earnings per share (EPS) 37.9% to $2.73.”

On December 15th, Lowe’s provided investors with its fiscal 2022 outlook, which not only touched upon continued growth prospects, but also, more share repurchases.  The press release read: “Based on its confidence in the company's continued growth trajectory and cash flow generation capabilities, the Board of Directors has authorized a new $13 billion common stock repurchase program.  This new repurchase program has no expiration date and adds to the previous program's balance, which was $7.3 billion as of December 14, 2021.  The company now has total share repurchase authorization of approximately $20 billion”   With this in mind, it’s likely that the continued reduction of LOW’s outstanding share count will help bolster earnings-per-share growth moving forward into 2022 (just as it has in 2021).  

In Kester’s article, he highlighted Lowe’s balance sheet data, showing that these strong shareholder returns (both in the form of dividends and stock buybacks) are sustainable, fundamentally.  Regarding the balance sheet, Kester wrote, “Lowe's has $18.56 billion in net debt, and it generated $13.61 billion in trailing-12-month earnings before interest, taxes, depreciation, and amortization (EBITDA). This equates to a net debt-to-EBITDA ratio of 1.4, which is well within the acceptable range for a retailer of this scale.”  

And, with specific regard to dividend safety and future dividend growth potential, he said, “And based on analysts' estimates for earnings of $11.94 per share this year against a dividend payout of $2.80 per share, Lowe's payout ratio of 23% leaves plenty of room for the dividend to sustain its decades-long growth streak.”   Kester was also bullish on the company’s continued success in the eCommerce arena.  He wrote, “And the company has positioned itself well in the age of e-commerce, as evidenced by the fact Lowe's.com sales were up 25%. This came on top of the 106% sales growth for Lowes.com in the same quarter last year.”  He concluded his article putting a spotlight on Lowe’s valuation.  

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.

One might assume that after 33.7% gains in 2020 and another 61.04% gains in 2021, that Lowe’s stock would be expensive at the end of 2021, trading near all-time highs. However, as Kester points out, that’s not the case.   He said, ‘Lowe's forward price-to-earnings ratio of about 19 comes in below the home improvement retail industry's average of 24. With earnings growth expected to outpace the industry over the next five years as well, Lowe's and its 1.3% yield are an attractive buy for dividend investors.”  How is this possible?  Well, in short, LOW’s bottom-line growth rate has matched its share price appreciation during the recent rally.  

In 2020, LOW’s earnings-per-share grew by 55%.  And, in 2021, LOW’s EPS is expected to increase another 35% on top of that (using the current analyst consensus for 2021 full-year results).  As Kester notes, LOW is currently trading for approximately 19x forward earnings estimates.  Lowe’s 20-year average price-to-earnings ratio is 19.9x.  Therefore, it’s reasonable to assume (looking at historical data) that shares continue to trade in a fair value range.  And, it appears that the blue chip (4 and 5-star rated) Wall Street analysts that we track with the Nobias algorithm agree.  

Right now, the average price target being applied to LOW shares by this cohort of analysts is $279.88.  LOW’s current share price is $258.48.  This implies that LOW shares are slightly undervalued, offering upside potential of approximately 8.2%.  And, looking at the community of credible authors that we track, the sentiment surrounding LOW shares is even more bullish.  Right now, 88% of the reports recently published by 4 and 5-star rated authors have expressed “Bullish” sentiment.  

Therefore, when looking at the aggregate analysis provided by the credible analysts/authors that we track, it appears that it’s not too late to accumulate LOW shares and take advantage of this new normal at-home environment. 

Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long both HD and LOW shares.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

GIS with Nobias technology: Can General Mills Overcome Inflationary Headwinds?

General Mills (GIS), a company famous for dominating the center aisles of the grocery store with its large portfolio of well known brands in the cereal, baking products, snacks, vegetables, and pet food categories, recently reported its fiscal 2022 second quarter earnings and the results disappointed Wall Street.  Because of this, GIS shares fell 2.45% this week and now sit at $65.99 which is approximately 5.3% below its recent 52-week high of $69.68.  

The primary issue during the company’s recent quarter wasn’t sales volumes, but instead, supply chain bottlenecks and inflationary headwinds that hurt margins and caused the company to miss Wall Street’s consensus earnings estimate.  

It wasn’t long ago that GIS appeared to be confident about its place in the post-pandemic operating environment.  In September, Demitrios Kalogeropoulos, a Nobias 4-star rated author published an article at The Motley Fool which highlighted his bullish outlook on the stock after analyzing a company presentation.  

Kalogeropoulos said, “General Mills (NYSE:GIS) is back to growing again. Just one quarter after announcing a sales slump, compared to a pantry-stocking period a year ago, the cereal and snack-food giant said that revenue is now rising.”

During the September presentation, Kalogeropoulos noted that GIS management saw inflationary hurdles ahead of them; however, he wrote, “CEO Jeff Harmening and his team see faster growth and accelerating profit gains overall, thanks to fundamental changes in demand and in General Mills' portfolio.” 

GIS Dec 2021

Looking at trailing data prior to the Q2 results Kalogeropoulos said, “Global organic revenue is rising at a 6% annual pace over the past two years, thanks to a mix of rising prices and increased volumes. The company held or extended its market share in most of its core categories, too, including cereal and pet food.” He highlighted the fact that the company had proven itself capable of dealing with supply chain/inflationary concerns throughout the pandemic thus far, saying, “Gross profitability declined, thanks mainly to soaring input costs. General Mills offset that slump with cost cuts, though, so that adjusted operating margin is still higher today (at 18% of sales) than it was before the pandemic struck (17% of sales).”

Kalogeropoulos put a spotlight on the company’s pet food business, driven by the Blue Buffalo brand that General Mills acquired in 2018, writing, “Consumers are increasingly reaching for premium dog food and treats, helping the pet segment notch a 20% annual profit increase since 2019.” 

General Mills’ management teams continued to make moves with regard to repositioning its portfolio so that it can take advantage of new consumer trends.   Kalogeropoulos said that GIS recently sold its European Yoplait business and added new brands to its fast growing pet food segment.  Overall, he said, “Sales should now barely decline compared to 2020's surge, executives said. Profits will be at the high end of their previous forecast, too.”

According to Kalogeropoulos, General Mills’ management believes that we’ve entered into a “new normal” period, with regard to consumer trends in a post-pandemic world.  General Mills believes that the eating/cooking at home trends that developed in 2020 are here to stay.  

Kalogeropoulos looks to be buying into this notion as well, concluding his piece by saying that General Mills “appears to be on a faster, more profitable growth path, which should reward patient shareholders over the long term.” And, as Vidhi Choudhary, a Nobias 4-star rated analyst, pointed out in early October, Kalogeropoulos wasn’t the only analyst who was bullish on GIS’s outlook.  

Choudhary published an article at The Street on October 1st which highlighted Citi Group’s bullish analyst note which came on the heels of the same investor presentation that Kalogeropoulos was focused on.   Choudhary wrote, “The iconic maker of Cheerios had "underperformed the market ... but demonstrated stronger execution than many of its peers in recent months," wrote Citi analysts Wendy Nicholson and Abigail Lake in a note published Friday.” She continued, saying, “Citi added that General Mills delivered much better-than-expected fiscal-first-quarter results, and the market barely noticed.”  

The Citi analysts didn’t appear to be concerned about inflationary headwinds.  Choudhary quoted Nicholson and Lake who said, "We expect that [General Mills] should continue to improve upon its market-share gains while raising prices to offset inflation.” 

Choudhary’s article points out that Citi raised its price target for GIS shares from $63/share to $70/share after the stock’s impressive Q1 results.  But, sentiment may be shifting after the recent Q2 numbers came in this week.  

Nathan Parsh, a Nobias 4-star ratted author published an article at Yahoo Finance breaking down the results.  Parsh noted that GIS’s Q2 results were mixed, with the company beating Wall Street’s expectations on the top-line but missing bottom-line numbers.  He said, “On a two-year stack basis, results were better as the company has managed to secure repeat customers. The company managed to pass along some of the higher costs from inflationary pressures in the business, but it wasn't enough, as operating profit still declined from the prior year.” 

With regard to GIS’s Q2 fundamentals, Parsh wrote, “​​General Mills reported fiscal second-quarter 2022 results on Dec. 21. Revenue grew 6.4% year-over-year to just over $5 billion, beating Wall Street analysts' estimates by $163 million. However, adjusted earnings per share of 99 cents compared unfavorably to $1.06 in the prior-year quarter and was 6 cents less than expected.” 

He continued, “Organic growth improved 5% for the quarter. Pricing and mix contributed to growth as volumes were flat. Adjusted operating profit was lower by 6%. General Mills was able to raise prices by 7%, but this was more than offset because, despite what headlines might have you believe, inflation has actually been much higher than 7%.”

GIS’s Pet segment was still a shining star for the company.  Parsh said, “The Pet segment grew 14% as both cat and dog foods improved double-digits. The companys Nudges, True Chews and Top Chews brands combined for 22% growth year-over-year.” Overall, however, he said, “The adjusted gross margin fell 330 basis points to 32.2% and the operating margin contracted 200 basis points due to supply chain constraints and inflationary pressures.”

Parsh touched upon the same bullish point as Kalogeropoulos, noting that the company appears to be holding onto the market share it gained during 2020 when the COVID-19 pandemic caused consumer behavior to shift.  He wrote, “Pre-pandemic market share of the U.S. was 55%, which improved to 65% during the past fiscal year. That number dropped just slightly to 62% for the first half of fiscal year 2022. General Mills now holds a higher percentage of market share than it did before the pandemic as the company has held onto many of the customers that it gained last year.” And it appears that management remains confident in its ability to execute in the “new normal” environment that Kalogeropoulos discussed earlier. 

Parsh highlighted the company’s updated 2022 fiscal year guidance, which calls for “Organic revenue is now expected to grow 4% to 5%, compared to the previous estimate of -1% to 3%. Adjusted earnings per share are now projected to range from -2% to 1%, a tiny improvement from the previous range of -2% to 0%.” At this point in time, it’s difficult to tell whether or not GIS’s sales volume growth will overcome the negative pressures that inflation puts on its margins (due to the unpredictable nature of the pandemic and how new variants, such as Omicron, will impact the global supply chain).  And with that in mind, Parsh concluded his piece with a cautious outlook.  He wrote, “The company will likely maintain a consistent business and safe dividend for many years to come.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

“However,” he continued, “I am personally inclined to wait to see what inflation looks like in the coming months before adding to my position in the name. If inflation looks like it is subsiding or at least not surging higher, then General Mills can benefit from lower input costs and higher pricing. I am not likely to begin selling the stock any time soon because of its market leadership and its stellar dividend history, but it seems like the company isn't quite able to keep up with inflation. If inflation continues rising out of control, then I think General Mills is more of a hold at the moment.”  

When looking at the aggregate opinion of the credible authors tracked by the Nobias algorithm, it appears that the vast majority of individuals remain bullish on GIS shares.  Right now, 85% of the opinions that we’ve seen published regarding this company are “Bullish”.  And, looking at the opinions posted by 4 and 5-star rated Wall Street analysts, we see that the average price target being placed on GIS shares right now is $72.00.  

Today, GIS trades for $65.99, which means that this average price target points towards upside potential of 9.1%.  With this in mind, it appears that the Nobias community of credible authors believes that General Mills has what it takes to overcome inflationary headwinds in the short-term, meaning that the recent post-earnings dip that GIS shares have experienced may represent an attractive buying opportunity.  

Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long GIS.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

PFE with Nobias technology: Pfizer Shares Are Up Nearly 60% In 2021. Can The Company Continue That Momentum Into 2022?

In an article titled, “3 COVID Stocks That Will Pay You Rich Dividends in 2022” which was recently published by a trio of authors at The Motley Fool, including George Budwell, who is a Nobias 4-star rated contributor, began by saying, “If you want to play it safe in 2022, it's not a bad idea to buy a healthcare company. Pharmaceutical stocks will likely do well, regardless of what the economy is doing. Healthcare is a necessity, so there probably won't be a slump here.”   And, as far as safe healthcare stocks go, a slew of highly rated analysts have recently posted bullish takes on Pfizer shares moving forward.  

In this article, we wanted to take a look to see whether or not Pfizer, which has been a top performer in 2021, is likely to continue its winning streak into 2022 as well.  In the COVID-19 stocks article highlighted above, Budwell’s colleague, Patrick Bafuma, commented on Pfizer shares saying, “The company boasts over 55% year-to-date gains, more than double the S&P's 27% thus far. That does not even include the pharma's 2.7% dividend yield.”

Bafuma continued, putting a spotlight on PFE’s attractive dividend yield, writing, “And the behemoth's dividend is about as safe as it gets. Its 2022 first-quarter payout will be the 333rd consecutive quarterly dividend paid. Going into the fourth quarter, it had roughly $30 billion on hand -- and that's after already paying out $6.5 billion in dividends through the first three quarters of the year. Suffice to say, the dividend is safe for the foreseeable future.”  

PFE Dec 2021

In a separate article, Budwell recently highlighted PFE’s outperformance as well, saying that Pfizer was the second best performing big pharma stock during the year thus far in 2021 with its 45.8% gains, trailing only Eli Lilly (LLY) which has posted 47% gains.  

This article was posted on December 1st, 2021.  Since then, both PFE and LLY have continued their strong rally.  As of today, PFE is still trailing LLY for the lead, but its year-to-date returns have increased to 59.49% (compared to LLY’s 61.75% gains).  The success of PFE’s COVID-19 vaccine is the primary catalyst for its near-term success.  

Budwell  wrote, “In fact, the Pfizer and BioNTech COVID-19 vaccine Comirnaty will likely end 2021 as the best-selling pharmaceutical product of all time from a single-year standpoint.”  And, as Budwell points out, he expects COVID-19 vaccines and treatments to continue to propel PFE shares higher into 2022 as well.  He wrote, “Comirnaty [which is the name of the COVID-19 vaccine that Pfizer developed with partner BioNTech] is slated to haul in no less than $36 billion in sales in 2021. To put this eye-popping revenue figure into perspective, AbbVie's Humira, which was the best-selling pharma product last year, generated $20.4 billion in sales in 2020.”  

Budwell pointed out that “​​During Pfizer's third-quarter earnings presentation, management said that Comirnaty is already on track to rake in $29 billion in sales in 2022.”  And, he notes, this Q3 guidance was before the Omicron variant began to spread.  The resurgence of COVID-19 via Omicron is likely to boost vaccine sales even higher.  And, as Budwell points out, in 2022, it won’t just be vaccine sales which make up Pfizer’s COVID segment, but also antiviral pills as well.   He wrote, “While its vaccine sales should continue to be stellar in 2022, the company will almost certainly get another major boost from its oral coronavirus pill Paxlovid.”   Budwell said that he believes that Paxlovid “could very well book upward of $24 billion” in sales during 2022, which would also be astounding from a historical perspective in terms of single year drug sales.  

Jonathan Phillip, a Nobias 5-star rated analyst, recently covered Paxlovid in an article at Nasdaq.com.  Regarding the drug, Phillip said, “Pfizer is also making another push on the pandemic front today as well. Simply put, the company is now planning to submit an application to the U.S. FDA for its coronavirus treatment, Paxlovid. Based on Pfizer’s interim data, the oral antiviral pill reduced Covid hospitalizations and deaths by a whopping 89%.”  

Phillip believes that this approval could boost the entire bio-tech sector in investors’ minds moving forward.  Something else that could augment valuations in the bio-tech space is merger and acquisition activity.  And with that in mind, we return to Budwell’s article, because he says that longer-term, Budwell says that he believes potentially large-scale M&A is in Pfizer’s future.  

Budwell wrote, “With nearly $30 billion already in the bank and more on the way, shareholders can probably expect the company to pursue a handful of in-licensing deals, multiple bolt-on acquisitions, and maybe even a megamerger.” When the COVID-19 pandemic ends, there will be a very large revenue shortfall for PFE to deal with.  And, using the cash flows that its vaccine and anti-viral sales are generating in the present to buy longer-term growth is an obvious way for this management team to make sure Pfizer remains relevant in a post pandemic world.  

Alex Carchidi, a Nobias 5-star rated analyst, also recently published a bullish piece on Pfizer, highlighting its strong 2021 total returns and its absolute dominance in the COVID-19 vaccine arena.  Carchidi wrote that Pfizer’s “Comirnaty is the world's most widely approved and the most purchased by far, and nothing else even comes close. It held a 74% share of the U.S. market, and 80% of the E.U. market as of October.”   And, he says, even if Comirnaty’s sales fall off in 2022 (which, as Budwell points out, is unlikely due to the recent rise of the Omicron variant), he’s not concerned because he believes that Paxlovid can more than make up for the potentially lose slack.  

Carchidi pointed out that “On Dec. 14, it confirmed the results of its recent phase 2/3 clinical trial, which showed that adult patients treated with Paxlovid within five days of symptom onset experienced an 88% reduction in their risk of hospitalization or death compared to placebo.”  He says that Pfizer’s management has already shared this data with the European regulators in its attempt to get emergency authorization for Paxlovid in that region.  Furthermore, he says, “And the U.S. government has already agreed to buy 10 million courses of the drug for $5.3 billion, to be delivered next year.”

Carchidi calls Pfizer a leading COVID-19 stock heading into 2022 and concluded his article saying, “So even if Comirnaty revenue scales down in 2022, Paxlovid income could just be getting started, and that's just one more reason that Pfizer is the leading COVID-19 treatment stock.”  

Kinjel Shah, another Nobias 5-star rated analyst, recently published a bullish article on Pfizer, which highlighted much of the same data that we’ve already discussed with regard to both Comirnaty and Paxlovid.  But Shah also discussed other pipeline successes, including, “Pfizer’s Prevnar-20, a 20-valent pneumococcal conjugate vaccine, was approved in the United States this year” as well as Pfizer’s recent M&A activity as bullish signs.  Shah said, “Pfizer announced a definitive agreement to acquire Arena Pharmaceuticals for $100 per share or $6.7 billion in an all-cash deal.”

Shah continued, “The deal will add Arena’s lead candidate, etrasimod, a next-generation and selective sphingosine-1-phosphate (S1P) receptor modulator, to Pfizer’s inflammation and immunology pipeline.  Arena’s pipeline also includes pipeline candidates like temanogrel and APD41, which are in mid-stage development for cardiovascular diseases.”  

Shah also notes that “strong growth of key brands like Ibrance, Inlyta and Eliquis” should continue to push its sales and earnings higher in 2022.  Shah points out that “Estimates for Pfizer’s 2022 earnings have gone up from $3.61 to $5.33 over the past 60 days” and therefore, the stock’s big rally over the last several months appears to be justified by its underlying fundamentals.  It was difficult to find a bearish report on Pfizer from a highly rated analyst.   

Budwell posted an article at The Motley Fool on December 6th which highlighted one of Pfizer’s recent dips saying, “On Sunday, the White House's chief medical advisor, Dr. Anthony Fauci, said that the preliminary data regarding the severity of the omicron variant was "encouraging." While this version of the novel coronavirus appears to be more transmissible than delta, the first batch of data seem to indicate that omicron might be less virulent.

Dr. Fauci did warn, however, that more data are required to draw any firm conclusions about the pathogenicity of this variant.” He continued, “If omicron is indeed less deadly than its predecessors yet spreads more easily, this variant might turn out to be great news from a public health standpoint. The bad news for vaccine makers like Pfizer, Ocugen, and Vaxart, though, is that a milder form of the novel coronavirus may significantly undercut demand for jabs.”  However, overall, Budwell’s more recent opinions make it clear that he remains bullish on PFE shares.  

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

And he’s not alone.  88% of the credible authors that we track with the Nobias algorithm currently offer a “Bullish” opinion on PFE shares.   With all of this bullish sentiment in mind, it’s interesting to look at the recent reports published by 4 and 5-star rated Wall Street analysts that we track and see the average price target applied to PFE shares is $45.50.   Today, PFE trades for $58.71.  Therefore, the average price target here represents downside potential of approximately 22.5%.  

As Shah said, Pfizer’s earnings estimates for 2022 have increased by nearly 48% during the last 60 days however, so this lower average price target could be the product of Wall Street analysts waiting for Pfizer to report its fourth quarter earnings before updating their opinions.  

Pfizer is a unique situation where the credible authors are much more bullish on the stock than the credible analysts that we track.  Time will tell who is correct, but one thing is certain: Pfizer is an industry leader right now, having posted year-to-date returns that put it in the upper echelon of all S&P 500 stocks.  

Long-term shareholders here have to be thrilled with the nearly 60% year-to-date returns that PFE has generated and reading through the recent reports published by credible authors, it’s clear that the majority of them expect for this positive momentum to continue into next year as well.  

Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long PFE.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

ADBE with Nobias technology: Adobe: Down 20% From Its 52-Week High, Is This Stock A Buy?

Abode (ADBE) has been one of the greatest growth stories in the technology sector in recent years.  This stock doesn’t get the same sort of fanfare that the vaunted F.A.N.G. names (Facebook, Amazon, Netflix, and Google) receive; however, its growth stacks up well against its popular big-tech peers.  Since 2014, Adobe shares have posted double digit annualized earnings-per-year growth every year.  During this period of time, ADBE’s EPS has risen from $1.29 to $12.48.  With that in mind, it’s no wonder that ADBE shares have generated a lot of wealth for its long-term shareholders. 

Over the last 5 years, ADBE is up approximately 437.5%.  However, during the last year, the stock’s performance has slowed down.  Adobe shares fell 14.95% last week, pushing their year-to-date returns down to just 11.30% (which is less than half of the 23.0% performance posted by the S&P 500 thus far in 2021).  This dip came on the heels of ADBE’s fourth quarter earnings report, which was posted this week, on December 16th.  Frankly put, when looking at an ADBE chart over the last 5 years or so, weakness in this company’s share price is a very rare occurrence.  And therefore, now that shares are down double digits from their recent highs, we wanted to take a look at what the community of credible authors that the Nobias algorithm tracks have been saying about the stock to see whether or not this is a dib that investors should consider buying.  

Coming into its Q4 report, Richard Bowman, a Nobias 5-star rated analyst, highlighted the fact that ADBE had beaten Wall Street’s expectations on the bottom line in 11 consecutive quarters and analysts’ sales estimates in 5 consecutive quarters.  

Coming into Q4, ABDE stock was trading with a relatively high valuation.  The stock’s blended price-to-earnings ratio was north of 50x.  This is a growth stock, meaning that the market trends to evaluate shares based upon expectations of future cash flows.  Therefore, when looking at analyst expectations for 2022 EPS, ADBE shares were trading with a forward P/E multiple of 46x (based upon a share price of approximately $630 and 2022 consensus EPS estimates of approximately $13.71).  In other words, ADBE’s forward P/E ratio was more than twice as high as the S&P 500’s (the broader market currently trades for approximately 21x forward earnings expectations).  Therefore, one might argue that shares were priced to near perfection.  

ADBE Dec 2021

Bowman noted that coming into the quarter, Wall Street expected to see, “Fourth quarter analyst estimates” of: 
* Normalized EPS: $3.20, up 52% YoY
* GAAP EPS: $2.53, down 45% YoY (due to an income tax expense in 4Q20)
* Revenue: $4.09 bln, up 19% YoY

Well, for the quarter, management produced results which beat on the top-line and came in-line on the bottom.  ADBE’s revenue came in at $4.11 billion during Q4, up 20.2% on a year-over-year basis.  ADBE’s non-GAAP earnings per share came in at $3.20, up 52% y/y and exactly in-line with analyst consensus estimates.   Looking at the results, which still represented strong y/y growth, it’s clear that it wasn’t the fourth quarter numbers which sparked the stock’s sell-off.  Instead, it was the company’s forward looking guidance, which points towards a slowdown.  And, when shares are priced to perfection, any slowdown will not be tolerated by the market.  

Brandon Michael, a Nobias 5-star rated analyst, highlighted ADBE’s recent dip in his market roundup article on the 16th.  Michael wrote, “Adobe offers a suite of software solutions to clients globally. This includes but is not limited to its Adobe Creative Cloud, Document Cloud, and Experience Cloud offerings. All of these allow Adobe to cater to creatives, students, small businesses, government agencies, and even global brands.”  He noted that the company’s down was down double digits after the market digested the company’s earnings conference call.  

Simply put, he highlighted the poor guidance that Adobe management provided, saying, “Moving along, in its most recent quarterly reporting, ADBE estimated revenue of nearly $17.9 billion and adjusted profit of an estimated $13.70 a share for fiscal 2022. The expectation from Wall Street are revenues of $18.2 billion and earnings of $14.26.”  

Nicholas Rossolillio, a Nobias 5-star rated author who writes for The Motley Fool, recently published an article highlighting ADBE’s slowing growth.  He wrote, “For example, adjusted earnings per share rose 28% in fiscal Q3. Based on management's guidance for fiscal Q4, adjusted earnings per share will only rise by about 13% year over year. But even if Adobe doesn't beat its own outlook, its full-year adjusted earnings would still be up by a very healthy mid-20% amount.”  

Rossolillio’s piece was published days before ADBE’s Q4 results were posted, but since the company’s results were in-line with the market’s expectations for Q4, his rationale, with regard to fiscal 2021’s growth rates remain intact.  Although Rossolillio’s opinion was posted without knowledge of management’s poor guidance provided during the Q4 conference call, he did highlight his outlook for the company’s near-term future, providing a rather bullish outlook, saying, “The company will be lapping a strong 2021, but this long-term shareholder is optimistic. With digital creators beginning to build next-gen experiences for the web, streaming video services, and the workplace, demand for creativity software isn't going to abate any time soon.” 

Rossolillio continued, “This bodes well for Adobe's continued success. The cloud-computing company has built itself into a hub for digital transformation, helping its users unlock new efficiencies and update their digital toolsets. Trillions of additional dollars will be spent on digital transformation in the coming decade, and capturing even a small fraction of that will deliver big gains for Adobe. 2022 may or may not be great for Adobe stock, but investors should stay focused on this company's potential over periods of many years -- not just one.”  

Royston Yang, another Nobias 5-star rated author who writes for The Motley Fool, recently highlighted his bullish opinion of ADBE in a recent article titled, “3 Growth Stocks that Could Double in 2022”.  With regard to Adobe’s recent growth, Yang said: “The SaaS company has displayed steady growth in subscription revenue from its fiscal year 2018 to fiscal year 2020. Over this period, subscription revenue increased from $7.6 billion to $11.6 billion and its proportion of total revenue has also jumped from 84.2% to 90.3%. The momentum has carried into 2021 with revenue for the first nine months of this year rising by 23.6% year over year to $11.7 billion. Subscription revenue took up 92.2% of total revenue for the period, underscoring the increasing importance of subscription sales in driving Adobe's total revenue. Ultimately, net income climbed by 19.2% year over year to $3.6 billion.”

With regard to his future outlook for the company, Yang wrote: “With a strong brand name and continuous and innovative enhancements to its slate of cloud services, Adobe should continue to garner more clients and grow its subscription base further. With a stronger base of customers and ongoing digital adoption, coupled with its robust software-as-a-service model of landing and expanding, Adobe stands a great chance of doubling next year.”

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.

In short, it appears that he remains bullish over the long-term, with a similar stance to Rossolillio’s.  Overall, when looking at the community of credible authors and analysts that the Nobias algorithm tracks in aggregate, we see an overwhelmingly bullish lean.  93% of the credible authors that we track have recently expressed a “Bullish” opinion of ADBE shares.  

Looking at the blue chip (4 and 5-star rated) Wall Street analysts that we track, the average price target on ADBE shares is currently $728.55.  It’s worth mentioning that we’ve seen 10 such analysts (4 and 5-star rated) update their price targets on ADBE since 12/16 when the company posted Q4 earnings.  Of these 10 rates, the average price target is $671.70.  

While this is lower than the average overall target (which implies that as more and more analysts updated their opinion with the new 2022 guidance data in mind, the overall average is likely to fall) it’s important to note that this $671.70 average still implies upside potential of approximately 20.7% when compared to ABDE’s current share price of $556.64.  

At $556.64, ADBE shares are trading with a 20.4% discount, relative to their 52-week high of $699.54.  While it’s unclear where the stock will find a near-term bottom, when looking at the average recent opinion of the credible authors/analysts that we track, it appears that the vast majority of them view this recent 20% pullback as an attractive buying opportunity.  

Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long FB, AMZN, and GOOGL.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

UPS with Nobias technology: Will UPS rally during the holiday season?

The United Parcel Service (UPS) has had a solid 2021 thus far.  UPS shares are up 22.68% year-to-date, which is only slightly below the 23.0% year-to-date performance posted by the S&P 500.  However, UPS’s dividend yield is slightly higher than the S&P 500’s (UPS shares yield 1.97% currently whereas the SPDR S&P 500 ETF (SPY) currently yields 1.24%) so with that factored in, the year-to-date comparisons between United Parcel Services and the broader market’s total returns are essentially in-line with one another.  

This stock has been in the news this week because its rival, FedEx (FDX) posted strong earnings which sent its shares up approximately 7.5% on Friday, December 17th.  UPS shares lagged, only rising 0.66%, causing certain bulls to wonder if UPS will follow suit and rally during the holiday shipping season as well.  

UPS won’t report its next quarterly earnings until February 1st, 2022, so investors won’t have the chance to see just how much the holiday season’s shipping volumes boost UPS’s sales and earnings for several months; however, in the meantime, we wanted to take a look at what the credible authors/analysts that the Nobias algorithm tracks have been saying about UPS shares to see if this logistics company might be next in line to experience a significant share price jump.  

Roughly a month ago, on November 16th, Nobias 5-star rated author, Daniel Foelber, posted an article at The Motley Fool titled, “5 Reasons UPS Deserves to Be at an All-Time High”.  He began that piece saying, “After a record 2020, United Parcel Service (NYSE:UPS) is showing no signs of slowing down. Shares of UPS have nearly doubled over the last three years and are up 23% year to date. “ He continued, writing, “In 2020, UPS was one of the few industrial companies to post record top- and bottom-line results. This year, it is one of the few industrial companies with a handle on its supply chain, as well as its labor force, despite rising costs.”  

Foelber cited the company’s double digit operating margin during 2021 thus far, and the 13% operating margin guidance for the third quarter, as proof that this management team is top notch.  He wrote, “Retaining a high operating margin shows that the company is successfully converting revenue to profit and managing costs in a way that limits the impact on its bottom line.” 

UPS Dec 2021

With regard to the stock’s strong profit-related performance, Foelber said, “In fact, UPS delivered record third-quarter 2021 revenue of $23.2 billion, up 9.2% over its record prior-year quarter. It also generated diluted earnings per share (EPS) of $2.65 for the third quarter, 18.9% above the year-ago period. The company is generating more free cash flow (FCF) than ever before, which is allowing it to grow its dividend, pay down debt, reinvest in the business, and buy back stock.”   He continued his bullish article, highlighting the company’s longer-term growth potential.  

Foelber stated, “Arguably more important than how UPS is doing today is how it's going to perform one, three, five, or even 10 years into the future. What makes UPS such a good business is that all three of its segments (U.S. domestic, international, and freight) continue to grow while operating at high profit margins. Driving that growth is an increasingly intertwined global economy, but also trends such as e-commerce, healthcare, and automotive shipping services.”  

And finally, Foelber highlighted the company’s strong dividend growth.  In the introduction we noted that UPS’s dividend is significantly higher than the S&P 500’s and Foelber talks about why, saying, “UPS pays $1.02 per share per quarter, double what it paid in 2010 and 5 times what it paid 20 years ago.”  He concluded his piece saying, “In sum, UPS deserves to be at an all-time high because its business performed well during the pandemic, continues to perform well despite economic challenges, and is positioned to perform well for years to come.”  

Lee Samaha, a Nobias 5-star rated author published a bullish report on UPS at The Motley Fool more recently, on December 16th.  Samaha said, “It's no secret that e-commerce volumes were booming even before the pandemic created a whole new generation of online shoppers. That's excellent news for the package delivery companies. However, it doesn't come without challenges.” 

Samaha notes that inefficiencies in the packaging and shipping businesses make it difficult for companies to “generate volume growth and maintain or grow profit margin”; however, it appears that UPS is doing just this.   Samaha said that the solution to the issues in the logistics space is as simple as being “more selective on the type of deliveries and customers you want because there's plenty of volume growth to go around.”   This is exactly the strategy that UPS has adopted under CEO Carol Tomé.  

Samaha touches upon the “better, not bigger” framework that Tomé has laid out in front of her company, writing, “The transformation strategy focuses on revenue generation from e-commerce deliveries, healthcare, and high-growth international markets -- particularly the small and medium-sized business (SMB) market. Meanwhile, "bigger, not better" implies utilizing existing assets better and being more selective on deliveries.”  

Samaha highlighted the same bullish margins data as Foelber, saying, “For example, UPS management forecasts its key U.S. domestic package margin will be 10.5% in 2021, a figure that's already at the bottom end of its targeted range (10.5%-12%) for 2023 fueled by 10.9% volume growth in the SMB market in the third quarter.”

As UPS’s shipment volumes increase, Samaha says, “investors can expect even more revenue growth to drop into earnings”.  Therefore, Samaha maintains a bullish stance when it comes to UPS over the longer-term.   Shares of United Parcel Service’s stock trade with a relatively high valuation premium over rival FedEx’s.  UPS’s blended price-to-earnings ratio is currently 18.01x.  FedEx, on the other hand, trades with a much lower 12.87x ratio.  

On a forward basis, FDX shares trade with a 12.2x forward P/E ratio (relative to consensus estimates for fiscal 2022 earnings-per-share expectations) while EPS trades with a 17.0x forward premium.  This could imply that FedEx’s recent rally was, in essence, that stock playing catch up to its larger peer (UPS’s market cap is $180.7 billion compared to FDX’s $63.2 billion market cap figure).  

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.

However, being that UPS’s margins are higher than FedEx’s and historically, UPS shares have produced more stable and reliable earnings growth (since 2009, UPS has produced positive earnings-per-share growth every single year, while FDX has shown more negative volatility, such as during 2020 when it’s earnings-per-share fell by 39%) might imply that the relatively higher valuation premium applied to UPS shares is justified.  

The community of credible authors that the Nobias algorithm tracks sure seem to think so.  Right now, 95% of these authors express a “Bullish” sentiment on UPS shares.  The average price target amongst the blue chip (Nobias 4 and 5-star rated) Wall Street analysts that we track for UPS is currently $242.75.  Compared to the stock’s current share price of $206.59, this average price target represents upside potential of approximately 17.5%.  

Therefore, it appears that the credible authors that we track do believe that UPS is likely to follow in FedEx’s recent footprints.  UPS shares have traded sideways since late June and if the bullish sentiment shown by the analysts that we follow is accurate, this period of consolidation should be forming the base for UPS’s next upside move.  

Only time will tell, but FedEx’s recent results point towards continued growth in the logistics industry and as both Foelber and Samaha point out, this company is second to none in terms of the record breaking profits that it’s generating on soaring shipping volumes.  

Disclosure:  Nicholas Ward has no position in any stock mentioned in this article.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

DOCU with Nobias technology: DocuSign: Is This Pandemic Darling A Buy Down 52% From Recent Highs?

As the work-from-home trend dominated the workplace in 2020, DocuSign became of the stock market’s biggest winners during the pandemic period.  During 2020, DOCU shares rose from approximately $74/share to more than $225/share at the close of the year.  This bullish momentum continued for the company, with shares hitting their current 52-week high of $314.76 in the summer of 2021. 

However, in recent months, we’ve seen the bullish sentiment that was surrounding these shares shift to a more bearish tone.  During August, September, and October, DOCU shares sold off.  And, this bearish momentum accelerated in a major way after the company’s recent Q3 report, which sent shares plummeting by more than 40%.  

Right now, DOCU is trading with a 52% discount compared to its recent highs.  And, with that in mind, we wanted to take a look at what the credible authors tracked by the Nobias algorithm have had to say about the stock recently, to see whether or not this significant sell-off is presenting an attractive opportunity to buy the dip. 

DOCU Dec 2021

However, Ryan Downie, a Nobias 5-star rated author, wrote about DOCU’s recent issues, which began to spawn prior to the tumultuous Q3 quarterly report.  Downie believes that there are numerous macro headwinds forming for DOCU (and speculative growth stocks like it) which were the major winners of 2020.  

He said, “The pandemic is by no means over. However, vaccination rates are climbing, nonvaccination treatments are improving, and people are becoming more adjusted to the lifestyle changes associated with public health. Many businesses are bringing employees back to offices next year. Overall, consumer behavior appears to be normalizing, and it's unwinding faster than people had anticipated.”

Furthermore, Downie continued, highlighting the changing economic environment, saying, “Just as importantly, the game of musical chairs in the capital markets also looks like it's about to end. The Fed seems like it's accelerating its tapering and rate-hike timeline, which should drive capital out of the stock market and toward other asset classes, such as bonds. This puts downward pressure on stock prices, and the high valuation ones are the first to get hit.”  

Vladimir Zernov, a Nobia 4-star rated analyst, recently published an article at Yahoo Finance titled, “Why Docusign Stock Is Down 40% Today” which highlighted the company’s recent plight from a micro standpoint.   He began his report saying, “DocuSign reported revenue of $545 million and adjusted earnings of $0.58 per share, beating analyst estimates on both earnings and revenue.”

Therefore, it wasn’t the Q3 results which disappointed the market.  Instead, as  Zernov noted, it was the forward looking guidance that management provided.  He said, “The company expects to report revenue of $557 million – $563 million, which means that growth is slowing down.” 

With regard to the expected slowdown, Zernov quoted Dan Springer, DOCU’s CEO, commented on the Q3 results saying, “After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth”. These words didn’t inspire confidence in the market and being that DOCU came into the third quarter print trading with an immense growth premium attached to shares, any disappointment was likely to lead to a sell-off.  

Zernov touched upon DOCU’s valuation in his article.  He wrote, “Currently, analysts expect that DocuSign will report earnings of $1.7 per share this year and $2.19 per share in the next year, so the stock is trading at 64 forward P/E despite the massive sell-off.”  He compared DOCU’s 40% plunge to other recent sell-offs that we’ve witnessed from major winners of 2020 and the unique operating environment created by the COVID-19 pandemic.  Zernov said, “Similar pandemic-era examples include Zoom, which is down by about 70% from highs that were reached back in October 2020, and Peloton, which is down by more than 70% year-to-date.”

Zernov continued, saying that neither Zoom nor Peloton have found footing, from a valuation support standpoint, since their recent sell-offs began than therefore, he expressed a bearish opinion of DOCU shares as well, saying, “In DocuSign’s case, potential for multiple compression remains significant even after the strong sell-off.”   Zernov wasn’t the only credible analyst that we track who published a bearish report on DOCU in recent years.  

On December 6th, Manisha Chatterjee, a Nobias 4-star rated analyst, wrote an article at entrepreneur.com titled, “Should You Buy the Post Earnings Dip in DocuSign?” Ultimately, Chatterjee’s conclusion was bearish.   Chatterjee began by highlighting DOCU’s recent downfall, saying, “The San Francisco-based company witnessed massive demand for its solutions amid the COVID-19 pandemic with the heightened remote working culture. However, the stock has lost 52.3% in price over the past month to close Friday’s trading session at $135.09, after hitting its 52-week low of $131.51.”  

Like Zernov, Chatterjee shed a light on DOCU’s valuation concerns, saying:  “In terms of forward non-GAAP P/E, DOCU’s 68.57x is 185.2% higher than the 24.04x industry average. The stock’s 57.47x forward EV/EBITDA  is 265.5% higher than the 15.72x industry average. Furthermore, its 12.77x forward EV/S and 12.73x P/S are higher than the 4.03x and 3.94x industry averages.”

Chatterjee concluded the report saying, “DOCU is a well-known company with more than 1,000,000 customers and hundreds of millions of users across 180 countries that use DocuSign to accelerate doing business. However, the stock is currently trading below its 50-day and 200-day moving averages of $260.96 and $251.36, respectively, indicating a downtrend. Also, the company could continue to be impacted as the demand for its solutions could decline as economies gradually recover and organizations prefer in-person meetings. So, we think it could be wise to wait before scooping up its shares.”  

Downie, was a bit more bullish than Chatterjee or Zernov.  In his response to DOCU’s recent 40%+ sell-off, he said, “This was all a healthy readjustment. The stock was way too expensive. Even after it got slammed, it's still more than 60% above its pre-pandemic level, with a forward P/E ratio still above 62. DocuSign is out of insane valuation territory, but it's still not really a value stock. Now it just looks like a reasonable growth stock for investors who wanted a more rational entry point.”  

Richard Bowman, a Nobias 5-star rated analyst, recently published an article which came to an even more bullish conclusion that Downie’s.  After analyzing the Q3 results, Bowman said, “Our estimate of DocuSign’s fair value based on forecast future cash flows is $180.60, (you can find out more about this calculation here). This implies the stock is now trading at a modest 23% discount - however, these forecasts may well be revised slightly lower now that guidance is softer.”  

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.

Bowman continued, saying, “It appears that the 50% decline in DocuSign’s share price has brought the stock back to a reasonable valuation. One of the reasons for this is the net loss which makes the company appear less profitable than the positive free cash flow suggests. The share may not be a bargain at the current price, but it may have less downside risk than other software stocks that are trading at substantial premiums.”  

When looking at the credible analysts that the Nobias algorithm tracks, we see that the average price target amongst the 4 and 5-star individuals that we rate on Wall Street for DOCU is currently $219.78.  This is even higher than Bowman’s fair value estimate, pointing towards upside potential of approximately 46.5% at DOCU’s current share price of $150.01.  

Overall, when looking at all of the articles and reports recently published on DOCU by the credible authors that our algorithm tracks, we see that 79% of the opinions expressed on DOCU shares are bullish.  Since DOCU’s Q3 report, the bull/bear spread has been a bit more even.  9 of the reports since 12/2/2020 (when the Q3 results were reported) have come along with a “sell” rating.  The other 8 reports that we’ve analyzed since 12/3/2021 have come with “buy” ratings.  

In short, the credible author community is dividend when it comes to DocuSign’s rating now that the disappointing results are in.  But, the Wall Street analysts who cover the stock continue to maintain an average price target which points towards immense upside.  

Disclosure:  Nicholas Ward has no position in any stock mentioned in this article.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

ROKU with Nobias technology: Is Roku A Buy Down 53% From 52-Week Highs?

Roku has been a favorite pandemic play amongst investors.  The social distancing measures that we saw put into place during the pandemic, which accelerated the growth of the “stay-at-home” stocks, was a big boon for Roku shares.  However, 2021 has not been kind to Roku.  The stock is currently down more than 53% from its all-time high of $490.76, and with that significant sell-off in mind, we wanted to see whether or not the credible authors that the Nobias algorithm tracks believe that this is a dip worth buying. 

Patrick Seitz, a Nobias 4-star rated analyst, highlighted Roku’s business model in a recent article which was centered around the company’s third quarter earnings report.   Regarding Roku’s operations, Seitz said:  “The San Jose, Calif.-based company started as a unit of internet television network Netflix (NFLX), making the company's first set-top box. But Netflix decided it wanted to be hardware agnostic, so it divested the business in 2007.

After the divestiture, Roku kept making set-top boxes and added streaming sticks to allow consumers to access internet video services such as Netflix, Hulu and Amazon (AMZN) Prime Video. It later licensed its operating system to smart TV manufacturers.

ROKU Dec 2021

Today Roku gets most of its revenue selling advertising on its platform, including commercials for ad-supported services such as its own Roku Channel. Plus, it takes a share of pay-per-view and subscription revenue from third-party services sold through its platform. Roku stock is seen tied to the shift of television ad dollars to streaming from traditional broadcast and cable services.”

The cord-cutting phenomena continues to have strong secular tailwinds, so one would imagine that a major player in this space would be surrounded by position sentiment from the growth investing community, right?   Well, for years, that was the case.  ROKU shares rose more than 150% in 2020.  However, the sell-off that shares have experienced since July has pushed its 2021 year-to-date returns down to -30.95%.  

Concerns about slowing growth and therefore, an irrationally high valuation appear to be the major catalysts for ROKU’s recent share price weakness.  Nicholas Rossolillo, a Nobias 5-star rated author who writes for The Motley Fool, recently published an article highlighting the stocks most recent leg down.  Rossolillo touched upon the stock’s -9% move in late November which led to ROKU’s 52-week low, saying, “A sky-high valuation has drawn plenty of criticism, and even after the steep declines, shares still trade for 11 times trailing-12-month sales and 108 times trailing-12-month free cash flow.”  

Operationally speaking, Rossolillo believes that Roku’s business is attractive.  He said, “Stock price and pandemic aside, though, Roku is doing more than just fine. During the third quarter of 2021, active accounts grew 23% year over year to 56.4 million, and average revenue per user over the last 12 months was up 49% to $40.10. This builds on the massive boom the company reported this same period a year ago (revenue growth of 73% in Q3 2020), when early pandemic lockdowns sent Roku into the stratosphere.”

And therefore, after the stock’s recent sell-off, Rossolillo is bullish on shares, saying, “Though valuation remains high, Roku is beginning to turn a corner on profitability and is poised to start generating robust returns in the coming years. If you were thinking you missed the boat on this stock during the pandemic-fueled explosion higher, now could be the second-chance buying opportunity you were waiting for.”

Seitz touched upon Roku’s relevant operational metrics during its recent Q3 report in his article, saying, “Roku ended the third quarter with 56.4 million active user accounts, up 1.3 million from the prior quarter. However, analysts had expected 1.68 million new user accounts.” 

While growth was disappointing, Seitz did note that, “Average revenue per user climbed to $40.10 in the third quarter, up 49% from the same quarter last year.”   With regard to international expansion, Seitz said, “The company now operates in more than 20 countries including the U.K., Mexico and Brazil. On Sept. 5, Roku announced plans to do business in Germany later this year.”  

This has the opportunity to be a nice growth opportunity for Roku; however, it’s also important to note that digital advertising companies like Roku tend to generate their best margins in the North American markets and therefore, growth from emerging markets might not create the bottom-line growth that some investors expect to see.  

Chris Lau, a Nobias 4-star rated analyst, recently published an article at Baystreet which highlights his concerns for the company's growth and the potential risks of piling into the major COVID-19 winners once again.  Lau wrote, “Tech. investors should avoid jumping back to Teledoc (TDOC), DocuSign (DOCU), Roku (ROKU), and especially Peloton (PTON). The document firms may have bottomed from here as electronic document sharing volumes increase. Nevertheless, PTON and ROKU are potentially at risk of losing their fad.”

It appears unlikely that we’ll see major COVID-19 social distancing measures or lockdowns in the U.S. like we did in 2020 (politicians on both sides of the aisle in the U.S. have been outspoken against large scale lockdowns because of the negative economic impact).  And, as Lau points out, “​​Streaming stocks are also losing momentum.” He continues, “Roku is trying to grow its revenue by winning advertisers and selling a monthly ad-free subscription. The former will have trouble competing with the likes of YouTube Premium. Roku will increase ad minutes per content, hurting viewership and advertiser return on investments.”  

In another recent article, Lau highlighted the continued negative momentum that Roku faces, which, in his opinion, are largely inspired by concerns surrounding rising competition and Roku’s inability to grow its advertiser base.  In that piece, Lau wrote, “Investors are worried that Roku’s ad-supported content will not lift revenue. Their concerns are justified. Roku needs to sustain user growth and increase the ads per content displayed. Yet the more ads it pushes to viewers, the less appealing its service is. Conversely, Youtube gradually increased its ad content. This encouraged more users to sign up for the premium subscription.”

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.

Lau isn’t the only analyst that is bearish on Roku shares (even after their recent sell-off).   Anusuya Lahiri, a Nobias 4-star rated author, recently published a piece at Yahoo Finance which highlighted a downgrade from Wall Street analyst, Michael Nathanson, of research firm Moffett Nathanson.   Lahiri noted that Nathanson recently “downgraded to Sell from Neutral with a price target of $220, down from $330, implying a 20.4% downside.” "Simply put,” Nathanson said, “we think our and the Street's long-term revenue and earnings estimates are just too damn high."

Lahiri did note that Matthew Truist, who is a Nobias 4-star rated analyst, maintained his “Buy” rating on ROKU shares after the company’s most recent quarter.  Truist did lower his price target from $360 to $330; however, at the time, that $330 price target still represented 30% upside potential.  

Looking at the other credible Wall Street analysts that our algorithm tracks (individuals with 4 or 5-star ratings) the average price target for ROKU shares is actually higher than Truist’s recent adjustment.  The average price target amongst the Nobias credible analysts is $380.63, which implies upside potential of approximately 66% from Roku’s current share price of $229.25.  Overall, 90% of the credible authors that we track have expressed a “Bullish” opinion on Roku shares.   With that in mind, the stock’s recent 53% sell-off appears to present an attractive opportunity for investors.  

Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long GOOGL and AMZN.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

T with Nobias technology: Is AT&T A Buy Trading With Its Lowest Price-To-Earnings Multiple In Decades?

For decades, AT&T (T) has been a favorite stock amongst income oriented investors and retirees who rely on the high dividend yield that the company has traditionally provided.  Up until very recently, AT&T was considered to be a dividend aristocrat, which meant that the company had not only maintained its annual dividend, but increased its annual payments to shareholders for at least 25 consecutive years.  

Coming into 2021, AT&T was on a 36-year annual dividend increase streak, which speaks towards the high quality and reliable nature of its dividend yield.  And yet, this all changed earlier in the year when management announced that it would be merging with Discovery Inc. (DISCA) and then spinning off the companies combined media/entertainment assets (AT&T owns Warner Media, which includes the HBO franchise as well).  As a part of this spin off, AT&T is projected to cut its dividend by anywhere from 40-50% from current levels.  

Therefore, this upcoming cut alongside with management’s decision to freeze its dividend (AT&T has made a $0.52/share quarterly dividend payment for 8 quarters in a row now) means that the company’s annual increase streak is officially over and the company has lost its vaunted dividend aristocrat status.   With all of that in mind, while it’s true that AT&T shares yield an impressive 8.87% right right now, this yield is misleading because by early 2022, the yield will be much lower after the spin-off and dividend cut.  

T Dec 2021

Michael Foster, a Nobias 4-star rated analyst, touched upon this in a recent article, saying, “First, back to Ma Bell: sure, she yields a high 8.4%, but the stock is one of the biggest yield traps on the market! AT&T shares have actually posted an 8.5% loss in the last year, with dividends included. This at a time when the S&P 500 returned more than 31%.”  

Ma Bell refers to AT&T’s former parent company, Bell Systems, which dominated the North American telecom market from 1877 to 1983 when it was forced to break up for anti-trust reasons.   Investors still remember the power of this company and refer to AT&T as Ma Bell, or “Mother Bell”.  For years, this was an affectionate term, but as you can see by the Foster quote from above, it’s now being used in a rather ironic tone more often than not.  

AT&T shares have experienced another leg down in their 2021 sell-off since Foster published his report on November 22, 2021 and now, on a year-to-date basis, AT&T shares are down 18.43%.  This means that even with the company’s hefty dividend factored into its total returns, AT&T has still produced performance which is down double digits in a year where the broader market is up nearly 25% with dividends factored in.  

While it’s true that T shareholders have suffered in a big way throughout 2021 thus far, the market isn’t about what has happened in the past, it’s about what happens in the future.   And therefore, the most important question surrounding AT&T right now isn’t “what have you done for me lately?”  It’s, “What can you do for me in the future?”  

Richard Bowman, a Nobias 5-star rated analyst, recently published an article titled, “AT&T (NYSE:T) looks Undervalued but Uncertainty Could lead to Further Downside” where he attempts to look at the bull/bear picture that AT&T shares present over the next year as the merger/spin-off looms.  He began by pointing out 4 potential downside risks that AT&T presents shareholders, even after its poor 2021 performance.  

Bowman listed them as: 

1. “AT&T plans to merge WarnerMedia and Discovery ( Nasdaq:DISCA) and spin off the combined entity to its shareholders. There is uncertainty about exactly what shareholders will receive in this deal, and Discovery’s share price has already fallen 30% since the deal was announced.”

2. “The company has a very high level of debt (the debt to equity ratio is 100%), and it’s not entirely certain where all the debts will end up after the assets are spun off.”

3. “The idea is for AT&T to focus on 5G and broadband going forward. But there isn’t a compelling growth strategy and the execution over the last 10 years has been poor.”

4. “The prospect of rising interest rates would make the lower dividend yield less attractive than other assets.”

Bowman continued, saying, “AT&T will still generate a lot of cash in the next few years and the reduced dividend yield will still be more attractive than most other shares. But the growth prospects don’t look exciting, and there’s a reasonable chance current shareholders will continue selling their stock, or sell as soon as they receive their WarnerMedia/Discovery shares.”  

But, he also notes that ongoing weakness here could represent an intriguing opportunity for long-term investors.   Why?  Well because AT&T shares are incredibly cheap right now.  AT&T is expected to generate $3.36 in earnings in 2021, which means that at its current ~$23.50 level, T shares are trading for just 7x 2021 expectations.   Over the last 5, 10, and 20 years, AT&T’s average price-to-earnings ratios have been 10.9x, 12.65x, and 13.95x, respectively.  

It’s unclear as to whether or not the company will be able to hit management’s guidance post-spin off.  During AT&T’s investor presentation regarding the Discovery deal, management called for the new 5G/fiber focused telecom company to be able to generate low single digit revenue growth, mid-single digit adjusted EBITDA growth, and mid-single digit earnings-per-share growth, from 2022-2024.   But, if this is the case, then investors buying shares today, at their lower prices in nearly 2 decades, are potentially setting themselves up for strong returns.  

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.

As Bowman points out, there is still a lot of speculation surrounding this spin-off and management’s ability to execute moving forward.  However, when looking at the Bull/Bear opinion of the credible authors tracked by the Nobias algorithm, it’s clear that there is a desire to buy this historic dip.  

Any sort of mean reversion, with regard to AT&T’s earnings multiple expanding back towards historical averages, would push the share price significantly higher.   And, it appears that the authors and analyst tracked by the Nobias algorithm recognize this.  Right now, 93% of the credible authors that we track are expressing a “Bullish” opinion on shares.   And, when looking at the credible (4 and 5-star rated) Wall Street analyst that we track, the average price target for AT&T shares is currently $33.00.   Today, AT&T trades for $23.46, which means that this average price target represents upside potential of approximately 40.7%.  

It’s clear, when looking at these estimates, that the credible analysts that we follow believe that the pessimistic sentiment surrounding the company and its upcoming dividend cut is irrational.   Therefore, the opinions expressed by the experts that we track point towards strong total returns moving forward once the market’s fear wears off and investors once again begin to focus on the underlying fundamentals that AT&T produces.  

Disclosure:  Nicholas Ward is long AT&T.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

DE with Nobias technology: Deere and Co. (DE) Shares Have Doubled Since 2019. Is There Still Room To Run?

Deere and Co. (DE) shares have been on an interesting ride over the last year or so.  Deere recently reported its fiscal Q4 2021 results, wrapping up a year in which the company posted earnings-per-share growth of 119%.  This triple digit growth figures comes on the heels of a -13% growth year during the worst of the COVID-19 pandemic during the company’s fiscal 2020 period. 

The $18.99/share of earnings that DE reported for the full fiscal year in 2021 is well above the $9.94/share earnings figure that DE reported during pre-COVID times in 2019.  And, with that in mind, the stock has been a major winner over the last couple of years.   DE shares were trading for approximately $173 at the end of 2019.  Today, they’re trading for $349.24, meaning that shares have essentially doubled during the last 2 years.  

DE shares are up 29.80% on a year-to-date basis, meaning that they’ve outperformed the broader market thus far in 2021 (the S&P 500 is up approximately 21.3% thus far this year).  However, Deere share have dipped in recent months and today they’re trading down approximately 12.75% from their 52-week high of $400.34.   With this recent weakness in mind, we wanted to take a look at what the credible authors (Nobias rated 4 or 5 stars) have had to say about the stock recently.  Is DE a buy during this dip?  Let’s see what the analysts tracked by our algorithm have to say.  

DE Dec 2021

One of the primary reasons that DE has sold off recently was the labor agreement issues that the company was having with its union workers which went on strike in mid-October.  The company has recently resolved the labor issues, coming to an agreement with union leaders, and Vidhi Choudhary, a Nobias 4-star rated analyst, recently covered this dispute in an article at The Street.  

Choudhary said that after the company posted such strong quarterly results back in August, the union began to feel as if its workers weren’t being compensated as generously as their recent productivity deserves.  He wrote, “Union members have been urging their negotiators to broaden the scope of the bargaining to include work rules, scheduling and other compensation.”

And, after early negotiations between the company and the union, Choudhary  noted, “Union members rejected the first proposal October 10, saying the raises and other improvements to benefits offered then were inadequate when Deere’s farm and construction equipment sales are rising and other employers are boosting pay significantly to attract workers.” This dispute caused investors to fear a production slowdown and falling margins as wage inflation related to the negotiations was factored into future estimates. 

Tyler Jett, a Nobias 4-star rated author, published an article at Yahoo Finance recently, highlighting the final deal that both sides agreed to in mid-November, ultimately ending the 5-week strike period.  After weeks of negotiations, Jett wrote that the two sides agreed to a deal which not only increased worker compensation, but also retirement benefits.   He wrote, “Under the contract approved Wednesday, workers on the lowest end of the pay grade, like those in foundry support, will see an hourly wage increase to $22.13 from $20.12. The skilled trades positions at the top of the pay grade, like electricians, will see hourly boosts to $33.05 from $30.04.”

And yet, even with this wage inflation in mind, Deere’s management remained confident about the company’s future moving forward into 2022, maintaining strong guidance.   Fiscal 2021 was a record year for Deere in terms of net income.  DE generated $5.96 billion in net income this year, which was more than double the $2.8 billion in net income that it generated during 2020 and well above its all-time net income record, produced in 2013, of $3.5 billion.  

The Associated Press published an article at last month highlighting management’s forward estimates, saying, “Next year, Deere predicts its profits will grow even higher to between $6.5 billion and $7 billion as demand for its iconic green tractors remains high and infrastructure spending helps boost demand for its construction equipment.” The article highlighted ongoing supply chain risks, saying, “The company said demand will likely exceed what Deere can produce next year again because of the ongoing supply chain problems.”  However, overall, the consensus Wall Street estimate for Deere’s fiscal 2022 earnings-per-share currently sits at $22.32/share, which is 18% above the company’s record 2021 figure.  

And, with regard to these strong profit oriented metrics, Passive Income Pursuit, a Nobias 5-star rated analyst, posted an article on Deere earlier in the year, highlighting the company’s strong shareholder returns.   Passive Income Pursuit wrote, “On August 25th the Board of Directors at Deere & Company (DE) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.90 to $1.05 which is an excellent 16.7% increase.  Shares currently yield 1.12% based on the new annualized payout.” But, as they point out, this wasn’t the only dividend increase that Deere provided in 2021.  

Deere did not increase its dividend in 2020, because of the uncertainties related to the COVID-19 pandemic.  The company didn't cut its dividend like so many stocks did during the COVID-19 recession; however, its frozen dividend was concerning to many income oriented investors.   But, as Passive Income Pursuit points out, the company has more than made up for this in the minds of those who pay close attention to dividend growth.  They wrote, “While this raise is exciting enough, what's truly special is that back in March Deere had already announced an increase.  The previous raise was a hefty 18.4% and with this second raise announced the November payout will be 38.2% higher than last year!”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

With regard to DE’s long-term dividend growth history, Passive income Pursuit wrote, “Dating back to 1992 there's been 29 years with year over year dividend growth ranging from 0.0% to 300.0% with an average of 19.6% and a median 9.5%.”  These strong dividend growth results in mind, combined with the nearly 20% forward earnings-per-share estimates in place for 2022, appear to be driving the bullish sentiment surrounding Deere shares within the Nobias community.  

Right now, 88% of the credible authors that our algorithm tracks are expressing “Bullish” opinions on the stock.  And, looking at the 4 and 5-star rated Wall Street analysts that we track, the average price target for DE shares is currently $447.00.  Relative to Deere’s current share price of $349.24, this represents upside potential of approximately 28%. 

Today, DE shares trade for approximately 18x earnings.  This $447.00 price target is in-line with a 20x multiple being applied to the current consensus average of $22.32 for 2022 earnings-per-share.  Therefore, it appears that the blue chip analysts that Nobias tracks expect to see multiple expansion over the next 12 months or so, signaling that this dip may be an attractive opportunity for longer term investors to take advantage of.  

Disclosure:  Nicholas Ward is long DE.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

PYPL with Nobias technology: PayPal Shares Are Down 33% From Their 52-Week Highs. Is Now The Time To Buy?

Financial technology, or Fin-tech, stocks have been all the rage in recent years now due to the secular growth trend associated with the world moving forwards a cashless society driven by digital transactions.  This has led to a slew of stocks in the fintech space experiencing massive rallies over the last 5 years or so.  Paypal (PYPL) is an interesting story to follow in this space because up until very recently, it was a very popular stock to buy.  PYPL shares are up 419% during the past 5 years.  However, during the last month, they’ve fallen nearly 19%.  

PayPal sold off after its recent earnings report and this weakness has pushed its year-to-date returns into negative territory.  PYPL shares are down 11.06% on a year-to-date basis, underperforming the broader markets by a very wide margin (the S&P 500 is up nearly 25% throughout 2021 thus far).  

Prior to PYPL’s recent earnings report, it was extremely easy to find credible authors highlighting the stock as a top growth pick.  However, we wanted to take a look at what the credible authors that Nobias tracks have had to say about the stock more recently, to see whether or not this post-earnings dip is one that long-term investors should consider buying.  

DISH Nov 2021

PayPal reported third quarter earnings results on November 8th, beating Wall Street’s consensus on the bottom-line, but missing expectations on the top-line.  PayPal generated $6.18 billion of sales during Q3, which represented 13.2% year-over-year growth.  However, this sales figure missed analyst estimates by $50 million and the 13.2% growth rate is the slowest that PYPL has generated since Q1 2020 (where the company generated 11.87% growth).  

On the bottom-line, PayPal posted non-GAAP earnings-per-share of $1.11, which beat analyst estimates by $0.03/share.  It’s worth noting that while PYPL’s top-line growth slowed during Q3, the reliable double digit sales growth that PYPL has been able to generate over the year is still the envy of just about every other company on Earth.  

And, this isn’t a speculative stock that generates strong top-line growth that doesn’t translate to strong profits as well.  PayPal split from Ebay (EBAY) in 2015 and since then the company has posted annual revenue growth results of 24% in 2015, 16% in 2016, 27% in 2017, 27% in 2018, 28% in 2019, and 25% in 2020.  Right now, the analyst consensus points towards PYPL’s earnings-per-share rising by 19% in 2021, 14% in 2022, and 28% in 2023.  In short, Wall Street believes that PayPal’s strong growth trajectory remains in place.  With this strong fundamental growth in mind, it’s easy to see why analysts have bee largely bullish on PYPL stock over the years.  

Looking at the credit authors that the Nobias algorithm tracks, there were several articles posted just before PYPL’s recent earnings report which highlighted the stock as a top buy pick.  On October 27th, Trevor Jennewine, a Nobias 5-star rated author, published an article at The Motley Fool where he touted both PayPal and Zillow (ZG) as top picks.  

With regard to PayPal, Jennewine said, “PayPal is one of the largest fintech companies in the world. Its platform spans 200 markets, offering a variety of financial services to both businesses and individual consumers. That includes payment processing (both in-store and online), point-of-sale solutions, and short-term financing for merchants; and mobile wallets, payment cards, shopping rewards, and crypto brokerage services for consumers.” “More importantly,”  Jennewine continued, “PayPal is still growing its business in new directions.”

With regard to recent growth, he wrote, “In 2020, the company launched a variety of products, including the Venmo credit card and QR code payments for PayPal's mobile apps. Like its acquisition of iZettle in 2018, these moves expanded its in-store presence. And management has already reported strong momentum -- Venmo's revenue growth accelerated to nearly 70% in the most recent quarter, and roughly 1.3 million merchants now accept PayPal QR codes at checkout.”   Jennewine believes that as PYPL adds more services to its fin-tech ecosystem, the company becomes more and more valuation to both merchants and consumers.  

PayPal increased its active accounts by 13.3 million to 416 million at the end of Q3 and there appears to be a lot of room left to grow.  Jennewine said, “The company currently puts its market opportunity at $110 trillion -- that figure is 90 times larger than the $1.2 trillion processed by PayPal's platform over the past year -- and management continues to execute on a strong growth strategy.” When he published his piece, he noted that PYPL shares were down 22% from their recent all-time highs and therefore, “That's why now looks like a good time to buy a few shares.”   Today, PYPL shares trade for $208.30, which means they’re down nearly 33% from their 52-week high of $310.16.  This implies that PYPL shares are an even better bargain today.  

Neil Patel, another Nobias 5-star rated author, also published an article in late October highlighting PYPL as a top pick.  Patel wrote, “Society is increasingly transitioning away from cash and toward digital payments, and PayPal is at the forefront of this movement. The company provides a broad range of tools for merchants to accept payments and for individuals with their daily financial lives. Over the past five years, the booming fintech has grown quarterly sales and profit 135% and 267%, respectively. And the stock has followed this strong fundamental performance, soaring almost six-fold during this time.”  

He continued, saying, “A business wouldn't be great without the presence of a competitive advantage. In PayPal's case, it's powered by dominant intangible assets, including a strong brand and an innovative culture. The company is globally recognized as a leader in safety, security, and speed when it comes to payments, factors that can't be compromised.”  

Patel highlighted PYPL’s strong second quarter margins and said, “And since the business already has the technological infrastructure in place to process massive numbers of transactions, the capital required to continue growing is minimal. PayPal invests 4% of sales in any period back into the company, which is why its free cash flow margin was a stellar 17% in the second quarter.” 

During Q3, PYPL’s operating margin came in at 23.8%.  Patel concluded his article saying, “These financial attributes, coupled with the company's consistent and steady revenue and profit growth over the past several years, support PayPal's forward price-to-earnings ratio around 47. The stock is also down more than 20% from its recent high in late July, giving investors a chance to buy on weakness.”  Because shares have continued their sell-off since Patel published his piece, PYPL is even cheaper today.  

Right now, PYPL trades for approximately 45.3x consensus 2021 earnings-per-share estimates of $4.60/share.  And, on a forward looking basis, PYPL trades for roughly 39.7x the Wall Street consensus earnings estimate of $5.25 for 2022. 

Vladimir Zernov, a Nobias 4-star rated author published a bearish article on the company after the recent Q3 results, explaining why PYPL shares fell 12% shortly after those results were posted.   As Zernov notes, the bearish pressure was put onto the stock because of future guidance.   He said, “In the fourth quarter, PayPal expects to report net revenue of $6.85 billion – $6.95 billion and adjusted earnings of $1.12 per share. The market is clearly disappointed by the soft guidance. Many analysts have already rushed to decrease their price targets for PayPal stock as they adjusted their models to account for slower growth.”  

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.

Zernov touched upon the relatively valuation issue that PYPL shares face, writing, “The key problem for PayPal stock right now is that established competitors in the payments space like Visa (V) and Mastercard (MA) are trading at lower multiples. The valuation gap between PayPal and Visa/Mastercard has closed after the recent sell-off, but it is not clear why PayPal should continue to trade at a premium to peers if the company fails to meet growth targets.” He concluded saying, “In this light, there may be more room for multiple compression in PayPal’s case, which could push the stock below the $200 level.”  

At the end of the day, the direction of PYPL’s share price is likely to follow its growth trajectory.  This stock trades with a high valuation premium attached and as Zernov points out, the company is going to have to continue to execute on strong growth to justify that premium.  Only time will tell if the company’s management team is able to reaccelerate growth into 2023 like Wall Street currently believes.  But, in the meantime, we continue to see that the credible authors and analysts tracked by the Nobias algorithm remain bullish on PYPL shares.  

When looking at the reports published by the credible authors that we track, 94% of them are “Bullish”.  Wall Street analysts have had a week to digest PayPal’s Q3 report and the company’s revised Q4 guidance and update their price targets for PYPL shares.  The blue chip (4 and 5-star rated) analysts that the Nobias algorithm tracks currently have an average price target of $277.33 on PYPL shares.   Relative to the stock’s current share price of $208.30, this represents upside potential of approximately 33%.  

Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long PYPL, MA, and V.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

DISH with Nobias technology: DISH Network Shares Have Fallen 15% In A Month. Is This Dip Worth Buying?

There has been an interesting tug of war going on in recent years in the media and entertainment space between the content producers and the distribution platforms.  Demand for content is higher than ever as society becomes more efficient and humans have more free time on their hands.  This secular theme has led to a handful of big winners in the media/entertainment space which have produced strong total returns for shareholders in recent years and continue to trade with elevated valuation premiums.  

However, the “cord cutting” phenomenon that we’ve witnessed play out over the last 5 years or so has really damaged the sentiment surrounding the legacy distribution platforms and many of these stocks trade with bargain barrel valuations attached to them because many investors believe that streaming is the way of the future and things like cable and satellite television are going to go the way of the dodo.  

DISH Network (DISH) is one such legacy player.  DISH shares are down roughly 34.2% over the last 5 years (drastically underperforming the broader market).  For comparison’s sake, the S&P 500 is up 115.9% over this same period of time.  DISH reported its Q3 earnings on November 4th, posting sales results which were in-line with analyst estimates.  DISH’s top-line result was $4.45 billion, which was down 1.8% on a year-over-year basis.  

DISH Nov 2021

DISH missed analyst expectations on the bottom-line, posting GAAP earnings-per-share of $0.88, which was $0.03 below Wall Street’s consensus estimate.  DISH shares are down approximately 15.2% since reporting Q3 results.  And therefore, we wanted to take a look at what the Nobias community of credible authors have been saying about shares recently to see whether or not this company has the potential to turn itself around, making this a double digit dip that investors should take advantage of.  

Billy Duberstein, a Nobias 4-star rated analyst, touched upon the secular headwinds that DISH currently faces in a recent article at The Motley Fool.  Early on in Duberstein’s report, he said, “The provider of DISH satellite cable TV, the SLING skinny bundle, and Boost Mobile prepaid wireless plans is up against some tough societal changes, and it lost subscribers in each of its businesses.”

He continued, highlighting the subscriber loss data from DISH’s Q3 report, writing, “DISH endured the loss of 13,000 pay TV subscribers, compared with an addition of 116,000 last year. As many know, the cable pay TV bundle is facing long-term declines, though DISH's large presence in rural parts of the nation without access to fast broadband should allow it to retain these pay TV customers for longer than the overall industry. So to see declines was disappointing, even as many are now moving over to streaming. DISH Network saw a 6% decline in satellite subscribers, while the skinny OTT Sling bundle grew subscribers by 4% -- not enough to offset legacy declines. Increased content costs also lowered margins.”

Duberstein also mentioned that DISH’s wireless segment lost 121,000 subscribers during Q3, which was especially disappointing for investors, because as he puts it, “that segment is supposed to be a potential growth business for the company.”  

Duberstein notes that DISH still has 5G aspirations and being that the total addressable market in that industry is so high, analysts continue to view this as a potential way for the company to make up for the negative growth that its legacy revenue streams are experiencing.  Yet, he concludes his piece highlighting the stock’s uncertainty, saying, “DISH's stock is quite cheap after the sell-off, at just 8.7 times trailing earnings. However, its core business is facing stagnation or decline, and its new 5G venture is highly uncertain. As such, it remains a risky stock, albeit with potential upside should the 5G effort pay off.”

However, as Wayne Rhodes, a Nobias 5-star rated analyst, recently pointed out in his DISH Q3 report, there are quite a few analysts who remain bullish on DISH, largely due to its low valuation and increased profit-related outlooks.  

Rhodes said, “ Stock analysts at Truist Securiti raised their FY2021 earnings per share estimates for DISH Network in a report released on Thursday, November 4th.”   He continued, “Truist Securiti analyst G. Miller now forecasts that the company will earn $3.79 per share for the year, up from their previous estimate of $3.43.”  

Rhodes also pointed out that, “Deutsche Bank Aktiengesellschaft boosted their price objective on shares of DISH Network from $68.00 to $77.00 and gave the company a “buy” rating in a report on Thursday, August 12th.”  He highlighted a bit price target upgrade from Moffett Nathanson as well citing that firm’s recent upgrade “of DISH Network from a “sell” rating to a “neutral” rating and boosted their price objective for the company from $15.00 to $40.00 in a report on Monday, July 26th.” 

More recently, he highlighted a Raymond James report on DISH which resulted in that firm cutting its price target from $56.00 to $52.00; however, as Rhodes notes, the Raymond James analyst “set a “strong-buy” rating on the stock in a research note on Friday.”

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.

Today, DISH shares trade for $36.54, which means that the Raymond James price target represents upside potential of approximately 42.3%.  “Finally,” Rhodes reported, “Pivotal Research boosted their price target on shares of DISH Network from $60.00 to $65.00 and gave the stock a “buy” rating in a research note on Friday, September 17th.”

All in all, when it comes to recent analyst reports, Rhodes says that “One investment analyst has rated the stock with a sell rating, six have assigned a hold rating, four have issued a buy rating and two have issued a strong buy rating to the company.”  The bullish lean of the analysts that Rhodes cites is in-line with the strong bullish sentiment that the Nobias algorithm tracks when looking at reports published by credible authors.  In that regard, DISH has a 91% “Bullish” sentiment score.  

And when looking at the valuations that the blue chip (4 and 5-star rated) Wall Street analysts that the Nobias algorithm tracks have applied to DISH shares, we see that the average price target for this company is $53.20.  Relative to DISH’s current share price of $36.54, this $53.20 figure represents upside potential of 45.6%.  

Disclosure:  Nicholas Ward has no DISH position.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

NVDA with Nobias technology: Nvidia Shares Are Up 45% In A Month. Is The Stock Still Attractive?

Facebook recently rebranded itself as Meta Platforms Inc., putting the “metaverse” into the global spotlight.  To most, this is still an abstract idea; however, the gist is that technological advancements in the augmented reality, the virtual reality, the artificial intelligence, and the semiconductor industries will enable humans to transcend reality as we know it, entering into a digitized mixed reality existence.  Admittedly, this sounds like something from science-fiction.  

Steven Spielberg recently portrayed a type of metaverse experience in his film, Ready Player One.  His film was set in 2045 and frankly, that time-line seems to be in-line with the suggestions coming from Meta Platforms Inc. management, who acknowledge that their present day investments into the metaverse aren’t likely to pay off anytime soon.  

However, the potential for long-term secular growth here appears to be massive, which is why Meta Platforms isn’t the only large-cap technology company investing heavily into metaverse related assets.  And while we’ve highlighted the company formerly known as Facebook as the catalyst which has pushed the metaverse into the headlines, the fact is, it may not be the biggest beneficiary of this long-term growth trend. 

Another large-cap technology company, Nvidia (NVDA), has been touted as a position winner in the metaverse space by Wall Street analysts this week, which has sent the stock soaring nearly 16.5% during the past 5 trading days alone.  

During the last 30 days, NVDA shares are up 45.48%.  Therefore, we wanted to take a look at this company to see what the credible authors that we track at Nobias Finance have had to say about the stock recently.  Is NVDA a buy here sitting near all-time highs?  Let’s see what the Nobias algorithm says.  

NVDA Nov 2021

With regard to NVDA, a report in Investor’s Business Daily written by Nobias 4-star rated author, Patrick Seitz, who highlighted NVDA’s recent operational success and quoted the research related to NVDA’s metaverse ambitious which was written by Wells Fargo analyst Aaron Rakers, who also receives a 4-star credibility ranking by the Nobias algorithm.  

It was Raker’s research note which played a large role in Nvidia’s 12% rally on Thursday.  In Seitz’ piece he quoted Rakers as saying, "We see Nvidia Omniverse as a key enabler/platform for the development of the metaverse across a wide range of vertical apps — industrial, manufacturing, design & engineering, autonomous vehicles/robotics, etc. - Nvidia Omniverse Enterprise represents a significant platform expansion strategy for Nvidia, which also entails a deepening recurring software story."

Seitz went on to say that after NVDA’s Q3 report, “Rakers reiterated his overweight, or buy, rating on Nvidia stock and raised his price target to 320 from 245.”  Seitz also touched upon the omniverse aspirations, saying that “Omniverse is an online platform that allows creators to collaborate in real time using physically accurate simulations and 3D renderings. Nvidia describes it as a "platform for connecting 3D worlds in a shared virtual universe."  He concludes that Nvidia is tied for first place when it comes to the Investor’s Business Daily’s fabless semiconductor industry group, signifying his bullish opinion.  

The metaverse isn’t the only growth driver that Nvidia is benefitting from right now.  Harsh Chauhan, a Nobias 5-star rated analyst, recently published an article titled “Nvidia Is Doubling Down on a Massive Opportunity” and the opportunity that he is referring to is the gaming market.  

Chauhan said, “The cloud gaming market is in its early phases of growth, and Nvidia has already moved into a dominant position in this multi-billion-dollar market that's expected to generate more than $6 billion in revenue by 2024.” He continued, saying that, “Nvidia's GeForce NOW cloud gaming service had more than 12 million members at the end of Sept. This is impressive considering that the number of paying cloud gaming subscribers is expected to hit 24 million by the end of the year.” 

Chauhan believes that NVDA could have a roughly 50% market share in the cloud gaming market by the end of 2021 via its GeForce Now platform.  In short, this is a subscription service which allows interested gamers to experience high-end gameplay on outdata devices.  

Chauhan highlighted a note that the company posted on its blog, highlighting the benefits of the GeForce Now service.  Nvidia wrote: “That means any underpowered PC or laptop — even with four-year-old integrated graphics — is instantly transformed into a gaming rig capable of displaying the hottest PC games in 1440p at 120 FPS with a compatible monitor that supports a refresh rate of 120Hz or higher.”  

Chauhan describes the Nvidia’s cloud gaming operations, saying, “Powered by what Nvidia calls the world's most powerful gaming supercomputer -- the GeForce NOW SuperPOD -- gamers can now stream games to their personal computers or MacBooks at a resolution of up to 1440p and 120 frames per second. Meanwhile, owners of Nvidia's media streaming device -- SHIELD TV -- can stream games in 4K HDR at 60 frames per second, which they couldn't do earlier. The SHIELD TV allows users to stream video content to their televisions through apps. The GeForce NOW RTX 3080 membership can turn those TVs into a gaming system.“ 

Chauhan went on to highlight the high costs of high-end gaming hardware in the market today, which is only getting worse because of ongoing supply chain issues.   He wrote, “As a result, it is difficult for gamers to lay their hands on an RTX 3080, and even if they manage to find one, they'll have to pay a heavy premium over the card's manufacturer's suggested retail price of $699. For instance, the average price of the RTX 3080 on eBay was more than $1,600 in the first two weeks of October.”  

The GeForce Now service costs $100/year for a priority plan, which makes it all the more attractive to prospective gamers.  This 5-star rated analyst believes that GeForce Now “can help Nvidia remain a top growth stock for a long time to come.” He concludes his piece saying, “Throw in the other major catalysts the company is sitting on, and it becomes easy to see why Nvidia's high growth rates could be here to stay.”  

The issue with Nvidia is its valuation.  Prior to its recent rally, Chauhan noted that the company was trading for 83x trailing earnings and 49x forward estimates.  He called NVDA “an ideal bet for investors willing to pay a rich valuation for a high-growth company.”  

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.

However, NVDA shares have rallied nearly 22% since Chauhan’s piece was published and today, at $297.52, NVDA shares trade for approximately 71.9x Wall Street’s consensus earnings-per-share figure for Nvidia of $4.14 in fiscal 2022.  This is a lofty premium, even if the stock manages to grow its bottom-line at a 66% clip this year analysts expect.  And therefore, while 75% of the credible authors that we track who have covered NVDA have expressed a “Bullish” opinion, we want to highlight the fact that many of these reports were published before the most recent leg of the stock’s rally and when looking at the average price target posted by blue chip (4 and 5-star rated) Wall Street analysts that we track, there appears to be a lot of risk attached to shares at today’s levels.  

The average price target amongst the credible analysts that Nobias Finance tracks is currently $246.36.  Relative to NVDA’s nearly $300 share price, this represents downside potential of approximately 17.2%.   Rakers is the only 4 or 5-star rated analyst that we track who has updated their opinion since the Facebook/metaverse hype occurred and it’s worth noting that his $320 estimate is the highest in our system.  

This implies that other analysts could also increase their estimates as they factor in the company’s most recent data into their models.  NVDA increased its sales by 68% last quarter and analysts remain very bullish on its prospects during the third quarter when it reports on November 17th.  However, for the time being, for all of the company’s long-term growth prospects, it appears as though Nvidia shares may be overvalued (in the short-term, at least), which is a risk that bullish investors certainly want to consider before buying shares.  

Disclosure:  Nicholas Ward is long NVDA.   Nicholas Ward wrote this article for Nobias at their request with a view 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.

FB with Nobias technology: Can Embattled Facebook Shares Overcome Recent Headline Risks?

Facebook (FB), which has recently been rebranded Meta (and will soon trade with the MVRS ticker symbol, starting December 1st, 2021) has been all over the financial news headlines in recent weeks.  

For several years now, Facebook has been front and center with regard to regulatory talks going on in the United States, as well as other countries across the world, who are concerned about the power of the big-tech stocks, especially when it comes to censorship, propaganda, false information, and election integrity issues. 

In recent years, Facebook has also been targeted for anti-competitive behavior and potential antitrust regulation because of its recent acquisitions of Instagram and WhatsApp, which has allowed this company to dominate its peers in the social media space.  

Most recently, when rival Snapchat (SNAP) posted poor earnings on October 21st, which disappointed and led to the company’s shares falling roughly 25%, there were fears that the issues that SNAP experienced with regard to the new iOS privacy settings would cause industry wide issues in the social media space now that it is more difficult for them to collect data and sell targeted advertisements within Apple’s (AAPL) digital ecosystem.  

Last week headlines also broke with regard to ongoing leakes, now referred to as “The Facebook Files” which shed a negative light on the inner workings of this company, its priorities, and ultimately, add to the regulatory spotlight and pressure that Facebook was already under.  

And most recently, we arrive at Facebook’s recent earnings report and the announcement that its founder and CEO, Mark Zuckerberg made, with regard to Facebook’s transition to Meta, which will be focused on growth in the metaverse, as opposed to being an ad-driven social media company (the metaverse idea is very interesting - almost something from science fiction - and yet, it appears that modern technology has the potential to make it a reality; here is the video that Zuckerberg posted highlighting the potential of the metaverse and explaining why Facebook will be pursuing leadership in that burgeoning industry).  

FB with Nobias technology Oct 2021

Needless to say, there is a lot to sort through when performing due diligence on FB shares.  With all of this going on, Facebook shares are down 15.8% from their 52-week highs.  And therefore, we wanted to take a look at what the credible analysts tracked by the Nobias algorithm have had to say about these headlines recently to see whether or not this is a dip that investors should consider buying.  

During his video, Zuckerberg highlighted the fact that building out the metaverse will require immense capital spending and therefore, the company plans to be more transparent about the financial performance of its Realty Labs segment moving forward.  

Nicholas Rossolillo, a Nobias 5-star rated analyst, recently published an article which highlights these ambitions.   Rossolillo said, “Starting in the fourth quarter of 2021 (which the company will report in January 2022), Facebook will add a new line item for FRL [which stands for Facebook Realty Labs] results and disclose the massive investments the company is making. This will separate Facebook's virtual reality operations from the advertising empire, which will now be called "Family of Apps" and include Facebook, Instagram, Messenger, WhatsApp, and other services.”  He continued, explaining that “The Oculus (AR/VR) business is the core of FRL. It includes hardware like Oculus Rift, designed to be used with a VR-ready PC; Oculus Quest, a stand-alone unit that delivers virtual worlds without the need for a separate computer; and mobile AR/VR headsets designed for use with a smartphone, like the now-discontinued Samsung Gear VR powered by Oculus.” 

Facebook management is making it clear to investors that their investments in the metaverse and virtual reality assets are long-term investments which aren’t likely to pay off in the near future.  The company mentioned that its FRL investments will reduce operating profits by approximately $10 billion in 2021.  However, the company believes that the short-term risks here are worth the potential long-term rewards.  

Rossolillo wrote, “Zuckerberg and company said FRL won't be profitable anytime soon. Nevertheless, they think the metaverse will become the successor to the mobile internet one day. Therefore, they are focused on getting the right products in place to get people and businesses introduced to the whole idea. Facebook thinks it can get 1 billion people using VR by the end of the decade, at which time it could generate many billions of dollars in annual revenue.”  

Rossolillo appears to be bullish on Facebook’s metaverse potential; however, it's important to note that at this point in time, the ultimate size, scale, and Facebook’s eventual market share of metaverse related revenues (because this isn’t the only technology company working on developing a virtual reality future) are speculative.  

It appears that this concept has tremendous growth potential, but it’s difficult for analysts to bake metaverse related sales, earnings, and cash flows into Facebook’s current valuation.  The metaverse concept is certainly exciting, for the company and for the world at large; however, it’s also important to focus on the success of the company in the here-and-now and therefore, let’s take a look at what Nobias 5-star rated analyst, Jill Goldsmith, recently had to say about the company’s Q3 report.  

Facebook reported its third quarter results on October 25th and Goldsmith covered them in an article on Yahoo Finance.  Facebook beat Wall Street’s consensus estimate on the bottom-line, posting earnings-per-share of $3.22, which was $0.04 higher than the Street’s expectations.  However, Facebook missed forecasts on the top-line and this disappointing revenue result has factored into the stock’s recent weakness.  Even though Facebook missed estimates, Goldsmith highlighted the strong double digit growth that the company produced, saying that the company generated “Revenue of $29 billion for the September quarter was up 35% from the year before but below Wall Street estimates.” She continued, writing that the company produced “Earnings per share of $3.22 — up 19% — were a beat.”  

With regard to its user base, Goldsmith points out that “Facebook hit 2.91 billion monthly active users last quarter, up 6% from the year earlier”.   She continued, pointing out that “DAUs [daily average users] were 1.93 billion on average, also an increase of 6% year-over-year.”  It turns out that the top-line results weren’t the only disappointing figures that the Q3 report included.  

Goldsmith said, “It [Facebook] expects fourth-quarter revenue to be in a range of $31.5 billion to $34 billion — below forecasts.”  She quoted a company statement provided during the Q3 report which read:  “Our outlook reflects the significant uncertainty we face in the fourth quarter in light of continued headwinds from Apple’s iOS 14 changes, and macroeconomic and COVID-related factors. In addition, we expect non-ads revenue to be down year-over-year in the fourth quarter as we lap the strong launch of Quest 2 during last year’s holiday shopping season.”  

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.

Lastly, Goldsmith highlighted the recent “Facebook Files” saying, “The social media giant has been engulfed in a storm of bad press jumpstarted by a whistleblower and a series of recent WSJ exposes called The Facebook Files — followed by a thrashing in other leading publications for its dangerous impact on young people, public discourse, politics and more.” She pointed out that whistleblower,  Frances Haugen, was questioned by Congress several weeks ago and highlighted her belief that the company is failing to self-monitor its platforms and prohibit the negative impacts that it has on society.  

Goldsmith said, “The nub of multiple reports is how FB’s own internal data showed harm. Haugen says it is absolutely within the company’s ability to take steps to address problems it but has repeatedly put use engagement and profit over the public good.”   She also reports that “files” continue to leak and therefore, there is potential further downside ahead for this social media name.  

However, when looking at the collective opinion on FB shares within the Nobias universe of highly credible authors, the strong bullish lean makes it clear that the analysts we track are happy to look past short-term issues and focus on the company’s long-term potential.   Right now, 89% of the credible authors that we track express “Bullish” opinions on FB shares.   And, the average price target on FB shares amongst the Wall Street analysis which receive 4 and 5-star ratings from the Nobias algorithm is currently $433.85.   Today, FB shares trade for $323.57.  Therefore, the average price target above points towards upside potential of approximately 34%.  

Disclosure:  Of the stocks discussed in this article, Nicholas Ward is long AAPL and FB.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

IBM with Nobias technology: Is IBM A Buy After Its Post Earnings Double Digit Sell-Off?

In a Nobias article on IBM in July after the company reported its second quarter results.  Last week, IBM reported its third quarter numbers and due to the battleground nature of this equity, we wanted to update subscribers on what vetted analysts are saying about the stock.  

The reason that IBM is such an interesting company for so many is because this name - Big Blue, as the company is affectionately called by many investors - was an integral part of the tech sector and the broader market at large for a couple of decades, prior to its recent struggles.  

However, unlike many of its peers in the technology space, IBM has underperformed over the last decade or so, having largely missed the significant shift from the PC to mobile and the ongoing enterprise migration to the cloud.  These secular trends have driven the growth which ultimately created several of the largest companies on Earth today.  What’s more, many of IBM’s peers in the “old tech space”, such as Cisco (CSCO), Microsoft (MSFT), and Oracle (ORCL), have latched on and adapted over the years, allowing the secular growth associated with the digital age to re-accelerate their top and bottom line trajectories as well.  During the last 1 and 5 year periods, Cisco is up 56.86% and 82.97%, respectively.   During these same periods, Microsoft is one of the market’s top performers, up 61.99% and 453.90%, respectively.  Oracle has posted strong performance as well over the trailing 1 and 5 year periods, up 71.26% and 151.53%, respectively.  IBM remains a major laggard, up just 14.87% during the last year and down 18.03% during the trailing 5 years.   During this 5-year period, not only has IBM underperformed its “old tech” brethren, but it has also underperformed the broader market by a wide margin as well.  The S&P 500 has posted gains of approximately 116% during the last half-decade.  

IBM with Nobias technology Oct 2021

With all of this in mind, investors continue to wait to see whether or not IBM’s new management team, led by Arvind Krishna, who took over the reins as CEO in 2020, are going to be able to turn this behemoth of a company around (even after its relative underperformance, IBM sports a $112.8 billion market cap).  Only time will tell, but the company’s earnings results are the best way to track its progress and therefore, we wanted to see what the credible analysts that the Nobias algorithms tracks have had to say about the company in light of its recent report.  Prior to the Q3 report, Nobias 5-star rated analyst, Richard Saintvilus, wrote an article titled, “IBM (IBM) Q3 Earnings: What To Expect”.  

In this piece, Saintvilus highlighted IBM’s relative underperformance as names like Microsoft and Amazon (AMZN) have taken the lion’s share of the cloud growth pie; however, with regard to IBM’s continued cloud-related operations, he said, “The company’s cloud ambitions have shown some promise in recent quarters and has provided ample revenue strength to support a higher multiple, thanks to the Red Hat acquisition which modernize the cloud business. The company is now forecasted to grow revenues by high single digits annually over the next 5 years.”

Saintvilus quoted Krishna, who highlighted his bullish outlook for IBM once it spins off its Managed Infrastructure Services unit into Kyndryl (right now, this transaction is expected to occur during Q4), saying, “With the spin-out of Kyndryl and the acquisition of Red Hat, you’re seeing that just under half of our portfolio is software, a little under one-third of it is consulting.”  

Nicholas Rossolillo, another Nobias 5-star rated analyst, recently penned an article highlighting the Kyndryl spin-off and what he believes investors should expect, ultimately providing an outlook which appears to be mixed, with regard to the future potential of the names on either side of the spin-off deal.   Rossolillo said, “The new IBM won't be an exciting high-growth company. Still, it will be rejuvenated enough that its stock will be worth another look, especially for investors who are interested in assets that offer a balance of gradual growth and income too.”

Rossolillo did go on to say that, “Corporate spinoffs -- where a company divests itself of one or more of its operating segments -- can be fantastic events for shareholders in aging businesses.” Oftentimes, when spin-offs like these occur, the market talks about the company “unlocking value” because various segments aren’t seeing rational cash flow multiples attached to them.  Furthermore, smaller, pure-play companies tend to be more nimble and with a more focused leadership team, can begin to see accelerating growth.   But, with regard to the Kyndryl spin-off, Rossolillo is not very bullish.  He wrote, “​​The practice of offloading legacy operations that no longer dovetail with a company's main priorities can help a company focus more tightly on its highest-growth and most profitable segments. In the case of the Kyndryl spinoff, there might be good reasons for IBM owners to sell the new shares shortly after they receive them. Kyndryl will be a large-cap business right off the bat, valued at some $19 billion, but its profit margins will be dismal, and the underlying operation has a history of slowly evaporating market share.”  

Rossolillo is more bullish on IBM moving forward, writing, “Post-spinoff, IBM will reorganize and begin reporting its business in four new segments: consulting (which is expected to deliver annual revenue growth in the high single-digit percentages for the next few years), software (mid-single-digit percentage growth), infrastructure (no growth), and financing (mid-single-digit percentage growth). Overall, IBM should be a mid-single-digit percentage growth company in the coming years.”   He maintained this line of thought, saying, “Plus, though this will remain one of the more pedestrian names in the tech industry, IBM is expected to accelerate its free cash flow growth to a high single-digit percentage rate in each of the next three years.”   And therefore, he concludes that investors - especially those interested in passive income (because IBM pays a dividend yield which is 5.24% right now, well above the broader market’s ~1.3% yield) - may very well be interested in IBM once it has shed the slow/negative growth drivers attached to Kyndryl.  

Closing out his piece, Rossolillo wrote, “Simply put, completing the spinoff of Kyndryl won't totally transform IBM. Still, this long-awaited offloading of some of the company's legacy services will be a good thing. So if dividend income is what you're after, this is the best time in a decade to own IBM stock.” It appears that he wasn’t the only one relatively bullish coming into the Q3 report.  

Saintvilus noted that the market responded positively to Krishna’s comments regarding the spin-off earlier in the year, saying, “IBM stock has rallied from about $115 back in January to over $150. While there is some near-term resistance, it appears the market is giving IBM more credit for the recent traction the company has made towards the cloud. But for the the shares to maintain their uptrend, the company on Wednesday will need to demonstrate continued operating leverage and revenue growth acceleration.”  

So, did the company live up to Wall Street’s expectations?  
When IBM reported the company did manage to beat analyst estimates on the bottom-line, posting non-GAAP EPS of $2.52/share, which was $0.01/share ahead of the analyst consensus. However, IBM  missed on the top-line, posting sales of $17.62 billion (which were $190m below consensus estimates). IBM’s sales did increase, ever so slightly, up 0.3% on a y/y basis.

During the trailing twelve months, Q3 pushed IBM’s free cash flow generation up to approximately $11 billion (however, much of this was during Q4 2020; year-to-date, IBM’s adjusted free cash flow comes in at ~$5b). IBM’s Cloud and Cognitive Software segment and its Global Business Services segment both posted slow and steady growth. Yet, its Systems segment saw its revenues shrink by 11% and the company’s Global Technology services saw its revenues shrink by 5%.

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

During the quarterly conference call, Krishna noted that ex-Kyndryl, IBM’s quarterly revenue growth would have been 2% on a y/y basis. Management also highlighted IBM’s improving balance sheet position, with cash sitting at $8.4 billion and the company’s long-term debt being reduced by approximately $7 billion.   With regard to shareholder returns, IBM’s CFO, James J. Kavanaugh said, “In addition to debt reduction, year to date, we've used $3 billion for acquisitions and over $4 billion for shareholder returns through dividends. However, even with all of this in mind, IBM shares sold off after the report, making it clear that their numbers did not live up to investors’ expectations.  

The stock trended down 11.57% on the week (last week).  This week the negative momentum continued, with IBM falling another 2.17%.  Overall, after this post-Q3 sell-off, IBM shares are down trading at an 18.15% discount to their 52-week high.   But, the selling pressure here appears to have created an attractive opportunity for patient investors. 

Looking at the credible analysts that Nobias tracks, we see a 92% “Bullish” sentiment rating.   And, amongst the 4 and 5-star rated Wall Street analysts that we track, the average price target for IBM shares currently sits at $161.25.  Today, IBM shares trade for $125.10, which means that relative to that average price target, shares present upside potential of 28.9%.  

Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long AMZN, CSCO, and MSFT.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

NFLX with Nobias technology: Is Netflix a Buy After its Third Quarter Earnings?

Netflix (NFLX) has long held the dominant position in the streaming wars.  This has allowed the stock to post fantastic returns over the long-term.  Simply put, Netflix is one of the top performing stocks in the entire market over the last decade, with 10-year total returns north of 3,800%.  However, in recent quarters, there have been concerns about whether or not the stock is going to continue to generate alpha like this.  Netflix is no longer the only show in town as far as streaming services go. Other streaming platforms, such as Disney+, have seen faster subscriber growth than Netflix in the recent past.  And, it’s unclear as to whether or not the massive capital expenditures that the company is dedicating towards content is going to result in attractive returns on investment.  On top of all of this uncertainty, NFLX shares continue to trade with a high growth premium attached (Netflix shares are trading for approximately 62x 2021 earnings-per-share estimates), intensifying the risk associated with shares.  

And yet, with all of this in mind, NFLX is up nearly 14% during the past month and the company just posted third quarter earnings which beat Wall Street’s expectations on both the top and bottom lines.  Because of the recent rally, we wanted to see what the credible authors tracked by the Nobias algorithm have had to say about the company recently to see if this momentum is built to last.  

NFLX with Nobias technology Oct 2021

Jessica Bursztynsky, a Nobias 4-star rated analyst, covered NFLX’s Q3 earnings report at CNBC.com.  She noted that the company generated earnings-per-share of $3.19 versus the consensus of $2.56, “according to Refinitiv survey of analysts”. Bursztynsky highlighted Netflix’s top-line results as well, saying that the company posted quarterly revenue of $7.48 billion which was in-line with the Refinitiv consensus of $7.48 billion.  Most importantly, she reported on Netflix’s subscriber numbers, writing, “The quarter’s subscriber growth of 4.4 million was a solid beat over the expected 3.84 million.”  Management was bullish on its current content slate, harping on the success of the recently released “Squid Game” show. 

Bursztynsky wrote, “Netflix said the South Korean dystopian series has become its “biggest TV show ever.” The company said 142 million member households globally watched the show in its first four weeks.”   But, Netflix management appears to be even more excited about the fourth quarter.   Bursztynsky touched upon NFLX’s forward guidance, saying, “The company said it expects to add 8.5 million subscribers in the fourth quarter.” She went on to quote Netflix’s co-CEO, Reed Hoffman, who said, ““We’re in uncharted territory. We have so much content coming in Q4 like we’ve never had, so we’ll have to feel our way through and it rolls into a great next year also.”

Lastly, Bursztynsky noted, Netflix is continuing to work towards adding gaming to its subscription service, although she notes, the company says that “it remains very early days for this initiative.” As Netflix’s video sub growth matures (especially in the United States) gaming appears to be a new growth market.   Bursztynsky said, “Netflix still wants to grab more users’ attention, competing against activities like watching TikTok, playing Fortnite or reading.” She noted that during the quarterly report, NFLX management said “that when Facebook experienced a global outage earlier this month, Netflix saw engagement increase 14% during that same time period.”

Gaming adds another avenue that its subscribers can take advantage of in terms of entertainment.  It’s clear at this point that the ultimate winner of the streaming wars will be the platform with the most eyeballs attached and between its upcoming content slate and new initiatives to expand its existing user base, it appears that Netflix is still looking to innovate.  

Neil Patel, a Nobias 5-star rated author, recently published an article highlighting the importance of scale in the streaming race, noting that Netflix’s first mover advantage in the space has created a significant moat for the company because of its ability to outspend peers.  

Patel said NFLX’s high subscriber count (and the cash flows that they generate) affords “Netflix the ability to pay $17 billion in cash on content in 2021 alone, which is far greater than other streaming companies. For a smaller competitor with fewer subscribers and a lower content budget, this just wouldn't make much financial sense.”  

Patel continued to highlight this bullish thesis saying, “Netflix can outspend rivals and bid on the best content, including top writers and producers, to keep its business flywheel accelerating. Gaining more members equals more revenue, which translates to higher cash outlays for compelling content. This in turn will attract more subscribers in a virtuous cycle.”  He concluded, “These favorable characteristics bode well for the business and will propel it further over the next decade.”  

And, in terms of expanding its content offerings into the gaming space, Gerelyn Terzo, a Nobias 5-star rated author, recently published an article at Yahoo Finance which discusses the company’s latest moves in that area of the content arena.   Terzo said, “Netflix has scooped up Night School Studio, a Los Angeles-based independent game developer behind titles such as Oxenfree. Night School Studio’s games can be accessed on platforms such as PlayStation, Xbox, the Switch and Steam. Netflix also expanded into mobile gaming with the addition of a handful of titles.”

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.

However, he notes, this move is not overly significant and likely represents a small step towards a much larger goal.   Terzo believes that for NFLX to make a significant splash in the gaming space, the company is going to have to make a $1b+ acquisition to immediately acquire the attractive intellectual property and programmers/developers that it will need to sustain gaming offerings over the long-term.  He wrote, “Wedbush analyst Michael Pachter said on CNBC that Hastings’ company would probably need to make a multi-billion dollar gaming acquisition in order to move the meter, such as Warner Brothers Interactive Entertainment, which is likely on the block.”

Only time will tell whether or not gaming will become a major part of NFLX’s content slate; however, the fact is, it wasn’t all that long ago that Netflix was a company shipping DVD’s to paying customers...if any company can quickly pivot and expand upon their business model, it’s likely this one.   Overall, even after the stock’s recent rally, the majority of the credible authors that we track with the Nobias algorithm maintain a bullish sentiment on NFLX shares. 

Right now, 87% of the credible authors that we follow express a “Bullish” outlook on the stock.   The average price target for NFLX amongst the 4 and 5-star rated Wall Street analysts that we track is currently $672.79.   Netflix closed the trading session on Friday at $664.78, which means that this average price target represents upside potential of 1.2%.  

In other words, the ~14% rally that we’ve seen play out during the last 30 days has eliminated a lot of the stock’s margin of safety; however, over the long-term, it appears that the credible authors that we track continue to believe in this company’s growth prospects.  

Disclosure:  Nicholas Ward has no NFLX position.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

DAL with Nobias technology: Should Investors Consider Buying Delta after it's Third Quarter Dip?

Coming out of the COVID-19 recession, we’ve seen much of the economy reopen.  However, the digital work-from-home trend which pushed employees out of the office appears to have remained largely in place.  This really hurts certain industries (commercial real estate, lodging, and the airlines, in particular).  Roughly 20 months after the onset of the COVID-19 pandemic, a debate still rages as to whether or not, with the benefit of hindsight, 2019 will prove to represent peak business travel? If this is the case, it will be difficult for the major U.S. airline stocks to recover because these companies have taken on a lot of debt and in many cases, sold large amounts of equity, which is putting pressure on their underlying fundamentals.  

For months, the airlines have been counting on business travel to pick back up to pre-pandemic levels; however, this hasn’t happened yet.  The airlines are attempting to make up for lost business volumes with heightened leisure travel as more and more travel restrictions are taken off the books and consumers who’ve been cooped up in their homes finally have the ability to go on vacations again.  However, it’s unclear as to whether or not leisure demand is going to be able to make up for the enterprise shortfall and with that in mind, there is still a lot of push and pull going on between the bulls and the bears when it comes to the airline stocks.  

Delta Airlines (DAL) just posted its third quarter earnings results.  Because of this, we wanted to take a look at what the credible analysts that the Nobias algorithm tracks have had to say about this battleground stock.   Coming into the quarter, Mircea Vasiu, a Nobias 4-star rated analyst, laid out Wall Street’s expectations for Delta’s Q3 results in an article at vantagepointtrading.com.  

DAL with Nobias technology Oct 2021

Vasiu touched upon DAL’s struggles during the recent past saying, “The stock price declined severely during the pandemic as travelling literally came to a halt. On top of that, the news that Warren Buffett, the famous investor, sold all its participation in the company pushed the stock price lower even more.”  

“However,” Vasiu continued, “Delta Air Lines stock price recovered smoothly. It is now up by 32.74% in the last 12 months, in a bullish trend since the 2020 dive. Ahead of the quarterly earnings, investors are optimistic that the company may deliver better than expected results, just like it did in the previous quarter, when it delivered a revenue surprise, beating expectations by $858 million.”  Coming into Q3, the analyst noted that Wall Street’s consensus was for DAL to generate $0.17/share in earnings, which would represent “the first positive quarter since the COVID19 pandemic started.”

Apparently these expectations for positive earnings have Wall Street analysts excited because Vasiu wrote, “Just like investors, analysts are optimistic about Delta stock price. Out of the 30 analysts covering Delta Air Lines stock price, 23 have issued buy ratings, while 7 have neutral ratings. More interestingly, no analyst has a sell rating for the Delta Air Lines stock.”  With that in mind, let’s take a look at Delta’s actual results, which were posted on Wednesday, October 13th, 2021.  

Delta Airlines beat analyst estimates on both the top and bottom lines; any yet, even after the surprisingly good results, DAL shares sold off.  Delta Airlines closed the week down 5.51% and now trade with a 20.6% discount to their 52-week highs.   Ben Mahaney, a Nobias 4-star rated analyst, covered the results in a recent Yahoo Finance article.  He began by saying, “Adjusted earnings of $0.30 per share significantly beat analyst estimates of $0.17 per share.”  This $0.30/share figure was well above the -$8.47/share that Delta produced during Q3 last year.  

However, Mahaney said, “The company warned that the current rise in fuel prices will hamper its ability to profit in the fourth quarter.” This appears to be a major catalyst for the stock’s negative momentum after the Q3 beat.   When it comes to DAL’s top-line, Mahaney wrote, “Revenue stood at $9.15 billion and outpaced the Street’s estimate of $8.39 billion. In the same quarter last year, the company posted revenue of $2.6 billion.”  

Mahaney went on to quote Delta’s CEO, Ed Bastian, who after the results said, “While demand continues to improve, the recent rise in fuel prices will pressure our ability to remain profitable for the December quarter. As the recovery progresses, I am confident in our path to sustained profitability as we continue to provide best-in-class service to our customers, strengthen preference for our brand, while creating a simpler, more efficient airline.”

Mahaney highlighted Delta’s near-term expectations and compared them to pre-pandemic levels saying, “Based on current flying demand and the upcoming holiday season, Delta expects its Q4 revenue to recover to a low 70% compared to Q4FY19, with 80% capacity. Additionally, the company announced the acquisition of two used A350 aircraft, which will start deliveries in the December quarter.” 

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.

However, looking a bit further out into the future, we see that Colin Scarola, a Nobias 4-star rated analyst, who is Vice President of Equity Research at CFRA Equity and Fund Research, is much more bullish on volume trends.   Scarola published an article at moneyshow.com after the Q3 results which highlighted CFRA’s bullish outlook for DAL shares.  He wrote, “CFRA raises its STARS rating on shares of Delta Airlines (DAL) to Strong Buy from Buy, while we keep our target price at $55 per share — 12x our 2022 EPS estimate (raised to $4.49 from $4.31; 2021 cut to -$3.82 from -$2.57).”   He continued, “DAL is now on course to generate positive free cash flow for the remainder of the pandemic, with pandemic balance sheet deterioration now complete, in our view, eliminating a key risk for the stock going forward.”  

Scarola said, “Shares have sold off about 20% since April even as the 2022 earnings outlook has greatly improved, in our view, leading to our upgrade to Strong Buy.”  He further said that CFRA believes that “the U.S. and other developed economies to be through low-hospitalization Delta variant waves by the end of Q3, setting the stage for a major resurgence of international and business travel in Q4.”

Overall, the community of credible authors that Nobias tracks shares this bullish outlook.   Right now, 81% of credible analysts express a “Bullish” opinion on DAL shares.   The average price target being applied to DAL by the 4 and 5-star Wall Street analysts that we track at Nobias is currently $53.60.  Today, DAL shares trade for $40.99, which means that the consensus price target represents upside potential of approximately 30.7%.  

Disclosure:  Nicholas Ward has no positions in any stock mentioned in this article.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

BA with Nobias technology: Coming Into Q3 Earnings, Is Boeing Ready To Rally?

Boeing’s fall from grace, as a best-in-breed industrial stock and a market darling, especially amongst dividend growth investors, during recent years has been an intriguing story to follow.   It wasn’t long ago that Boeing was generating massive cash flows due to the popularity of its narrow body plane sales.  

The company held an incredible strong market share position as a part of a global duopoly in the commercial air space (alongside AirBus) and wasn’t only seeing its sales increase, but its margins as well, due to the strong demand for its products and the burgeoning services segment that management was focused on which didn’t only generate reliably, recurring revenues, but also widened the company’s moat by increasing switching costs for airlines due to a more vertically integrated model.  

Coming into 2019, Boeing had a record backlog and it appeared that the stock had smooth sailing ahead due to the secular growth that was playing out in the global aerospace industry.  However, then we saw the 737 Max groundings, which shook the world’s confidence in Boeing’s hardware, which was quickly followed by the COVID-19 pandemic, which effectively shut down global travel.  

This one-two punch caused Boeing’s earnings to go negative in 2019 and then again in 2020, it forced management to cut BA stock’s dividend, and do immense damage to the company’s balance sheet as Boeing had to raise approximately $35 billion in debt to avoid tapping into government stimulus that was available during the COVID-19 period.  

BA with Nobias technology Oct 2021

From early 2019 to early 2020, BA shares sold off from their record highs in the $440 area to lows around $100.00/share.  Since the depths of the COVID-19 sell-off, we’ve seen BA climb out of that hole and today, shares trade for $217.04.  Today’s share price still means that BA is trading down more than 50% from its all-time highs set just a couple of years ago.  And, now that we’re seeing an uptick in travel as the world’s economy reopens, we wanted to take a look at what the credible authors tracked by the Nobias algorithm have had to say about BA shares.  Boeing is scheduled to report Q3 earnings in late October, making this an intriguing stock for investors looking for exposure to potential reopening plays.  

Kamaron Leach, a Nobias 4-star rated analyst, recently published an article at Bloomberg which highlighted the confidence that some of the beaten down industrial names that were really hurt during the COVID-19 are now expressing.   Leach mentioned that big-tech firms continue to cash their massive cash flows to bolster their balance sheets; however,he’s seeing a lot of cyclical non-financial names becoming more aggressive with their cash hoards, saying, “But others seen as prime beneficiaries in the changing economic landscape -- such as GE and Boeing on the aerospace front -- have begun spending down reserves, just as consumers are returning to old spending and travel habits.” 

Leach quoted a source, Jeff Windau, a senior analyst at Edward Jones, who said, “A year or so ago in the throes of the pandemic, I think everyone was really trying to bolster their balance sheets. Now things have rebounded considerably with better visibility given how the trends are progressing and things look to be improving quite a bit from an industrial economy standpoint.”

Leach points out that Boeing’s cash hoard has fallen from $32.4 billion a year ago to $21.3 billion when his article was published back in August after the company’s second quarter results.  During BA’s Q2 conference call, Dave Dohnalek, the company’s interim CFO, highlighted the company’s plans regarding its cash position saying, “Our debt balance remains stable at $63.6 billion at the end of the quarter. We expect to have lower total debt at the end of the year due to the paydown of maturing bonds and potential early paydown of our delayed draw term loan.”

Dohnalek continued, “We remain focused on reducing our debt levels and actively managing our balance sheet. Our investment-grade credit rating is important to us and we will continue to consider all aspects of our capital structure to strengthen our balance sheet.”  Dohnalek said that he expects BA to become cash flow positive again in 2022 and as Leach points out, higher capital expenditures from non-financial stocks who’re experiencing renewed confidence like this should help to bolster economic growth, meaning that the confidence seen by management teams like BA’s has the potential to create a virtuous economic cycle (propelling fundamentals higher over the short-to-medium term).  

While BA hasn’t posted earnings data yet, the company has recently published its Q3 delivery data from its commercial and defense segments.   Ben Mahaney, a Nobias 4-star rated author, published a report on Yahoo Finance which highlighted the company’s recent delivery data.  

Mahaney said, “With overall travel rebounding, Boeing delivered a total of 85 commercial jets in Q3, up from 79 jets delivered in Q2. This included 66 deliveries of the 737 MAX jet and none of its 787 models.” He continued, “Additionally, Boeing delivered a total of 37 defense aircraft in Q3, fewer than the 43 delivered in Q2. Year-to-date, Boeing has delivered a total of 241 commercial jets and 122 military aircraft.”  

Mahaney highlighted a quote from the company which read, “In our commercial business, we increased 737 MAX deliveries in the quarter, and progressed in safely returning the 737 MAX to service in more international markets.” He also highlighted an analyst report which Cowen & Co.’s Cai Rumohr published in response to Boeing’s delivery data. 

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.

Mahaney  wrote, “Rumohr was disappointed with the September deliveries as 737 picked up the pace, but 787 still paused. However, he is encouraged by the fact that Boeing’s 22 net orders show the eighth straight month of positive bookings, reflecting an uptick in demand and surpassing Airbus’ 1 net order after lagging it in August.” 

Since reporting Q2 results, Boeing shares are down roughly 12.5%. The positive order flow and the 2022 projections from management are great, but after so much negative volatility in recent years, it appears as though the market is waiting for more concrete data, with regard to the company’s growth rebound.  This means that the upcoming Q3 report has a chance to play a major role in the company’s share price movement moving forward.  

Coming into the Q3 reporting season, the vast majority of the credible analysts that the Nobias algorithm tracks have a positive outlook for Boeing shares. 87% of the credible authors that we track currently express “Bullish” sentiment when it comes to BA shares.  

And, the average price target of $256.67 for BA shares posted by the blue chip (4 and 5-star rated) Wall Street analysts tracked by the Nobias algorithm is currently 18.3% higher than BA’s current share price of $217.04.   With this in mind, it appears that the credible community of authors that we track are betting on a rebound for BA shares as the broader economy continues to improve coming out of the COVID-19 pandemic.  

Disclosure:  Nicholas Ward has no positions in any stock mentioned in this article.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

TDOC with Nobias technology: Down 50%, Is TelaDoc Health Finally A Bargain?

2020 created a perfect storm for the acceleration of the existing telehealth trends due to the COVID-19 pandemic which not only created a high demand for healthcare visits, but also put in place social distancing restrictions.  Because of this, we saw stocks like TelaDoc Health (TDOC) soar.  

TDOC shares rose from $101/share at the end of 2019 to nearly $200/share on 12/31/2020.  TDOC’s rally continued early into 2021 as well, with the stock hitting its 52-week high of $308.00/share back in February of this year.  However, since then we’ve seen a distractic sell-off here with the optimism surrounding the TelaDoc shares fading and the stock coming back down to Earth a bit (from a valuation standpoint).  

Today, TDOC trades for just $135.4, meaning that shares have fallen more than 55% from their highs.  Year-to-date, TDOC shares are down 31.98%.  And with that in mind we wanted to take a look at what the credible authors that the Nobias algorithm tracks have been saying about this beaten down growth stock as of late.  

Nobias 5-star rated analyst, Rachel Warren, recently published an article where she highlighted two of her favorite places where investors should be putting $1,500.00 to use right now.   She said, “In an ever-unpredictable market, long-term investing takes patience. Most people won't get rich through stocks overnight; it takes time to realize and sustain meaningful portfolio returns.” And therefore, for the sake of her article, she was on the lookout for best-in-breed high growth picks that have the potential to generate real wealth over the long-term.  One of her choices was TDOC.  

TDOC with Nobias technology Oct 2021

Warren said, “It seems that some investors have dismissed telemedicine provider Teladoc Health (NYSE:TDOC) as a pandemic stock in recent months -- passing on it as vaccinations accelerate and many people go back to work, school, and social activities in person. However, it would be a mistake to count out Teladoc as a solid, long-term investment.” With regard to the stock’s huge year during the pandemic, Warren noted, “There's no doubt 2020 was a big year for Teladoc. It reported 10.5 million medical visits on its platform last year, made major acquisitions of fellow telemedicine providers InTouch Health and Livongo, and grew its revenue by an incredible 98% from 2019.”   However, she continued, saying, “But the need for quality telehealth services isn't just evaporating now that we have reached a different stage in the pandemic, and the proof has been evident in Teladoc's quarterly reports so far in 2021.”

Warren highlighted TDOC’s triple digit y/y revenue growth during 2021 as well, saying that in Q1 TDOC’s top-line grew by 151% which was then followed by a 109% y/y growth performance during Q2.   She noted that patient visits are on the rise on the digital health platform as well, with y/y growth here coming in at 56% during Q1 and 28% during Q2.   She believes that this is the best-in-breed option for investors looking for exposure to this growing market. 

Warren wrote, “Teladoc is the leading telehealth company in the world. Consumers know and like its platform, and happy customers mean more revenue. According to results from the J.D. Power 2021 U.S. Telehealth Satisfaction Study, Teladoc garnered "the highest ranking and outperformed all other direct-to-consumer providers in all study subcategories, including customer service, consultation and enrollment.” And therefore, TDOC is a name that Warren likes over the long-term, concluding her piece by saying, “I believe you can buy and hold for years, and long-term investors should consider taking advantage of its current discount from earlier highs.”

Warren isn’t the only highly rated analyst that we’ve seen publish bullish reports on TDOC recently.   Trevor Jennewine, a Nobias 5-star rated analyst also recently highlighted his bullish stance in an article titled, “New Investor? 2 Smart Stocks to Buy Right Now”  Jennewine began his piece saying, “Teladoc is disrupting the multi-trillion dollar healthcare industry. Its virtual-first platform connects patients with healthcare professionals, allowing them to attend appointments from the comfort of their own homes. More importantly, Teladoc leans on a provider network of over 50,000 clinicians, with expertise in over 450 sub-specialties, making it the most comprehensive telehealth solution available.”  

Highlighting one of the primary reasons for the stock’s recent decline (de-accelerating growth) Jennewine did note that, “During the most recent quarter, Teladoc's U.S. memberships grew by just 1%, a sharp deceleration from the 92% growth in the prior year. As a result, the stock currently sits 50% below its all-time high. But I think that overreaction creates a buying opportunity for long-term investors.”  However, he believes that this company remains in a great position to disrupt the traditional healthcare industry, saving money for providers and patients alike, and therefore, he concludes that TDOC is an attractive bargain after its 50%+ sell-off.  

Jennewine concluded his piece saying, “Last year, the average time between a member's request and a telehealth appointment was just 10 minutes. And Teladoc's virtual platform saves clients $472 per visit compared to alternative solutions, according to Veracity Analytics. Put another way, Teladoc makes healthcare faster, cheaper, and more convenient. And as more patients become comfortable with the idea of engaging with clinicians remotely, I think Teladoc will see strong demand from employers, insurance companies, and health systems.”  

Adria Cimino, a Nobias 5-star rated analyst, also recently highlighted TDOC as a potential bullish bet for investors, touching upon its recent M&A activity which she believes will  increase the company’s growth potential over the long-term.   Cimino highlighted TDOC’s $18.5 billion Livongo acquisition from late 2020, saying, “The company's acquisition of Livongo last year helped it step up its game in chronic-illness management. Now, more than 20% of chronic-care members are enrolled in multiple Teladoc programs. That's up from 6% a year earlier, which is key because more than 40% of adult Americans suffer from more than one chronic condition.” 

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.

Brian Withers, another Nobias 5-star rated analyst, also touched upon the fact that TDOC is expanding its capabilities across the healthcare sector during a recent podcast in which he said, “When you look at across all of these from general medicine behavior health, hospitals and health systems, ongoing, things like hypertension. The addressable market, $121 billion, just in the U.S. is massive for Teladoc, and I think they'll continue to be the leader here and continued to click away at this addressable market.”  

Obviously, TDOC won’t capture 100% of the market share here, but this just goes to show the massive upside potential that this company has so long as it can continue to innovate and grow.  The world is moving in an ever-digital direction.  It seems clear that the healthcare industry will continue to shift in this direction as well.  And therefore, TDOC has an opportunity to post strong growth over the long-term, which is exciting for many investors.  

Right now, 75% of the credible authors that we track with the Nobias algorithm express a “Bullish” opinion of TDOC shares.  The average price target amongst the blue chip (4 and 5-star rated) Wall Street analysts which we track that cover the stock is $195.20.  Compared to TDOC’s current share price of $135.4, this implies upside potential of 42.6%.  

In her piece, Cimino notes that TDOC isn’t profitable yet; however, even with this being said, she notes,  “I expect consumers' interest in telehealth and Teladoc's investments in growth will help it get there.”   It appears that the vast majority of the Nobias community of credible authors agrees.  

Disclosure:  Nicholas Ward has no positions in any stock mentioned in this article.    Nicholas Ward wrote this article for Nobias at their request with a view 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.

CVX with Nobias technology: After Rallying 12% During the Last Month, Does Chevron Have More Room To Run?

Thus far, 2021 has been a banner year for the energy space.  The entire market has performed well, with the S&P 500 up 16.9% on a year-to-date basis.  However, the energy sector is outpacing the broader maket’s results by a wide margin as the best performing S&P 500 sector thus far, up 50.09% year-to-date.  

The oil majors have largely underperformed their sector benchmark; however, 50% gains in a very high bar to clear.  Chevron (CVX), for instance, is up 27.95% thus far throughout 2021.  This beats the S&P 500 by roughly 65%, so CVX investors should be quite happy.  However, CVX shares have been on such a strong run during the last month (where they’re up more than 12%) that we wanted to take a look at what the Nobias credible authors have had to say about the company’s shares to see if this rally is expected to continue and whether or not CVX can potentially make up some of the lost ground, relative to its sector peers.  

In a recently published article titled, “5 Dow Stocks With the Biggest Dividends Are Great Q4 Buys Now”, Lee Jackson, a Nobias 5-star rated analyst, provided his bullish outlook for CVX shares.   Jackson wrote, “This energy giant is a solid way for investors who are more conservative to be positioned in the sector. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals.” He continued, highlighting what sets CVX apart from its peers, saying, “With the strongest financial base of the majors, coupled with an attractive relative asset base, many on Wall Street feel that Chevron offers the most straightforwardly positive risk/reward.”  

CVX with Nobias technology Oct 2021

Today, CVX shares yield 4.96%, which is well above the S&P 500’s 1.3% dividend yield.   And, Jackson believes that this yield is relatively safe, saying, “Although current conditions do not warrant a large focus on production growth, Chevron possesses numerous medium-term drivers that should support production levels in the coming years.”  

Although CVX’s recent performance appears to have been based upon positive sentiment surrounding the oil industry, with especial regard to record high natural gas prices, investors can go back to CVX’s strong Q2 earnings beat when the company posted its quarterly results back in late July as the base of the recent rally.  

Shariq Khan, a Nobias 4-star rated analyst, covered these results for Yahoo Finance. In his piece, Khan notes that CVX’s disciplined capital spending is the primary reason that the stock is performing so well, fundamentally speaking.  Khan wrote, “Chevron last year slashed spending to allow profits to flow at above $50 a barrel. Lower costs and higher prices generated the highest cash flow in two years, enabling the company to pare debt and resume share repurchases, officials said.” 

Khan said that Chevron’s Chief Executive Michael Wirth mentioned that “Share buybacks will resume this quarter at an annual rate of between $2 billion and $3 billion.”.   This is obviously a shareholder friendly move and these buybacks, alongside higher margins produced by strong energy prices should bolster CVX’s bottom-line results coming into future quarters.  

With regard to the company’s second quarter results, Khan said that Chevron “reported an adjusted profit of $3.27 billion, or $1.71 per share, compared with a loss of $2.92 billion, or $1.56 per share, the same quarter a year ago. Year-ago results included writedowns. Earnings topped Wall Street estimates of a $1.50 a profit, according to Zacks consensus of eight analysts.” 

Value Investing News, a Nobias 4-star rated analyst, also covered CVX’s Q2 report and they wrote, “Chevron's revenue increased 1 percent over the past trailing twelve-month period versus the previous twelve-month period. Gross margins increased to 25.51% for the second quarter compared to the same period in the previous year, and operating margins increased to 8.66% over the same period. Net earnings for past trailing twelve months were $3587.0 million, up 141% from the prior year.” 

With specific regard to the aforementioned strong balance sheet that CVX boasts, Value Investing News said, “Moving on to the balance sheet, Chevron's cash levels jumped 7% for the second quarter over the same period last year. Overall liquidity of the balance sheet, as measured by the current ratio, increased 9.48% this past year. The current ratio for Chevron now stands at 1.11. The company increased shares outstanding by 3.27%.”   This should help to provide solace to investors.  Furthermore, the strong financial position that CVX finds itself in not only allows for the company to return cash to shareholders, but also invest in future growth initiatives.  

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.

Neha Chamaria, a Nobias 4-star rated analyst, recently penned a piece at The Motley Fool, highlighting one such recent investment.   On September 9th, Chamaria wrote, “This morning, it announced a collaboration with Chevron U.S.A, a subsidiary of oil giant Chevron (NYSE:CVX), to jointly invest in facilities that'll produce sustainable aviation fuel from inedible corn, as well as protein and corn oil as byproducts. In exchange for its investments, Chevron will have the right to purchase 150 million gallons of fuel per year.”   She continued, writing, “In a big move, the company recently established a separate business unit to fast-track decarbonization and has been on a collaboration spree in recent weeks. On Sept. 7, Chevron announced plans to produce a test batch of sustainable aviation fuel for Delta Air Lines (NYSE:DAL). Its collaboration with Gevo looks to be related to those plans.”  

In short, CVX is using its strong cash flows derived largely from fossil fuels in the present to diversify its revenue stream as we head into a future that is trending towards more renewable energy sources.   Overall, the vast majority of credible authors that the Nobias algorithm tracks share the bullish sentiments shared above.  Right now, 92% of the credible authors that we track express a “Bullish” outlook for CVX shares.  

The average price target amongst the credible Wall Street analysts that we track for CVX is currently $121.50.  Today, CVX trades for $108.05.  This average price target points towards upside potential of approximately 12.5%.  

Disclosure:  Nicholas Ward has no positions in any stock mentioned in this article.    Nicholas Ward wrote this article for Nobias at their request with a view 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.