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Turtle Beach, Coherent, Apple, Netflix and Disney highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – October 29, 2018 – Zacks Equity Research highlights Turtle Beach (HEAR - Free Report) as the Bull of the Day, Coherent (COHR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple (AAPL - Free Report) , Netflix (NFLX - Free Report) and Disney (DIS - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

Turtle Beach is a $260 million maker of headphones for gamers whose stock exploded higher this year after surprising investors and analysts with big sales and profit growth.

In fact, its sales this year are expected to grow 78% and exceed its market cap, giving it a very attractive price-to-sales valuation of under 1.0.

This growth is coming from the newest craze in the $138 billion global gaming market known as "battle royale" where as many as 100 online opponents play last-man-standing fantasy combat simulations.

The most popular games in this realm are Fortnite, Players Unknown Battleground (PUBG for short) and Call of Duty. And where Turtle Beach comes in is with high-tech headphones that can hear in 360 surround-sound. Gamers crave this advanced technology -- in styles, sophistication and price ranges from $25 to $250 -- because it's the only way to hear one's opponents sneaking up on them. 

Profit Estimates Move Higher

Two weeks ago the maker of must-have high-tech gaming headsets pre-announced Q3 results slated for November 6.

On Wednesday 10/11, Turtle Beach raised its Q3 guidance for revenue to $73–74 million from $65 million previously, for adjusted EBITDA to $17 million from $11 million previously, and for EPS to $0.74–0.78 from $0.44 previously.

Accordingly, analysts responded by raising the Zacks Q3 EPS consensus 64% from $0.47 to $0.77. And that's why HEAR is a Zacks #1 Rank Strong Buy again this year.

Wedbush analysts, who have a $42 price target on HEAR shares, think that Turtle Beach headsets will be a hot holiday gift for gamers. And they see a trend of upgrading around major October game launches like Call of Duty and  Red Dead Redemption produced by Rockstar Games.

And November brings the much anticipated Battlefield V. In the Wedbush view, this positions Turtle Beach to surpass its previously implied Q4 guidance.

Though I'm not a gamer, I was amazed during the August Gamescom keynote by NVIDIA CEO Jensen Huang held this year in Cologne, Germany where Battlefield V previews were featured.

Huang wowed the gamer/developer crowd with amazing views, stats and demos on NVIDIA's record-breaking new "deep learning" architecture called Turing, featuring RTX image and light reconstruction/simulation powers that computers teach themselves.

That's something to look forward to as I'm also an NVDA investor. But more currently, I'm hearing the Call of Duty gamers are loving the new Black Ops 4 edition and they need Turtle Beach headsets to play it well.

Oppenheimer analysts have a $35 price target on HEAR as they also see strong international opportunities for Turtle Beach headsets.

Bear of the Day:

Coherentrecently slipped to a Zacks Rank #5 (Strong Sell) and is now the Bear of the Day just a few short weeks before the next earnings event.  Let's take a look at how this stock became the lowest of the Zacks Ranks in this Bear of the Day article.

Description

Coherent, Inc. is an American company, designs, manufactures and markets laser systems and components, laser measurement and control products, optics, and laser accessories, which are used both in industry and scientific research. Their markets are the microelectronics industry (e.g., flat panel display manufacturing, integrated circuit packaging, and integrated circuit inspection), scientific research, OEM components, and materials processing (e.g., CO2 lasers for cutting metals).

Recent Earnings Reports

COHR has reported EPS below the Zacks Consensus Estimate in each of the last two quarters.  The most recent quarter was a miss of $0.07 for a negative earnings surprise of 2%.

The report previous to that was a miss of 15 cents for a negative earnings surprise of 4.3%.

COHR doesn't have the worst history I have ever seen, but it certainly isn't the best.

Estimates

The Zacks Rank tells me how earnings estimates have trended of late.  I see from the Zacks Rank #5 (Strong Sell) that earnings estimates will be heading lower.

CHOR has seen the estimate for 2018 move from $14.24 90 days ago down to $13.72.  

There was a similar move for the 2019 Zacks Consensus Estimate as it moved from $14.52 to $12.83 over the same time period.

Estimates for the current quarter have fallen a lot.  90 days ago the Zacks Consensus Estimate was calling for $3.75, but that number now stands at $3.30.

Additional content:

How Many iPhones Will Apple Sell in Its Q4?

Apple became the first publicly listed U.S. company to reach $1 trillion in market value on the back of the iPhone. Now, with its fiscal fourth quarter financial results due out Thursday, November 1, let’s look at how many flagship smartphones Apple is projected to sell and how much revenue the iPhone will generate.

iPhone

Apple introduced its new iPhone XR, iPhone XS, and iPhone XS Max in mid-September at its now customary launch event. Apple’s CEO Tim Cook and other executives showed off the tech giant’s latest offerings, which also featured the next generation Apple Watch, in order to hype sales before the key holiday shopping period.

Last year’s high-priced 10th anniversary iPhones, which these new models build upon, helped lift iPhone revenues despite slower unit growth. The iPhone XS Max is set to start at $1,099 and could cost up to $1,449. Therefore, the new phones should theoretically help boost Apple’s top line once again.

But Apple’s fiscal fourth quarter won’t include many new iPhone sales since it will feature the quarterly results for the period that ended on September 30. With that said, let’s see how many iPhones Apple is expected to sell and how much revenue the company is expected to make from them since the smartphone is still its most important business unit.

To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

Apple’s total iPhone unit sales are projected to reach 46.954 million, based on our latest NFM estimates. This would mark less than a 1% jump from the year-ago quarter’s 46.677 million.

Luckily, the higher prices look as though they will once again boost iPhone revenues in a big way.

The tech giant’s total iPhone revenues are expected to surge roughly 23.5% from $28.846 billion in Q4 of 2017 to hit $35.651 billion this year. Apple saw its iPhone revenues pop 20% in Q3 to hit $29.906 billion. Meanwhile, third-quarter iPhone unit sales rose marginally from 41.026 million to 41.300 million.

Q4

Overall, Apple’s Q4 revenues are projected to climb by 17.1% to hit $61.55 billion, based our current Zacks Consensus Estimate. Therefore, based on our projections, iPhone revenues are expected to account for approximately 58% of Apple’s total Q4 revenues. Meanwhile, Apple is projected to see its adjusted quarterly earnings soar by 34.3% to reach $2.78 per share.

Apple has also earned a ton of positive earnings estimate revisions over the last 60 days. This positive earnings revision movement helps Apple earn a Zacks Rank #2 (Buy). Investors should also remember that Apple’s other business units, including services and “other products,” continue to shine.

Plus, Apple is ready to enter the streaming TV market to take on Netflix, Disney and others.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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