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Cambium Networks, Palo Alto Networks, Micron Technology, NVIDIA and Inphi highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – December 8, 2020 – Zacks Equity Research Shares of Cambium Networks Corporation (CMBM - Free Report) as the Bull of the Day, Palo Alto Networks, Inc. (PANW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Micron Technology, Inc. (MU - Free Report) , NVIDIA Corp. (NVDA - Free Report) and Inphi Corp. .
Cambium Networks is a Zacks Rank #2 (Buy) and it is a growth stock. It has an A for Growth and a D for Value. CMBM has a wonderful chart and a great growth story, but the fact that the stock dropped when there was a stock offering is while I selected this stock to be the Bull of the Day. Buyers of the dip, rejoice! This is one dip that you need to look into.
Secondary
Last week the company announced that a shareholder would be selling 2.5M shares. This was received poorly, but the stock rallied from down around 10% to back to break even. About a month ago there was a shelf offering by the company where the company might raise up to $25M (or about 1M shares) and a shareholder would be selling 5M shares.
The stock was at 22 at the time of the announcement and it has rallied big-time, even as the market knew there was a good size seller coming. Then the market learned that the seller is hitting for half of the amount and the stock opened lower… but that attracted buyers. This tells me that the offering won’t have too much trouble being placed in the hands of institutional shareholders.
Part of the reason for this is the good growth and great chart.
Earnings History
Excellent history of beating the number. I see 4 straight beats with one big one 3 quarters ago. That skewed the average higher a little bit to 137% -- but most of the beats are in the 60% range.
Earnings Estimates
This is what I love to see, estimates ticking higher throughout the quarter. This quarter has seen the number move from 17 cents to 20 cents to 26 cents. That is just great.
Next quarter has seen the number move from 12 cents to 13 cents to 15 cents and is now at 21 cents.
The Rank cares more about the annual numbers and they are seeing the same thing. On top of that there is earnings growth of more than 20%.
Valuation
So you have to pay up for this growth… but I love this spot to be grabbing it. A forward PE of 32x is a lot as I the 13x price to book, but the growth is huge here. 66% this year and 33% is expected for next year… and that number will probably end up being closer to 50% than 66%.
Margins are low now, but they are moving higher. I see gross margins at 50% and they could easily move to 70% down the road. Operating margin was -2% 2 quarters ago and was +3.6% in the most recent quarter. That is what we love to see as it will drive earnings higher.
Palo Alto Neworks is a Zacks Rank #5 (Strong Sell) and that made me scratch my head. I knew the company reported a good quarter and the stock had an outstanding month of November... so what gives? Let's take a look at why this stock is the Bear Of The Day.
Description
Palo Alto Networks, Inc. provides cybersecurity platform solutions worldwide. The company provides firewall appliances and software; Panorama, a security management solution for the control of appliances and software deployed on an end-customer's network as a virtual or a physical appliance; and virtual system upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances. It also offers subscription services covering the areas of threat prevention, uniform resource locator filtering, malware and persistent threat, laptop and mobile device protection, and firewall, as well as cyberattacks, threat intelligence, and data loss prevention. The company was founded in 2005 and is headquartered in Santa Clara, California.
Recent Earnings
In Mid November I saw the company posting EPS of $1.62 and that was fully $0.28 better than the Zacks Consensus Estimate. That translates to a positive earnings surprise of 20%.
I also saw that the company guided EPS for the next quarter and the whole year ahead of the market consensus at that time.
This beat stretches the company record to more than 3 years without a miss.
Estimates
I see the Zacks Consensus Estimate moving higher for this quarter... but lower for next quarter. That isn't something that you see all the time and it is really the only evidence I can point to as to why this is a Zacks Rank #5 (Strong Sell).
The current quarter saw an increase of 10 cents, from $1.33 to $1.43. Next quarter moved from $1.33 to $1.26.
That nickel drop coupled with many other stocks seeing estimates increase of late might be enough to send this stock to the lowest Zacks Rank.
Valuation
Sometimes the Rank can be a little fickel and I don't expect PANW to stay a Zacks Rank #5 (Strong Sell) for very long. When we turn to valuation, we see that 53x forward earnings is a lot and so is 38x price to book. A price to sales multiple of 8x is also a little high, but here was growth of 22% in the most recent quarter.
Additional content:
Solid Stocks to Tap a Booming Semiconductor Market
Global semiconductor sales reflected both a month-over-month and a year-over-year increase in October, according to the Semiconductor Industry Association (“SIA”). Also, the body said that global sales of semiconductors are projected to see impressive growth in 2020 and 2021. Much like the tech sector, the global semiconductor industry, which plays a key role in the high-growth technology space, has been left somewhat less unaffected by the coronavirus pandemic.
One of the major reasons behind this impressive show is growing demand for smartphones, as people are spending more time on their mobile phones. This, thus, could act as a tailwind for the industry in the near term.
Semiconductor Sales Jump in October
The SIA said on Dec 4 that global semiconductor sales reached $39 billion in October from $36.8 billion in October 2019, increasing 6% year over year. Also, sales increased 3.1% from September’s figure of $37.9 billion.
Regionally, sales increased 14.2%, 6.3% and 5.3% year over year in the Americas, China and Asia Pacific, respectively. However, sales plummeted on a year-over-year basis in Japan and Europe where it declined 1% and 4.8%, respectively. On a month-over-month basis, sales jumped in all the regions. Sales grew 6% and 3.2% in Europe and the Americas, respectively. Also, it increased 2.9%, 1.6% and 2.8% in China, Japan and Asia Pacific, respectively.
Global Sales Projected to Grow
A separate report released by the World Semiconductor Trade Statistics (“WSTS”) projects impressive growth for the industry in the coming days. The WSTS projects semiconductor sales to touch $433.1 billion in 2020, up 5.1% year over year from $412.3 billion. Moreover, 2021 is projected to witness robust chip sales. Sales are projected to rise 8.4% in 2021.
The forecast for both 2020 and 2021 is higher than the projections made by the WSTS in July. It had earlier projected sales growth of 3.2% and 6.2% for 2020 and 2021, respectively.
Slowing smartphone sales during the coronavirus pandemic was a cause of concern for not only mobile manufacturers but also chipmakers. However, that seems to be changing now with economies having opened up. Microchip demand is also likely to get a boost from the 5G boom in Europe and parts of Asia, including China and Singapore. These are likely to aid the chip market in the days to come.
Our Choices
Given the growing demand for smartphones and the ongoing 5G boom, the semiconductor industry is likely to be benefited. Below are three chip stocks that investors can gain from in the current scenario.
Micron Technology through global brands, namely Micron, Crucial and Ballistix, manufactures and markets high-performance memory and storage technologies including Dynamic Random Access Memory, NAND flash memory, NOR Flash, 3D XPoint memory and other technologies.
The company’s expected earnings growth rate for next year is 28.3%. The Zacks Consensus Estimate for current-year earnings has improved 28.3% over the past 60 days. Micron sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
The company’s expected earnings growth rate for the current year is 66.8%. The Zacks Consensus Estimate for current-year earnings has improved 6% over the past 60 days.NVIDIA holds a Zacks Rank #2.
Inphi operates as a provider of fabless high-speed analog semiconductor solutions for the communications and computing markets.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the past 60 days.Inphi Corporationhas a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Cambium Networks, Palo Alto Networks, Micron Technology, NVIDIA and Inphi highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – December 8, 2020 – Zacks Equity Research Shares of Cambium Networks Corporation (CMBM - Free Report) as the Bull of the Day, Palo Alto Networks, Inc. (PANW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Micron Technology, Inc. (MU - Free Report) , NVIDIA Corp. (NVDA - Free Report) and Inphi Corp. .
Here is a synopsis of all five stocks:
Bull of the Day:
Cambium Networks is a Zacks Rank #2 (Buy) and it is a growth stock. It has an A for Growth and a D for Value. CMBM has a wonderful chart and a great growth story, but the fact that the stock dropped when there was a stock offering is while I selected this stock to be the Bull of the Day. Buyers of the dip, rejoice! This is one dip that you need to look into.
Secondary
Last week the company announced that a shareholder would be selling 2.5M shares. This was received poorly, but the stock rallied from down around 10% to back to break even. About a month ago there was a shelf offering by the company where the company might raise up to $25M (or about 1M shares) and a shareholder would be selling 5M shares.
The stock was at 22 at the time of the announcement and it has rallied big-time, even as the market knew there was a good size seller coming. Then the market learned that the seller is hitting for half of the amount and the stock opened lower… but that attracted buyers. This tells me that the offering won’t have too much trouble being placed in the hands of institutional shareholders.
Part of the reason for this is the good growth and great chart.
Earnings History
Excellent history of beating the number. I see 4 straight beats with one big one 3 quarters ago. That skewed the average higher a little bit to 137% -- but most of the beats are in the 60% range.
Earnings Estimates
This is what I love to see, estimates ticking higher throughout the quarter. This quarter has seen the number move from 17 cents to 20 cents to 26 cents. That is just great.
Next quarter has seen the number move from 12 cents to 13 cents to 15 cents and is now at 21 cents.
The Rank cares more about the annual numbers and they are seeing the same thing. On top of that there is earnings growth of more than 20%.
Valuation
So you have to pay up for this growth… but I love this spot to be grabbing it. A forward PE of 32x is a lot as I the 13x price to book, but the growth is huge here. 66% this year and 33% is expected for next year… and that number will probably end up being closer to 50% than 66%.
Margins are low now, but they are moving higher. I see gross margins at 50% and they could easily move to 70% down the road. Operating margin was -2% 2 quarters ago and was +3.6% in the most recent quarter. That is what we love to see as it will drive earnings higher.
Bear of the Day:
Palo Alto Neworks is a Zacks Rank #5 (Strong Sell) and that made me scratch my head. I knew the company reported a good quarter and the stock had an outstanding month of November... so what gives? Let's take a look at why this stock is the Bear Of The Day.
Description
Palo Alto Networks, Inc. provides cybersecurity platform solutions worldwide. The company provides firewall appliances and software; Panorama, a security management solution for the control of appliances and software deployed on an end-customer's network as a virtual or a physical appliance; and virtual system upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances. It also offers subscription services covering the areas of threat prevention, uniform resource locator filtering, malware and persistent threat, laptop and mobile device protection, and firewall, as well as cyberattacks, threat intelligence, and data loss prevention. The company was founded in 2005 and is headquartered in Santa Clara, California.
Recent Earnings
In Mid November I saw the company posting EPS of $1.62 and that was fully $0.28 better than the Zacks Consensus Estimate. That translates to a positive earnings surprise of 20%.
I also saw that the company guided EPS for the next quarter and the whole year ahead of the market consensus at that time.
This beat stretches the company record to more than 3 years without a miss.
Estimates
I see the Zacks Consensus Estimate moving higher for this quarter... but lower for next quarter. That isn't something that you see all the time and it is really the only evidence I can point to as to why this is a Zacks Rank #5 (Strong Sell).
The current quarter saw an increase of 10 cents, from $1.33 to $1.43. Next quarter moved from $1.33 to $1.26.
That nickel drop coupled with many other stocks seeing estimates increase of late might be enough to send this stock to the lowest Zacks Rank.
Valuation
Sometimes the Rank can be a little fickel and I don't expect PANW to stay a Zacks Rank #5 (Strong Sell) for very long. When we turn to valuation, we see that 53x forward earnings is a lot and so is 38x price to book. A price to sales multiple of 8x is also a little high, but here was growth of 22% in the most recent quarter.
Additional content:
Solid Stocks to Tap a Booming Semiconductor Market
Global semiconductor sales reflected both a month-over-month and a year-over-year increase in October, according to the Semiconductor Industry Association (“SIA”). Also, the body said that global sales of semiconductors are projected to see impressive growth in 2020 and 2021. Much like the tech sector, the global semiconductor industry, which plays a key role in the high-growth technology space, has been left somewhat less unaffected by the coronavirus pandemic.
One of the major reasons behind this impressive show is growing demand for smartphones, as people are spending more time on their mobile phones. This, thus, could act as a tailwind for the industry in the near term.
Semiconductor Sales Jump in October
The SIA said on Dec 4 that global semiconductor sales reached $39 billion in October from $36.8 billion in October 2019, increasing 6% year over year. Also, sales increased 3.1% from September’s figure of $37.9 billion.
Regionally, sales increased 14.2%, 6.3% and 5.3% year over year in the Americas, China and Asia Pacific, respectively. However, sales plummeted on a year-over-year basis in Japan and Europe where it declined 1% and 4.8%, respectively. On a month-over-month basis, sales jumped in all the regions. Sales grew 6% and 3.2% in Europe and the Americas, respectively. Also, it increased 2.9%, 1.6% and 2.8% in China, Japan and Asia Pacific, respectively.
Global Sales Projected to Grow
A separate report released by the World Semiconductor Trade Statistics (“WSTS”) projects impressive growth for the industry in the coming days. The WSTS projects semiconductor sales to touch $433.1 billion in 2020, up 5.1% year over year from $412.3 billion. Moreover, 2021 is projected to witness robust chip sales. Sales are projected to rise 8.4% in 2021.
The forecast for both 2020 and 2021 is higher than the projections made by the WSTS in July. It had earlier projected sales growth of 3.2% and 6.2% for 2020 and 2021, respectively.
Slowing smartphone sales during the coronavirus pandemic was a cause of concern for not only mobile manufacturers but also chipmakers. However, that seems to be changing now with economies having opened up. Microchip demand is also likely to get a boost from the 5G boom in Europe and parts of Asia, including China and Singapore. These are likely to aid the chip market in the days to come.
Our Choices
Given the growing demand for smartphones and the ongoing 5G boom, the semiconductor industry is likely to be benefited. Below are three chip stocks that investors can gain from in the current scenario.
Micron Technology through global brands, namely Micron, Crucial and Ballistix, manufactures and markets high-performance memory and storage technologies including Dynamic Random Access Memory, NAND flash memory, NOR Flash, 3D XPoint memory and other technologies.
The company’s expected earnings growth rate for next year is 28.3%. The Zacks Consensus Estimate for current-year earnings has improved 28.3% over the past 60 days. Micron sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
The company’s expected earnings growth rate for the current year is 66.8%. The Zacks Consensus Estimate for current-year earnings has improved 6% over the past 60 days.NVIDIA holds a Zacks Rank #2.
Inphi operates as a provider of fabless high-speed analog semiconductor solutions for the communications and computing markets.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the past 60 days.Inphi Corporationhas a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.