For Immediate Release
Chicago, IL – May 11, 2021 – Zacks Equity Research Shares of Devon Energy Corporation (
DVN Quick Quote DVN - Free Report) as the Bull of the Day, Bilibili Inc. ( BILI Quick Quote BILI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Novavax, Inc. ( NVAX Quick Quote NVAX - Free Report) , Roblox Corporation ( RBLX Quick Quote RBLX - Free Report) and Wynn Resorts, Limited ( WYNN Quick Quote WYNN - Free Report) . Here is a synopsis of all five stocks: Devon Energy is a Zacks #1 (Strong Buy) that is an independent energy company engaged in exploration, development and production of oil and natural gas.
As oil prices continue to climb, so does DVN, which is up over 70% on the year. While this is a big move, there seems to be more room higher for the stock after an impressive earnings report.
More about Devon
The company was founded in 1971, is Headquartered in Oklahoma City, Oklahoma. Devon’s operations are mainly concentrated in the onshore areas of North America, in which it operates almost 4,000 gross wells.
DVN is valued at about $17 billion and has a Forward PE of 12. The company holds a Zacks Style Score of “B” in Growth, “C” in Momentum and “D” in Value.
Devon reported EPS earlier this month, beating on the bottom line by 28%. The company missed on revenues, but raised FY21 production to 529-559k bpd v the 485-499k prior. The company also announced a fixed and variable dividend of $0.34, a 13% sequential increase.
The EPS beat made it the eighth beat out of the last ten quarters. Investors liked the numbers and took the stock up over 10% in just a couple days.
The solid report has helped estimates higher as analysts are adjusting their numbers. For the current year, estimates have jumped to $2.12 from $1.94 (9%) over the last 7 days. For next year, estimates have climbed 3% over that same time frame.
Since earnings, the stock has seen multiple upgrades, with analysts very favorable towards their variable dividend strategy. Additionally, analysts commented that stronger volumes and cash margins should help shares react positively.
Most price targets range from the $30-$35 area. The higher end targets are about 25% higher from current trading levels.
As the world reopens the demand for energy is increasing. Crude oil prices have been driven higher in anticipation of resurgence in economic activity globally. Higher prices will only help Devon and fuel the bulls to keep buying the stock.
A move in crude oil prices over $70 to be a major tailwind and help the stock price even higher.
The post-earnings move took the stock to 2020 highs. There should be fresh powder above if oil prices remain strong.
Looking at the Fibonacci levels, there are 161.8% extension targets at $31.25. These are found by drawing March highs to April lows. Looking at an even bigger extension, we see 161.8% Fib targets at $40.56. This is found by drawing 2020 highs to the COVID crash lows.
Those that don’t want to chase this breakout can eyeball the 50-day moving average at $23. This level has held up since November and has only been cracked once this year.
Oil prices continue their bullish momentum as the world gets back to work. Energy companies are well positioned to take advantage of this market as prices rise. Devon’s dividend policy is attractive as rates continue to stay low.
Expect investors to continue buying the stock as it approaches $30. Those looking for a good entry should monitor the stock under $25 on any large market sell off.
Bilibili is a Zacks Rank #5 (Strong Sell) that provides online videos, live broadcasting and mobile games, primarily in China. The streaming video website appeals to the Chinese youth as it is the closest thing China has to YouTube. Overview of Company
BILI was founded in 2009 and is based in Shanghai, China. The company has over 8,000 employees and is valued at $32 billion. The stock has Zacks Style Scores of “B” in growth, but “D” in momentum and Value.
Investors took the stock from $45 to $160 earlier this year, but has since sold off on valuation concerns.
Previous Earnings and Estimates
The company has an inconsistent earnings history, reporting five earnings beats out of the last nine quarters. However, the recent move higher in the stock actually came off a miss on EPS of 11% back in November. The key to positive price action wasn’t the bottom line, but rather monthly active users, or MAUs.
The average MAUs grew 54% year over year, while the average paying monthly users was up 89% y/y. This helped revenues come in at $3.2B v the $1.9B mark the prior year. The company then guided revenues for Q4 in a range of $3.6-3.7B.
These numbers sparked the stock higher, which helped investors before the quarter triple their investment over a period of three months.
The stock has come off significantly since the February highs as investors are uncertain those numbers can be repeated. The company will report May 13
th, when it is expected to report a loss of 36 cents. Over the last 90 days, that number dropped from a loss of 26 cents, or 38%. Looking at the current year, we saw a large drop in estimates over that same time frame. Analysts previously expected a loss of $0.87, but now that number is a loss of $1.41.
Looking at those estimates, we can understand why the stock sold off. Investors might be facing a large down move after earnings, if the company doesn’t beat these expectations.
The stock rode the momentum train to start the year, holding the 21-day moving average until late February. The 50-day MA found buyers, but eventually failed as well and is now at resistance at $110.
Earnings likely provide two scenarios that determine the stocks future. First, earnings beat with continued MAU growth that helps the bulls break the 50-day. From there, the stock can continue its trend higher. However, the second scenario could be a disappointment in MAU growth and an EPS miss. This would likely lead the stock lower, where it could possibly test the 200-day moving average at $81.
Bilibili is growing, but the stock got way ahead of itself in valuing the earnings growth. Falling estimates have helped reality set in as the stock is off 40% from highs. Even so, there is risk the company could miss expectations and fall further. Those that want in the stock should wait for the 200-day and see if it holds.
Those that want in the internet services area can find a much more diversified company with Google. The stock is a Zacks Rank #1 (Strong Buy) and trading near all-time highs.
Additional content: Indexes Sink into Monday's Close; Plus Q1 Results for NVAX, WYNN and RBLX
Markets had been trading on bifurcated paths in the first session of the week, with the Dow sailing ahead riding a six-day winning streak and the Nasdaq being hit hard for the first time in the last three trading days. At the end of the day, however, the Dow closed -0.09%, the S&P 500 fell 1.04% and the Nasdaq more than doubled this loss: -2.55%, its worst single trading day in almost two months. The small-cap Russell 2000 fared worst, -2.59%.
In what has often looked like a cautious approach toward mitigating risk near all-time highs — trading out of growth tech into cyclicals, and vice-versa — became a bit unruly yesterday with an hour before the closing bell, and then again minutes into the close. The impact of the sizable drop in the Nasdaq helped pull down the S&P 500, and even became a drag on the blue-chip Dow, it would appear.
More Q1 earnings results hit the tape after the market close, with more unruliness to content with: growing pains for another biotech firm with a Covid vaccine candidate and a kids’ gaming platform showed wildly vast numbers, while a Las Vegas and Macau gaming entertainment firm tries to get itself off the canvas from a year-long pandemic:
Novavax shares popped 3% in late trading on the biotech’s Q1 results: a bottom-line loss of $3.05 per share was worse than the -$2.65 expected (and far lower than the -58 cents reported in the year-ago quarter), though revenues returned more than +10,000% from a year ago to $447 million, easily surpassing the Zacks consensus $292 million. The company expects results for its Covid-19 vaccine sometime in the ongoing quarter.
Open-source online platform
Roblox gained 3.5% after hours following its Q1 results, even though the company showed big misses on both top and bottom lines: -46 cents per share was a big downward swing from the +21 cents expected, while $387 million in quarterly sales missed the $568 million analysts were looking for. But revenue growth surged 140% in this, the firm’s first earnings report since its direct listing IPO last month. Wynn Resorts missed bottom-line expectations by a penny to -$2.01 per share, for the company’s seventh straight quarterly miss. Revenues in the quarter reached $726 million. However, shares are up 2% in after-hours trading (+52% year over year) on better-than-expected EBITDA in Macau, Las Vegas and Boston. The company also announced its Wynn Interactive digital business will be spun off into a SPAC. Questions or comments about this article and/or its author? Click here>> Zacks Top 10 Stocks for 2021
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