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Arista Networks and Skechers have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – November 15, 2022 – Zacks Equity Research shares Arista Networks (ANET - Free Report) as the Bull of the Day and Skechers (SKX - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA - Free Report) , Zscaler (ZS - Free Report) and Coupa Software .
Arista Networks is a Zacks Rank #1 (Strong Buy) that develops markets, and sells cloud networking solutions globally. The company offers cloud networking solutions that consist of extensible operating systems, a set of network applications, as well as gigabit Ethernet switching and routing platforms.
The stock struggled for most of the year as many tech stocks have in 2022. However, unlike others in the tech space, Arista continues to outperform on earnings.
Recently, the company proved its earnings momentum once again, helping the stock spike above its summer highs. Now ANET is only down only 13% from all-time highs. Relatively speaking, investors should be happy with this performance and looking to the year ahead, we should see the stock post new highs.
More About ANET
The company incorporated in 2004 and is headquartered in Santa Clara, California. It employs about 3,000 people and has a market cap of $39 billion. The company went public in June 2014 and currently has more than 7,000 cloud customers worldwide.
Impressive Earnings Momentum
The relative strength in the stock should not be ignored. There are a handful of well-known tech stocks down over 70% this year. The reason for this has been overvalued names that do not live up to earnings expectations.
For Arista, the stock has beaten the Nasdaq this year for two reasons:
First, the valuation is not inflated, with the Forward PE at 30. Because of this, the stock has not been shorted and sold as hard as other tech names with lofty valuations.
Second, the company continues to beat on earnings, not once missing EPS since going public.
Looking at their most recent quarter, Q3 came in with a 19% EPS beat. ANET reported $1.25 v the $1.05 expected and revenues came in at $1.18B v the $1.06B expected.
Arista also guided Q4 higher, now seeing a range of $1.18-1.20B v the $1.10B expected. Gross margins were lower year over year, but operating margins came in above last years.
Estimates Rising
Analysts were impressed with the quarter and have taken their numbers higher across all time frames.
Since earnings, current quarter estimates have gone from $1.07 to $1.19, or 11% higher. Expectations for next quarter have been lifted as well, with estimates going up by 16%.
Looking down the road, the numbers continue to tick higher. For the current year, we have seen estimates go from $4.04 to $4.33 over the last month. This 7% bump higher is impressive, but nothing compared to the 12% spike in estimates that Arista is seeing for next year.
After earnings, a handful of analysts also lifted their price targets. Citi reiterate ANET with a Buy and $190 target, up from $170. Morgan Stanley lifted to $130 from $115 and kept its equal weight. Barclays has an Overweight and a $143 target, which they lifted from $131.
The Technical Take
The stock made all-time highs at $148.57 late last year. Over the summer, when markets were very weak, the stock bottomed at $89.12. Since then, two earnings beats have helped the stock come up over 40% off those 2022 lows.
So now, investors should be looking to find entries into this stock as the overall market stabilizes.
The low made this summer happened to be the 50% retracement made from COVID lows to all-time highs. If we are targeting the -23.6% Fibonacci level, this gives us targets at $174 or 35% higher from the current price.
While its hard to chase after a big move higher, investors can wait for pullbacks and look at moving averages. For ANET, the 21-day ,50-day, and 200-day moving averages are all in the same area, between the $115 and $118 levels. That area should be a massive support zone where investors can enter.
In Summary
In bear markets, stocks showing relative strength should not be ignored. They are strong for a reason and when markets turn, they can be outperformers for the next trading year and beyond.
Investors should watch this one closely and look to enter on pullbacks. The stock should hold up well the rest of the year and look to take out all-time highs in 2023.
Skechers is a Zacks Rank #5 (Strong Sell) that designs, develops, markets, and distributes footwear for men, women, and children in the United States and overseas. The company offers casual, casual athletic, sport athletic, trail, sandals, boots, and retro fashion footwear for men and women.
The stock is 25% off 2022 lows, so are investors getting ahead of themselves?
Analysts are pumping the breaks, dropping estimates for the upcoming quarter and year. Considering the upwards move and estimates, profit taking should be considered.
More About SKX
Skechers was founded in 1992, is headquartered in Manhattan Beach, CA. The company is valued just over $6 billion and has a Forward PE of 18. SKX has Zacks Style Scores of “D” in Value and “F” in Growth.
Skechers operates about 4,300 company-and third party owned stores and sells its products through department and specialty stores, athletic and independent retailers, boutiques, and online retailers; and through its e-commerce sites, concept stores, and factory and warehouse outlet stores.
The company operates through four segments: Domestic Wholesale, International Wholesale, Retail Sales and e-commerce Sales. Skechers brands include Skechers USA, Skechers Sport, Skechers Active, Modern Comfort, Skechers Street, Twinkle Toes, Z-Strap, Skechers Stretch Fit, Skechers GOrun and many more.
Q4 Earnings
Skecher’s has a volatile earnings past, but the company has beaten 9 out of the last 12 quarters. However, when they reported in late October, Skechers reported their first miss in a year.
For Q3, Skechers posted revenue beat, but a 26% EPS miss. This miss included an unfavorable impact due to foreign exchange rates.
The company guided Q4 down significantly. Revenues for Q4 are now expected to be in a range of $1.73-1.78B v the 1.82B prior. Q4 EPS is now seen at a range of $0.30-0.40 v the expected $0.57.
Year over year gross margins feel to 47.1% b the 49.9% last year.
Estimates
The cut in guidance forced analyst to drop their numbers, with estimates falling significantly since earnings.
Over the last 30 days, number have fallen across all time frames. For the current quarter, estimates have gone from $0.57 to $0.34, a drop of 40%. For the current year, estimates dropped to $2.25 from $2.65, or 15%.
The numbers do not improve much for next year, with estimates dropping almost 11%.
Argus downgraded the stock to Hold from Buy after earnings. The firm cites supply chain disruptions and China COVID restrictions as headwinds for the stock.
The Technicals
The stock has struggled over the last year, falling almost 30% from 2021 highs. However, the last couple weeks the stock has surged over 20% after the company reported the earnings miss.
The stock has now broken the 200-day moving average and hit highs not seen since August. Normally this would be a bullish sign and there might be some short covering in the works.
But the $42 level has been a tough nut to crack this year. This stock has failed four times already in 2022 and given the fundamental challenges, this spot would likely see resistance again.
Investors would be better off taking profits and waiting for conditions to improve. If a entry is desired, the $35.30 area is the 50-day moving average and would likely offer some support.
In Summary
Considering the rally over the last few weeks, investors should be very cautious. The stock has come well off lows after a quarter where the outlook was not good. This can be a good sign if the overall market continues momentum.
However, due to supply chain issues and China COVID lockdowns, Skechers will likely see their fundamentals woes to persist over the short term. Investors should take the rally as an opportunity to sell and revisit the name down the road.
Additional content:
Will Weak Gaming Chip Demand Hurt NVIDIA's Q3 Earnings?
NVIDIA Corp. is slated to report third-quarter fiscal 2023 results on Nov 16.
NVIDIA impressed investors with its stellar financial performance and experienced robust top and bottom-line growth in the past several quarters. However, the weakening demand for its chips used in gaming and data center end markets has put a break on its growth momentum as depicted from the last reported quarter.
In the second quarter of fiscal 2023, though NVIDIA’s revenues of $6.7 billion met the Zacks Consensus Estimate, revenues came lower than management’s May 2022 forecast of $8.10 billion (+/-2%) due to weaker sales across its Gaming and Data Center business segments. Moreover, non-GAAP earnings plunged 51% year over year to 51 cents per share.
The trend is likely to have continued in the third quarter. In its second-quarter earnings release, the company stated that revenues from its Gaming market segments would decline sequentially as OEMs and channel partners continue to reduce inventory levels.
NVIDIA experienced robust sales for its chips used in gaming end markets for the past couple of years. This was driven by pandemic-induced stay-at-home instructions.
The demand for NVIDIA’s gaming chips increased immensely as people were surfing games to stay engaged and entertained indoors during lockdowns. Moreover, with the massive emergence of multiplayer online games and Gaming-as-a-Service concepts, the demand for graphic processing units shot up exponentially.
However, the reopening of economies, along with the rising global slowdown concern amid the ongoing Russia-Ukraine war and the U.S.-China trade war, has been hurting the demand for gaming chips.
The company’s revenues from the Gaming market platform plunged 33% year over year and 44% sequentially in the last reported quarter. We believe that the trend is likely to have continued in the third quarter. The Zacks Consensus Estimate for the Gaming segment’s revenues is pegged at $1.4 billion, indicating a 56.6% decline from the year-ago quarter’s revenues of $3.22 billion.
Zacks Rank & Stocks to Consider
NVIDIA currently carries a Zacks Rank #3 (Hold). Shares of NVDA have decreased 44.5% year to date (YTD).
Some better-ranked stocks worth considering from the broader technology sector are Zscaler and Coupa Software. Celestica and Zscaler each sport a Zacks Rank #1 (Strong Buy) at present, while Coupa carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved 9.4% up to $1.86 per share in the past 30 days.
CLS' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 11.8%. Shares of the company have increased 2.9% YTD.
The Zacks Consensus Estimate for Zscaler's second-quarter fiscal 2023 earnings has been revised 5 cents north to 26 cents per share over the past 90 days. For fiscal 2023, earnings estimates have moved a penny north to $1.18 per share in the past 60 days.
ZS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have declined 55.7% YTD.
The Zacks Consensus Estimate for Coupa's fourth-quarter fiscal 2023 earnings has been revised 3 cents northward to 7 cents per share over the past 90 days. For fiscal 2023, earnings estimates have moved upward by 19 cents to 44 cents per share in the past 90 days.
Coupa's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 478.1%. Shares of COUP have slumped 65% YTD.
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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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Arista Networks and Skechers have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 15, 2022 – Zacks Equity Research shares Arista Networks (ANET - Free Report) as the Bull of the Day and Skechers (SKX - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA - Free Report) , Zscaler (ZS - Free Report) and Coupa Software .
Here is a synopsis of all five stocks.
Bull of the Day:
Arista Networks is a Zacks Rank #1 (Strong Buy) that develops markets, and sells cloud networking solutions globally. The company offers cloud networking solutions that consist of extensible operating systems, a set of network applications, as well as gigabit Ethernet switching and routing platforms.
The stock struggled for most of the year as many tech stocks have in 2022. However, unlike others in the tech space, Arista continues to outperform on earnings.
Recently, the company proved its earnings momentum once again, helping the stock spike above its summer highs. Now ANET is only down only 13% from all-time highs. Relatively speaking, investors should be happy with this performance and looking to the year ahead, we should see the stock post new highs.
More About ANET
The company incorporated in 2004 and is headquartered in Santa Clara, California. It employs about 3,000 people and has a market cap of $39 billion. The company went public in June 2014 and currently has more than 7,000 cloud customers worldwide.
Impressive Earnings Momentum
The relative strength in the stock should not be ignored. There are a handful of well-known tech stocks down over 70% this year. The reason for this has been overvalued names that do not live up to earnings expectations.
For Arista, the stock has beaten the Nasdaq this year for two reasons:
First, the valuation is not inflated, with the Forward PE at 30. Because of this, the stock has not been shorted and sold as hard as other tech names with lofty valuations.
Second, the company continues to beat on earnings, not once missing EPS since going public.
Looking at their most recent quarter, Q3 came in with a 19% EPS beat. ANET reported $1.25 v the $1.05 expected and revenues came in at $1.18B v the $1.06B expected.
Arista also guided Q4 higher, now seeing a range of $1.18-1.20B v the $1.10B expected. Gross margins were lower year over year, but operating margins came in above last years.
Estimates Rising
Analysts were impressed with the quarter and have taken their numbers higher across all time frames.
Since earnings, current quarter estimates have gone from $1.07 to $1.19, or 11% higher. Expectations for next quarter have been lifted as well, with estimates going up by 16%.
Looking down the road, the numbers continue to tick higher. For the current year, we have seen estimates go from $4.04 to $4.33 over the last month. This 7% bump higher is impressive, but nothing compared to the 12% spike in estimates that Arista is seeing for next year.
After earnings, a handful of analysts also lifted their price targets. Citi reiterate ANET with a Buy and $190 target, up from $170. Morgan Stanley lifted to $130 from $115 and kept its equal weight. Barclays has an Overweight and a $143 target, which they lifted from $131.
The Technical Take
The stock made all-time highs at $148.57 late last year. Over the summer, when markets were very weak, the stock bottomed at $89.12. Since then, two earnings beats have helped the stock come up over 40% off those 2022 lows.
So now, investors should be looking to find entries into this stock as the overall market stabilizes.
The low made this summer happened to be the 50% retracement made from COVID lows to all-time highs. If we are targeting the -23.6% Fibonacci level, this gives us targets at $174 or 35% higher from the current price.
While its hard to chase after a big move higher, investors can wait for pullbacks and look at moving averages. For ANET, the 21-day ,50-day, and 200-day moving averages are all in the same area, between the $115 and $118 levels. That area should be a massive support zone where investors can enter.
In Summary
In bear markets, stocks showing relative strength should not be ignored. They are strong for a reason and when markets turn, they can be outperformers for the next trading year and beyond.
Investors should watch this one closely and look to enter on pullbacks. The stock should hold up well the rest of the year and look to take out all-time highs in 2023.
Bear of the Day:
Skechers is a Zacks Rank #5 (Strong Sell) that designs, develops, markets, and distributes footwear for men, women, and children in the United States and overseas. The company offers casual, casual athletic, sport athletic, trail, sandals, boots, and retro fashion footwear for men and women.
The stock is 25% off 2022 lows, so are investors getting ahead of themselves?
Analysts are pumping the breaks, dropping estimates for the upcoming quarter and year. Considering the upwards move and estimates, profit taking should be considered.
More About SKX
Skechers was founded in 1992, is headquartered in Manhattan Beach, CA. The company is valued just over $6 billion and has a Forward PE of 18. SKX has Zacks Style Scores of “D” in Value and “F” in Growth.
Skechers operates about 4,300 company-and third party owned stores and sells its products through department and specialty stores, athletic and independent retailers, boutiques, and online retailers; and through its e-commerce sites, concept stores, and factory and warehouse outlet stores.
The company operates through four segments: Domestic Wholesale, International Wholesale, Retail Sales and e-commerce Sales. Skechers brands include Skechers USA, Skechers Sport, Skechers Active, Modern Comfort, Skechers Street, Twinkle Toes, Z-Strap, Skechers Stretch Fit, Skechers GOrun and many more.
Q4 Earnings
Skecher’s has a volatile earnings past, but the company has beaten 9 out of the last 12 quarters. However, when they reported in late October, Skechers reported their first miss in a year.
For Q3, Skechers posted revenue beat, but a 26% EPS miss. This miss included an unfavorable impact due to foreign exchange rates.
The company guided Q4 down significantly. Revenues for Q4 are now expected to be in a range of $1.73-1.78B v the 1.82B prior. Q4 EPS is now seen at a range of $0.30-0.40 v the expected $0.57.
Year over year gross margins feel to 47.1% b the 49.9% last year.
Estimates
The cut in guidance forced analyst to drop their numbers, with estimates falling significantly since earnings.
Over the last 30 days, number have fallen across all time frames. For the current quarter, estimates have gone from $0.57 to $0.34, a drop of 40%. For the current year, estimates dropped to $2.25 from $2.65, or 15%.
The numbers do not improve much for next year, with estimates dropping almost 11%.
Argus downgraded the stock to Hold from Buy after earnings. The firm cites supply chain disruptions and China COVID restrictions as headwinds for the stock.
The Technicals
The stock has struggled over the last year, falling almost 30% from 2021 highs. However, the last couple weeks the stock has surged over 20% after the company reported the earnings miss.
The stock has now broken the 200-day moving average and hit highs not seen since August. Normally this would be a bullish sign and there might be some short covering in the works.
But the $42 level has been a tough nut to crack this year. This stock has failed four times already in 2022 and given the fundamental challenges, this spot would likely see resistance again.
Investors would be better off taking profits and waiting for conditions to improve. If a entry is desired, the $35.30 area is the 50-day moving average and would likely offer some support.
In Summary
Considering the rally over the last few weeks, investors should be very cautious. The stock has come well off lows after a quarter where the outlook was not good. This can be a good sign if the overall market continues momentum.
However, due to supply chain issues and China COVID lockdowns, Skechers will likely see their fundamentals woes to persist over the short term. Investors should take the rally as an opportunity to sell and revisit the name down the road.
Additional content:
Will Weak Gaming Chip Demand Hurt NVIDIA's Q3 Earnings?
NVIDIA Corp. is slated to report third-quarter fiscal 2023 results on Nov 16.
NVIDIA impressed investors with its stellar financial performance and experienced robust top and bottom-line growth in the past several quarters. However, the weakening demand for its chips used in gaming and data center end markets has put a break on its growth momentum as depicted from the last reported quarter.
In the second quarter of fiscal 2023, though NVIDIA’s revenues of $6.7 billion met the Zacks Consensus Estimate, revenues came lower than management’s May 2022 forecast of $8.10 billion (+/-2%) due to weaker sales across its Gaming and Data Center business segments. Moreover, non-GAAP earnings plunged 51% year over year to 51 cents per share.
The trend is likely to have continued in the third quarter. In its second-quarter earnings release, the company stated that revenues from its Gaming market segments would decline sequentially as OEMs and channel partners continue to reduce inventory levels.
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Softness in Gaming Chip Demand
NVIDIA experienced robust sales for its chips used in gaming end markets for the past couple of years. This was driven by pandemic-induced stay-at-home instructions.
The demand for NVIDIA’s gaming chips increased immensely as people were surfing games to stay engaged and entertained indoors during lockdowns. Moreover, with the massive emergence of multiplayer online games and Gaming-as-a-Service concepts, the demand for graphic processing units shot up exponentially.
However, the reopening of economies, along with the rising global slowdown concern amid the ongoing Russia-Ukraine war and the U.S.-China trade war, has been hurting the demand for gaming chips.
The company’s revenues from the Gaming market platform plunged 33% year over year and 44% sequentially in the last reported quarter. We believe that the trend is likely to have continued in the third quarter. The Zacks Consensus Estimate for the Gaming segment’s revenues is pegged at $1.4 billion, indicating a 56.6% decline from the year-ago quarter’s revenues of $3.22 billion.
Zacks Rank & Stocks to Consider
NVIDIA currently carries a Zacks Rank #3 (Hold). Shares of NVDA have decreased 44.5% year to date (YTD).
Some better-ranked stocks worth considering from the broader technology sector are Zscaler and Coupa Software. Celestica and Zscaler each sport a Zacks Rank #1 (Strong Buy) at present, while Coupa carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved 9.4% up to $1.86 per share in the past 30 days.
CLS' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 11.8%. Shares of the company have increased 2.9% YTD.
The Zacks Consensus Estimate for Zscaler's second-quarter fiscal 2023 earnings has been revised 5 cents north to 26 cents per share over the past 90 days. For fiscal 2023, earnings estimates have moved a penny north to $1.18 per share in the past 60 days.
ZS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have declined 55.7% YTD.
The Zacks Consensus Estimate for Coupa's fourth-quarter fiscal 2023 earnings has been revised 3 cents northward to 7 cents per share over the past 90 days. For fiscal 2023, earnings estimates have moved upward by 19 cents to 44 cents per share in the past 90 days.
Coupa's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 478.1%. Shares of COUP have slumped 65% YTD.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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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.