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Affirm and Dillard's have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – September 13, 2024 – Zacks Equity Research shares Affirm (AFRM - Free Report) as the Bull of the Day and Dillard’s (DDS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Chevron (CVX - Free Report) , APA Corp. (APA - Free Report) and ConocoPhillips (COP - Free Report) .
Affirm is a Zack Rank #1 (Strong Buy) and is a financial services company that offers "buy now, pay later" solutions, allowing customers to make purchases and pay over time.
The company provides flexible payment plans, including interest-free options, across various merchants.
The stock returned from the dead after a 68% EPS beat in late August. The former triple-digit high-flying stock started flying again as of late, moving from $32 to $45 in a few days.
Since the post-earnings up move the stock has pulled back as much as 20%. So, the question for investors is whether the momentum can continue and take out the recent highs.
About the Company
Affirm was founded in 2012 and is headquartered in San Francisco, California. The stock is valued at $12 billion, and the company employs 2,000.
Affirm offers point-of-sale payment solutions, merchant commerce tools, and a consumer app. Its platform, supported by bank and capital market partnerships, allows customers to pay over time.
The company serves a wide range of merchants, including small businesses, large enterprises, and omnichannel brands across industries like sporting goods, home, travel, electronics, fashion, and general merchandise.
The stock has a Zacks Style Score of “A” in Momentum and “B” in Growth. However, the stock has a “F” in Value, which certainly keeps value investors away.
Q4 Earnings
In late August, AFRM reported a 69% EPS beat for Q4. Revenues came in at $659M v the $599M and the company raised Q1, as well as FY25 revenue guidance.
GMV (Gross Merchandise Volume) came in at $7.2B up 31% y/y. Both total active merchants and consumers were higher quarter over quarter.
Affirm's management reflected on achieving their goal of adjusted operating income profitability by the end of FY23, reporting $15 million in Q4 and $381 million for FY24, with $150 million earned in the fourth quarter. Looking ahead, they set a new goal of achieving GAAP profitability by the fourth quarter of FY25 and maintaining it moving forward.
Despite GMV being just over 2% of U.S. and Canadian e-commerce, they see significant growth opportunities. Their focus for FY25 includes scaling the Affirm Card, enhancing consumer engagement with personalized incentives, expanding into the UK, and rolling out new integrations.
Estimates Rising
Since reporting earnings, analysts have been lifting their earnings estimates and price targets.
For the current quarter, estimates went from -$0.53 to -$0.38. For the next quarter, they improved from -$0.41 to -$0.36
For the current year, numbers have gone from -$1.46 a month ago to -$0.82
While estimates remain negative for this year, next year we see that analysts are looking for $0.39, up from negative $0.95 just 30 days ago.
Since earnings, the stock has received several upgrades, including Barclays, which reiterated its Overweight rating and raised its price target from $41 to $50.
The Technical Take
When the stock IPO’s back in 2021, there was much excitement about the company. The stock IPO’d at $49 but opened significantly higher at $90.90. From there the stock climbed to $176.65.
However, a series of disappointing earnings reports, along with market weakness took the stock down in 2022. And in early 2023 the stock bottomed at $8.62.
Since that bottom, the stock made multiple attempts to return to its glory days. The rally in late 2023 helped the stock get to $50, but it fell back into the $20s again until the recent earnings report took AFRM back to $45.
This is a very volatile name, so an investor entry price is critical so let's go over some support areas.
The 200-day moving average is at $35.35.
The 21-day MA is $34.90.
The 50-day is $31.
The gap fill is $32.50.
Looking at Fibonacci levels can give us an upside target. The 61.8% level above $39, which can be found by drawing from February highs to August lows, has been broken by the bulls. The target is the 161.8% extension which is $66, or 60% above current trading levels.
In Summary
Affirm has shown strong growth potential, with management's focus on achieving profitability and expanding its market presence. With analysts raising estimates and multiple upgrades, Affirm's stock remains a high risk/reward play.
Strategic entry points and long-term vision could reward investors, but caution is needed given its past volatility and rapid price swings.
Dillard’s is a Zacks Rank #5 (Strong Sell) that is a department store chain in the United States. It offers a wide range of products, including clothing, footwear, accessories, beauty products, home goods, and furniture. They focus on selling mid- to high-end brands and operate both physical stores and an online platform.
The stock continues to trend lower in 2024 and recently accelerated to the downside after reporting earnings.
Investors might be tempted to buy the dip, but analysts have been lowering estimates and the chart has a bearish look to it.
About the Company
Dillard’s was founded in 1938 and is headquartered in Little Rock, Arkansas. The company employs about 30,000 employees and the stock market cap of $5.4 billion.
The company manages 273 Dillard’s locations, including 28 clearance stores, across 30 states. Additionally, it offers its merchandise online. The majority of its stores are situated in the Southwest, Southeast, and Midwest regions of the United States.
The stock holds Zacks Style Scores of “A” in Value, but “D” in both Growth and Momentum.
Q2 Earnings
In August, Dilliard's reported a 22% EPS miss for Q2. This was the first miss since 2020 when COVID was at its peak.
Revenue missed and same-store sales were down 5% y/y. Margins were also down y/y and inventory was unchanged.
Management expressed disappointment with the weak performance in the second quarter, citing a challenging consumer environment and rising expenses that impacted profitability. They are actively working to address these issues but noted that they ended the quarter with over $1 billion in cash and short-term investments.
Estimates Fall
Since earnings, analysts have cut earnings estimates sharply.
For the current quarter, the estimates have fallen from $7.35 to $6.47, or 12%.
The next quarter saw a similar drop, with numbers falling from $10.12 to $9.05, or 11%.
Looking at next year, analysts have dropped estimates by 11%, falling from $32.25 to $28.81.
With the falling estimates, analysts have been lowering price targets as well. UBS reiterated its sell rating and lowered its PT to $194. That is about 40% lower than current levels.
Technical Take
The stock is trading below all major moving averages. The 21-day is $347, the 50-day is $382 and the 200-day is $405. After the earnings report, the 50-day moved below the 200-day, a signal known as the “Death Cross”.
The stock has recently broken a Fibonacci support level just under $350. This breaks the long-term trend so investors should shy away from the name until the chart situation improves.
In Summary
Dillard’s recent struggles highlight serious challenges ahead, with disappointing earnings results and a bearish technical outlook.
The substantial cut in earnings estimates and the technical "Death Cross" signal suggest that the stock could face further declines. Investors should exercise caution and consider waiting for a clearer turnaround before reassessing the stock's potential.
Additional content:
CVX, APA, COP Stocks Hit 52-Week Lows as Oil Market Slides
The Oil/Energy market has been roiled by concerns over a slowdown in global economic activity, particularly the decline in fuel demand in China. The space has seen a brutal sell-off, with the Energy Select Sector SPDR — a key indicator of the largest U.S. energy companies — dropping 5.7% over the past month. Alongside the decline in crude oil prices, shares of major energy companies have plunged, with the likes of Chevron, APA Corp. and ConocoPhillips, among others, hitting new 52-week lows.
Giving some respite to the battered fuel, the latest Short-Term Energy Outlook (STEO) of the U.S. Energy Information Administration (EIA) predicts a recovery in oil prices despite the prevailing market challenges. The EIA forecasts that Brent crude prices will rise above $80 per barrel by the end of the month, up from the recent low of under $70 per barrel.
This forecast is driven by a widening supply deficit, with global oil demand expected to average a record 103.1 million barrels per day (bpd) in 2024, some 200,000 bpd higher than the previous estimates. Meanwhile, global production is anticipated to lag at 102.2 million bpd due to delayed output increases by OPEC and its allies.
Factors Behind EIA's Projections
EIA's projections reflect a complex demand and supply dynamic. The agency expects that oil consumption will continue to outpace production due to OPEC+'s decision to delay production increases until December. This supply shortfall is anticipated to reduce global oil inventories, creating an upward pressure on prices. However, the forecast is not without risks. Persistent economic concerns, including slowing growth in China and reduced fuel demand, have weighed heavily on market sentiment, limiting upward price momentum.
A Comparative Study of EIA, OPEC, IEA
In contrast, OPEC has a slightly different view, cutting its growth forecast for global oil demand for the second consecutive month. OPEC now expects demand to grow by 2.03 million bpd in 2024, down from its previous estimate of 2.11 million bpd but above EIA's one million bpd estimate. The forecast for 2025 was also reduced to 1.74 million bpd, down from 1.78 million bpd.
Despite expectations of healthy demand from sectors like air travel and non-OECD countries, concerns about sluggish growth in China and increasing competition from alternative energy sources weighed on the projections. The disparity between EIA and OPEC forecasts highlights the uncertainty surrounding future oil demand, with OPEC suggesting a slower recovery in key markets.
Comparing EIA's outlook with the International Energy Agency (IEA), the latter forecasts global consumption to grow by just under 1% in the coming years, aligning more closely with EIA's conservative view. Both EIA and IEA emphasize the impact of OPEC+ production cuts in maintaining market tightness. EIA’s forecast, however, is more optimistic about a near-term price recovery, driven by expected inventory drawdowns and strategic supply management by OPEC+.
Implications of Oil’s Bearish Run for Energy Stocks
Should oil prices fail to recover as anticipated, energy stocks like Chevron, APA and ConocoPhillips could face further downside. Lower oil prices would directly impact their revenue streams, potentially forcing reductions in capital expenditures and triggering a reevaluation of production targets. This environment poses a significant challenge for these Zacks Rank #3 (Hold) companies, as sustained low prices could erode profit margins and investor confidence. The commodity is currently trading at around $70 a barrel and recently fell to its lowest since December 2021.
Despite the current market turbulence, there remains a cautiously optimistic outlook for oil prices. The possibility of stronger economic growth in non-OECD nations, combined with strategic supply adjustments by OPEC+, could support a gradual recovery in prices. Investors should keep an eye on evolving market dynamics, as potential policy interventions and changes in global demand patterns may provide some relief. While the path forward is fraught with challenges, the underlying fundamentals suggest that the oil market may stabilize in the medium term, offering hope for a rebound in energy stocks.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
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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Affirm and Dillard's have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 13, 2024 – Zacks Equity Research shares Affirm (AFRM - Free Report) as the Bull of the Day and Dillard’s (DDS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Chevron (CVX - Free Report) , APA Corp. (APA - Free Report) and ConocoPhillips (COP - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Affirm is a Zack Rank #1 (Strong Buy) and is a financial services company that offers "buy now, pay later" solutions, allowing customers to make purchases and pay over time.
The company provides flexible payment plans, including interest-free options, across various merchants.
The stock returned from the dead after a 68% EPS beat in late August. The former triple-digit high-flying stock started flying again as of late, moving from $32 to $45 in a few days.
Since the post-earnings up move the stock has pulled back as much as 20%. So, the question for investors is whether the momentum can continue and take out the recent highs.
About the Company
Affirm was founded in 2012 and is headquartered in San Francisco, California. The stock is valued at $12 billion, and the company employs 2,000.
Affirm offers point-of-sale payment solutions, merchant commerce tools, and a consumer app. Its platform, supported by bank and capital market partnerships, allows customers to pay over time.
The company serves a wide range of merchants, including small businesses, large enterprises, and omnichannel brands across industries like sporting goods, home, travel, electronics, fashion, and general merchandise.
The stock has a Zacks Style Score of “A” in Momentum and “B” in Growth. However, the stock has a “F” in Value, which certainly keeps value investors away.
Q4 Earnings
In late August, AFRM reported a 69% EPS beat for Q4. Revenues came in at $659M v the $599M and the company raised Q1, as well as FY25 revenue guidance.
GMV (Gross Merchandise Volume) came in at $7.2B up 31% y/y. Both total active merchants and consumers were higher quarter over quarter.
Affirm's management reflected on achieving their goal of adjusted operating income profitability by the end of FY23, reporting $15 million in Q4 and $381 million for FY24, with $150 million earned in the fourth quarter. Looking ahead, they set a new goal of achieving GAAP profitability by the fourth quarter of FY25 and maintaining it moving forward.
Despite GMV being just over 2% of U.S. and Canadian e-commerce, they see significant growth opportunities. Their focus for FY25 includes scaling the Affirm Card, enhancing consumer engagement with personalized incentives, expanding into the UK, and rolling out new integrations.
Estimates Rising
Since reporting earnings, analysts have been lifting their earnings estimates and price targets.
For the current quarter, estimates went from -$0.53 to -$0.38. For the next quarter, they improved from -$0.41 to -$0.36
For the current year, numbers have gone from -$1.46 a month ago to -$0.82
While estimates remain negative for this year, next year we see that analysts are looking for $0.39, up from negative $0.95 just 30 days ago.
Affirm Holdings, Inc. price-consensus-chart | Affirm Holdings, Inc. Quote
Since earnings, the stock has received several upgrades, including Barclays, which reiterated its Overweight rating and raised its price target from $41 to $50.
The Technical Take
When the stock IPO’s back in 2021, there was much excitement about the company. The stock IPO’d at $49 but opened significantly higher at $90.90. From there the stock climbed to $176.65.
However, a series of disappointing earnings reports, along with market weakness took the stock down in 2022. And in early 2023 the stock bottomed at $8.62.
Since that bottom, the stock made multiple attempts to return to its glory days. The rally in late 2023 helped the stock get to $50, but it fell back into the $20s again until the recent earnings report took AFRM back to $45.
This is a very volatile name, so an investor entry price is critical so let's go over some support areas.
The 200-day moving average is at $35.35.
The 21-day MA is $34.90.
The 50-day is $31.
The gap fill is $32.50.
Looking at Fibonacci levels can give us an upside target. The 61.8% level above $39, which can be found by drawing from February highs to August lows, has been broken by the bulls. The target is the 161.8% extension which is $66, or 60% above current trading levels.
In Summary
Affirm has shown strong growth potential, with management's focus on achieving profitability and expanding its market presence. With analysts raising estimates and multiple upgrades, Affirm's stock remains a high risk/reward play.
Strategic entry points and long-term vision could reward investors, but caution is needed given its past volatility and rapid price swings.
Bear of the Day:
Dillard’s is a Zacks Rank #5 (Strong Sell) that is a department store chain in the United States. It offers a wide range of products, including clothing, footwear, accessories, beauty products, home goods, and furniture. They focus on selling mid- to high-end brands and operate both physical stores and an online platform.
The stock continues to trend lower in 2024 and recently accelerated to the downside after reporting earnings.
Investors might be tempted to buy the dip, but analysts have been lowering estimates and the chart has a bearish look to it.
About the Company
Dillard’s was founded in 1938 and is headquartered in Little Rock, Arkansas. The company employs about 30,000 employees and the stock market cap of $5.4 billion.
The company manages 273 Dillard’s locations, including 28 clearance stores, across 30 states. Additionally, it offers its merchandise online. The majority of its stores are situated in the Southwest, Southeast, and Midwest regions of the United States.
The stock holds Zacks Style Scores of “A” in Value, but “D” in both Growth and Momentum.
Q2 Earnings
In August, Dilliard's reported a 22% EPS miss for Q2. This was the first miss since 2020 when COVID was at its peak.
Revenue missed and same-store sales were down 5% y/y. Margins were also down y/y and inventory was unchanged.
Management expressed disappointment with the weak performance in the second quarter, citing a challenging consumer environment and rising expenses that impacted profitability. They are actively working to address these issues but noted that they ended the quarter with over $1 billion in cash and short-term investments.
Estimates Fall
Since earnings, analysts have cut earnings estimates sharply.
For the current quarter, the estimates have fallen from $7.35 to $6.47, or 12%.
The next quarter saw a similar drop, with numbers falling from $10.12 to $9.05, or 11%.
Looking at next year, analysts have dropped estimates by 11%, falling from $32.25 to $28.81.
With the falling estimates, analysts have been lowering price targets as well. UBS reiterated its sell rating and lowered its PT to $194. That is about 40% lower than current levels.
Technical Take
The stock is trading below all major moving averages. The 21-day is $347, the 50-day is $382 and the 200-day is $405. After the earnings report, the 50-day moved below the 200-day, a signal known as the “Death Cross”.
The stock has recently broken a Fibonacci support level just under $350. This breaks the long-term trend so investors should shy away from the name until the chart situation improves.
In Summary
Dillard’s recent struggles highlight serious challenges ahead, with disappointing earnings results and a bearish technical outlook.
The substantial cut in earnings estimates and the technical "Death Cross" signal suggest that the stock could face further declines. Investors should exercise caution and consider waiting for a clearer turnaround before reassessing the stock's potential.
Additional content:
CVX, APA, COP Stocks Hit 52-Week Lows as Oil Market Slides
The Oil/Energy market has been roiled by concerns over a slowdown in global economic activity, particularly the decline in fuel demand in China. The space has seen a brutal sell-off, with the Energy Select Sector SPDR — a key indicator of the largest U.S. energy companies — dropping 5.7% over the past month. Alongside the decline in crude oil prices, shares of major energy companies have plunged, with the likes of Chevron, APA Corp. and ConocoPhillips, among others, hitting new 52-week lows.
Giving some respite to the battered fuel, the latest Short-Term Energy Outlook (STEO) of the U.S. Energy Information Administration (EIA) predicts a recovery in oil prices despite the prevailing market challenges. The EIA forecasts that Brent crude prices will rise above $80 per barrel by the end of the month, up from the recent low of under $70 per barrel.
This forecast is driven by a widening supply deficit, with global oil demand expected to average a record 103.1 million barrels per day (bpd) in 2024, some 200,000 bpd higher than the previous estimates. Meanwhile, global production is anticipated to lag at 102.2 million bpd due to delayed output increases by OPEC and its allies.
Factors Behind EIA's Projections
EIA's projections reflect a complex demand and supply dynamic. The agency expects that oil consumption will continue to outpace production due to OPEC+'s decision to delay production increases until December. This supply shortfall is anticipated to reduce global oil inventories, creating an upward pressure on prices. However, the forecast is not without risks. Persistent economic concerns, including slowing growth in China and reduced fuel demand, have weighed heavily on market sentiment, limiting upward price momentum.
A Comparative Study of EIA, OPEC, IEA
In contrast, OPEC has a slightly different view, cutting its growth forecast for global oil demand for the second consecutive month. OPEC now expects demand to grow by 2.03 million bpd in 2024, down from its previous estimate of 2.11 million bpd but above EIA's one million bpd estimate. The forecast for 2025 was also reduced to 1.74 million bpd, down from 1.78 million bpd.
Despite expectations of healthy demand from sectors like air travel and non-OECD countries, concerns about sluggish growth in China and increasing competition from alternative energy sources weighed on the projections. The disparity between EIA and OPEC forecasts highlights the uncertainty surrounding future oil demand, with OPEC suggesting a slower recovery in key markets.
Comparing EIA's outlook with the International Energy Agency (IEA), the latter forecasts global consumption to grow by just under 1% in the coming years, aligning more closely with EIA's conservative view. Both EIA and IEA emphasize the impact of OPEC+ production cuts in maintaining market tightness. EIA’s forecast, however, is more optimistic about a near-term price recovery, driven by expected inventory drawdowns and strategic supply management by OPEC+.
Implications of Oil’s Bearish Run for Energy Stocks
Should oil prices fail to recover as anticipated, energy stocks like Chevron, APA and ConocoPhillips could face further downside. Lower oil prices would directly impact their revenue streams, potentially forcing reductions in capital expenditures and triggering a reevaluation of production targets. This environment poses a significant challenge for these Zacks Rank #3 (Hold) companies, as sustained low prices could erode profit margins and investor confidence. The commodity is currently trading at around $70 a barrel and recently fell to its lowest since December 2021.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Way Forward for Oil Stocks
Despite the current market turbulence, there remains a cautiously optimistic outlook for oil prices. The possibility of stronger economic growth in non-OECD nations, combined with strategic supply adjustments by OPEC+, could support a gradual recovery in prices. Investors should keep an eye on evolving market dynamics, as potential policy interventions and changes in global demand patterns may provide some relief. While the path forward is fraught with challenges, the underlying fundamentals suggest that the oil market may stabilize in the medium term, offering hope for a rebound in energy stocks.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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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.