For Immediate Release
Chicago, IL – May 08, 2017 –Zacks Equity Research Align Technology (NASDAQ: (ALGN - Free Report) – Free Report ) as the Bull of the Day, Community Health Systems (NYSE: (CYH - Free Report) – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ultra Clean Holdings (NASDAQ: (UCTT - Free Report) – Free Report ), Tyson Foods, Inc. (NYSE: (TSN - Free Report) – Free Report ) and Huntsman Corporation (NYSE: (HUN - Free Report) – Free Report ).
Here is a synopsis of all five stocks:
Bull of the Day :
Align Technology (NASDAQ:(ALGN - Free Report) – Free Report ) is one of the strongest medical technology success stories of the past year, with 27.8% sales growth in 2016 and an expected 25%+ top line ramp in 2017.
First quarter company earnings, reported on April 27, confirmed that the growth story for the $11.4 billion maker of the revolutionary dental technology Invisalign is well intact.
In 1999, Align Technology pioneered the invisible orthodontics market with the introduction of the Invisalign system and by 2001 had manufactured one million unique clear aligners.
Smiles All Around for a Record Quarter
In its quarterly report, the company delivered adjusted EPS of 85 cents, up 71% from the year-ago quarter. Earnings were higher than the company’s guided range of 64-67 cents and thus clobbered the consensus for a 27% beat.
More importantly, the sales growth continues to surprise too as Align delivered its strongest quarter of Invisalign case shipment growth since early 2010, with worldwide shipments +27.1% year-over-year including international shipments +41% and North America up 20%.
Overall, revenues grew 30.0% year over year to a record $310.3 million in the quarter, surpassing the Zacks Consensus Estimate of $297 million.
Clear Guidance for Straighter Teeth
For the second quarter, this growth is expected to persist, with management guiding to 25-27% case shipment growth and 26-28% revenue growth next quarter. And for full-year, management is now calling for case shipment and company-wide revenue growth of 25%, all above analyst estimates prior to the company conference call.
Here were comments from Align Technology President and CEO Joe Hogan, courtesy of the company press release on April 27...
"2017 is off to a great start with first quarter revenues, volumes, gross margin and EPS above our expectations. For the quarter, net revenues were up 30% year-over-year, driven by strong Invisalign case shipments of 27% year-over-year to a record 38.9 thousand doctors shipped to during the quarter. These results reflect growth from both our North America and International regions, and higher than expected teenage cases across the board, which increased 32% year-over-year."
Since the report, Wall Street analysts have moved quickly to raise their earnings estimates, bumping the full-year 2016 consensus from $3.00 to $3.25 and taking 2017 profit projections up 8.4% to $3.89.
Bear of the Day :
Community Health Systems (NYSE:(CYH - Free Report) – Free Report ) has been in a slow recovery since plunging from $50 to $5 from August of 2015 to October of 2016.
But earnings estimates still don't appear to have bottomed.
Since the company reported last week, full-year 2016 estimates have fallen further from $0.57 to $0.48.
And 2017 profit projections dropped as well from $1.11 to $0.99.
Here were some updates from the company's recent report...
Community Health Systems reported adjusted earnings of 8 cents per share in the first quarter of 2017, which beat the Zacks Consensus Estimate of 6 cents by 33%.
In the first quarter, net operating revenue of $4.5 billion surpassed the Zacks Consensus Estimate by 3.3% but decreased 10.3% year over year.
Total admissions of 2.1 billion decreased 11.5% and adjusted admissions of 4.5 billion declined 12.5%, both on a year-over-year basis. On a same-store basis, admissions dipped 1.5% and adjusted admissions were down 1.4%, both on a year-over-year basis.
In the reported quarter, total operating expense declined 6.2% to $4.4 billion, primarily due to lower salaries and benefits paid to employees, depreciation & amortization-related expenses and other operating costs.
As of Mar 31, 2017, the company’s total assets declined 13% year over year to $21.7 billion. Cash and cash equivalent grew 38% year over year to $247 million.
The company paid off a substantial portion of its debt through divestures. It now has a long-term debt of $14.7 billion as of Mar 31, 2017, down 0.7% year over year.
Total shareholders’ equity was $1.43 billion as of Mar 31, 2017, down 11.5% from year-end 2016.
Cash flow from operations was $242 million at the end of the first quarter, down 17.7% year over year from $294 million.
Bulls Get Airborne with Tech: May Market Strategy
The following is an excerpt from Zacks Chief Strategist John Blank’s full May Market Strategy report . To access the full PDF, click here .
Info Tech Leads Q1 Earnings Upgrades
S&P 500 earnings could record +12.5% y/y growth in Q1-2017, the best since Q3-2011. What’s hot? Info Tech. In Q1, it is clocking +15.8% annual earnings growth.
And what is HOT within Tech? Semis!
That’s the industry I focus on in May.The ratio of Nasdaq-to-S&P 500 share indexes is the now the highest it has been -- since Sept 2000.
Range-bound Oil Prices
NOTE: OPEC meets again, on May 25th.
Look back to look ahead. Booming global share markets after the U.S. election, in part, reflected hopes of an oil production deal. A deal eventually came to pass in late November when OPEC met in Vienna. A subsequent agreement between non-OPEC producers also cut supply in December.
That helped deliver a significant boost to crude prices.
What does this tight oil trading range portend for global markets?
The tight range means there is neither excessive fear nor greed available to oil producing countries in 2017. It also explains why Mexico recently sold off hedges on oil prices recently. They don’t want to suffer from any downside risk if this oil price story goes south.
The rise in U.S. rig count looks ominous, but this recovery to above 800 rigs is off a low number.
1,400 -- That’s the number of rigs seen in 2014.
Zacks May Sector/Industry/Company Telescope
May industry tables at Zacks have changed -- dramatically.
The sole carryover from April is Info Tech, which remains the most Attractive of S&P 500 sectors.
After Tech, Zacks covering analysts noted the rise of Consumer Staples, Materials, and Industrials. There showed clearly a spending gain --made by business cap-ex-- as the U.S. unemployment rate hit 4.5%, which is tight.
The other May move up in sentiment was made by Health Care . Could this sector be back from the dead? The shorts may be packing up their bags here.
(1) Info Tech rises to Very Attractive. Semis are HOT, and Misc. Tech is great too.
Zacks #1 Rank (STRONG BUY) Company --
Ultra Clean Holdings (NASDAQ:(UCTT - Free Report) – Free Report ): This is a $700 million market cap stock on a tear recently.
The company is a developer and supplier of critical subsystems for the semiconductor capital equipment, flat panel, solar and medical device industries.
Ultra Clean offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component neutral design and manufacturing and component testing capabilities. Ultra Clean's customers are primarily original equipment manufacturers for the semiconductor capital equipment, flat panel, solar and medical device industries.
Ultra Clean is headquartered in Menlo Park, CA.
(2) Consumer Staples rises, all the way to Very Attractive. The industry leader is Soaps & Cosmetics, followed by Agri-Business, Tobacco, and Food/Drug Retail.
Zacks #2 Rank (BUY) Company --
Tyson Foods, Inc. (NYSE:(TSN - Free Report) – Free Report ): This is a $22.4 billion market cap stock, with a quarterly report due on May 8th.
The company is the world's largest fully integrated producer, processor and marketer of chicken and poultry-based food products. Tyson is a comprehensive supplier of value-added chicken products through food service, retail grocery stores, club stores and international distribution channels.
Although its core business is chicken, in the United States Tyson is also the second largest maker of corn and flour tortillas under the Mexican Original brand and through its subsidiary Cobb Vantress, the top chicken breeding stock supplier.
(3) Materials rise to Attractive. The 2 leaders are Steel and Chemicals.
Zacks #1 Rank (STRONG BUY) Company --
Huntsman Corporation (NYSE:(HUN - Free Report) – Free Report ): This is a $5.87 billion market cap stock.
The company is among the world's largest global manufacturers of differentiated and commodity chemical products for a variety of industrial and consumer applications.
(4) Industrials rise to Attractive. The leaders are many: Machinery, Pollution Control, Construction-Building Services, and Metal Fabricating. There is a cap-ex spending cycle picking up.
(5) Health Care rises to Attractive. The leader is Medical Care.
(6) Consumer Discretionary falls back to a Market Weight. The industry leader is Publishing, followed by Leisure. A big loser is Home Furnishing-Appliance
(7) Financials fall back to Market Weight. The leader is Banks & Thrifts. Investment Funds are the big loser.
(8)Telco Services stays a Market Weight.
(9) Energy falls back to Unattractive. The leader is Energy-Alternates. The big losers are Oil & Gas Integrated and the Oil & Gas Pipelines.
(10) Utilities fall to Very Unattractive. There is no strong industry here.
This is an excerpt from Zacks Chief Strategist John Blank’s full May Market Strategy report . To access the full PDF, click here .
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