For Immediate Release
Chicago, IL – Nov 15, 2017 – Zacks Equity Research highlights NVIDIA (NVDA - Free Report) as the Bull of the Day and Herbalife (HLF - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Fossil Group, Inc. (FOSL - Free Report) , 1-800-Flowers.com, Inc. (FLWS - Free Report) and Pandora Media, Inc. (P - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
NVIDIAdelivered another strong beat-and-raise quarter last week and the stock once again stretched for new highs above $215.
On the top line, Q3 revenues surged 31.5% year-over-year to $2.636 billion, and surpassed the Zacks consensus estimate of $2.364 billion by 11.5%.
On the bottom line, NVIDIA posted earnings of $1.33 per share on a non-GAAP basis, up over 60% year-over-year, and clobbering by 41.5% the Zacks consensus of 94 cents per share.
The robust earnings performance not only stemmed from significant revenue growth but also from gross margin and operating margin expansion.
Is NVDA Too Expensive at 50X?
But many investors wonder if the stock is still a buy as it now trades for 53 times trailing 12-month earnings.
As an NVDA investor, I have a bias that says "Yes, I would still be a buyer near $200."
And, after this most recent quarterly report, as I go over the growth profile in all its different business segments and customers, I find multiple reasons to reinforce this view.
In sum, as long as the leading provider of gaming processors, High Performance Computing in data centers, and emerging AI technologies keeps delivering solid double-digit sales and earnings growth, along with upside surprises each quarter, then paying 48 times the current projection for next year's profits isn't a bad proposition.
So, two important questions follow...
1) Will the market demand for HPC/AI solutions in data center, gaming, and automotive segments continue to grow at high double-digits?
2) Can NVIDIA maintain their dominant position, even as Intel forges a renewed alliance with arch enemy Advanced Micro Devices to gain a foothold in GPU processor markets?
To help you decide whether the current 50X multiple is too expensive for NVIDIA's growth, this article will go over the current and forecast leadership of NVIDIA and why some Wall Street investment banks believe the company is on its way to earning $8 per share in 2020, which would equate to a 31X multiple at high Street targets near $250.
Bear of the Day:
Herbalife has fallen into the cellar of the Zacks Rank recently as Wall Street investment banks continue to shy away from the network marketer of health and nutrition products.
The Herbalife website now shows just 5 research houses covering the stock, with Citigroup and SunTrust the only two standout names.
After the company reported Q3 results on November 2, and provided guidance for the coming year, SunTrust analysts lowered their 2018 full-year EPS estimate by 8% from $5.65 to $5.20.
HLF delivered a slight EPS miss due to Mexico's earthquakes. But it was the forward outlook which brought the downward estimate revision.
Herbalife provided preliminary 2018 guidance including volume growth of 2% to 6% and revenue growth of 5.5% to 9.5%. The company also projected full-year EPS of $4.60 to $5.00.
But that midpoint of $4.80 does not reflect potential impacts from share buybacks or tax benefits from share-based compensation. These could shift the adjusted EPS guidance higher by as much as $0.50.
Still, that would put the best revised consensus under the prior estimate of $5.40. And we have yet to hear from Citigroup, who raised their price target from $71 to $73 in early October, while maintaining a hold rating.
Ackman Still in the Game
On October 5, HLF shares spiked from $68 to $76 on 7.5 million shares, possibly on word that Bill Ackman's hedge fund Pershing Square might be covering their big short position.
It was confirmed in early November that Ackman had indeed bought back his shares and was reengineering a new short position with put options.
3 Stocks Under $10 that Soared Tuesday
Here at Zacks, we don’t typically focus on a stock’s actual per-share price. Instead, our proven stock-picking system puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors. However, we know that lower-priced stocks can be attractive for smaller investors, and we stay tuned into the stocks that are grabbing headlines, regardless of their share price.
With that said, we recognize that stocks trading for under $10 per share continue to attract plenty of investor attention, likely because they give the average investor the ability to take sizeable position in a company—just like the heavy-hitters on Wall Street.
Another interesting thing about stocks under $10 is that they are often susceptible to massive one-day swings, which means that they frequently among our biggest daily movers. That was the case today, as several noteworthy companies trading for less than $10 per share surged during regular trading hours.
Check out these three stocks under $10 that soared today:
1. Fossil Group, Inc.
Fossil Group has plummeted in the wake of its disappointing earnings release last week, but the stock showed some signs of bouncing back today. Shares of the accessory maker gained more than 5.5% to hit an intraday high of $7.15 as investors reacted favorably to the debut of its first sporty smartwatch, the Fossil Q Control. Today’s gains have brought the stock back to its pre-earnings level, but FOSL is still a long way off its 52-week high of $36.87.
2. 1-800-Flowers.com, Inc.
Shares of 1-800-Flowers were up more than 3.3% in late afternoon trading Tuesday, and earlier in the afternoon, the stock reached an intraday high of $9.25 per share. While the company has been bleeding money this year, its latest earnings report included narrower-than-expected losses, and the stock has responded well. Still, earnings estimates for the upcoming fiscal year have been steadily on the way down, which has helped FLWS earn a Zacks Rank #4 (Sell).
3. Pandora Media, Inc.
Pandora is another company that disappointed investors with its most recent earnings report. The internet radio pioneer missed revenue estimates, and its stock was punished as result, plummeting nearly 40% in the week following the report. Nevertheless, shares look to have bottomed out. On Tuesday, the stock began its recovery, surging more than 4.81% and hitting an intraday high of $4.93 per share.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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