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DexComis a $13 billion med-tech developer of continuous glucose monitoring (CGM) systems for people with diabetes. DXCM became a Zacks #2 Rank after a strong beat and raise quarter reported on 2/21.
DexCom delivered Q4 adjusted EPS of 54 cents vs the consensus of 17-c for a giant 217% beat. And Q4 revenues of $338 million beat the consensus view of $307.5 million by a healthy 10%. Much of the good news was baked in as the company had preannounced the coming strong results. But they even beat those numbers.
As you probably know, diabetes patients must stick their finger several times per day to monitor their blood sugar. Dexcom is changing that with a device called a continuous glucose monitor (CGM). These devices track glucose levels throughout the day rather than rely on bloody finger sticks and test strips.
And this, as you might guess, gives patients and their care providers more accurate data to measure and understand daily ebbs and flows in blood glucose levels.
In February, DexCom received Health Canada approval for its G6 CGM System. Dexcom announced that the Health Canada thumbs up for its next generation CGM system was for people with diabetes ages two years and up. It was previously introduced into the U.S, U.K., Ireland, and several other European countries and has seen strong sales so the G6 commercial launch in Canada, planned for late 2019, is much anticipated.
Analysts Hail the Innovation and the Growth
Here were analyst reactions to DexCom's Feb 21 report after the company offered 2019 revenue guidance of $1.175 billion to $1.225 billion, representing 19% growth over last year, and gross profit margin of approximately 65%...
Cowen & Co: Analyst Doug Schenkel raised his price target on DexCom to $175 from $150 following its "blowout" Q4 results. The analyst believes its guidance leaves plenty of room for top and bottom line upside, though he admits a new competitor product could provide headline risk. He views the shares as a long-term core holding. Schenkel reiterated his Outperform rating on DexCom shares.
Canaccord Genuity: Analyst Kyle Rose raised his price target on DexCom to $160 from $140 following its strong Q4 results. The analyst expects its exceptional growth to continue, supported by strong growth in sensor volumes, continued worldwide adoption of CGM, and the ongoing launch of G6, which is just now moving into additional territories and Medicare. Rose views DexCom as one of the best pure growth assets across the med-tech space.
Piper Jaffray: Analyst JP McKim told investors in a research note that he believes DexCom is positioning itself for the next $1B in sales to be "solid, profitable growth." The restructuring allows the company to scale quicker and at a lower cost over the longer term, McKim says. He reiterated an Overweight rating on DexCom with a $165 price target.
Oppenheimer analysts raised their 2019 sales estimate to $1.22 billion from $1.13 billion, with US growth in the mid-teens and elsewhere up ~30%. Their EPS projection rose to $0.59 from $0.25 on solid operating leverage and their price target goes to $167 from $150.
Leerink Swann analysts explained why DXCM could continue to commance a premium valuation. Their $170 price target applies a ~9.5X price-to-sales multiple to their $1.512 billion 2020 revenue estimate. DXCM shares currently trade at about 10X their $1.22 bilion 2019 sales estimate, which is a premium to comparable small-cap MedTech companies.
comScoreis a Zacks Rank #5 (Strong Sell) and checks in with an F for the Value Style Score and a D for the Growth Style Score. The company posted a beat of the Zacks Consensus Estimate on February 28, but it is now the Bear of the Day. Let's take a look at why that is the case.
Description
comScore, Inc. is a global leader in measuring the digital world. This capability is based on a massive, global cross-section of more than two million consumers who have given comScore permission to confidentially capture their browsing and transaction behavior, including online and offline purchasing. comScore panelists also participate in survey research that captures and integrates their attitudes and intentions.
Through its proprietary technology, comScore measures what matters across a broad spectrum of behavior and attitudes. comScore analysts apply this deep knowledge of customers and competitors to help clients design powerful marketing strategies and tactics that deliver superior ROI. comScore services are used by global leaders such as AOL, Microsoft, Yahoo!, Verizon, Best Buy, The Newspaper Association of America, Tribune Interactive, ESPN, Fox Sports, Nestle, MBNA, Starcom USA, Universal McCann, the United States Postal Service, Merck and Expedia.
Recent Earnings
Although the chart show that SCOR beat earnings, I see other data that suggest that SCOR missed in a big way. I see a loss of $0.46 compared to an expected loss of $0.21 on the bottom line.
Revenue of $109M was good for 6% growth and topped the $104.8M estimate.
Prior to this report, Zacks shows that SCOR missed the prior three quarter with an average negative earnings surprise of 52%.
Estimates
The estimate data on the detailed estimate page is not fully functioning at the moment, but I do see that there were negative revisions over the last 30 and 60 days.
If you look at the agreement section, you can see there were negative earnings estimate revisions for this quarter, next quarter and for the full year.
Valuation
Without a positive earnings number, there is no PE, but I do see a 2.3x book multiple which is where value players should be happy. They tend to like a book multiple below 3x. A price to sales multiple of 3x is fairly rich considering the low growth profile.
Margins are negative, but they are moving in the right direction. That said, SCOR will likely not post positive earnings this year or next.
Why lululemon (LULU - Free Report) Looks Like a Buy Heading into Q4 Earnings
Lululemon shares popped over 3% Thursday heading into the release of its fourth quarter financial results, as part of its larger 2019 climb. The yoga apparel and athleisure giant’s bottom-line looks set to surge as it expands its menswear business, its global reach, and more.
Recent News
Barclays analysts earlier this week elaborated on why they are high on Lululemon as it tries to grab market share from Nike and Under Armour—which has struggled to roll out compelling athleisure offerings. The firm currently has an “overweight” rating on Lululemon stock and a $200 a share price target, which represents roughly 39% upside compared to LULU’s $144.35 a share closing price on Wednesday. Analyst Matthew McClintock said that Canadian company “has a significantly larger [total addressable market] than even the most optimistic estimates likely expect.”
“We continue to believe Lululemon’s [total addressable market] is ever-expanding as the company has entered into men’s in a meaningful way, has seen success in office, travel [and] commute offerings and continues to see a significant amount of opportunity in bras and outerwear.”
Company Overview
As the Barclays analyst mentioned, the firm has expanded far beyond its original women’s yoga apparel in recent years. Lululemon currently sells men’s and women’s jackets for as much as $600 as it tries to compete against other higher-end brands.
Lululemon now boasts a lineup of outwear, shoes, accessories, as well as more work-appropriate and fashion-focused offerings for both men and women—which will likely become a key growth area for LULU as companies around the country relax their dress codes. Earlier this month, Lululemon also signed NFL quarterback Nick Foles as its first men’s ambassador in an effort to attract consumers away from more traditional sportswear brands.
The company closed Q3 with 426 stores around the world. Investors should also note that LULU’s e-commerce comps surged 46%. Going forward, the company’s ability to expand its digital commerce business will likely become even more important in the internet-crazed retail age. This expansion includes the firm’s presence across social media outlets, where brands are now built from scratch and consumers shop directly.
Outlook & Earnings Trends
As we alluded to at the top, shares of Lululemon have jumped over 22% this year to outpace the S&P 500’s 13% climb, its industry’s 18% average, and Nike. LULU stock rested up 3.10% through mid-afternoon trading Thursday at $148.82 a share. This marked a roughly 10% downturn from its 52-week high of $164.79 a share, which gives the stock some room to run.
Before we look at what to expect from LULU’s Q4 financial results, it is worth noting that company management raised its quarterly guidance earlier this year on the back of strong holiday period sales. The Vancouver, Canada-based firm upped its guidance based on total comparable sales growth in the mid-to-high teens, up from high-single to low-double digits comps expansion.
With that said, Lululemon’s Q4 revenues are projected to jump 23.7% to reach $1.15 billion, based on our current Zacks Consensus Estimate. This would top Q3’s 21% top-line growth. Meanwhile, the firm’s full-year revenues are projected to surge roughly 26% from fiscal 2017’s $2.65 billion to reach $3.27 billion. Last year, total full-year revenue popped just 13%.
Moving on, Lululemon is projected to see its adjusted Q4 earnings soar 30.8% to touch $1.74 a share. Plus, the athletic apparel company’s full-year EPS figure is expected to surge 44.4% to reach $3.74 a share. We should also note that LULU has seen some positive earnings estimate revision activity recently.
Bottom Line
Lululemon is currently a Zacks Rank #2 (Buy) based, in part, on its recent earnings estimate revision activity. The company also boasts an “A” grade for Growth in our Style Scores system. And Lululemon executives have reaffirmed its goal to reach $4 billion in revenue by 2020, which includes hitting $1 billion in menswear sales.
LULU is scheduled to release its Q4 and full-year 2018 financial after the closing bell on Wednesday, March 27.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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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DexCom, comScore, Lululemon, Nike and Under Armour highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 22, 2019 – Zacks Equity Research DexCom (DXCM - Free Report) as the Bull of the Day, comScore (SCOR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Lululemon (LULU - Free Report) , Nike (NKE - Free Report) and Under Armour (UAA - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
DexComis a $13 billion med-tech developer of continuous glucose monitoring (CGM) systems for people with diabetes. DXCM became a Zacks #2 Rank after a strong beat and raise quarter reported on 2/21.
DexCom delivered Q4 adjusted EPS of 54 cents vs the consensus of 17-c for a giant 217% beat. And Q4 revenues of $338 million beat the consensus view of $307.5 million by a healthy 10%. Much of the good news was baked in as the company had preannounced the coming strong results. But they even beat those numbers.
As you probably know, diabetes patients must stick their finger several times per day to monitor their blood sugar. Dexcom is changing that with a device called a continuous glucose monitor (CGM). These devices track glucose levels throughout the day rather than rely on bloody finger sticks and test strips.
And this, as you might guess, gives patients and their care providers more accurate data to measure and understand daily ebbs and flows in blood glucose levels.
In February, DexCom received Health Canada approval for its G6 CGM System. Dexcom announced that the Health Canada thumbs up for its next generation CGM system was for people with diabetes ages two years and up. It was previously introduced into the U.S, U.K., Ireland, and several other European countries and has seen strong sales so the G6 commercial launch in Canada, planned for late 2019, is much anticipated.
Analysts Hail the Innovation and the Growth
Here were analyst reactions to DexCom's Feb 21 report after the company offered 2019 revenue guidance of $1.175 billion to $1.225 billion, representing 19% growth over last year, and gross profit margin of approximately 65%...
Cowen & Co: Analyst Doug Schenkel raised his price target on DexCom to $175 from $150 following its "blowout" Q4 results. The analyst believes its guidance leaves plenty of room for top and bottom line upside, though he admits a new competitor product could provide headline risk. He views the shares as a long-term core holding. Schenkel reiterated his Outperform rating on DexCom shares.
Canaccord Genuity: Analyst Kyle Rose raised his price target on DexCom to $160 from $140 following its strong Q4 results. The analyst expects its exceptional growth to continue, supported by strong growth in sensor volumes, continued worldwide adoption of CGM, and the ongoing launch of G6, which is just now moving into additional territories and Medicare. Rose views DexCom as one of the best pure growth assets across the med-tech space.
Piper Jaffray: Analyst JP McKim told investors in a research note that he believes DexCom is positioning itself for the next $1B in sales to be "solid, profitable growth." The restructuring allows the company to scale quicker and at a lower cost over the longer term, McKim says. He reiterated an Overweight rating on DexCom with a $165 price target.
Oppenheimer analysts raised their 2019 sales estimate to $1.22 billion from $1.13 billion, with US growth in the mid-teens and elsewhere up ~30%. Their EPS projection rose to $0.59 from $0.25 on solid operating leverage and their price target goes to $167 from $150.
Leerink Swann analysts explained why DXCM could continue to commance a premium valuation. Their $170 price target applies a ~9.5X price-to-sales multiple to their $1.512 billion 2020 revenue estimate. DXCM shares currently trade at about 10X their $1.22 bilion 2019 sales estimate, which is a premium to comparable small-cap MedTech companies.
Bear of the Day:
comScoreis a Zacks Rank #5 (Strong Sell) and checks in with an F for the Value Style Score and a D for the Growth Style Score. The company posted a beat of the Zacks Consensus Estimate on February 28, but it is now the Bear of the Day. Let's take a look at why that is the case.
Description
comScore, Inc. is a global leader in measuring the digital world. This capability is based on a massive, global cross-section of more than two million consumers who have given comScore permission to confidentially capture their browsing and transaction behavior, including online and offline purchasing. comScore panelists also participate in survey research that captures and integrates their attitudes and intentions.
Through its proprietary technology, comScore measures what matters across a broad spectrum of behavior and attitudes. comScore analysts apply this deep knowledge of customers and competitors to help clients design powerful marketing strategies and tactics that deliver superior ROI. comScore services are used by global leaders such as AOL, Microsoft, Yahoo!, Verizon, Best Buy, The Newspaper Association of America, Tribune Interactive, ESPN, Fox Sports, Nestle, MBNA, Starcom USA, Universal McCann, the United States Postal Service, Merck and Expedia.
Recent Earnings
Although the chart show that SCOR beat earnings, I see other data that suggest that SCOR missed in a big way. I see a loss of $0.46 compared to an expected loss of $0.21 on the bottom line.
Revenue of $109M was good for 6% growth and topped the $104.8M estimate.
Prior to this report, Zacks shows that SCOR missed the prior three quarter with an average negative earnings surprise of 52%.
Estimates
The estimate data on the detailed estimate page is not fully functioning at the moment, but I do see that there were negative revisions over the last 30 and 60 days.
If you look at the agreement section, you can see there were negative earnings estimate revisions for this quarter, next quarter and for the full year.
Valuation
Without a positive earnings number, there is no PE, but I do see a 2.3x book multiple which is where value players should be happy. They tend to like a book multiple below 3x. A price to sales multiple of 3x is fairly rich considering the low growth profile.
Margins are negative, but they are moving in the right direction. That said, SCOR will likely not post positive earnings this year or next.
Why lululemon (LULU - Free Report) Looks Like a Buy Heading into Q4 Earnings
Lululemon shares popped over 3% Thursday heading into the release of its fourth quarter financial results, as part of its larger 2019 climb. The yoga apparel and athleisure giant’s bottom-line looks set to surge as it expands its menswear business, its global reach, and more.
Recent News
Barclays analysts earlier this week elaborated on why they are high on Lululemon as it tries to grab market share from Nike and Under Armour—which has struggled to roll out compelling athleisure offerings. The firm currently has an “overweight” rating on Lululemon stock and a $200 a share price target, which represents roughly 39% upside compared to LULU’s $144.35 a share closing price on Wednesday. Analyst Matthew McClintock said that Canadian company “has a significantly larger [total addressable market] than even the most optimistic estimates likely expect.”
“We continue to believe Lululemon’s [total addressable market] is ever-expanding as the company has entered into men’s in a meaningful way, has seen success in office, travel [and] commute offerings and continues to see a significant amount of opportunity in bras and outerwear.”
Company Overview
As the Barclays analyst mentioned, the firm has expanded far beyond its original women’s yoga apparel in recent years. Lululemon currently sells men’s and women’s jackets for as much as $600 as it tries to compete against other higher-end brands.
Lululemon now boasts a lineup of outwear, shoes, accessories, as well as more work-appropriate and fashion-focused offerings for both men and women—which will likely become a key growth area for LULU as companies around the country relax their dress codes. Earlier this month, Lululemon also signed NFL quarterback Nick Foles as its first men’s ambassador in an effort to attract consumers away from more traditional sportswear brands.
The company closed Q3 with 426 stores around the world. Investors should also note that LULU’s e-commerce comps surged 46%. Going forward, the company’s ability to expand its digital commerce business will likely become even more important in the internet-crazed retail age. This expansion includes the firm’s presence across social media outlets, where brands are now built from scratch and consumers shop directly.
Outlook & Earnings Trends
As we alluded to at the top, shares of Lululemon have jumped over 22% this year to outpace the S&P 500’s 13% climb, its industry’s 18% average, and Nike. LULU stock rested up 3.10% through mid-afternoon trading Thursday at $148.82 a share. This marked a roughly 10% downturn from its 52-week high of $164.79 a share, which gives the stock some room to run.
Before we look at what to expect from LULU’s Q4 financial results, it is worth noting that company management raised its quarterly guidance earlier this year on the back of strong holiday period sales. The Vancouver, Canada-based firm upped its guidance based on total comparable sales growth in the mid-to-high teens, up from high-single to low-double digits comps expansion.
With that said, Lululemon’s Q4 revenues are projected to jump 23.7% to reach $1.15 billion, based on our current Zacks Consensus Estimate. This would top Q3’s 21% top-line growth. Meanwhile, the firm’s full-year revenues are projected to surge roughly 26% from fiscal 2017’s $2.65 billion to reach $3.27 billion. Last year, total full-year revenue popped just 13%.
Moving on, Lululemon is projected to see its adjusted Q4 earnings soar 30.8% to touch $1.74 a share. Plus, the athletic apparel company’s full-year EPS figure is expected to surge 44.4% to reach $3.74 a share. We should also note that LULU has seen some positive earnings estimate revision activity recently.
Bottom Line
Lululemon is currently a Zacks Rank #2 (Buy) based, in part, on its recent earnings estimate revision activity. The company also boasts an “A” grade for Growth in our Style Scores system. And Lululemon executives have reaffirmed its goal to reach $4 billion in revenue by 2020, which includes hitting $1 billion in menswear sales.
LULU is scheduled to release its Q4 and full-year 2018 financial after the closing bell on Wednesday, March 27.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
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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.