For Immediate Release
Chicago, IL – November 18, 2019 – Zacks Equity Research Shares of Jazz Pharmaceuticals (JAZZ - Free Report) as the Bull of the Day, Canon (CAJ - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Advanced Energy Industries, Inc. (AEIS - Free Report) , Inphi Corp. (IPHI - Free Report) and Skyworks Solutions, Inc. (SWKS - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
The stock market is en fuego right now. It seems like every stock is breaking out to all-time highs. It’s times like this when investors can lose sight of what makes money over the long run. Stocks with the strongest earnings do the best over time. One way to find stocks with strong earnings trends is by leaning on the time-tested power of the Zacks Rank. Today’s Bull of the Day is one of those stocks.
I’m talking about Zacks Rank #1 (Strong Buy) Jazz Pharmaceuticals. Jazz Pharmaceuticals plc, a biopharmaceutical company, identifies, develops, and commercializes pharmaceutical products for various unmet medical needs in the United States, Europe, and internationally. The company has a portfolio of products and product candidates with a focus in the areas of sleep and hematology/oncology. Its lead marketed products include Xyrem, an oral solution for the treatment of cataplexy and excessive daytime sleepiness (EDS) in adult and pediatric patients with narcolepsy; Erwinaze to treat acute lymphoblastic leukemia; Defitelio for the treatment of adult and pediatric patients with hepatic veno-occlusive disease, a potentially life-threatening complication of hematopoietic stem cell transplantation; and Vyxeos liposome for injection, a product for the treatment of adults with newly-diagnosed therapy-related acute myeloid leukemia.
The reason for the favorable Zacks Rank lies in estimate revisions coming from analysts around Wall Street. Over the last thirty days, seven analysts have increased their estimates for the current quarter, while ten have done so for the current year. The bullish moves have pushed up the Zacks Consensus Estimates for the current quarter from $3.71 to $4.03 while current year consensus is up from $14.98 to $15.81.
Those estimates have helped spark a rally in Jazz Pharmaceuticals. The stock bottomed out under $120 in mid-October. Since then, shares have rallied dramatically with the stock closing all the way up at $138.64 on Friday November 15th.
Bear of the Day:
The top stocks are often found top industries. It makes sense because if the whole industry is doing well, individual companies are likely to experience the same tail winds as other companies within that industry. At the same time, stocks in industries which are struggling can face headwinds that make it very hard to consistently deliver profits. Today’s Bear of the Day is a stock that’s in a struggling industry.
Today’s Bear of the Day is Zacks Rank #4 (Sell) Canon. Canon Inc. manufactures and sells office multifunction devices (MFDs), plain paper copying machines, laser and inkjet printers, cameras, diagnostic equipment, and lithography equipment. The company operates through four segments: Office Business Unit, Imaging System Business Unit, Medical System Business Unit, and Industry and Others Business Unit.
Canon is in the Office Automation and Equipment industry that currently ranks in the Bottom 4% of our Zacks Industry Rank. The stock itself is a Zacks Rank #4 (Sell). The reason for the unfavorable rank stems from the series of negative estimate revisions coming from analysts. Over the last ninety days, two analysts have cut their earnings estimates for the current year and next year. The bearish moves have made a negative impact on our Zacks Consensus Estimates. The current year estimate has come down from $1.55 to $1.28 while next year’s number is off from $1.73 down to $1.64.
The negative estimates have made an impact on the stock price. Canon was trading near $40 in early 2018. That was before estimates started coming down. A quick look at the Price and Consensus Chart shows estimates going in a negative direction since then. It should come as no surprise that the stock has been tumbling since then. Lately, there’s been a bit of divergence. Over the last few months, CAJ has rallied from $25 to nearly $28. At the same time, estimates have continued to fall. That is troubling sign for long-term holders of the stock.
3 Semiconductor Stocks to Buy After Strong Earnings, Chip Growth
Stocks continue to shine in November on the back of stronger-than-projected quarterly earnings results, solid U.S. jobs data, another interest rate cut, and some U.S.-China trade war progress. In fact, the Dow, S&P 500, and Nasdaq all touched brand new highs once again Friday morning.
The semiconductor industry has been historically cyclical and recent runs of outsized success put some firms in hard-to-compare positions. Yet chip companies will remain a vital part of the ongoing technological revolution from cloud computing to artificial intelligence and integral for many of the biggest companies in the world.
With this in mind, we searched for semiconductor stocks utilizing our Zacks Stock Screener that investors might want to consider buying ahead of what could be a strong year for chip companies in 2020…
Advanced Energy Industries, Inc.
Advanced Energy’s power solution technologies are used within everything from data centers to semiconductor equipment. AEIS beat our Q3 earnings and revenue estimates on November 12 and is part of our Semiconductor Equipment - Wafer Fabrication industry, which rests in the top 2% of over 250 Zacks industries. CEO Yuval Wasserman said in prepared quarterly remarks that “demand for our products in the semi equipment market is improving on increased foundry/logic investments and the beginning of investment in memory.”
The Fort Collins, Colorado-headquartered firm officially completed its acquisition of Artesyn Embedded Power in September. AEIS shares have surged over 36% in the last three months and 50% in the past year as they try to fight back toward their Oct. 2017 highs. Our current Zacks Consensus Estimates call for its Q4 and Q1 2020 revenue to soar over 100%, boosted by its Artesyn purchase. Meanwhile, its fiscal 2020 sales are projected to surge 66% to $1.25 billion, with adjusted earnings expected to bounce back. AEIS is currently a Zacks Rank #1 (Strong Buy) based on its solid longer-term earnings estimate revisions and it has crushed our earnings estimates in the trailing three periods.
Inphi makes semiconductor components and optical subsystems for networking OEMs, cloud computing and telecom companies, and more. We could get more technical, but all most investors need to know is that IPHI helps “move big data fast, around the globe, with high quality and reliability.” Like AEIS, Inphi topped our Q3 estimates recently and also posted record revenue and EPS, on the back of cloud and telecom strength. Plus, the company announced on November 11 that it plans to buy eSilicon for $216 million in both cash and the assumption of debt.
Inphi’s full-year 2019 sales are projected to jump 23% to help lift adjusted fiscal year earnings by 84%. Then the company’s 2020 revenue is expected to pop another 21% higher, with its EPS set to climb an additional 30%. IPHI is a Zacks Rank #2 (Buy) right now that sports an “A” grade for Growth in our Style Scores system. And the Santa Clara, California-based firm’s stock price is up 24% since it posted earnings in late October and 92% over the last 52 weeks.
Skyworks Solutions, Inc.
Skyworks Solutions is an analog semiconductor firm that is set to benefit from the roll out of 5G, the proliferation of the Internet of Things, and more as part of the broader wireless networking revolution. In keeping up with today’s theme, Skyworks topped our Q4 fiscal 2019 earnings and revenue estimates earlier this week on November 12. Skyworks has since seen its longer-term consensus earnings estimates climb. SWKS is expected to see its adjusted full-year 2020 EPS figure pop 1.1%, while 2021 is projected to come in 17.6% higher.
Meanwhile, Skyworks’ full-year FY20 sales are projected to pop 1.8%, with 2021 expected to jump another 9.3% to $3.76 billion. SWKS shares have soared 30% in the last three month and 50% in 2019, yet they still have room to run before they reach their 2017 highs. On top of that, Skyworks pays an annualized dividend of $1.76 per share at the moment, for a yield of 1.78%, which roughly matches the 10-year U.S. Treasury. SWKS is part of our Semiconductors - Radio Frequency industry that is in the top 7% of our industries and it holds a #2 (Buy) along with “B” grades for Value and Momentum.
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