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Rubicon, Rogers, Lam Research, Applied Materials and Intel as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – March 12, 2020 – Zacks Equity Research highlights The Rubicon Project (RUBI - Free Report) as the Bull of the Day and Rogers Corporation (ROG - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onLam Research Corp. (LRCX - Free Report) , Applied Materials, Inc. (AMAT - Free Report) and Intel (INTC - Free Report) .

Here is a synopsis of all four stocks:

Bull of the Day:                                              

The Rubicon Project is a Zacks Rank #1 (Strong Buy) that focuses on the buying and selling of advertising. The company’s cloud platform allows real time trading of digital advertising between buyers and sellers.

The stock had recently broken out to three-year highs after it had shown investors consecutive quarters of earnings beats, capped off by a blowout quarter back in February.

The recent sell off has squashed long-term holders’ dreams of a big run higher. After the stock was up almost 40% on the year, RUBI investors are now looking at an almost 20% loss!

The selling is related to Coronavirus and recession fears, but the big swing lower seems to be overdone. Long-term investors will likely benefit buying at current prices, while shorter-term traders can play for a bounce on any relief rally.

Q4 Earnings a Beat

On February 26th, Rubicon saw their seventh straight EPS beat. The earnings surprise was to the upside, with the company beating by 21% on the bottom line. In addition, RUBI saw revenues at $48.5 million vs the $41.1 million year over year. The company said its also on track to close the Telaria merger in April.

CEO Michael G. Barrett had comments on the merger:

We're excited about the go-to-market opportunity ahead of us when we close the pending merger with Telaria to better serve sellers and fill buyer demand in the growing area of CTV and web video. On a combined basis, CTV and web video will approach half of our total revenue”

The stock had a nice move higher in early February after the company guided FY19 revenue higher in late January. After RUBI reported EPS, the stock started selling, despite the beat. Then the market sell-off hit and things went south fast.

The Sell Off

You don’t often see a stock go from up 40% on the year to down 20% with no stock specific news. However, the recent market selloff is creating liquidity issues for investors. They are selling at any prices, which is forcing tremendous pressure lower on stocks. The fear of the Coronavirus and a potential recession is making the situation worse.

The Technical Take

There isn’t much to like on the technical front. The stock broke Fibonacci levels, the 50-day average and the 200-day. However, given the move lower, investors should watch that 200-day as a point of entry. If the bulls can get back above the moving average, currently at $8.60, they might get control of the stock back.

I would expect that $7 would also offer some support. The stock tested this level three times in the back half of 2019, with all three offering solid support.

Analyst Raising Estimates

The recent earnings have analysts excited about the stock, which are helping estimates higher. For the current year, estimates have gone from $0.11 to $0.21 over the last month, a 47% jump. In addition, the current quarter has also seen a 33% jump over the last month.

In Summary

The sell off since early February has been out of the control of RUBI and their investors. Outside forces have hammered the stock lower and now the RUBI is at buyable levels. While there is still a lot of fear in the marketplace at the moment, Rubicon is a stock that investors need to watch when the atmosphere turns.

Bear of the Day:

Rogers Corporation is a Zacks Rank #5 (Strong Sell) that is a global leader in engineered materials to power, protect and connect the world. The company delivers high-performance solutions that enable clean energy, internet connectivity, safety applications and other technologies.

Stock Off 50% Since May

Everything was going right for Rogers early last year. The momentum in the markets helped carry the stock over $200. However, a string of earnings that barely beat the bottom-line number helped bring in selling. The when the Coronavirus fears hit, Rogers exposure to the global economy helped the stock even lower, over 50% from highs.

Earnings Slowing

Early in 2019, Rogers was seeing earnings beats in the double digits. However, the last three quarters the company hasn’t been able to get much more than a 10% beat to the upside. While a beat is always better than a miss, the slowing of earnings growth has caused the stock to sell off after the big run.

Estimates Headed Lower

Perhaps the biggest issue with the stock is how drastic the analyst’s estimates are falling. Over the last month, Rogers has seen the current quarter’s estimates fall from $1.26 to $0.85, a 32% fall. Additionally, the current year has seen a 19% drop over the same time frame.   

If these numbers continue to fall, I would expect the stock to follow suit.

In Summary

Rogers has two things working against the stock bouncing back. First, we have earnings estimates falling across the all-time frames. Until these numbers improve, investors will be net sellers. Additionally, the Coronavirus is attacking global companies and their ability to business. If the virus continues to spread, Rogers stock will continue to fall.

Additional content:

3 Dividend-Paying Semiconductor Stocks to Buy Amid Coronavirus Volatility

Market volatility continues as the coronavirus spreads more quickly outside of China across the globe, including in the U.S. The Dow, the S&P 500, and the Nasdaq have all plummeted toward bear market territory, down nearly 20% from their recent highs.

Apple, Microsoft and other tech giants sent early warning signs to Wall Street about the impact the novel coronavirus might have due to the downturn in both supply and demand in China. Now, as the virus spreads, the impact could be worse. However, there are signs that things are starting to return to a state of normalcy in the world’s second-largest economy after weeks of containment efforts.

Meanwhile, Italy is on lockdown and U.S. states and cities are making efforts to curb the spread. Congress and the White House are taking steps to mitigate the economic impact in the U.S. Plus, the Fed has already cut its benchmark interest rate by half a percentage point and analysts expect to see another cut soon.

Amid all the uncertainty, the yield on the 10-year U.S. Treasury note earlier this week fell to an all-time intraday low of below 0.40% and it currently rest at around 0.77%—over 1% below where it began 2020 at 1.87%.

Given the ultra-low yields and the already beaten-down market, investors are likely still on the hunt for some solid stocks to buy or add to their watchlists. With this in mind, here are three highly-ranked semiconductor stocks that also pay a dividend that investors might want to consider at the moment…

Lam Research Corp.

Lam Research is a global supplier of wafer fabrication equipment and services for the semiconductor industry. The firm in late January topped our Q2 fiscal 2020 estimates. More recently, on March 3 LRCX released what it calls the most “innovative etch product that has been developed in the last 20 years.” The new Sense.i platform will help produce finer 3D details on chips amid ever more complex smartphones, devices, and more.

LRCX currently pays an annualized dividend of $4.60 a share, for a 1.65% yield. The company has also consistently raised its dividend, with its payout up 21% against 2018’s $3.80. Lam Research executives said at its recent investor day that the firm plans to return 75% to 100% of free cash flow in the near term to investors via buybacks and dividends.  

LRCX’s strong post-release earnings estimate revision activity—Q3’s consensus up 17% and fiscal 2020 up 12%—helps it earn a Zacks Rank #2 (Buy). Our current Zacks estimates call for Lam Research’s adjusted 2020 earnings to surge 15.6% and another 20% in fiscal 2021. LRCX’s revenue is set to jump 9.1%, with 2021 projected to come in 12.6% higher at $11.86 billion.

Lam Research’s Semiconductor Equipment - Wafer Fabrication industry currently rests in the top 5% of our more than 250 Zacks industries. LRCX also holds an overall “B” VGM score, due to its strong Value score—trading at a discount against its industry. Shares of Lam Research have fallen as part of the broader market selloff, down about 20% in the last month. Still, LRCX stock is up over 55% in that last year and 125% in the last three years to outpace its industry’s 67% average climb,

Applied Materials, Inc.

Applied Materials is a semiconductor equipment firm. AMAT is a leader in “materials engineering solutions” that are used to make “virtually every new chip and advanced display in the world” and management is confident it will thrive in the big-data and artificial intelligence age. Applied Materials in mid-February beat our Q1 2020 earnings and sales estimates, with quarterly revenue up 11% and adjusted earnings up 21%.

AMAT is currently trading at 12.8X forward 12-month earnings estimates, which marks a solid discount against its industry’s 17.7X average. The firm, which is part of the same strong industry as LRCX, pays an annualized dividend of $0.84 a share, for a yield of 1.59%. Applied Materials also returns value to shareholders via buybacks and its impressive earnings revisions activity helps it hold a Zacks Rank #1 (Strong Buy) right now.  

Peeking ahead, AMAT’s revenue is projected to surge 20% in fiscal 2020 and another 9.9% in 2021 to hit $19.24 billion. On the bottom-line, its adjusted FY20 EPS figure is projected to skyrocket over 36%, with 2021 expected to come in another 15.4% higher. And shares of Applied Materials are still up 35% in the last year despite its coronavirus-induced roughly 20% drop in the last serval weeks.

Intel

Intel is the largest semiconductor maker in the U.S. by revenue. The historic chip powerhouse topped our fourth quarter estimates in late January, driven by data-center and PC demand. INTC also upped its guidance and noted that it is set to benefit from the on-going expansion of the cloud computing market and more. “Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns,” CEO Bob Swan said in prepared remarks.

Our Zacks estimates call for Intel’s fiscal 2020 revenue to jump 2.2% to help lift its bottom-line by 2.5%. Then the company’s adjusted 2021 EPS figure is projected to pop another 2.1%, on 1.2% stronger sales. Like all of its peers on this list, Intel boasts strong post-release earnings revision activity. This positivity helps it earn a Zacks Rank #1 (Strong Buy), alongside its “B” grade for Growth in our Style Scores system.

On the payout front, Intel last quarter announced that it raised its annualized dividend by 5%. The firm’s new annualized dividend sits at $1.32 a share for a 2.50% yield. Meanwhile, INTC is trading at 10.7X forward 12-month earnings estimates. This marks a discount against its industry’s 14.3X average and its own three-year median of 12.1X.

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