by Ian Harvey
IMPORTANT NOTE: There is no stop-loss or pre-determined sell price recommended – this is left to the discretion of the individual trader.
Option Trade - Activision Blizzard, Inc. (NASDAQ:ATVI) Calls
Friday, July 28, 2017
** OPTION TRADE: Buy the ATVI AUG 18 2017 65.000 CALL at approximately $1.00. Sell price is left to your own judgment.
Activision Blizzard, Inc. (NASDAQ:ATVI), a publisher of online, personal computer, console, handheld, mobile and tablet games, reports its second-quarter earnings results on August 3, after the market closes.
Wall Street brokerages expect Activision Blizzard, Inc (NASDAQ:ATVI) to announce EPS of $0.30 and revenues of $1.35 billion versus consensus of $1.22 billion. sales of $1.21 billion for the current quarter. Eight analysts have issued estimates for Activision Blizzard’s earnings, with the lowest sales estimate coming in at $1.17 billion and the highest estimate coming in at $1.23 billion. Activision Blizzard posted sales of $1.61 billion during the same quarter last year, which suggests a negative year over year growth rate of 24.8%. The business is expected to report its next earnings report after the market closes on Thursday, August 3rd.
On average, analysts expect that Activision Blizzard will report full-year sales of $1.21 billion for the current financial year, with estimates ranging from $6.38 billion to $6.88 billion. For the next year, analysts expect that the company will post sales of $7.18 billion per share, with estimates ranging from $6.84 billion to $7.49 billion.
Activision Blizzard established the Overwatch League to gain from e-sports.
The company sold the first seven teams, receiving about $140 million of unexpected revenue. It is estimated 21 more teams will be sold.
Therefore, Activision is likely to beat earnings in 2017.
The company is very likely to beat earnings. The main reason for this is the sale of seven Overwatch teams, which was not taken into account by the company when it provided the guidance during Q1 earnings call. Therefore, a buying opportunity has arisen.
As a result, it can be expected ATVI will transit towards business with more recurring revenue, making the company even more attractive.
However, the main takeaway from here is the fact that full-year revenues will get an unexpected boost from selling the teams. It is stated a fee for acquiring one franchise amounts to approximately $20 million. Therefore, seven teams that have been sold should provide about $140 million additional revenue for the company. Moreover, as 21 more teams are expected to be sold by the end of the year, revenues are likely to be much higher than it is currently expected.
It is worth noting the company has a sound history of beating estimates, as is evident from the last four quarters.
Already, the Blizzard side of the company is coming off a strong quarter in which monthly active users were up 58% year over year to 41 million, driven by the success of Overwatch , which grew its player base to 30 million. Blizzard revenue increased 50%, and operating income nearly doubled year over year, despite no new game releases.
Management cited other games as solid contributors as well, such as World of Warcraft and Hearthstone , the latter having 70 million registered players. But the main growth driver right now is Overwatch , which is building a lot of momentum as the company gets ready to launch a professional league based on the game.
In late May, Blizzard ran a promotion in celebration of Overwatch 's one-year anniversary that allowed gamers to download Overwatch and play for free until they reached a certain level. The anniversary event could have helped Overwatch continue its momentum in the second quarter.
To keep player engagement up, Activision just released Zombies Chronicles, one of its most significant content updates in the second year following a Call of Duty release, and Blizzard recently unloaded a smorgasbord of additional content across several of its titles as well.
Analysts and Hedge Funds Opinions
Piper Jaffray analyst Michael Olson is bullish on shares of Activision Blizzard. The analyst reiterates an Overweight rating on ATVI, while raising the price target to $65 (from $60), ahead of video gaming giant’s second quarter earnings on August 3.
Olson wrote, “We see potential for slight revenue and EPS upside, driven primarily by ongoing microtransactions for Overwatch offsetting a weaker sell through and DLC for Call of Duty: Infinite Warfare. We look for growth of digital revenue sources (both Overwatch and Call of Duty Black Ops III) to mitigate weaker sell-through of Call of Duty: Infinite Warfare and associated DLC. Activision’s June quarter NPD revenue was down 42% y/y (vs. our ex-King revenue estimate of -33%), but it’s worth noting that NPD has understated actual y/y growth by an average of 30ppts over the past two quarters due to a shift to digital sources, which NPD does not capture. Regarding FY17 guidance, we would expect a slight increase in the EPS outlook, potentially consistent with any Q2 EPS beat.”
Also, Activision Blizzard‘s stock had its “buy” rating reiterated by stock analysts at Jefferies Group LLC in a research note issued to investors on Thursday, July 13th. They presently have a $68.00 price objective on the stock. Jefferies Group LLC’s price target suggests a potential upside of 10.68% from the stock’s current price.
As well, Activision Blizzard‘s stock had its “overweight” rating reiterated by equities researchers at Morgan Stanley in a report issued on Saturday. They currently have a $67.00 price objective on the stock. Morgan Stanley’s target price points to a potential upside of 9.96% from the stocks previous close.
One research analyst has rated the stock with a sell rating, four have given a hold rating and twenty-two have issued a buy rating to the stock. The company currently has an average rating of “Buy” and a consensus target price of $64.38.
Shares of Activision Blizzard have climbed 59.4% so far in 2017, according to data from S&P Global Market Intelligence, following a pair of impressive quarterly reports from the video-game giant.
And Activision won't be hitting the brakes anytime soon. Management is pushing forward with in-game advertising on a broader basis. That's also not to mention the long-term promise of e-sports -- an industry with massive potential, considering hundreds of millions of people already watch e-sports and play Activision's enviable slate of games.
All things considered, it’s clear Activision is having a banner year. With no shortage of opportunities to extend its success, it's no surprise to see shares trading near all-time highs right now.
Activision Blizzard has a 50 day moving average of $59.49 and a 200-day moving average of $51.24. Activision Blizzard has a one year low of $35.12 and a one year high of $63.19. The stock has a market cap of $47.06 billion, a P/E ratio of 45.814 and a beta of 1.07.
Option Trade - First Solar, Inc. (NASDAQ:FSLR) Calls
Thursday, July 27, 2017
** OPTION TRADE: Buy the FSLR AUG 18 2017 47.500 CALL at approximately $1.70. Sell price is left to your own judgment.
Now that earnings season is upon us, the solar industry is displaying a bullish theme; and there is plenty of evidence mounting to show that solar stocks will crush expectations this earnings season.
Obviously, First Solar, Inc. (NASDAQ:FSLR), a provider of photovoltaic (PV) solar energy solutions, will benefit.
First Solar, Inc. will release earnings today; July 27th after the market closes.
Analysts predict that First Solar, Inc. will report earnings of ($0.01) per share for the current quarter. Seven analysts have made estimates for First Solar’s earnings; with the lowest EPS estimate coming in at ($0.31) and the highest estimate coming in at $0.04. First Solar reported earnings per share of $0.87 in the same quarter last year, which would suggest a negative year over year growth rate of 105.7%.
As well, analysts expect that First Solar will report full year earnings of $0.54 per share for the current year, with EPS estimates ranging from $0.46 to $0.59. For the next fiscal year, analysts expect that the business will report earnings of $0.95 per share, with EPS estimates ranging from $0.50 to $1.63.
However, it is likely that the analyst consensus is not incorporating a very material project sale, which is believed to be worth at least $0.70, while EPS consensus sits at -$0.01.
First Solar's stock has increased more than 50% since late April, when Suniva filed a Section 201 petition with the ITC.
The price increase since late April represents a $1.6 billion increase in equity market value.
And Axiom’s Gordon Johnson, who upped his rating on the company from a “Hold” to a “Buy,” and simultaneously raised his price target on FSLR stock to $51, certainly provides plenty of bullishness. He explained:
“Our checks suggest FSLR has delayed its transition to Series 6 technology, instead running its Series 4 production lines longer to accommodate Section 201-based demand (our contacts indicate FSLR is sold out through 3Q18)… With 7 BUYS & 13 HOLDS, we see sell-side sentiment as skewed too negatively (a number of upgrades could be on tap). Annualizing our 3Q17 EPS est. of c80 & applying a mid-cycle 16x P/E multiple, we derive a fwrd. 12-mo. PT of $51.”
There's a lot of evidence recently that
the second quarter -- and potentially third quarter -- of 2017 will see much
higher solar demand than anyone expected. China's policies have led to a surge
in installations, and the Suniva trade case making its way through the U.S.
government is causing developers to push up their own construction and
purchasing time lines.
This has two impacts on solar-panel
manufacturers. The first is that panel prices go up short term. There have been
reports that prices are up on the spot market -- and that would help all solar
manufacturers. Axiom's Gordon Johnson has also reported that he believes First
Solar is selling panels at $0.50 to $0.60 per watt, a notable jump from
commodity panels selling for $0.35 to $0.40 per watt at the end of 2016. Higher
prices would definitely lead to higher margins for those who have capacity
that's not already sold out.
Not only are panels being sold for more
than expected, but we'll probably see some manufacturers delay manufacturing
shutdowns and produce more panels in 2017 than they expected. First Solar and
SunPower are shutting down or upgrading their manufacturing lines, and anything
they can keep running to take advantage of the current pricing environment
would be a positive.
During the first quarter results, First Solar stated that it has about 1 gigawatt (GW) of solar project in late stage negotiations, which are likely to be confirmed in the second and third quarter. Expect the confirmation of these orders to get reflected in First Solar's soon-to-be reported second quarter results, which in turn will boost its top line.
Moreover, the company sold the Switch Station 1 and 2 solar projects to EDF Renewable Energy for an undisclosed amount. According to the company's previous announcement, this too could be accretive to the quarter under review.
Like other solar majors, SunPower Corp. SPWR , Renesola Ltd. SOL and Sunrun Inc. RUN , First Solar's top line is also expected to get a boost from the booming solar market across the globe. In particular, countries like China, Japan and India are investing heavily in solar projects, which have opened up multiple growth opportunities for the industry.
Analysts and Hedge Funds Opinions
The struggling solar industry may not quite be out of the woods just yet, but Wall Street analysts are growing increasingly bullish on industry leader First Solar, Inc.
Axiom's Gordon Johnson expects First Solar Q2 earnings to “dazzle.“We are hearing that First Solar is delaying the ramp up of its Series 6 technology, and instead focusing on ramping back up its Series 4 technology. Given that we believe First Solar is selling modules at $.50 to $.60, and we are hearing rumblings that they are sold out through third quarter of 2018, we believe the company is going to show potentially significant upside to consensus estimates, which have not changed dramatically,” Johnson said.
In Axiom’s note, Johnson highlighted how the delays in Series 6 technology helps First Solar accommodate Section 201-based demand. Ultimately, these factors helped lead to a $51 price target.
Also, “We see sell-side sentiment as skewed too negatively (a number of upgrades could be on tap),” Johnson wrote.
According to Johnson, since the market is in a bullish state, this could drive estimates on solar stocks even higher, particularly for First Solar, until a final decision is made.
Deutsche Bank analyst Vishal Shah reflects a similar sentiment….
"If you recall, we have been highlighting some of the recent developments around section 201 trade case as well as stronger S6 execution as the key drivers for near term positive share price performance," Shah wrote. Looking at Q2, he expects upside to current estimates and for First Solar's momentum to continue in the near term as he set a $47 price target.
On Tuesday, Bank of America and Cowen both released positive commentary on First Solar ahead of the company’s second-quarter earnings report expected on July 27.
According to Bank of America analyst Krish Sankar, First Solar is the best-positioned stock to capitalize in an uptick in U.S. solar demand in the second half of 2017.
“We continue to believe FSLR is positioned well (significant Series 4 inventory and Series 6 rolling out in CY18) and stands to benefit from an increase in module prices,” Sankar wrote.
First Solar is Bank of America’s only Buy-rated solar stock.
Cowen is also bullish on First Solar thanks to the potential of the Series 6 roll-out. Analyst Jeffrey Osborne said 2017 will be a transitional year for First Solar as it updates its product pipeline.
“We believe product cycles are imperative for the story to work, in particular the exciting S6 transition, which should lead to First Solar having a permanent cost advantage in both module and system cost versus Asian based peers,” Osborne wrote.
Bank of America has a $54 price target for First Solar, while Cowen has a $47 price target.
As well, BidaskClub raised First Solar from a “hold” rating to a “buy” rating in a research note on Wednesday, June 28th. Cowen and Company set a $40.00 target price on First Solar and gave the stock a “buy” rating in a research note on Monday, July 10th.
One analyst has rated the stock with a sell rating, twenty have issued a hold rating, seven have assigned a buy rating and two have given a strong buy rating to the stock. First Solar currently has an average rating of “Hold” and a consensus price target of $44.12.
Also, Metropolitan Life Insurance Co. NY increased its stake in First Solar by 84.7% during the first quarter, according to its most recent disclosure with the Securities and Exchange Commission. The institutional investor owned 72,656 shares of the solar cell manufacturer’s stock after buying an additional 33,328 shares during the period. Metropolitan Life Insurance Co. NY’s holdings in First Solar were worth $1,969,000 as of its most recent filing with the SEC.
By combining the increased prices and volumes there could be a huge earnings beats on the bottom line. And most analysts haven't increased expectations, so investors may still be surprised how good the results are.
First Solar, Inc. has a 12-month low of $25.56 and a 12-month high of $49.50. The firm’s market cap is $4.74 billion. The stock’s 50 day moving average price is $39.62 and its 200 day moving average price is $34.34.
Option Trade - AbbVie Inc (NYSE:ABBV) Puts
Wednesday, July 26, 2017
** OPTION TRADE: Buy the ABBV AUG 18 2017 70.000 PUT at approximately $0.55. Sell price is left to your own judgment.
AbbVie Inc (NYSE:ABBV),
a research-based biopharmaceutical company,
is scheduled to release second-quarter 2017 earnings, before the
opening bell on July 28. Wall Street analysts predict that AbbVie will announce
$1.40 earnings per share for the current fiscal quarter. Six analysts have
provided estimates for AbbVie’s earnings, with estimates ranging from $1.37 to
$1.42. AbbVie posted earnings of $1.26 per share during the same quarter last
Analysts expect that AbbVie will report full year
earnings of $5.52 per share for the current fiscal year, with EPS estimates
ranging from $5.47 to $5.57. For the next financial year, analysts anticipate
that the business will post earnings of $6.55 per share, with EPS estimates
ranging from $6.26 to $7.00.
Last quarter, the company delivered a positive surprise
of 1.59%. We note that AbbVie's earnings history is a mixed bag as the
pharmaceuticals company delivered positive surprises in the two of the last
four quarters but recorded in-line earnings in the other two. The average
earnings beat for the last four quarters is 1.65%.
Monday saw AbbVie Inc. being ordered to pay $150 million
to an Oregon man who accused the drugmaker of hiding the heart-attack risks of
its AndroGel testosterone booster, but the company’s first trial loss probably
won’t stand because jurors awarded no compensation for injuries.
At the first-quarter 2017 conference call, management
revealed that it expects second-quarter 2017 earnings in the range of
$1.39-$1.41 per share. Revenues are expected to grow between 7% and 8% on a
reported basis. Currency headwinds are expected to hurt revenues by 1%.
The company's key drug, Humira, is likely to remain the
main growth driver in the second quarter. Though Humira is doing well, the
company is concerned about the product's long-term prospects owing to the
potential biosimilar competition.
Another area of focus is the performance of Imbruvica,
added to AbbVie's portfolio following its May 2015 acquisition of
Pharmacyclics. The drug recorded strong sales since past few quarters; although
Imbruvica has huge commercial potential, investors should know that revenues
from it will be shared with Johnson & Johnson JNJ , which has a
collaboration agreement with Pharmacyclics.
Abbvie's Hepatitis C virus (HCV) treatment, Viekira, will continue to be adversely impacted by an intense pricing and competitive pressure in the HCV market.
Analysts and Hedge Funds Opinions
Vetr downgraded AbbVie from a “strong-buy” rating to a “buy” rating and set a $74.98 price objective for the company in a report on Thursday, May 4th.
Several other analysts have also recently commented on the company…..
Nine equities research analysts have rated the stock with
a hold rating, six have issued a buy rating and two have assigned a strong buy
rating to the company. The company has a consensus rating of “Buy” and a
consensus target price of $71.00.
Also, Oakwood Capital Management LLC CA cut its stake in shares of AbbVie by 0.6% during the first quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). The institutional investor owned 65,645 shares of the company’s stock after selling 380 shares during the period.
AbbVie Inc. has a 52-week low of $55.06 and a 52-week high of $75.04. The firm has a market capitalization of $115.83 billion, a P/E ratio of 18.86 and a beta of 1.51. The firm has a 50-day moving average price of $71.63 and a 200 day moving average price of $65.94.
Option Trade - Juniper Networks, Inc. (NYSE:JNPR) Calls
Tuesday, July 25, 2017
** OPTION TRADE: Buy the JNPR AUG 18 2017 30.000 CALL at approximately $0.80. Sell price is left to your own judgment.
Juniper Networks, Inc. (NYSE:JNPR), that designs, develops, and sells products and services for high-performance networks to enable customers to build networks for their businesses, is scheduled to announce its Q2 2017 results today, Tuesday, July 25, after the market closes.
In the last quarter, Juniper reported adjusted reported non-GAAP earnings (including share-based compensation and share-based payroll tax expense) of 34 cents per share, beating the Consensus Estimate by three cents.
As well, the company's revenues of $1.22
billion surpassed the Consensus Estimate and its own expectation of $1.20
billion (+/- $30 million). Revenues increased almost 11.2% on a year-over-year
basis, beating management's expectation of 9% increase.
Juniper anticipates revenues of
approximately $1.28 billion (+/- $30 million) for second-quarter 2017,
reflecting almost 5% growth. This falls within management's long-term revenue
growth expectation of 3-6%.
Non-GAAP gross margin is projected to be
around 62.5% (+/- 0.5%). The company expects non-GAAP operating expenses of
$500 million (+/- $5 million), and non-GAAP operating margin of almost 23.5%.
Non-GAAP earnings are expected to be 54 cents per share (+/- 3 cents).
Impressive first-quarter results and
positive second-quarter guidance have helped the company outperform the
industry on a year-to-date basis. While the industry lost 0.7%, the stock
returned 4.2% over the same time frame.
Over the last few quarters, the company has reported sustained growth in the services segment, with double digit growth in services revenues. Moreover, the services segment gross profit margin has improved consistently in the same period.
Juniper has seen growing demand and adoption of its Software Defined Secure networks (SDSN) platforms. The recent security enforcement, which enhances security across enterprise networks as well as public and private clouds, has made its SDSN platform even more lucrative.
In the second quarter, CloudSeeds selected Juniper's Contrail Networking software-defined networking (SDN) solution for its new Infrastructure as a Service (IaaS) data center solutions. Coloclue, an association of network specialists, adopted Juniper's NVF Solution for building a next generation production network. Most recently, i3D.net also selected Juniper's SDSN platform for network security.
Analysts and Hedge Funds Opinions
Raymond James Financial, Inc. upgraded shares of Juniper Networks from a market perform rating to an outperform rating in a research note released on Friday morning reports. They currently have $34.00 price objective on the network equipment provider’s stock.
Several other analysts have also recently commented on the company…..
Four analysts have rated the stock with a sell rating, twelve have given a hold rating, twelve have assigned a buy rating and one has issued a strong buy rating to the company. The company currently has a consensus rating of Hold and an average target price of $32.18.
As well, NN Investment Partners Holdings N.V. raised its stake in Juniper Networks by 47.3% during the second quarter, according to its most recent filing with the Securities and Exchange Commission. The fund owned 474,851 shares of the network equipment provider’s stock after buying an additional 152,412 shares during the period. NN Investment Partners Holdings N.V. owned 0.12% of Juniper Networks worth $13,239,000 at the end of the most recent reporting period.
The company's recent unveiling of Cloud-Grade Networking, which covers telemetry, automation and machine learning processes, will also boost its top line.
Juniper Networks has a market cap of $11.25 billion, a price-to-earnings ratio of 18.61 and a beta of 1.08. The stock’s 50 day moving average price is $28.85 and its 200 day moving average price is $28.52. Juniper Networks has a 52 week low of $22.12 and a 52 week high of $30.96.
Option Trade - Caterpillar Inc. (NYSE:CAT) Calls
Monday, July 17, 2017
** OPTION TRADE: Buy the CAT AUG 18 2017 110.000 CALL at approximately $1.30. Sell price is left to your own judgment.
Heavy machinery maker Caterpillar Inc. (NYSE:CAT), which manufactures construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives, will report its second-quarter results before the market open on July 25, with the consensus calling for earnings of $1.26 per share. During the same period last year the company had earnings of $1.09, and the stock has appreciated 12.4% year to date.
Caterpillar has been a solid performer over the last 18 months. The stock began to rise in early 2016 as the commodities market improved, and the recent strength can be attributed to President Trump’s desire to boost federal spending on infrastructure, as well as build a wall on the Mexican border. The company has also benefited from ongoing strength in the housing market.
Conditions remain in place to drive the stock moving forward, and despite trading near its 52-week high shares should trend higher if the quarterly numbers impress.
Analysts see earnings growth of 31.4% on average for the next five years, and 15.6% year over year for the most recent quarter. The market expects a strong beat, with a whisper number of $1.32 versus the consensus $1.26.
Caterpillar has posted better than expected profits the last four quarters, and has topped sales estimates three of the last four quarters, with big beats on the top and bottom line last quarter. Look for another good set of numbers, and the stock to build on its recent gains.
BMO Capital upgraded Caterpillar to "outperform" from "market perform" with a $125 price target based on earnings power that could propel the company's stock to a conceivable upside of $208 to $224, or roughly double its current stock price.
BMO said it thinks Caterpillar will lay out a five-year plan at an investor event in September detailing earnings that could approach BMO's $16 EPS forecast. Profit improvement will stem from three factors: cyclical recovery with potential company benefits, significant cost-cutting already underway and a new management team expected to focus on expanding profitability.
"We also see more runways for Caterpillar's cost-cutting initiatives of lowering headcount, improving sourcing and shuttering or consolidating more than 30 factories since initiating a large-scale restructuring plan in Q3 2015," BMO wrote.
Caterpillar Inc. seems to be poised to beat at earnings season. That is because Caterpillar is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings—with the most up-to-date information possible—is a pretty good indicator of some favorable trends underneath the surface for CAT in this report.
In fact, the most accurate estimate for the current quarter is currently at $1.29 per share for CAT, compared to a broader Consensus Estimate of $1.26 per share. This suggests that analysts have very recently bumped up their estimates for CAT, giving the stock an Earnings ESP of 2.38% heading into earnings season.
The operating conditions in China have improved over the last 12 months, with the only exclusion being May 2017. Manufacturing activity in China (FXI) expanded in June 2017 compared to its fall in May; which is good for CAT.
Analysts and Hedge Funds Opinions
Zacks Investment Research upgraded shares of Caterpillar from a “hold” rating to a “buy” rating and set a $121.00 price objective on the stock in a research report last Friday.
According to Zacks, “Caterpillar’s May sales rose 8%, an improvement from 1% growth witnessed in the last two months thanks to continual improvement in Asia Pacific. It remains to be seen whether this momentum will be sustained as even though commodity prices have improved lately, it is not sufficient to drive a relevant increase in short-term demand for new equipment. Caterpillar guides revenues in the range of $38–$41 billion and earnings of $3.75 per share for 2017, a 2% and 10% year–over-year growth, respectively. In construction, Asia Pacific is showing promise while leading indicators of U.S. construction signal robust conditions ahead. The company’s efforts to reduce costs will help boost margins. Year to date, the stock has outperformed the Zacks sub industry. Also, it has a positive record of earnings surprises.”
Also, Goldman Sachs Group Inc raised shares of Caterpillar from a “buy” rating to a “conviction-buy” rating and set a $120.00 target price for the company in a research note on Tuesday, April 4th.
Two equities research analysts have rated the stock with a sell rating, twelve have given a hold rating, eleven have issued a buy rating and one has assigned a strong buy rating to the stock. The company currently has an average rating of “Hold” and an average price target of $97.49.
Caterpillar Inc.’s market cap is $64.08
billion. The firm’s 50-day moving average is $104.38 and its 200 day moving
average is $97.66. Caterpillar Inc. has a 52-week low of $75.78 and a 52-week
high of $109.36.
Option Trade - Texas Instruments Incorporated (NASDAQ:TXN) Calls
Monday, July 17, 2017
** OPTION TRADE: Buy the TXN AUG 18 2017 82.500 CALL at approximately $1.30. Sell price is left to your own judgment.
NOTE: Back on June 16 I recommended 2 different options trades for TXN….. the first was not successful.
However, the second trade was given as an alternative – which is the same as above – except the buy-in price is now much cheaper. If you managed to execute this trade I would suggest you buy more options which will also reduce the cost previously paid.
Semiconductor stocks, of which Texas Instruments Incorporated (NASDAQ:TXN) is a part of, have been on a terrific ride driven by improving overseas demand and innovative technologies. New areas such as autonomous cars, cloud computing, gaming, wearables, VR headsets, drones, virtual reality devices, Internet of Things (IoT) and artificial intelligence are fueling growth in the sector, offsetting struggling traditional businesses like PCs and smartphones.
Texas Instruments is one of the world's leading designers and suppliers of digital signal processors and analog integrated circuits, and is slated to report second-quarter 2017 results after the market closes on Tuesday, July 25th. Analysts expect Texas Instruments to post earnings of $0.96 per share for the quarter. Texas Instruments has set its Q2 guidance at $0.89-1.01 EPS.
Texas Instruments' surprise history has
been quite impressive as the company beat estimates in each of the last four
quarters with an average positive surprise of 7.68%.
In the last one year, the stock has underperformed the industry it belongs to. It gained 24.8% compared with the industry's gain of 35.3%.
Internally, Texas Instruments has always executed rather well. It, along with chipmaker Intel (INTC), remains one of the few semiconductor companies that depend on internal capacity for manufacturing the bulk of its devices. Since the company usually builds out capacity well ahead of demand, it is able to make opportunistic purchases. As a result, it is able to contain capex at up to 4% of sales even while on an expansion plan.
Texas Instruments continues to prudently invest its R&D dollars into several high-margin, high-growth areas of the analog and embedded processing markets. This is gradually increasing its exposure to the industrial and automotive markets and increasing dollar content at customers, while reducing its exposure to volatile consumer/computing markets.
There are indications of strengthening auto and industrial markets, which are helping the company. The communications and enterprise systems market is stable. The personal electronics market remains weak.
Analysts and Hedge Funds Opinions
BMO Capital Markets reiterated a “buy” rating and set a $92.00 price target on shares of Texas Instruments in a research report on Monday, April 17th.
Several other analysts have also recently commented on the company…..
B. Riley reiterated a “neutral” rating and set a $83.00 price target on shares of Texas Instruments in a research report on Wednesday, April 26th.
Jefferies Group LLC lifted their price target on Texas Instruments from $88.00 to $94.00 and gave the company a “buy” rating in a research report on Friday, April 28th.
Vetr downgraded Texas Instruments from a “strong-buy” rating to a “buy” rating and set a $89.16 price target for the company. in a research report on Tuesday, April 18th.
Two equities research analysts have rated the stock with a sell rating, sixteen have issued a hold rating, twelve have issued a buy rating and one has given a strong buy rating to the company. The stock currently has a consensus rating of “Hold” and an average target price of $82.42.
There is plenty of optimism about TI's compelling product line, the differentiation in its business and lower-cost 300mm Analog output. Also, the channel inventories remain very low, meaning that demand is likely to remain strong.
The company has a market cap of $81.40 billion, a PE ratio of 21.74 and a beta of 1.20. The company’s 50-day moving average is $80.06 and its 200 day moving average is $78.92. Texas Instruments Incorporated has a 52-week low of $64.74 and a 52-week high of $84.65.