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 - Xerox Corp (NYSE:XRX) Calls
Friday, January 12, 2018
** OPTION TRADE: Buy the XRX FEB 16 2018 33.000 CALL at approximately $0.66.
Sell price is left to your own judgment.
Xerox Corp
(NYSE:XRX) is reportedly in
talks to team up with Japanese camera maker Fujifilm Holdings. According to the
Wall Street Journal, the copy specialist is under pressure from Carl Icahn --
its largest stakeholder -- to modernize, with the activist investor warning in
an open letter to shareholders last December that XRX could end up like Eastman
Kodak. Icahn owns a stake of roughly 9.7 percent, according to Eikon data.
And while the two
companies have been in a joint photocopy venture for more than five decades,
speculation surrounding the latest deal includes rumors of new leadership at
Xerox.
The duo is
discussing an "array" of potential transactions, including a change of
control at Xerox. However one source told the newspaper a complete takeover was
off the table.
Fujifilm is a
natural partner, given that the two companies already operate together in Asia
and Australasia via a 75-25 joint venture called Fuji Xerox.
Fujifilm shares fell 1.5 percent by mid-morning in Tokyo on
Jan. 11, to 4,737 yen per share.
Fujifilm has a market value of nearly $19 billion, excluding
treasury stock, while Xerox is worth close to $8 billion. The two companies
have a Tokyo-based joint venture, Fuji Xerox, which is 75 percent owned by
Fujifilm.
Analysts and Hedge Funds Opinions
UBS restated a “hold” rating and issued a $34.50 price
objective on shares of Xerox in a research note on Tuesday, December 5th.
Several other analysts
have also recently commented on the company…..
Shares of Xerox Corp have received a consensus
recommendation of “Buy” from the twelve brokerages that are presently covering
the stock. Three analysts have rated the stock with a hold rating and eight
have assigned a buy rating to the company. The average price target among
brokers that have issued a report on the stock in the last year is $35.50.
Institutional
investors that have recently made a change to their positions in the stock….
Summary
The rumors are being well received on Wall Street, with XRX
stock up 4.5% to trade at $31.71 yesterday. Since skimming its most recent low
of $27.55 in mid-November, XRX stock has added 15%.
Analysts, meanwhile, expect the stock to surge to levels not
seen since early 2015, with the security's average 12-month price target docked
at $37.31 -- a 17.5% premium to Xerox stock's current price.
The shares have certainly been prone to big moves in recent
months, though, per XRX's 60-day historical volatility of 23.1% -- docked in
the 73rd annual percentile.
Xerox has consistently made bigger-than-expected moves over
the past year, relative to what the options market has expected.
Xerox has a current ratio of 1.63, a quick ratio of 1.33 and a debt-to-equity ratio of 0.97. Xerox has a 12-month low of $25.84 and a 12-month high of $37.08. The company has a market cap of $7,548.48, a P/E ratio of 8.82 and a beta of 1.12.
Option Trade - Delta Air Lines, Inc. (NYSE:DAL) Calls
Wednesday, January 10, 2018
** OPTION TRADE: Buy the DAL FEB 16 2018 57.500 CALL at approximately $0.65.
Sell price is left to your own judgment.
Airline stocks are
likely to report better-than-expected earnings per share in the fourth quarter
of 2017.
The overall
sentiment pertaining to airlines is quite positive ahead of the earnings
season. This is because airline stocks seem to be back in favor after
struggling for most of 2017 due to multiple headwinds like the back-to-back
hurricanes and unit revenue issues, among others.
The fourth-quarter earnings season will
be kicked off by Delta Air Lines, Inc.
(NYSE:DAL).
The GOP's tax-cut package, ticket prices
and, naturally, those targets seem likely to be focal points for investors. On
Tuesday, Bank of America Merrill Lynch said the tax cuts are likely to boost
business travel, helping Delta, United Airlines (UAL) and American Airlines
(AAL).
As for Q4 itself, Wall Street expects
Delta to report earnings per share of 90 cents, up 10%, on revenue of $10.16
billion, a 7% increase. That top-line gain would mark the biggest increase
since Q3 2014. The Earnings Whisper number is $0.95 per share.
Delta last week said it expected a
roughly 4% increase in passenger unit revenue during the quarter, which would
be its best showing all year in the key metric. The company expects adjusted
operating margin of around 11%.
After United flat-out terrified
investors in October following a murky 2018 financial forecast and shares of
American and others retreated on a mixture of worries about too much expansion
and rising costs, Delta has remained "the
go-to legacy airline," Morgan Stanley analyst Rajeev Lalwani said in a
research note last week.
He cited the carrier's 2018 profit and
the cost targets it outlined last month at its investor day — EPS of
$5.30-$5.70 and unit cost growth of flat to up 2% along with the potential lift
from the GOP's tax reform — as reasons to like the airline.
Influencing Factors
Any brighter outlook from Delta, however, would follow a fourth quarter in which the carrier had to cancel some 1,400 flights following an outage at its Atlanta hub, denting its pretax income by an amount expected to be somewhere between $25 million and $50 million. The company will take a one-time charge of $150 million to $200 million from the tax cuts, which have had the effect of lowering the value of some assets on large corporations' books.
Still, the carrier said it expected to see positive unit revenue in all its markets globally, after discounting from low-cost, long-haul European carriers, a stronger dollar and economic difficulties weighed on those results in years past.
Delta also has tried to broaden its international coverage through joint ventures. It agreed to form one last month with Canada's WestJet — and management could offer more details on that front.
Moreover, Delta has been the "most rational" in competing with ultra-low-cost carriers, JPMorgan's investment thesis on the company says. Dirt-cheap fares from Spirit Airlines and others have, at times, tempted the bigger carriers into matching them on price, whittling away profits and aggravating investors.
"Delta is often cited as the peer leader in terms of capital allocation and execution, and we believe investors will continue to take notice," JPMorgan analyst Jamie Baker wrote.
Tax reform is a factor that could boost Delta Air Lines stock this year. At its investor day last month, the company disclosed that a reduction in the statutory corporate tax rate from 35% to 20% would boost its estimated 2018 EPS by $1.00-$1.25. The statutory rate has been set at 21%, so Delta will get most of that projected savings.
In addition, the tax reform bill creates incentive for capital spending by allowing companies to fully write off capital expenditures for the next five years. That's great timing for Delta, which is in the early innings of a major fleet renewal project.
As a result, Delta probably won't owe any cash taxes until 2020, a year later than previously expected. Even then, its cash tax rate will probably be just 12%-15%. Delta should have more cash freed up to spend on dividends and share buybacks in the next few years.
Analysts and Hedge Funds Opinions
J.P. Morgan analyst Jamie Baker said in November, Delta will likely beat all major U.S. airlines in unit revenue growth in 2018.
J.P. Morgan has an "outperform" rating and $68 price target for DAL stock.
Vetr upgraded shares of Delta Air Lines from a strong
sell rating to a sell rating in a research note published on Wednesday. They
currently have $49.97 price objective on the transportation company’s stock.
Several other analysts have also recently commented on the company…..
Two analysts have rated the stock with a
sell rating, one has assigned a hold rating, sixteen have assigned a buy rating
and one has given a strong buy rating to the stock. Delta Air Lines currently
has a consensus rating of Buy and a consensus price target of $68.12.
Institutional investors that have recently made a change to their positions in the stock….
DAL shares are currently trading just shy of their all-time high, and with a P/E of just 11.2, there appears to be plenty of value left in the stock. The recent tax law changes could lead to more discretionary income in the pockets of Americans, which could be used on more travel, so Wall Street remains very bullish on the company.
Delta Air Lines, Inc. has a 52 week low of
$43.81 and a 52 week high of $56.84. The company has a quick ratio of 0.36, a
current ratio of 0.43 and a debt-to-equity ratio of 0.54. The firm has a market
capitalization of $39,910.00, a price-to-earnings ratio of 11.22, and a
price-to-earnings-growth ratio of 1.78 and a beta of 1.30.
Option Trade - Comcast Corporation (NASDAQ:CMCSA) Calls
Wednesday, January 10, 2018
** OPTION TRADE: Buy the CMCSA FEB 16 2018 42.500 CALL at approximately $0.70.
Sell price is left to your own judgment.
Headquartered in Philadelphia, PA, Comcast Corporation (NASDAQ:CMCSA), a
media and technology company, is expected to report earnings on Wednesday,
January 24, 2018 before the market opens. The report will be for the fiscal
Quarter ending Dec 2017. Based on 17 analysts' forecasts, the consensus EPS
forecast for the quarter is $0.48. The reported EPS for the same quarter last
year was $0.44.
Comcast Corporation has been trading in
a bullish manner, based on the relative positions of the stock’s 20 and 200 day
moving averages. In the last month, the price of CMCSA has increased +6.84%.
Comcast stock is supported by pretty
great numbers. Net income for the trailing twelve months was almost $10
billion. This comes off of fiscal year 2016's $8.7 billion. Cash flow is what
cable is all about and Comcast stock has terrific cash flow. Operating cash flow
rose from $16.9 billion in FY14, to $18.8 billion in FY15, to $19.2 billion in
FY16. That's tremendous!
Free cash flow has been pretty stable at
$9.5 billion. As operating cash flow increased, so did capital expenditure
(capex).
CMCSA stock is also reasonably valued, trading
at 8.8 time enterprise value to EBITDA.
Influencing Factors
Things changed in the past 20 years, as cable distributors went after content providers, such as when Comcast bought NBC-Universal. That has helped Comcast stock become more diversified.
Its cable network subsidiary owns a bunch of solid, if unspectacular, channels including USA, MSNBC, E!, Syfy, CNBC, Bravo, NBC Sports, Golf Channel, Oxygen, Sprout, Esquire, Chiller, CNBC World, Universal HD and Cloo.
The cable network subsidiary generates about 14% of revenues and about one-sixth of all operating income.
The broadcast TV subsidiary has NBC and Spanish-language Telemundo, which brings in about 13% of revenues and just about 7% of operating income.
Comcast, because of the Universal and Dreamworks Animation purchases, also has a substantial studio business. As big as these operations are, particularly Universal, they offer about 9% of revenues, and 4% of operating income.
Comcast stock traditionally has been a solid grower, with adjusted EPS growing 7% last year and forecast to grow an impressive 18% this year.
The Comcast business also has a reasonable amount of diversification, with roughly 30% of profit coming from outside the communications business.
The NBCUniversal entertainment unit might seem at risk in a media landscape increasingly dominated by streaming services like Netflix, Inc. (NASDAQ:NFLX), Hulu, and Amazon.com, Inc. (NASDAQ:AMZN). But it, too, is growing, with revenue excluding the impact of the Olympics up a solid 12.5% through the first three quarters of 2017.
Analysts and Hedge Funds Opinions
Comcast had its target price hoisted by equities researchers at Morgan Stanley from $44.00 to $50.00 in a research note issued on Tuesday. The brokerage presently has an “outperform” rating on the cable giant’s stock. Morgan Stanley’s price objective would suggest a potential upside of 22.40% from the stock’s current price.
Also on Tuesday, Comcast had its
price target raised by analysts at Evercore ISI from $44.00 to $48.00. They now
have an "outperform" rating on the stock. 18.6% upside from the
current price of $40.48.
Several other analysts have also recently commented on the company…..
One analyst has rated the stock with a sell rating, two have given a hold rating and twenty-seven have given a buy rating to the company. The stock presently has a consensus rating of “Buy” and a consensus target price of $46.15.
Institutional investors that have recently made a change to their positions in the stock….
Summary
Comcast has a twelve month low of $34.78 and a twelve month high of $42.18. The firm has a market cap of $191,110.00, a price-to-earnings ratio of 19.27, a P/E/G ratio of 1.85 and a beta of 1.00. The company has a debt-to-equity ratio of 1.06, a quick ratio of 0.74 and a current ratio of 0.74.
Option Trade - Advanced Micro Devices, Inc. (NASDAQ:AMD) Calls
Tuesday, January 09, 2018
** OPTION TRADE: Buy the AMD FEB 16 2018 13.000 CALL at approximately $0.60.
Sell price is left to your own judgment.
Advanced
Micro Devices, Inc. (NASDAQ:AMD), a global
semiconductor company, has undergone a
dramatic transformation over the past couple of years. It has repositioned
itself as a true leader of the design and computing world. That tactic has
certainly reaped major dividends for investors.
And now, investors are piling into AMD
shares and selling Intel stock after major chip security vulnerabilities were
revealed earlier last week, and it totally makes sense.
Enterprises will likely diversify their
chip security architecture risk for mission-critical applications by buying
more AMD server chips. The company's "architecture differences" have
proven immune to the more problematic one of the two disclosed vulnerabilities.
On-top-of-this, there is a slate of new
products that began rolling out in early 2017; Advanced Micro Devices is more
competitive today than it's been in years. Its Ryzen chips compete with Intel
(NASDAQ: INTC) in the PC CPU market, its Vega GPUs go head-to-head with NVIDIA
(NASDAQ: NVDA), and its EPYC server CPUs are in the early stages of clawing
back market share.
AMD announced a slew of product updates
on Monday. The Ryzen family will expand in February with desktop chips
featuring integrated graphics, followed by the launch of second-generation
Ryzen chips in April. On the graphics front, mobile gamers will have Vega as a
discrete graphics option in 2018. It's shaping up to be an eventful year for
the perennial underdog.
Influencing Factors
The launch of Ryzen Mobile late last year expanded Ryzen into the laptop market, providing a Ryzen CPU paired with Vega graphics. The missing piece has been desktop chips with built-in graphics. That will change in February when AMD fills in this gap in its lineup.
The first Ryzen APUs, featuring Vega graphics, are expected to be available on Feb. 12. The name of the game here is "good enough" gaming.
Following this launch, AMD plans to refresh its Ryzen lineup with the Zen+ architecture during the second quarter. Zen+ will be built on a 12nm process, compared to the 14nm process employed for the current batch of Ryzen chips. Zen+ is a revision, not a major architectural revamp, so performance improvements won't be earth-shattering.
Big changes will come with the launch of the Zen 2 architecture, probably sometime in 2019. The Zen 2 design is already complete, and AMD promises improvements "in multiple dimensions."
AMD is also expanding its addressable market when it comes to graphics. The company launched its discrete desktop Vega GPUs in August, its re-entry into the high-end graphics card market.
All of these new products are being announced against the backdrop of the ongoing CPU security bug saga.
Analysts and Hedge Funds Opinions
Multiple Wall Street analysts predicted AMD will take advantage of the Intel's security issues.
AMD could use it as "a marketing edge given differing architectures and no vulnerability yet," Mizuho Securities analyst Vijay Rakesh wrote in a note to clients Wednesday.
Intel's high-profit data-center business, which sells server chips to cloud computing providers and enterprises, is the chipmaker's crown jewel.
Rakesh noted that Intel had 99 percent market share of the data-center market, representing a huge opportunity for AMD.
"Longer-term customers could be more motivated to find alternatives at AMD and possibly ARM (CAVM benefits) to diversify the architectural risks," Bank of America Merrill Lynch analyst Vivek Arya wrote Thursday. "AMD appears poised to be the most direct beneficiary."
Any increase will be a boon for AMD because the Wall Street consensus for the company's 2017 estimated sales is just $5.25 billion.
One leading tech industry analyst says the chipmaker will do just that.
"The news of Intel's processor security issue and the potential performance degradation to correct it comes at an inopportune time as Intel currently faces heavy competitive pressure from its long-time nemesis, AMD," Fred Hickey, editor of High Tech Strategist, wrote in an email Thursday. "AMD's new line of chips is a significant challenger for the first time in many years (since AMD's Opteron chip days)."
AMD launched new line Epyc data-center processors to much fanfare last June with design wins at cloud computing providers Microsoft Azure and Baidu.
"For
Intel, it likely means loss of market share (lower revenues) as well as loss of
pricing power (lower gross margins) as the advantage shifts to the buyers and
away from Intel, which has totally dominated the PC/computer server processor
market in recent years," Hickey said. "AMD's new processor chips already had
momentum and that momentum will likely be propelled further by the recent
security issue disclosures."
Several other analysts have also recently commented on the company…..
Four equities research analysts have rated the stock with a sell rating, seventeen have issued a hold rating, ten have assigned a buy rating and one has given a strong buy rating to the company’s stock. Advanced Micro Devices has an average rating of “Hold” and a consensus price target of $17.73.
Institutional investors that have recently made a change to their positions in the stock….
Summary
AMD has a big year ahead of it as it expands its portfolio of products and competes more broadly with both Intel and NVIDIA.
After years of losses, Advanced Micro is looking to turn a profit in 2017. While analysts forecast just 13 cents per share in earnings for fiscal year 2017, that’s up almost 200% year-over-year. They further expect 177% growth in 2018. Revenue growth of 23% in 2017 is forecast to slow to just 12.3% in 2018.
The positive here is that profitability is expanding much faster than revenue, meaning margins are moving in the right direction. If AMD can turn cash flow positive, shares can really start to gain some upside momentum. That should be the case as revenues churn higher and profitability explodes.
Advanced Micro Devices, Inc. has a 12-month low of $9.42 and a 12-month high of $15.65. The company has a quick ratio of 1.20, a current ratio of 1.70 and a debt-to-equity ratio of 2.61. The company has a market cap of $11,230.00, a P/E ratio of -148.50, a price-to-earnings-growth ratio of 6.93 and a beta of 2.47.
Option Trade - Vuzix Corporation (NASDAQ:VUZI) Calls
Monday, January 08, 2018
** OPTION TRADE: Buy the VUZI FEB 16 2018 7.500 CALL at approximately $0.80.
Sell price is left to your own judgment.
Vuzix
Corporation (NASDAQ:VUZI) has
a long-standing presence as a wearables maker in the enterprise technology
market, working with companies such as DHL, Airbus and Bosch.
Vuzix has a prime
focus on developing wearable displays with AR for the enterprise workforce.
Along those lines, the company is working on internal products like the M300
smart glasses and the Vuzix Blade while working with partners such as Toshiba
(OTCPK:TOSBF) to produce customized solutions.
On Friday this
stock began its’ upwards trajectory with a lot more to come!
The path to success
in bleeding edge technologies such as augmented reality (AR) remains difficult
no matter the size of the company. Microsoft (MSFT) has struggled getting
HoloLens off the ground and private Magic Leap (MLEAP) finally announced a
product that Business Insider seems less than impressed about despite long
hyped technology.
This brings the
story back to Vuzix Corp. that sits at the intersection of hype and investor
questions but has the potential to solve these debates with a strong 2018 based
on partnerships and new smart glasses.
The Vuzix Blade smart glasses will be the first powered by Amazon's Alexa, as unveiled at CES 2018 in Las Vegas.Vuzix will unveil a set of smart glasses powered by Alexa this week, as Amazon's smart assistant continues to pose a threat to leading platforms from Apple and Google.
The $1,000 glasses are aimed at a "prosumer" market, such as golfers or business customers, the company said, but will eventually come down in price and incorporate new features.
Voice assistants are key on smaller devices, such as glasses, where swiping is impractical. And Amazon has found a way to tap that market through small companies like Vuzix, which has a market capitalization of just about $186 million.
Vuzix's is one of many augmented-reality products expected out of CES, a consumer electronics trade show taking place in Las Vegas next week.
Augmented reality is a technology that projects computerized images onto a live video image from the real world, while its cousin virtual reality completely embeds the user in a 360-degree computer-generated world.
Depending on their
quality, availability and price, these AR products could haunt Apple, which has
planned its own smart speaker and is reportedly working on augmented reality
glasses. But with Siri's HomePod debut delayed, Alexa seems to be stepping into
the augmented reality market.
Influencing Factors
CEO Paul Travers said he's bullish enough on the impact of new augmented reality technologies that he plans to take Vuzix glasses to consumer markets early in the second quarter of this year.
"Our opinion is that if you make something that solves a problem, there's a market for it," he said.
He said that from the early 2000s, clients had requested "Oakley-style" smart glasses, but until recently, it was difficult to package fast processing power into a small hardware package like glasses frames. But coming technologies, particularly 5G internet connectivity and faster processors, will allow more communication between the "edge" of the device and the cloud, enabling advanced technologies such as artificial intelligence to appear on small, thin screens.
The Toshiba deal, as mentioned earlier, is a prime focus of the 2018 opportunity with the company signing a purchase commitment of at least $5 million with Vuzix. The company only produced $1.4 million in sales for Q3, so the size of this deal alone is very material to how Vuzix performs this year.
On top of that, the smart glasses supplier recently completed a six figure deal with a top-5 biopharma company and falls on top of the 350 pilot programs and proof of concepts in the sales pipeline for the M300 smart glasses.
Vuzix keeps moving forward with developing new smart glasses. The Blade smart glasses utilize waveguide optics technology to provide the first AR wearable that looks and feels like actual sunglasses. The Blade won four CES Innovations awards and will be featured at the upcoming CES show this month. TechCrunch suggests that AR technology will get a big push at CES 2018.
The current analyst forecast is for nearly 400% revenue growth in 2018. Even hitting the Q4 revenue target of about $2.4 million would be a huge step in the right direction. The company would nearly double Q3 revenues of $1.4 million.
The market thought Q3 was going to be the break out quarter and that didn't happen due to supposed production issues on the M300 smart glasses. All the pieces exist for hitting the Q4 and 2018 targets.
Analysts and Hedge Funds Opinions
Vuzix was upgraded by Zacks Investment Research from a “sell” rating to a “hold” rating in a research note issued on Tuesday, December 19th.
According to Zacks, “Vuzix Corporation designs, manufactures, and sells display devices that are worn like eyeglasses and feature built-in video screens that enable the user to view video and digital content, such as movies, computer data, the Internet or video games. It produces both monocular and binocular Video Eyewear devices. The Company focuses on consumer markets for gaming and mobile video and on rugged mobile displays for defence and industrial applications. Vuzix Corporation is based in Rochester, New York. “
Separately, Maxim Group restated a “buy” rating and issued an $11.00 target price on shares of Vuzix in a report on Wednesday, September 6th.
Also, Chardan Capital set a $10.00 price objective on Vuzix and gave the company a “buy” rating in a research note on Tuesday, December 26th.
Institutional investors that have recently made a change to their positions in the stock….
Insider News……
Most key insiders including the CEO, CFO, COO, and a Director have recently purchased shares in the open market.
The amounts purchased are not massive, but rather a solid signal of faith in the prospects of the smart glasses in production and development.
Summary
The $1,000 glasses are aimed at a "prosumer" market, such as golfers or business customers, the company said, but will eventually come down in price and incorporate new features.
Vuzix has a long-standing presence as a wearables maker in the enterprise technology market but is now looking toward consumers.
Vuzix's is one of many augmented-reality products expected out of CES, a consumer electronics trade show taking place in Las Vegas this week.
Vuzix has all the pieces in place for a solid 2018.
The company remains on the path towards an inevitable inflection point that will reward investors.
Vuzix Co. has a market capitalization of
$156.54, a price-to-earnings ratio of -6.95 and a beta of 1.16. Vuzix Co. has a
52 week low of $4.10 and a 52 week high of $7.80.