“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, January 29, 2018

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 - Bristol-Myers Squibb Co. (NYSE:BMY) Calls

Friday, February 02, 2018

** OPTION TRADE: Buy the BMY FEB 16 2018 67.500 CALL at approximately $0.90.

Sell price is left to your own judgment.

Bristol-Myers Squibb Co. (NYSE:BMY), which is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products, is expected to beat expectations when it reports fourth-quarter 2017 results on Monday, February 05, before the market opens.

Bristol-Myers Squibb 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 BMY in this report.

Analysts have very recently bumped up their estimates for BMY, giving the stock an Earnings ESP of +0.90% heading into earnings season.

Jefferies Group analyst J. Holford anticipates that the biopharmaceutical company will post earnings of $3.12 per share for the year. Jefferies Group has a “Hold” rating and a $72.00 price target on the stock. Jefferies Group also issued estimates for Bristol-Myers Squibb’s FY2019 earnings at $3.76 EPS, FY2020 earnings at $4.30 EPS and FY2022 earnings at $5.69 EPS.

Bristol-Myers' shares have increased 30.1% in the past year while the industry recorded an increase of 26.6%.

Influencing Factors

Bristol-Myers' blockbuster immuno-oncology drug, Opdivo is expected to continue as the primary sales driver in the fourth quarter. The drug is already approved in multiple cancer indications. In the past two quarters, the drug received approval for five line extensions, which is expected to boost sales. Moreover, in December 2017, Opdivo's label was expanded as adjuvant therapy for completely resected melanoma.

Also, Bristol-Myers has secured a real lead in kidney cancer. The combination of Opdivo and Yervoy in September proved able to help kidney cancer patients survive longer. FDA approval is likely in the next few months. Bristol said Tuesday that the approval could add more than $1 billion in Opdivo sales.

Opdivo trial results are also forthcoming in newly diagnosed liver and gastric cancer. Bristol sees $1 billion-plus opportunities in both populations, and these are relatively less crowded treatment areas.

Bristol also got an unexpected boost later on Tuesday from its partner Nektar Therapeutics, which during its own conference showcase revealed promising data from a combination of its lead drug candidate with Opdivo. The smaller company’s shares soared 19 percent.

A lung-cancer success would be a boost for Bristol.

In January 2018, the European Commission approved the label expansion of Yervoy injection in pediatric patients 12 years of age and older with unresectable or metastatic melanoma. The FDA had approved the drug for this indication in July 2017. The Consensus Estimate for the drug's sales in the fourth quarter is $315 million.

In November 2017, Bristol-Myers announced that the FDA has approved line extension of Orencia in pediatric patients with Ph+ chronic myeloid leukemia in chronic phase. The label expansions (including psoriatic arthritis in July 2017) and new administration option approved in June 2017 is expected to fuel growth of the drug, which registered growth of 10% in the previous quarter. The Consensus Estimate for Orencia sales is $686 million.

The company is developing its key drug, Opdivo as monotherapy as well as combination therapy for several tumor types in multiple studies, with two label expansion applications under review in the United States.

Analysts and Hedge Funds Opinions

Deutsche Bank analyst, Gregg Gilbert, reiterated his Buy rating on shares of Bristol-Myers Squibb Co. and raised his price target to $60 from $56 after updating his model based on recent IMS trends and other developments, including tax reform. 

Several other analysts have also recently commented on the company…..

  • Barclays raised their target price on shares of Bristol-Myers Squibb from $58.00 to $65.00 and gave the company an “equal weight” rating in a research note on Friday, October 13th.
  • Jefferies Group cut shares of Bristol-Myers Squibb from a “buy” rating to a “hold” rating and set a $72.00 price objective for the company.
  • BMO Capital Markets set a $49.00 price objective on shares of Bristol-Myers Squibb and gave the stock a “sell” rating in a research report on Thursday, October 12th.
  • Citigroup set a $72.00 price objective on Bristol-Myers Squibb and gave the stock a “buy” rating in a report on Wednesday, October 25th.
  • Credit Suisse Group set a $62.00 price objective on Bristol-Myers Squibb and gave the stock a “hold” rating in a report on Monday, January 22nd.
  • Zacks Investment Research cut Bristol-Myers Squibb from a “hold” rating to a “sell” rating in a report on Tuesday, January 9th.
  • Finally, Leerink Swann lifted their target price on Bristol-Myers Squibb from $61.00 to $72.00 and gave the stock an “outperform” rating in a report on Monday, October 23rd.

Two equities research analysts have rated the stock with a sell rating, nine have assigned a hold rating and nine have assigned a buy rating to the company’s stock. The stock currently has an average rating of “Hold” and a consensus target price of $65.38.

Institutional investors that have recently made a change to their positions in the stock….

  • Vanguard Group Inc. grew its stake in shares of Bristol-Myers Squibb by 0.3% in the second quarter. Vanguard Group Inc. now owns 118,661,690 shares of the biopharmaceutical company’s stock valued at $6,611,829,000 after buying an additional 333,685 shares in the last quarter.
  •  BlackRock Inc. grew its stake in shares of Bristol-Myers Squibb by 2.4% in the second quarter. BlackRock Inc. now owns 99,454,602 shares of the biopharmaceutical company’s stock valued at $5,541,612,000 after buying an additional 2,367,864 shares in the last quarter.
  • Dodge & Cox grew its stake in shares of Bristol-Myers Squibb by 1.6% in the second quarter. Dodge & Cox now owns 29,579,461 shares of the biopharmaceutical company’s stock valued at $1,648,168,000 after buying an additional 459,271 shares in the last quarter.
  • Finally, Northern Trust Corp grew its stake in shares of Bristol-Myers Squibb by 3.9% in the second quarter. Northern Trust Corp now owns 24,041,862 shares of the biopharmaceutical company’s stock valued at $1,339,612,000 after buying an additional 910,496 shares in the last quarter.

 Insider News……

Director Theodore R. Samuels II bought 4,000 shares of the stock in a transaction on Friday, December 15th. The stock was purchased at an average price of $62.30 per share, with a total value of $249,200.00. Following the completion of the purchase, the director now owns 22,000 shares in the company, valued at $1,370,600.

Summary

Bristol-Myers Squibb has a market capitalization of $102,780.00, a P/E ratio of 24.72, a PEG ratio of 2.21 and a beta of 1.18. Bristol-Myers Squibb Co has a fifty-two week low of $48.32 and a fifty-two week high of $66.10. The company has a debt-to-equity ratio of 0.47, a quick ratio of 1.46 and a current ratio of 1.59.


Option Trade - Merck & Co., Inc. (NYSE:MRK) Calls

Thursday, February 01, 2018

** OPTION TRADE: Buy the MRK FEB 16 2018 60.000 CALL at approximately $0.95.

Sell price is left to your own judgment.

Headquartered in New Jersey, Merck & Co., Inc. (NYSE:MRK), one of the largest pharmaceutical companies by revenue, is expected to beat expectations when it reports fourth-quarter and full-year 2017 results tomorrow February 02, before the market opens. Wall Street analysts are estimating EPS (earnings per share) of $0.94 on revenues of $10.5 billion.

Merck’s revenues are estimated to increase 3.7% to $10.5 billion in 4Q17 compared to $10.1 billion in 4Q16. For 4Q17, the company is expected to report growth in operating revenues. A favorable impact of foreign exchange could contribute to growth in revenues for the quarter. Growth will most likely be driven by strong sales of Gardasil, Keytruda, and a few animal health products.

Last quarter, the company delivered a positive earnings surprise of 7.77%.

Merck’s performance has been pretty impressive, with the company exceeding earnings expectations in all the trailing four quarters. The average positive earnings surprise over the last four quarters is 7.76%.

Influencing Factors

Merck’s new products like Keytruda (cancer) and Bridion (sugammadex) Injection are likely to drive the top line this quarter.

Keytruda sales are being driven by the launch of new indications globally. Keytruda sales are gaining particularly from strong momentum in the first-line lung cancer indication as the therapy is the only anti-PD-1 approved in first-line setting.

The Keytruda development program also significantly advanced in 2017 with regulatory approvals for six new indications in the United States, four in Europe and three in Japan.

The approvals expanded the patient population, driving up sales in the third quarter. This momentum is likely to drive fourth-quarter as well as 2018 results.

Strong demand in most markets is driving sales of Bridion (sugammadex) Injection.

While continued pricing pressure is hurting sales of older products like Januvia, lower demand due to competitive pressure is dampening sales of Isentress. Importantly, on the Q3 call, the company had said that though pricing pressure will continue to hurt sales of Januvia/Janumet, volumes may improve in the future quarters, especially outside the United States.

The animal health franchise should also boost sales this quarter. Total revenues for the segment are expected to grow in 4Q17 from the inclusion of products acquired from Vallée SA and an increase in sales of companion animal products. Revenues could also have a favorable impact from foreign exchange.

Merck & Co. acquired Vallée SA, a Brazil-based company, in 1Q17. The acquisition added anti-infectives, parasiticides, and vaccines to Merck’s Animal Health portfolio.

Revenues for the Animal Health segment are expected to increase in 4Q17 due to increased sales of companion animal products such as Bravecto; increased sales of vaccines; increased sales of ruminants, swine, and poultry products; and the Vallée SA acquisition.

Analysts and Hedge Funds Opinions

Merck & Co. was upgraded by analysts at ValuEngine from a “hold” rating to a “buy” rating in a research report issued to clients and investors on Wednesday, January 10th.

As well, Merck & Co. had its price target upped by BMO Capital Markets from $68.00 to $72.00 in a research note published on Wednesday, January 17th. They currently have an outperform rating on the stock.

Several other analysts have also recently commented on the company…..

  • JPMorgan Chase & Co. set a $70.00 target price on shares of Merck & Co., Inc. and gave the stock a “buy” rating in a research note on Sunday, October 29th.
  • Berenberg Bank reaffirmed a “hold” rating on shares of Merck & Co., Inc. in a research note on Wednesday, November 1st.
  • Bank of America started coverage on shares of Merck & Co., Inc. in a research note on Tuesday, November 28th. They issued a “buy” rating and a $64.00 price target on the stock.
  • Finally, Sanford C. Bernstein reissued a “buy” rating and issued a $64.00 price target on shares of Merck & Co., Inc. in a research note on Wednesday, November 15th.

As of January 30, 2018, there are 23 analysts tracking Merck & Co. Fourteen of them recommend a “buy,” and nine recommend a “hold.” None of them recommend a “sell.” The consensus rating for Merck is 2.13, which represents a “buy” for both growth investors and value investors.

Institutional investors that have recently made a change to their positions in the stock….

  • Sound Shore Management Inc. CT grew its holdings in Merck & Co. by 6.7% in the third quarter. The institutional investor owned 3,351,152 shares of the company’s stock after buying an additional 211,247 shares during the quarter. Sound Shore Management Inc. CT owned 0.12% of Merck & Co., Inc. worth $214,574,000 at the end of the most recent quarter.
  • Honeywell International Inc. grew its holdings in shares of Merck & Co., Inc. by 18.8% in the 3rd quarter. Honeywell International Inc. now owns 633,700 shares of the company’s stock worth $40,576,000 after purchasing an additional 100,500 shares during the last quarter.
  • Deprince Race & Zollo Inc.’s holdings in Merck & Co., Inc. were worth $41,784,000 as of its most recent filing with the SEC.
  • Finally, Stifel Financial Corp grew its holdings in shares of Merck & Co., Inc. by 3.6% in the 2nd quarter. Stifel Financial Corp now owns 3,308,781 shares of the company’s stock worth $211,982,000 after purchasing an additional 116,491 shares during the last quarter.
Summary

Merck & Co., Inc. has a quick ratio of 1.16, a current ratio of 1.43 and a debt-to-equity ratio of 0.57. Merck & Co., Inc. has a 52 week low of $53.63 and a 52 week high of $66.80. The firm has a market cap of $169,024.08, a price-to-earnings ratio of 15.95, a P/E/G ratio of 3.09 and a beta of 0.76.


Option Trade - Cypress Semiconductor Corporation (NASDAQ:CY) Calls

Wednesday, January 31, 2018

** OPTION TRADE: Buy the CY MARCH 16 2018 17.000 CALL at approximately $1.05.

Sell price is left to your own judgment.

Cypress Semiconductor Corporation (NASDAQ:CY), a manufacturer of embedded system solutions for automotive, industrial, home automation and appliances, consumer electronics and medical products, will report earnings tomorrow, Thursday February 01, 2018, after the market closes. Wall Street expects Cypress to report $0.25 per share in earnings on revenue of $593 million for the quarter, a substantial improvement over the prior-year period's earnings of $0.15 per share and revenue of $530 million. These estimates are in line with the company's fourth-quarter guidance, though it won't be surprising if Cypress beats expectations because it had already booked 90% of its fourth-quarter revenue estimate less a month into the quarter.

In fact, Cypress' USB-C revenue had more than doubled from the second to the third quarter because of the iPhone production ramp.

On average, analysts expect that Cypress Semiconductor will report full-year earnings of $0.85 per share for the current fiscal year, with EPS estimates ranging from $0.84 to $0.88. For the next year, analysts expect that the company will report earnings of $1.18 per share, with EPS estimates ranging from $1.13 to $1.25.

Shares of Cypress Semiconductor gained 33.2% in 2017, according to data from S&P Global Market Intelligence , as the company enjoyed the fruits of recent acquisitions and successfully followed its "Cypress 3.0" strategy of targeting markets growing faster than the overall semiconductor market.

Most recently, Cypress stock resumed its upward march leading up to and following its equally impressive third-quarter results in late October. Revenue and adjusted earnings per share climbed more than 15% and 80%, respectively, including strength across all key markets and 80% growth in Internet of Things wireless connectivity revenue.

"Our customers are relying on us for more bill-of-material coverage," elaborated CEO Hassane El-Khoury, "with approximately 80% of our revenue generated by customers buying more than one product family across connectivity, microcontrollers and memory."

Influencing Factors

Cypress Semiconductor stock has entered 2018 on a high after soaring nicely last year. The chipmaker has wowed Wall Street by targeting fast-growing areas within the semiconductor space -- such as connected cars, connected homes, and factory automation -- as a part of its Cypress 3.0 strategy.

Cypress showcased significant year-over-year revenue gains from its 2016 acquisition of Broadcom's connectivity business, and strong new cost synergies realized from its acquisition of Spansion in early 2015. All the while, Cypress changed its corporate structure from four divisions to two -- a microcontroller and connectivity division (MCD) and a memory products division (MPD) -- to more effectively target the highest-growth verticals in the broader embedded semiconductor industry.

Cypress is following a strategy of attacking markets that are growing at a faster rate than the overall semiconductor industry. Automotive is one such area where Cypress sees a lot of potential because of the growing semiconductor content in cars.

In fact, Cypress' automotive business is currently bigger than NVIDIA’s, supplying 30% of its total revenue. The chipmaker looks set to increase its automotive revenue thanks to its smart-product development moves.

Cypress is going all-out after the automotive infotainment market, which is expected to double in the next five years, according to Markets and Markets. And its USB-C business will continue picking up pace as the technology gains widespread adoption in consumer devices like smartphones and laptops.

Analysts and Hedge Funds Opinions

Piper Jaffray Companies reissued their buy rating on shares of Cypress Semiconductor in a research report published on Monday. The firm currently has a $22.00 price target on the semiconductor company’s stock.

Several other analysts have also recently commented on the company…..

  • Mizuho reaffirmed a “buy” rating and issued a $20.00 target price (up previously from $18.00) on shares of Cypress Semiconductor in a research report on Friday, January 12th.
  • BidaskClub raised Cypress Semiconductor from a “buy” rating to a “strong-buy” rating in a research report on Saturday, January 6th.
  • Susquehanna Bancshares began coverage on shares of Cypress Semiconductor in a research report on Wednesday, December 13th. They set a positive rating and a $20.00 price target for the company.
  • Finally, Morgan Stanley reissued an “underweight” rating and set a $14.50 price target on shares of Cypress Semiconductor in a research report on Wednesday, December 13th.

Cypress Semiconductor has been given a consensus rating of “Buy” by the seventeen research firms that are presently covering the company. Two research analysts have rated the stock with a sell rating, three have given a hold rating, ten have given a buy rating and one has assigned a strong buy rating to the company. The average 1-year price objective among brokers that have covered the stock in the last year is $20.05.

Institutional investors that have recently made a change to their positions in the stock….

  • Rice Hall James & Associates LLC lifted its position in shares of Cypress by 12.7% in the fourth quarter. The fund owned 1,782,736 shares of the semiconductor company’s stock after acquiring an additional 200,199 shares during the quarter. Rice Hall James & Associates LLC owned approximately 0.53% of Cypress Semiconductor worth $27,169,000 at the end of the most recent reporting period.
  • Deroy & Devereaux Private Investment Counsel Inc. boosted its position in shares of Cypress Semiconductor by 15.8% during the third quarter. Deroy & Devereaux Private Investment Counsel Inc. now owns 1,543,264 shares of the semiconductor company’s stock worth $23,180,000 after buying an additional 210,992 shares during the period.
  • HAP Trading LLC acquired a new position in shares of Cypress Semiconductor during the third quarter worth about $5,386,000.
  • Westfield Capital Management Co. LP bought a new stake in Cypress Semiconductor during the third quarter worth about $53,009,000.
  • Finally, Phocas Financial Corp. raised its holdings in Cypress Semiconductor by 4.5% during the second quarter. Phocas Financial Corp. now owns 990,222 shares of the semiconductor company’s stock worth $13,517,000 after acquiring an additional 42,607 shares in the last quarter.

Summary

In all, Cypress seems to be in a strong position to grow its business both in the short and the long run, and a strong quarterly report should confirm the same.

Cypress Semiconductor has a market cap of $5,750.00, a price-to-earnings ratio of -43.10, a P/E/G ratio of 1.99 and a beta of 2.01. The company has a debt-to-equity ratio of 0.60, a quick ratio of 0.92 and a current ratio of 1.35. Cypress Semiconductor Co. has a twelve month low of $11.63 and a twelve month high of $17.90.


Option Trade - Eli Lilly and Co. (NYSE:LLY) Calls

Tuesday, January 30, 2018

** OPTION TRADE: Buy the LLY FEB 16 2018 90.000 CALL at approximately $0.85.

Sell price is left to your own judgment.

Drug manufacturer Eli Lilly and Co. (NYSE:LLY) will report earnings for the fiscal Quarter ending Dec 2017 tomorrow, January 31, before the market opens. Based on 8 analysts' forecasts, the consensus EPS forecast for the quarter is $1.08. The reported EPS for the same quarter last year was $0.95.

It is expected that Eli Lilly and Company LLY will beat expectations when it reports; last quarter, the company delivered a positive earnings surprise of 1.94%.

Lilly's shares have risen 16.6% in the past year while the industry recorded an increase of 29%.

Last week Eli Lilly received Food and Drug Administration approval for Elanco, its flea and tick treatment on dogs. Given the trend in pet spending, this should be seen as a positive development for Eli Lilly stock. Further, there was positive data found in a clinical 1b trial when combed Lilly's Cyramza with Oraxol, a treatment from Athenex Inc (NASDAQ: ATNX ).

There are some positive developments for LLY stock. Further, the company's fundamentals remain positive.

Influencing Factors

The company remains a leader in the diabetes market, with soaring sales for Trulicity and strong momentum for Forteo and Trajenta.

In addition, Lilly has claimed a spot in the lucrative but crowded autoimmune-disease market with Taltz. The drug, which won FDA approval in 2016 for treating plaque psoriasis and in late 2017 for treating psoriatic arthritis, ranks as Lilly's fastest-growing drug, with sales skyrocketing more than 580% year over year in the first three quarters of 2017.

Lilly CEO Dave Ricks stated at the recent J. P. Morgan Healthcare Conference that the company's "next chapter of growth" will be in treating pain. The drugmaker's pipeline includes three promising late-stage candidates targeting treatment of migraine -- galcanezumab, lasmiditan, and tanezumab. Potential FDA approval for galcanezumab could come later this year, and Lilly hopes to submit lasmiditan for approval in 2018 as well.

Like the previous couple of quarters, strong uptake of new products like Trulicity, Taltz, Basaglar, Cyramza, Jardiance and Lartruvo is likely to make up for the decline in sales of established products like Zyprexa, Alimta, Cialis, Strattera and Effient.

While Trulicity sales are likely to benefit from growth in GLP-1 and market share gains, Jardiance sales are expected to be driven by increased market share within the growing SGLT2 class.

Continued strong uptake outside the United States will continue to drive sales of Cyramza. Strong launch uptake is likely to drive sales of Basaglar, Taltz and Lartruvo. Also note that Taltz was approved for a new indication - active psoriatic arthritis (PsA) - in December 2017 - which can bring in some additional sales in the fourth quarter.

Another new drug, Olumiant (baricitinib) was launched in select European countries and in Japan last year while it is under review in the United States. In the third quarter, strong launch uptake in Germany led to better sales of the drug. This trend is likely to be reflected in the soon-to-be reported quarter's results. Lilly and partner Incyte Corporation plan to re-submit the new drug application (NDA) for Olumiant in United States sometime in the near future.

Some older products like Humalog, Trajenta and Forteo are also expected to do well.

Analysts and Hedge Funds Opinions

Eli Lilly was assigned a $100.00 price objective by investment analysts at Jefferies Group in a report issued on Tuesday, January 16th. The brokerage currently has a “buy” rating on the stock. Jefferies Group’s price objective suggests a potential upside of 17.04% from the company’s previous close. Jefferies Group also issued estimates for Eli Lilly’s FY2017 earnings at $4.25 EPS, FY2018 earnings at $4.68 EPS, FY2020 earnings at $5.84 EPS, FY2021 earnings at $6.75 EPS and FY2022 earnings at $7.42 EPS.

Several other analysts have also recently commented on the company…..

  • Argus upgraded Eli Lilly and from a “hold” rating to a “buy” rating and upped their target price for the company from $85.52 to $115.00 in a report on Friday, January 5th.
  • Credit Suisse Group downgraded Eli Lilly and from an “outperform” rating to a “neutral” rating and upped their target price for the company from $84.23 to $88.00 in a report on Tuesday, October 10th.
  • BMO Capital Markets set a $73.00 target price on Eli Lilly and and gave the company a “sell” rating in a report on Tuesday, December 12th.
  • Berenberg Bank restated a “buy” rating and set a $98.00 target price on shares of Eli Lilly and in a report on Thursday, October 26th.
  • Finally, Zacks Investment Research downgraded Eli Lilly and from a “buy” rating to a “hold” rating in a report on Monday, October 30th.

Four investment analysts have rated the stock with a sell rating, six have assigned a hold rating and nine have assigned a buy rating to the company. Eli Lilly and presently has an average rating of “Hold” and an average target price of $94.41.

Institutional investors that have recently made a change to their positions in the stock….

  • Janus Henderson Group PLC lifted its stake in Eli Lilly and by 7,093.5% during the second quarter. Janus Henderson Group PLC now owns 9,353,275 shares of the company’s stock worth $769,774,000 after purchasing an additional 9,223,251 shares during the last quarter.
  • Dodge & Cox lifted its stake in Eli Lilly and by 22,094.9% during the second quarter. Dodge & Cox now owns 5,991,952 shares of the company’s stock worth $493,138,000 after purchasing an additional 5,964,955 shares during the last quarter.
  • Renaissance Technologies LLC lifted its stake in Eli Lilly and by 91.1% during the second quarter. Renaissance Technologies LLC now owns 5,694,905 shares of the company’s stock worth $468,691,000 after purchasing an additional 2,714,505 shares during the last quarter.
  • Finally, Vanguard Group Inc. lifted its stake in Eli Lilly and by 2.3% during the second quarter. Vanguard Group Inc. now owns 70,207,891 shares of the company’s stock worth $5,778,109,000 after purchasing an additional 1,610,885 shares during the last quarter.

Summary

Lilly's has strong brand name and a 2.5% dividend yield. Furthermore, the company's operating cash flow and free-cash flow have been on the mend. After bottoming in 2016, both figures are rebounding higher in impressive fashion.

As well, small sales growth and double-digit earnings growth suggest margins will continue to head higher, another good sign for LLY.

Combined with a lower tax rate, the company's prospects look bright.

Eli Lilly and Co has a debt-to-equity ratio of 0.66, a quick ratio of 1.03 and a current ratio of 1.38. The company has a market capitalization of $95,800.00, a P/E ratio of 41.43, and a price-to-earnings-growth ratio of 1.69 and a beta of 0.35. Eli Lilly and Co has a twelve month low of $74.00 and a twelve month high of $89.09.


Option Trade - Advanced Micro Devices, Inc. (NASDAQ:AMD) Calls

Monday, January 29, 2018

** OPTION TRADE: Buy the AMD MARCH 16 2018 13.000 CALL at approximately $1.05.

Sell price is left to your own judgment.

Advanced Micro Devices, Inc. (NASDAQ:AMD), a global semiconductor company, will report earnings tomorrow, Tuesday, January 30, 2018, after the market closes. The consensus earnings estimate is $0.05 per share on revenue of $1.40 billion and the Earnings Whisper number is $0.06 per share. Consensus estimates are for year-over-year earnings growth of 350.00% with revenue increasing by 26.58%.

In third-quarter 2017, earnings of 10 cents per share and revenues of $1.64 billion beat the Consensus Estimate of 8 cents and $1.51 billion, respectively.

As well, revenues increased 26% year over year and 34% sequentially, driven by robust performance of the company's product portfolio comprising Ryzen, EPYC and Radeon Vega.

The company is expected to benefit from robust demand of graphic processor units (GPUs), product portfolio strength and expanding partner base.

AMD has faced some issues in recent years, but has managed to turn things around of late. The company's stock price currently stands at nearly 6 times its value from the beginning of 2016. AMD is now looking to challenge Intel with its new Ryzen and EPYC processors, and is on the cusp of taking advantage of its prowess in graphics technology by doing what Nvidia is doing for data centers.

Overall earnings estimates have been revised higher since the company's last earnings release.

Influencing Factors

Strong demand for GPUs in industries like gaming and blockchain is likely to drive the top-line growth. Growing adoption of Vega-based GPUs, Radeon E9170 Series GPUs and Polaris products is a key catalyst.

AMD's strong product portfolio is also a major growth driver. Solid demand for the expanded Ryzen processor family in the desktop market is a tailwind.

As well, the company's Ryzen PRO-based offerings have already been adopted by prominent commercial PC providers including Dell, Lenovo and HP. The availability of Ryzen Threadripper processors has enabled AMD to re-enter the high-end desktop market.

During the fourth quarter, the company launched Ryzen mobile processors. The company is working with Qualcomm to integrate its Snapdragon LTE modem solution in Ryzen mobile processors. The partnership will help AMD address the needs of high performance consumers as well as enterprise notebook platforms.

Also, strong adoption of EPYC server processors is a growth driver.

AMD is the No. 2 graphic processors behind data visualization giant Nvidia Corporation (NASDAQ: NVDA). While it has no real chance to catch up or surpass NVDA, it has a very strong position in the sector as the No. 2 player, with a good size moat around it.

And AMD is currently building discrete Radeon graphic cards for Intel core processors for Apple Inc.’s (NASDAQ: AAPL) iMac Pro.

Another interesting development will be the huge surge in cryptocurrencies. To mine these currencies takes huge processing power. And as the demand grows for these coins, so will equipment to mine them. And given the security vulnerabilities and speed challenges for Intel processors, it may give AMD a leg up in this market, since currency miners are very protective of their efforts.

Analysts and Hedge Funds Opinions

Vetr upgraded shares of Advanced Micro Devices from a hold rating to a buy rating in a research note released on Thursday. Vetr currently has $13.47 target price on the semiconductor manufacturer’s stock.

Several other analysts have also recently commented on the company…..

  • Jefferies Group reaffirmed a buy rating and set a $19.00 target price on shares of Advanced Micro Devices in a research report on Wednesday, October 25th.
  • Bank of America reaffirmed a buy rating on shares of Advanced Micro Devices in a research report on Sunday, October 1st.
  • Zacks Investment Research raised Advanced Micro Devices from a hold rating to a buy rating and set a $13.00 target price for the company in a research report on Friday, October 27th.
  • Finally, Mizuho reaffirmed a “buy” rating and set a $17.00 price target on shares of Advanced Micro Devices in a report on Tuesday, November 28th.

Four investment analysts have rated the stock with a sell rating, seventeen have assigned a hold rating and eleven have assigned a buy rating to the company’s stock. Advanced Micro Devices has an average rating of “Hold” and an average target price of $14.54.

Institutional investors that have recently made a change to their positions in the stock….

  • Gateway Investment Advisers LLC grew its stake in shares of Advanced Micro Devices by 32.5% during the fourth quarter. The fund owned 631,346 shares of the semiconductor manufacturer’s stock after acquiring an additional 154,756 shares during the quarter. Gateway Investment Advisers LLC owned about 0.07% of Advanced Micro Devices worth $6,490,000 as of its most recent SEC filing.
  • Vanguard Group Inc. raised its stake in Advanced Micro Devices by 6.6% during the 2nd quarter. Vanguard Group Inc. now owns 93,092,619 shares of the semiconductor manufacturer’s stock worth $1,161,796,000 after acquiring an additional 5,797,819 shares during the period.
  • CI Investments Inc. grew its holdings in Advanced Micro Devices by 312.3% during the 3rd quarter. CI Investments Inc. now owns 7,322,893 shares of the semiconductor manufacturer’s stock valued at $93,367,000 after buying an additional 5,546,993 shares in the last quarter.

Summary

It is expected that AMD's annual revenue to increase from $5.2 billion in 2017 (estimated) to $6.3 billion in 2019, implying a CAGR of 10%. In addition, expect EBITDA to grow from an estimated $0.43 billion in 2017 to nearly $1 billion in 2019.

The company will continue to benefit from a product line refresh including Ryzen and EPYC, strong growth in average processor pricing due to demand for high-end computing, as well as continued expansion in the embedded market.

Advanced Micro Devices has a market capitalization of $12,490.00, a price-to-earnings ratio of -161.88, a price-to-earnings-growth ratio of 6.47 and a beta of 2.47. The company has a quick ratio of 1.20, a current ratio of 1.70 and a debt-to-equity ratio of 2.61. Advanced Micro Devices, Inc. has a twelve month low of $9.70 and a twelve month high of $15.65.






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