JetPay sold for $184 million

NCR Corp. to acquire JetPay for $5.05 per share

JetPay sold for $184 million, Stockwinners
JetPay sold for $184 million, Stockwinners

NCR Corporation (NCR) announced a definitive agreement to acquire Allentown, PA-based JetPay (JTPY).

The transaction will be a cash tender offer of $5.05 per JetPay share, which represents a multiple of 2.9 times 2018 consensus revenue forecast of $63.4 million.

The purchase price is approximately $184 million and will be financed with a combination of cash on hand and existing capacity under NCR’s revolving credit facility.

The offer has been approved by each company’s board of directors.

This acquisition will enable NCR to integrate a cloud-based payments platform into its enterprise point-of-sale solutions for retail and hospitality industries.

It also accelerates NCR’s strategy of increasing recurring revenue growth and expanding margins by enhancing its mix of software and services.

The transaction is anticipated to close by year-end, subject to regulatory approval and other customary closing conditions. The two companies anticipate a smooth transition for customers, channel partners and employees.

Two of JetPay’s major stockholders, Flexpoint Ford, a private equity investment firm that specializes in the financial services and healthcare industries, and Larry Stone, a longstanding executive in the payment processing industry, have agreed to tender their shares in support of the transaction.


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L3 Technologies and Harris to merge

Harris, L3 Technologies to combine in merger of equals

L3 Technologies and Harris to merge, Stockwinners
L3 Technologies and Harris to merge, Stockwinners
L3 Technologies and Harris to merge, Stockwinners
L3 Technologies and Harris to merge, Stockwinners

Harris Corporation (HRS) and L3 Technologies (LLL) have agreed to combine in an all stock merger of equals.

Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, L3 shareholders will receive a fixed exchange ratio of 1.30 shares of Harris common stock for each share of L3 common stock, consistent with the 60-trading day average exchange ratio of the two companies.

Upon completion of the merger, Harris shareholders will own approximately 54% and L3 shareholders will own approximately 46% of the combined company on a fully diluted basis.

The combined company, L3 Harris Technologies, will be the 6th largest defense company in the U.S. and a top 10 defense company globally, with approximately 48,000 employees and customers in over 100 countries.

For calendar year 2018, the combined company is expected to generate net revenue of approximately $16B, EBIT of $2.4B and free cash flow of $1.9B.

The combination is expected to generate approximately $500M of annual gross pre-tax cost synergies, or $300M net of savings returned to customers, in year 3.

The savings will come from reducing direct and indirect spend, rationalizing footprint, consolidating corporate and segment headquarters, establishing a common shared services platform for IT and finance and reducing other overhead costs.

The company is expected to invest approximately $450M cash to achieve the synergies over the next 3 years.

The combined company will target $3B in free cash flow by year 3, driven by organic growth, cost synergies, working capital improvements and capital expenditure efficiencies. L3 Harris Technologies will be well capitalized with a strong balance sheet and a leverage ratio of 2.2 times net debt to trailing twelve months EBITDA.

The combined company will remain committed to maintaining an investment grade credit rating and a dividend payout consistent with each company’s current practice and deploying excess cash toward share repurchases, including up to $2B in share repurchases in the 12 months post-closing.

L3 Harris Technologies will be headquartered in Melbourne, Florida.

The combined company’s Board of Directors will have 12 members, consisting of six directors from each company. William Brown will serve as chairman and CEO, and Christopher Kubasik will serve as vice chairman, president and COO for the first two years following the closing of the transaction. For the third year, Brown will transition to executive chairman and Kubasik to CEO, after which Kubasik will become chairman and CEO.

The merger is expected to close in mid-calendar year 2019, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by the shareholders of each company.


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Toyota enters self-driving car services

Toyota, SoftBank agree to form JV for self-driving car services

Toyota enters self-driving car services, Stockwinners
Toyota enters self-driving car services, Stockwinners

Shares of Toyota (TM) are in focus on Thursday after the company announced plans to team up with SoftBank (SFTBF) to develop self-driving car services.

The news follows an announcement from General Motors (GM) on Wednesday that Honda (HMC) will invest $2.75B and take a 5.7% stake in its Cruise self-driving vehicle unit, in which SoftBank is also an investor.

TOYOTA, SOFTBANK TO FORM JV

Toyota announced in a statement that it and SoftBank will form a joint venture called MONET, short for mobility network, to develop businesses that will use driverless-car technology to offer new services, such as mobile convenience stores and delivery vehicles in which food is prepared en route.

MONET will provide coordination between Toyota’s Mobility Services Platform, Toyota’s information infrastructure for connected vehicles, and SoftBank’s Internet of Things Platform, which was built to create new value from the collection and analysis of data acquired from smartphones and sensor devices, the companies said.

MONET will roll out an autonomous driving service using e-Palette, Toyota’s dedicated battery electric vehicle for mobility services, by the second half of the 2020s, Toyota and SoftBank added.

The venture will have initial capital of Y2B, and SoftBank will own just over half of the business, which will initially focus on Japan and eventually go global, according to a Reuters report.

Junichi Miyakawa, chief technology officer at SoftBank who will be CEO of the new company, commented that “SoftBank alone and automakers alone can’t do everything… We want to work to help people with limited access to transportation.”

WHAT’S NOTABLE

Earlier this year, Toyota set up a new company dedicated to the research and development of self-driving vehicles, with plans to invest $2.8 billion to develop a commercially viable autonomous car.

RECENT PARTNERSHIPS IN AUTONOMOUS VEHICLES

On Wednesday, Cruise and GM announced that they partnered with Honda to work towards large-scale deployment of autonomous vehicle technology.

Honda will work jointly with Cruise and General Motors to fund and develop a purpose-built autonomous vehicle for Cruise that can serve a wide variety of use cases and be manufactured at high volume for global deployment.

Honda will contribute approximately $2B over 12 years to these initiatives, which, together with a $750M equity investment in Cruise, brings its total commitment to the project to $2.75B.

SoftBank’s Vision Fund committed $2.3B to Cruise earlier this year.

Additionally, Renault (RNSDF)-Nissan (NSANY) and Daimler (DDAIF) are considering expanding their collaboration to battery and autonomous vehicle technology as well as mobility services, Reuters reported on Wednesday, citing comments made by the CEOs of both companies.

“The industry being in transformation in the area of connectivity, autonomous cars and connected services, there are plenty of areas of cooperation for our entities,” Renault Nissan CEO Carlos Ghosn said.


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Integrated Device Technology sold for $6.7 billion

Renesas acquires Integrated Device for $49 per share or $6.7B

 

Integrated Device Technology sold for $6.7 billion, Stockwinners
Integrated Device Technology sold for $6.7 billion, Stockwinners

Renesas Electronics (RNECY) and Integrated Device Technology (IDTI) announced they have signed a definitive agreement under which Renesas will acquire IDT for $49.00 per share in an all-cash transaction representing an equity value of approximately $6.7B.

The stock closed yesterday down 58c to $42.08. Closing of the transaction is expected to occur in the first half of 2019, following approvals by IDT shareholders and the relevant regulatory authorities.

Renesas anticipates near- and long-term revenue growth from “expanded opportunities and access to fast-growing industries, and cost savings from a greater scale business platform to bring innovation and improvements” with an expected financial impact of approximately over $250M.

The transaction is expected to be accretive to Renesas’ non-GAAP gross margin and non-GAAP earnings per share by approximately 1.6%pts and 18%, respectively, immediately after closing.

Renesas plans to finance the transaction with cash reserves and approximately 679B yen of bank loans. Renesas does not intend to raise equity financing for this transaction. T

he companies said, “The acquisition combines two recognized leaders in embedded processors and analog mixed-signal semiconductors, each with unique strengths in delivering products to improve performance and efficiency in high-computing electronic systems. The boards of directors of both companies have unanimously approved the transaction.”


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Engility Holdings sold for $2.5 billion

SAIC to acquire Engility in all-stock deal valued at $2.5B

Engility Holdings sold for $2.5 billion, Stockwinners
Engility Holdings sold for $2.5 billion, Stockwinners

SAIC (SAIC) and Engility Holdings (EGL) announced that they have entered into a definitive agreement under which SAIC will acquire Engility in an all-stock transaction valued at $2.5B, $2.25B net of the present value of tax assets, creating the second largest independent technology integrator in government services with $6.5B of pro-forma last 12 months’ revenue.

The combination of these two complementary businesses will accelerate SAIC’s growth strategy into key markets, enhance its competitive position and provide significant financial benefits.

The transaction will create market sub-segment scale in strategic business areas of national interest, such as defense, federal civilian agencies, intelligence, and space.

In addition, it expands the capabilities of both companies, bringing additional systems engineering, mission, and IT capabilities to a broader base of customers.

Under the terms of the merger agreement, Engility stockholders will receive a fixed exchange ratio of 0.450 shares of SAIC common stock for each share of Engility stock in an all-stock transaction.

Based on an SAIC per share closing price of $89.86 on September 7, 2018, the transaction is valued at $40.44 per share of Engility common stock or $2.5B in the aggregate, including the repayment of $900M in Engility’s debt.

SAIC has obtained a financing commitment letter from Citigroup Global Markets Inc. for a new seven-year senior secured $1.05B term loan facility under our existing credit agreement.

The proceeds will be used to repay Engility’s existing debt and associated fees. SAIC expects no immediate change to its quarterly cash dividend as a result of this transaction.

The transaction is expected to close by the end of the fiscal fourth quarter ending February 1, 2019, following customary closing conditions, including regulatory and SAIC and Engility shareholder approvals.

The transaction has been unanimously approved by both boards.

The businesses will continue to operate separately until the transaction closes. The combined company will retain the SAIC name and continue to be headquartered in Reston, Virginia.

Following closing, Tony Moraco will continue as CEO and as an SAIC board member. SAIC will expand its board to include two additional members from Engility’s board.


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Duo Security sold for $2.35B

Cisco confirms intent to acquire Duo Security for $2.35B

 

Duo Security sold for $2.35B, Stockwinners
Duo Security sold for $2.35B, Stockwinners

Cisco (CSCO) announced its intent to acquire privately-held Duo Security, headquartered in Ann Arbor, MI.

Duo Security’s solution verifies the identity of users and the health of their devices before granting them access to applications – helping prevent cybersecurity breaches.

Integration of Cisco’s network, device and cloud security platforms with Duo Security’s zero-trust authentication and access products will enable Cisco customers to easily and securely connect users to any application on any networked device.

Under the terms of the agreement, Cisco will pay $2.35 billion in cash and assumed equity awards for Duo Security’s outstanding shares, warrants and equity incentives on a fully-diluted basis.

The acquisition of Duo Security will: Extend intent-based networking into multi-cloud environments.

Cisco currently provides on-premises network access control via its Identity Services Engine product. Duo’s software as a service-based model will be integrated with Cisco ISE to extend ISE to provide cloud-delivered application access control. Simplify policy for cloud security.

By verifying user and device trust, Duo will add trusted identity awareness into Cisco’s Secure Internet Gateway, Cloud Access Security Broker, Enterprise Mobility Management, and several other cloud-delivered products.

Expands endpoint visibility coverage. Cisco’s in-depth visibility of over 180 million managed devices will be augmented by Duo’s broad visibility of mobile and unmanaged devices.

The acquisition is expected to close during the first quarter of Cisco’s fiscal year 2019, subject to customary closing conditions and required regulatory approvals.

Duo Security, which will continue to be led by CEO Dug Song, will join Cisco’s Networking and Security business led by EVP and GM David Goeckeler.

CSCO closed at $41.86.


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Shopify little changed after Q2 results

Analysts diverge on Shopify after quarterly results

Shopify little changed after Q2 results, Stockwinners
Shopify little changed after Q2 results, Stockwinners

Following the company’s second quarter results, Piper Jaffray analyst Michael Olson downgraded Shopify (SHOP) to Neutral saying the quarter was “not good enough” and the stock’s valuation fairly reflects current business trends.

Meanwhile, his peers at Baird and Canaccord both reiterated buy-equivalent ratings and raised their price targets on the shares following what they view as a “solid” quarter.

RESULTS

Shopify reported second quarter adjusted earnings per share of 2c and revenue of $245M, above consensus of (3c) and $234.64M, respectively.

GMV for the second quarter was $9.1B, an increase of 56% over the second quarter of 2017, and Gross Payments Volume, or “GPV,” grew to $3.6B.

The company said it sees third quarter revenues between $253M-$257M, third quarter GAAP operating loss in the range of $40M-$42M and adjusted operating loss in the range of $9M-$11M.

Additionally, Shopify said it expects FY18 revenues between $1.015B-$1.025B, FY18 GAAP operating loss in the range of $105M-$110M and adjusted operating profit in the range of $0-$5M.

PIPER MOVING TO THE SIDELINES

In a research note to investors, Piper Jaffray’s Olson downgraded Shopify to Neutral from Overweight and lowered his price target to $145 from $155 as he believes the stock’s current valuation adequately reflects the long-term growth story.

The analyst argued that the company’s second quarter was “good, but not good enough,” with monthly recurring revenue below investor expectations with a deceleration from 57% to 49% year-over-year growth between Q1 and Q2.

While Olson acknowledged that Shopify is performing well, the analyst told investors he believes this performance is mostly reflected in the shares’ valuation.

‘SOLID  QUARTER’

Still bullish on the name, Canaccord Genuity analyst David Hynes told investors to not let yesterday’s post-earnings selloff in shares of Shopify confuse them on the fundamentals.

The analyst believes this was another “solid” quarter for Shopify as the company grew its nearly $1B revenue run-rate at 62% in the quarter.

Further, Hynes pointed out that he does not believe Shopify’s growth is decelerating faster than expected or that merchant churn is “going to sneak up and bite” the company.

He continues to believe that Shopify is one of the best-positioned growth stories in application software, and is confident that this business will ultimately scale to material profits. Hynes reiterated a Buy rating on the shares, while raising his price target on the stock to $165 from $160.

Meanwhile, Baird analyst Colin Sebastian also raised his price target for Shopify to $165 from $150 and reiterated an Outperform rating on the shares. While acknowledging that slowing monthly recurring revenue growth, a new shelf filing and its third quarter loss guidance weighed on the shares, the analyst said that this was another “solid” quarter for the company.

Ramping Plus adoption, international expansion, and new Merchant Solutions features should continue to drive significant growth, he contended. Sebastian told investors that he continues to like Shopify based on the significant e-commerce growth opportunity and defensible market leadership position he sees being demonstrated in the second quarter results.

PRICE ACTION

In Wednesday morning trading, shares of Shopify were fractionally down to $137.60.


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Dropbox drops as Facebook mulls switch to Google

Dropbox drops as Facebook mulls switch to Google for cloud storage

Dropbox drops as Facebook mulls switch to Google, Stockwinners
Dropbox drops as Facebook mulls switch to Google, Stockwinners

Shares of Dropbox (DBX) fell in morning trading following a report that said Facebook (FB) is considering moving its cloud storage away from the file hosting service.

FACEBOOK CONSIDERING SWITCH

Facebook is considering switching to Google (GOOG, GOOGL) for email and productivity applications, The Information reported earlier, citing two people with knowledge of the discussions.

The move would be a setback for Microsoft (MSFT), whose applications Facebook currently uses. Facebook, which has about 27,000 employees, stopped using Google apps inside the company several years ago. Additionally, Facebook is also considering moving its cloud storage to Google from Dropbox, according to The Information.

WHAT’S NOTABLE

Last month, Dropbox announced a new chapter in the evolution of Magic Pocket, its custom-built storage infrastructure, saying it is deploying Shingled Magnetic Recording, or SMR, drive technology to increase overall storage density, reduce the company’s physical data center footprint and provide significant cost savings without sacrificing performance or reliability.

Dropbox said at the time that it expects to have a quarter of its Magic Pocket infrastructure on SMR drive capacity by 2019. In its debut earnings report, Dropbox reported revenue of $316.3M, up 28% from the year-ago period.

PRICE ACTION

Shares of Dropbox are down about 4% to $31.03 in morning trading following the report.


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Oracle lower after losing business to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft , Stockwinners
Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft ,

Shares of Oracle (ORCL) are sliding after JPMorgan analyst Mark Murphy downgraded the stock to Neutral, citing negative results from a survey of Chief Information Officers about their spending.

The analyst noted that the survey showed spending contraction ahead as Oracle’s databases are being unplugged in favor of Microsoft (MSFT) and Amazon (AMZN) databases.

SURVEY SAYS

In a research note this morning, JPMorgan’s Murphy downgraded Oracle to Neutral from Overweight as specific metrics in the firm’s large-scale CIO survey have arced over into negative territory.

The analyst told investors that while Oracle’s shares have risen from the $30s into the high $40s in the last 2 years, the company’s fundamental performance has remained inconsistent. Citing his survey of 154 CIOs, Murphy noted that Oracle received the largest number of indications for planned spending contraction this year, materially more than the second-worst company, which was IBM (IBM) with 25 indications of spending contraction.

Further, while ranking the top 8 or 9 mega-vendors in terms of who will be most critical and indispensable to CIOs’ IT environment in the future, Oracle only received 6.5% of votes, down from 11% in previous surveys, the analyst highlighted.

At the same time, Murphy pointed out that Amazon AWS improved from 9.5% of votes last year to 14.9% of votes this year, creating the appearance of a “sucking sound” out of Oracle and into AWS.

The company also ranked number 8 in terms of association with Digital Transformation projects, disappointing relative to its scale and lagging behind the likes of SAP (SAP), IBM, and Cisco (CSCO), he added, noting that despite Oracle’s efforts to build a Cloud presence, it rated no better than SAP in terms of association with Cloud Computing plans, and is nowhere close to the leaders Microsoft, Amazon, and Google (GOOGL; GOOG) in this respect. Oracle was mentioned by only 2% of the CIOs as the platform that will be “most integral” to their cloud computing plans, Murphy said.

Overall, the analyst questions where Oracle’s business and stock are heading in the next couple of years if the largest-scale CIO survey shows Oracle now has negative spending intentions, is lagging in Digital Transformation projects, is trailing in Cloud Computing plans, its databases are being unplugged in favor of Microsoft and Amazon databases, its applications are being unplugged in favor of Salesforce (CRM) and Workday (WDAY) applications, and customers are weary of its unpopular commercial tactics.

Murphy also lowered his price target on Oracle’s shares to $53 from $55.

WHAT’S NOTABLE

In a research note of his own, Nomura Instinet analyst Christopher Eberle lowered his price target for Oracle to $60 from $64 ahead of the company’s fourth quarter results on June 19.

The analyst trimmed his estimates to account for currency and expectations for more modest revenue acceleration in fiscal 2019. He remains optimistic, however, on Oracle’s transition and model growth reacceleration as the year progresses. Eberle reiterated a Buy rating on the shares.

PRICE ACTION

In Wednesday’s trading, shares of Oracle dropped almost 5% to $46.14.


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Rockwell Automation to make $1B investment in PTC

Rockwell Automation to make $1B equity investment in PTC

Rockwell Automation to make $1B equity investment in PTC, Stockwinners
Rockwell Automation to make $1B equity investment in PTC

PTC (PTC) and Rockwell Automation (ROK) announced that they have entered into a definitive agreement for a strategic partnership that is expected to accelerate growth for both companies and enable them to be the partner of choice for customers around the world who want to transform their physical operations with digital technology.

As part of the partnership, Rockwell Automation will make a $1B equity investment in PTC, and Rockwell Automation’s Chairman and CEO, Blake Moret, will join PTC’s board of directors effective with the closing of the equity transaction.

Under the terms of the agreement relating to the equity investment, Rockwell Automation will make a $1 billion equity investment in PTC by acquiring 10,582,010 newly issued shares at a price of $94.50, representing an approximate 8.4% ownership interest in PTC based on PTC’s current outstanding shares pro forma for the share issuance to Rockwell Automation.

The price per share represents an 8.6% premium to PTC’s closing stock price on June 8, 2018, the last trading day prior to today’s announcement.

Rockwell Automation intends to fund the investment through a combination of cash on hand and commercial paper borrowings.

Rockwell Automation will account for its ownership interest in PTC as an Available for Sale security, reported at fair value.

As separately announced today, Rockwell Automation is increasing its share repurchase target for fiscal year 2018 to $1.5 billion.

This represents a $300 million increase to its previous plans to repurchase $1.2 billion of its stock in fiscal year 2018.

The investment transaction is subject to customary closing conditions and regulatory approvals, and is expected to close within 60 days.

PTC Inc. develops and delivers software products and solutions worldwide.


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GE creates new company to develop unmanned traffic management

GE creates  AiRXOS to develop unmanned traffic management 

GE introduces new company AiRXOS, Stockwinners
GE introduces new company AiRXOS

GE (GE) introduced AiRXOS a new company helping to accelerate the safe, efficient, scalable integration of air and ground space for manned and unmanned vehicles.

AiRXOS helps government agencies, regional aviation authorities and private sector operators manage and meet the increasing demand for sophisticated and safe Unmanned Aircraft Systems operations. AiRXOS is a wholly-owned subsidiary of GE.

The Department of Transportation recently announced the UAS IPP to help government agencies, municipalities, regional aviation authorities and private sector operators manage and meet the increasing demand for sophisticated and safe UAS operations.

Of the ten pilot programs, AiRXOS was selected as a partner for three: The City of San Diego, the City of Memphis, and the Choctaw Nation of Oklahoma. AiRXOS will work with these program partners in safely demonstrating capabilities such as operations over urban settings, night operations, beyond visual line of sight, as well as developing overall UTM systems.

Drive Ohio’s UAS Center announced an investment of $5.9M for UTM research that will include both air and ground vehicles and will complement Drive Ohio’s current efforts for autonomous and connected vehicle testing along the U.S. 33 Smart Mobility Corridor. AiRXOS has been selected as a partner, along with Gryphon Sensors, CAL Analytics, and Ohio State University’s College of Engineering to implement a UTM solution for the U.S. 33 Smart Mobility Corridor. AiRXOS has also formed a collaboration with NUAIR Alliance for an unmanned testing and rating initiative that will combine NUAIR’s new National Unmanned Systems Testing and Rating capability with AiRXOS’ Autonomous Service Platform.

While NUSTAR will objectively measure UAS performance and test systems against industry consensus standards, AiRXOS will automate the processes used by commercial operators, pilots, organizations, and drone manufacturers to engage in commercial flight operations.

To support this effort, AiRXOS plans to open an office in the Syracuse, New York Tech Garden offices. To keep pace with innovation, NASA’s Technical Capability Level testing and the expansion of the Low Altitude Authorization and Notification Capability service program continue to move the industry forward.

AiRXOS is a TCL partner and has recently applied for a LAANC application in support of bringing a broad range of UAS operations safely to scale.

GE closed at $13.64.


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BAE Systems receives contract for submarines

BAE Systems receives contract for payload tubes for Virginia-class submarines 

BAE Systems receives contract for submarines, Stockwinners
BAE Systems receives contract for submarines

BAE Systems (BAESY) has received a contract to produce payload tubes for two of the U.S. Navy’s new Virginia-class submarines to support increased firepower on the Block V version of the attack subs.

Under the contract with General Dynamics Electric Boat, a builder of the Virginia class, BAE Systems will deliver two sets, each consisting of four tubes, for the Virginia Payload Modules on the SSN 804 and SSN 805.

The Virginia Payload Module extends the length of the Block V submarines over previous versions of the Virginia-class by adding an additional mid-body section to create more payload space for greater firepower.

Each large-diameter payload tube can store and launch up to seven Tomahawk cruise missiles.

The VPM offers exceptional flexibility as well for the integration of future payload types, such as unmanned systems or next-generation weapons.

BAE Systems, which is also providing payload tubes for the SSN 803 under a previously awarded VPM contract, has a long history of supporting the Navy’s submarine fleet as the leading provider of propulsors and other submarine systems.

The company was selected to provide propulsors, spare hardware, and tailcones for Block IV Virginia-class vessels and stands ready to provide the same support for the Block V subs.

Under this most recent contract, BAE Systems will also develop the processes and tooling necessary for the Block V payload tube production.

Work will be performed at the company’s facility in Louisville, Kentucky, with deliveries scheduled to begin in 2020.

BAESY last traded at $35.39


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Barron’s is bullish on Google

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy, stocks to watch, 

BULLISH   MENTIONS:

Alphabet a ‘bargain’ in big tech – Alphabet (GOOG; GOOGL) has the world’s dominant search engine in Google, as well as valuable businesses like YouTube, the Android cellphone operating system, and Waymo autonomous vehicles, but investor are not giving the company enough credit partly because of worries that it, like Facebook (FB), will soon face greater government regulation, Andrew Bary writes in this week’s edition of Barron’s. Alphabet trades for almost 25 times projected 2018 earnings, but its effective P/E is lower because of nearly $100B in net cash and losses in its “other bets” businesses, he adds.

AI done right may give managers ‘an edge.’  – BlackRock (BLK), Vanguard, Fidelity, and T. Rowe Price (TROW), among others, have all invested time and money setting up tech centers in major cities, apart from their headquarters, as they compete for cost savings, Crystal Kim writes in this week’s edition of Barron’s. Artificial Intelligence, done right, could also give portfolio managers an edge, and better serve investors with a wider array of financial planning tools, the report adds.

 IAC/InterActiveCorp sells at discount of assets value – Over the past two decades, Barry Diller’s IAC/InterActiveCorp (IAC) has generated a higher return than Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B), Jack Hough writes in this week’s edition of Barron’s. But the shares of IAC/InterActiveCop sell at a discount to the value of its assets, he notes.

Spotify stock could rise to five times sales. – Spotify Technology  (SPOT) made its market debut las week and while its stock price could remain volatile in the months ahead, shares could “reasonably” rise to five times sales, Avi Salzman writes in this week’s edition of Barron’s.

BEARISH  MENTIONS

Facebook bracing for Capitol Hill grilling – In a follow-up story, Barron’s notes that this week Facebook’s (FB) CEO Mark Zuckerberg will come to Washington to testify before an eager group of lawmakers. Congress has a chance to remind citizens of its watchdog role, the report noted, adding that while this week’s optics will no doubt be bad, the stock’s valuation already reflects much of the pain.

Smartphone growth sags as new models not compelling enough – People are holding onto their phones longer, on average, because what they are being offered in the new models just is not compelling enough, Tiernan Ray writes in this week’s edition of Barron’s. This does not bode well for traditional makers of chips for smartphones, including Skyworks (SWKS), Qorvo (QRVO), Qualcomm (QCOM), and Synaptics (SYNA), the report adds.


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Elliott Management discloses 10.3% stake in Commvault

Elliott says intends to nominate four candidates to Commvault board

Elliott says intends to nominate four candidates to Commvault board. Stockwinners
Elliott  to nominate four candidates to Commvault board. Stockwinners

Elliott Management Corporation, which manages funds that collectively own 10.3% of common stock and economic equivalents of Commvault Systems (CVLT), released a letter announcing its intention to nominate four candidates to the Commvault Board.

In addition, the letter outlined a path forward for Commvault to create significant shareholder value through fundamental improvements in the company’s execution, operations, capital allocation and governance.

Elliott stated in the letter that it is looking forward to constructive engagement with the company and optimistic about developing a mutually supported path forward. Elliott’s board nominees include Martha Bejar, Wendy Lane, John McCormack and Chuck Morgan.

PRICE  ACTION

CVLT stock was last up over 9.6% to $62.70. At that price next resistance is at $64.60, the 52-week high.


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Barron’s is bullish on Tesla, bearish on Deutsche Bank

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS:

Comcast a bargain despite risk – Comcast (CMCSA; CMCSK) has fallen from favor with investors following its the proposal to buy SKY (SKYAY) as they fear it will get into a bidding war with Fox (FOXA) and overpay for Sky, Andrew Bary writes in this week’s edition of Barron’s. Now the stock trades at a discount to rival Charter (CHTR) and yields 2.2%, he notes.

Investors may want to look at Microsoft to play tech-stock downdraft  – For the past two weeks, large-cap technology stocks have sold off on investor concerns following the data crisis at Facebook (FB), Bill Luby writes in this week’s edition of Barron’s. One collateral-damage victim has been Microsoft (MSFT), and it is “easy to argue” that the downturn in its shares is overdone, Luby contends, adding that the tech giant’s strong fundamentals, combined with good technical support for its shares just below their recent price, make the company’s stock a strong candidate for a rebound.

Oil refiners primed for profits – The outlook for companies that turn crude oil into gasoline has looked better and demand for refining is poised to grow faster than supply in the years ahead, leading to a surge in profits and share prices across the industry, Jack Hough writes in this week’s edition of Barron’s. Refiners include Andeavor (ANDV), Marathon Petroleum (MPC), Philips 66 (PSX) and Valero (VLO), the report notes.

New AI era for chip makers– Artificial intelligence is about to become a lot more pervasive as the computer circuitry to perform AI grows more prevalent, Tiernan Ray writes in this week’s edition of Barron’s. The desire to embed AI in just about anything has meant that more chip makers are racing to diffuse their designs for circuitry that processes the algorithms that drive the software, he note, adding that relevant companies spanning the semiconductor industry include Nvidia (NVDA), CEVA (CEVA), Synopsys (SNPS) and Cadence Design Systems (CDNS).

Tesla stock may rally later this year – In a follow-up article, Barron’s notes that investors have had fun following Tesla’s journey, reaping stock gains of 600% in the last five years, but some wonder if “the music is going to stop.” The key question is whether Tesla (TSLA) can raise enough cash to keep going, the report notes, arguing that Tesla should “live to fight another day” to produce cars, and may even start to turn a cash profit next year. Barron’s believes later this year, its shares will most likely rally as clouds lift.

BEARISH  MENTIONS:

New CEO may not save Deutsche Bank stock – News that Deutsche Bank (DB) Chairman Paul Achleitner has been looking for another CEO grabbed the financial industry’s attention, but just as it may be premature to organize farewell drink for current CEO John Cryan, it may also be too soon to turn bullish on the shares, Victor Reklaitis writes in this week’s edition of Barron’s. There are plenty of reasons to stay bearish on the stock and the latest escalation of tensions between Achleitner and Cryan is just “a piece of Deutsche Bank puzzle,” he adds.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.