Tiffany seen as a take-over target

Tiffany seen as possible target for big European luxury player

Tiffany seen as a take over target. Stockwinners.com
Tiffany seen as a take over target

Shares of Tiffany (TIF) are on the rise after Citi analyst Paul #Lejuez upgraded the stock to Buy, citing currency tailwinds, tax reform and the increasing probability the jewelry retailer becomes a takeover target of an European luxury conglomerate.

BUY TIFFANY

In a research note to investors, Citi’s Lejuez upgraded Tiffany to Buy from Neutral and raised his price target on the shares to $115 from $92.

The third quarter brought several positive inflection points, he contended, noting that it was the first quarter in several years that the company saw strength in both the fashion category and the high/fine/solitaire category at the same time.

Further, Lejuez argued that the shares look attractive as currency tailwinds and tax reform should benefit the company’s earnings.

The analyst also told investors that he sees increasing probability that the jewelry retailer will become a target of an European luxury conglomerate, making Tiffany’s risk/reward that much more favorable.

Management seems to understand the challenges and opportunities and they are not sitting still, he pointed out, making the analyst more optimistic that the changes he has seen thus far have Tiffany on a better path for success.

WHAT’S NOTABLE

Earlier in the month, KeyBanc analyst Edward #Yruma also upgraded Tiffany to Overweight from Sector Weight, with a $115 price target, saying he believes the positive 1% Americas comparable sales growth in the third quarter points to the early stages of a more broad-based sales recovery.

Recent strength in silver jewelry is now being augmented by early signs of improvement in higher-end jewelry, Yruma argued, adding that he views Tiffany as a “strong brand.”

PRICE ACTION

In Thursday’s trading, shares of Tiffany have gained over 3% to $99.27.


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Cerner and Amazon to announce a deal next week

Amazon to announce ‘huge healthcare deal’ with Cerner, CNBC says

 

AWS and CERNER to announce major deal. See Stockwinners.com for details

Shares of Cerner (CERN) are up 4.5% to $69.75 after CNBC, citing sources, reported that Amazon Web Services (AMZN) CEO Andy Jassy plans to announce next week that the company is teaming up with Cerner to help health-care providers better use their data.

Cerner Corporation designs, develops, markets, installs, hosts, and supports health care information technology, health care devices, hardware, and content solutions for health care organizations and consumers in the United States and internationally.

ANALYST COMMENTS

Stifel analyst David #Grossman noted that such an agreement would allow Cerner to leverage AWS’ global reach and technology to scale this business, which is still relatively small but is perceived to be one of the more important and faster growing industry segments, Grossman tells investors.

A “much more significant opportunity” would be for Cerner to reduce implementation times and reduce the capital intensity of its business by partnering with a hyperscale cloud provider, like Amazon, added Grossman, who keeps a Hold rating on Cerner shares.

RBC Capital analyst George #Hill commented that he thinks the deal would give the company even more credibility when trying to sell its outsourcing or hosting services to large health system clients.

The analyst, who doesn’t see Amazon getting into the provider interface business near to medium term, doesn’t view the deal as a meaningful threat to Cerner, he adds. Hill maintains an Outperform rating and $74 price target on Cerner shares.

Piper Jaffray analyst Sean #Wieland says that if they can overcome patient privacy risks, the partnership will be complementary and synergistic. Further, the analyst believes the deal would also validate Cerner as a market leader in Electronic Health Records. Wieland reiterates an Overweight rating and $70 price target on Cerner‘s shares.

OTHERS TO WATCH

Shares of athenahealth (ATHN) initially dropped after CNBC said Cerner (CERN) will be teaming up with Amazon Web Services (AWS) to help health-care providers better use their data, but the stock has recovered to briefly move back into positive territory following the headlines.


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Wal-Mart reports on Thursday

What to watch in Wal-Mart earnings report

Wal-Mart Guides Higher. See Stockwinners.com for details

Wal-Mart (WMT) is scheduled to report results of its third quarter before the market open on Thursday, November 16, with a conference call scheduled for 7:00 am EDT.

What to watch for:

1. GUIDANCE:

Wal-Mart is expected to update its guidance for the fiscal year. Wal-Mart previously forecast Q3 EPS of 90c-98c and comp sales for Walmart U.S. up 1.5%-2% excluding fuel and Sam’s Club comps excluding fuel up 1%-1.5%.

The company raised the low end of its FY18 adjusted EPS view to $4.30-$4.40 from $4.20-$4.40 and backed this guidance at its investor day.

Also at the investor day event, Wal-Mart forecast FY19 EPS to be up approximately 5% vs. FY18 adjusted EPS, with consolidated net sales growing at or above 3%. Baird analyst Peter Benedict expects a solid quarter with good comps and traffic momentum and a guide to earnings growth.

2. COMPETITION:

Retailers like Wal-Mart have been hurt by an increase in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores.

According to reports, Wal-Mart has raised prices for some food and household items on its U.S. website to be higher than prices for the same products sold in-store in an effort to increase profits and drive store traffic.

Wal-Mart, which has previously tried to keep online prices equal to in-store prices, is testing a new system, which has caused higher web prices for products that would otherwise be unprofitable to ship.

Wal-Mart recently sent a recreational vehicle to the University of Pennsylvania as part of a roughly dozen college recruitment tour to break into Ivy League recruitment, Bloomberg reported. The move comes after CEO Doug McMillon told investors Wal-Mart would “look even more like a tech company” to respond to competition from Amazon.

Recently, rival eBay (EBAY) said it will match rivals’ prices on many top Black Friday deals through Cyber Monday. Lidl is gaining little traction after expanding in the U.S. with grocers Wal-Mart and Kroger (KR) recovering most of the market share they lost when the German discounter opened its first nine U.S. stores in June, The Wall Street Journal reported last month.

In October, Wal-Mart said it expects to have grocery pickup in over 2,000 stores by the end of 2018 and noted that its Sam’s Club fresh food efforts are “really encouraging.”

3. OTHER INITIATIVES:

Wal-Mart is looking to grow its presence in the online fashion market, recently buying Bonobos, ShoeBuy, Moosejaw and ModCloth.

Wal-Mart President and CEO Doug McMillon said on the Q2 earnings call that the retailer is testing associate delivery of online orders in “a few” stores and plans to have approximately 100 automated pickup towers in stores across the U.S. by the end of the year, “where customers can pick up their orders within a matter of minutes.”

He also noted that Wal-Mart has tests going on with “digital endless aisle shopping, robotics and image analytics to scan aisles for outs and we’re using machine learning to assist our merchants with pricing.”

More recently, Walmart.com and Lord & Taylor said that Lord & Taylor will launch a flagship store on Walmart.com in Spring 2018.

4. HOLIDAY SEASON:

Wal-Mart is giving employees the opportunity to work extra hours during the holiday season rather than hire temporary seasonal workers.

In addition, the retailer said it will offer more than 2M items for free two-day shipping without a membership fee on orders over $35.

Also, Wal-Mart announced plans to bring back its Holiday Helpers, associates dedicated to assisting customers, and will increase the number of them in stores to help customers.

Wal-Mart will also host more than 20,000 holiday parties at its Supercenters.

WMT last traded at $90.58.


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JC Penney’s woes continue

J.C. Penney plunges after slashing 2017 earnings view

JC Penney's woes continue. See Stockwinners.com for details

Shares of J.C. Penney (JCP) are down 21%, a new multi-year low, after the retailer slashed its forecast for fiscal 2017 as it accelerated actions to liquidate inventory and overhauled its women’s apparel department. Following the implementation of the “reset,” the retailer said it has already seen an improvement in performance.

THIRD QUARTER UPDATE

J.C. Penney said it expected to report an adjusted loss per share of (45c)-(40c) for the current quarter, well below the current analysts’ consensus of a loss of (18c), and comparable store sales up 0.6%-0.8%.

Cost of goods sold for the quarter are expected to increase 300 to 320 basis points compared to the same period last year, impacted primarily by a greater sales penetration in major appliances and e-commerce and the decision to accelerate the liquidation of inventory.

Chairman and Chief Executive Officer Marvin Ellison stated that “based on the encouraging results from a third quarter reset in women’s apparel, which expanded our casual and contemporary offering, we made the strategic decision to accelerate a wider transformation of the entire women’s department by clearing slow-moving inventory primarily in women’s and other apparel categories.”

He noted that “following this comprehensive reset, we saw an improvement in performance, particularly in our women’s division.”

The retailer also said that Jeffrey Davis, its new Chief Financial Officer, will oversee the company’s pricing and planning policies to improve its predictive analytics capabilities and get a better view of current sales trends.

The retailer said the inventory liquidation favorably impacted sales during September and October, and that “although these actions will create a short-term negative impact to cost of goods sold and earnings, long term, we firmly believe it was the right decision for the company as we transition into the fourth quarter and fiscal 2018.”

J.C. Penney will report third quarter results on November 10.

SLASHED FISCAL 2017 OUTLOOK

However, the “improvement” Ellison noted following the reset was not enough for the retailer to maintain its forecast, and J.C. Penney significantly cut its fiscal 2017 adjusted EPS view to 2c-8c from 40c-65c and comp sales down 1% to flat vs. its prior view of down 1% to up 1%.

Prior to the report, analysts expected J.C. Penney would report FY17 EPS of 43c. Cost of goods sold for the year are now seen up 100-200 basis points vs. 2016 and free cash flow is now seen at $200M-$300M.

WHAT’S NOTABLE

Retailers tend to clear out leftover inventory ahead of the critical holiday season to stock up on fresh merchandise. J.C. Penney and other mall-based retailers and department stores have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21, and H&M, as well as an increase in online shopping on sites such as Amazon (AMZN).


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Amazon reports today

What to watch in Amazon earnings report

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Amazon (AMZN) is scheduled to report results of its third fiscal quarter after the market close on Thursday, October 26, with a conference call scheduled for 5:30 pm ET.

What to watch for:

1. ONLINE RETAIL 

In his preview of Amazon’s Q3 report, DA Davidson analyst Tom #Forte said that particular attention will be paid to the company’s “co-opetition” efforts with Google (GOOG).

Forte noted that the Google challenge in particular is becoming increasingly important and “problematic” for Amazon, as Google’s search algorithm changes made in May resulted in prioritizing local stores with physical inventory of merchandise.

This has prompted Amazon to increase spending on Google’s product listing ads to preserve its traffic, which weighed on profits in Q2 and may again be a headwind in Q3, the analyst told investors.

Meanwhile, Piper Jaffray analyst Michael #Olson says his firm’s Amazon search index indicates Q3 unit growth will be 28%, in-line with the Street and a slight acceleration from 27% in Q2. The analyst believes Amazon is well positioned to beat Q3 margins excluding Whole Foods, but calls Q4 margins a “wild-card.” He expects “solid” Q3 results and remains “highly confident” in Amazon’s growth.

2. WHAT’S NEXT IN WAL-MART FIGHT

Amazon turned the brick-and-mortar retail industry on its head in June when it announced a deal to buy Whole Foods. In his preview, Forte also said that attention will be on the initial performance of Whole Foods and the competitive threat from Walmart (WMT).

Just yesterday, Amazon announced a connected door-lock and security-camera system for Prime members that lets delivery people drop off packages inside of customer homes.

In late September, Wal-Mart announced a limited test to allow in-home delivery of groceries for some customers in Silicon Valley. The initiative was the latest in a series this year from Walmart as it steps up its battle with the online e-commerce leader.

Last week, The Wall Street Journal reported, citing a person familiar with the matter, that Wal-Mart is near a deal with Lord & Taylor that would give the department store dedicated space on walmart.com. Lord & Taylor will continue to operate its own website, but shoppers at lordandtaylor.com will be able to pick up and return items at Wal-Mart’s 4,700 U.S. retail stores, according to the report.

Eventually, Bonobos and Jet.com, both of which are owned by Wal-Mart, could eventually be included in the project, the report added.

3. PRIME

Amazon does not disclose membership data for its Prime subscription service, but Consumer Intelligence Research Partners recently released its analysis of buyer shopping patterns for Amazon for the third quarter, which indicates that Amazon Prime now has 90M U.S. members.

Shoppers continue to spend on average about $1,300 per year, compared to about $700 per year for non-member customers, the report added.

4. AWS:

In the third quarter of last year, cloud unit Amazon Web Services reported net sales of $3.23B, up from $2.09B a year prior.

AWS segment operating income grew to $861M in Q3 of last year from $428M in the same period of the prior year.

In Q2 of this year, AWS revenue had ballooned to $4.1B and its operating income grew to $916M.

Separately, today Amazon announced plans to open its seventh Canadian fulfillment centre to be located in the greater Calgary region’s Rocky View community. The 600,000 square foot customer fulfillment facility located in Nose Creek Business Park, Amazon’s first in Alberta, will create more than 750 new full-time associate roles – joining Amazon’s current and growing workforce of 2,000-plus full-time fulfillment employees across the country.

In total, Amazon employs more than 4,400 employees throughout Canada working at corporate offices, development centers, and other facilities. The new facility will join Amazon’s network of current fulfillment centres located in Ontario: Brampton, Mississauga, and Milton, and British Columbia: Delta and New Westminster. Associates at this facility will pick, pack, and ship items ranging from aviator sunglasses to zebra costumes.

AMZN last traded at $974.03. It has a 52-weeks trading range of $710.10 – $1,083.31.


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MoviePass membership jumps

Helios and Matheson jumps as MoviePass exceeds initial projections

Helios and Matheson jumps as MoviePass exceeds initial projections. See Stockwinners.com for details

Shares of Helios and Matheson Analytics (HMNY) jumped in Tuesday’s  trading after the company said its MoviePass theater subscription services surpassed over 600,000 paying monthly subscribers this month.

MOVIEPASS EXCEEDING PROJECTIONS

Helios and Matheson, a majority owner of MoviePass, said this morning that the subscriber base for the movie theater subscription service surpassed 600,000 paying monthly subscribers as of October 18, compared to about 20,000 as of August 14.

The company said the continued growth has exceeded initial expectations.

The company also said that its subscriber churn rate has been shrinking, to 2.4% in month two from 4.2% in month one.

Based on current churn rates, MoviePass said monthly subscriber retention is above 96% and average paying monthly subscriber life expectancy is 46.8 months.

“Month after month we aim to improve our service with faster card delivery, improved application updates, and an easier-to-use web site. We believe our strategy is paying off in terms of increased satisfaction, reduced churn, and faster growth,” MoviePass CEO Mitch Lowe said in a statement.

“When you apply computer science and machine learning to an industry that we believe has lacked significant innovation, useful patterns start to emerge,” said Helios and Matheson Chairman and CEO Ted Farnsworth.

WHAT’S NOTABLE

On August 15, Helios and Matheson announced that it had entered into a definitive agreement to acquire a majority stake of MoviePass, which is led by Lowe, a Netflix (NFLX) co-founder and former Redbox president.

Helios and Matheson also introduced a new monthly movie ticket subscription of $9.95, allowing customers to get into one showing every day at any theater in the U.S. that accepts debit cards for about the price of a single ticket each month.

The following month, MoviePass subscribers rose to over 400,000 from less than 20,000.

Earlier this month, Helios and Matheson increased its ownership stake in MoviePass to 53.71% from 53%. Helios and Matheson Analytics shareholders still have to approve the company’s purchase of its majority stake in MoviePass.

Following the price cut to $9.95, MoviePass said its website was overwhelmed by the volume of traffic from interested customers, forcing some theatergoers to wait almost a month before their passes arrived in the mail. At the time, Lowe said he “totally underestimated demand,” but the company boosted its team to 35 to deal with the backlog.

CITRON, STREET SWEEPER CAUTIOUS

Some are cautious on Helios and Matheson as shares have jumped over 1000% since announcing the acquisition of a majority stake in MoviePass.

Citron Research tweeted on October 11 that Helios and Matheson’s stock will “trade back to $20 Retail investors are warned. You might like product but $1+bill it isn’t. Giving away $1 for .90 no biz.”

A day later, Citron tweeted that “Don’t like to stay short companies that are expected to lose money high borrow $ hit tgt price in one day. all timing.” Helios and Matheson has also been mentioned cautiously by TheStreetSweeper.

PRICE ACTION

Helios and Matheson, while off earlier highs, is still up about 2% to $13.56.


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Nokia and Amazon join forces

Nokia announces strategic collaboration with Amazon Web Services

Nokia Gets $2 Billion from Apple. See Stockwinners.com Market Radar

Nokia (NOK) announced a strategic collaboration with Amazon Web Services, or AWS, (AMZN) that will accelerate the migration of service provider applications to the cloud and drive digital innovation for large enterprise customers.

Nokia and AWS are working together to bring a unique and powerful set of solutions that will enable service providers to implement cloud strategies faster leveraging Nokia’s expertise in wireless, wireline and 5G technologies.

The two companies will work to deliver differentiated solutions using Nokia SD-WAN and its IMPACT IoT platform in combination with AWS Greengrass, machine learning and artificial intelligence services.

The scope of the agreement announced today covers four areas of collaboration: Nokia will support service providers in their AWS implementation strategy with a complete suite of services including consulting, design, integration, migration and operation for infrastructure and applications.

Nokia and AWS will work together to generate new 5G and Edge Cloud strategies and guidance for customers including reference architectures that enable both service providers and enterprises to benefit.

Nokia and AWS are working to bring an improved user experience for Nuage Networks SD-WAN customers who use AWS.

Enterprises can benefit from this seamless integration with AWS and launch secure branch connectivity in hybrid environments with “Single Pane of Glass” capabilities.

Finally, the companies are commercializing IoT use cases with AWS Greengrass, Amazon Machine Learning, Nokia Multi-access Edge Computing and Nokia IMPACT platform.


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Are Pharmacies Amazon’s Next Victim?

Analyst sees Amazon disrupting retail pharmacy industry

Https://stockwinners.com/In a research note this morning, #Bernstein analyst Lance #Wilkes told investors that he expects Amazon (AMZN) to enter the retail pharmacy industry, which leaves him increasingly concerned it will negatively impact Pharmacy Benefit Manager, or PBM, earnings levers.

AMAZON TO DISRUPT RETAIL PHARMACY

Amazon will enter the retail pharmacy industry, especially because it is a large and disruptable market, Bernstein’s Wilkes told investors, adding that he believes Amazon is well positioned to address/impact the major customer issues in this market.

Wilkes sees the retail pharmacy sector as a $300B market with potential margins in the high single digits, and believes the barriers to online/mail adoption have been poor user interface and insufficient cost savings to motivate consumers to switch to online/mail.

Amazon can disrupt retail pharmacy given the operating expense efficiencies of a centralized online model, he argued, while noting that the major advantages come from eliminating 70,000 retail locations, which could be replaced by automated distribution centers with efficient pharmacist oversight.

Further, the analyst pointed out that Amazon could further lower prices if it is willing to sacrifice margin to gain scale. In terms of strategic options, Wilkes argued that the e-commerce giant could either partner with large PBMs, such as UnitedHealth’s (UNH) OptumRx or Cigna (CI), or disrupt both the PBM and retail pharmacy model through buying a smaller transparent PBM or creating a carve-out online option for MCOs and employers.

The analyst believes OptumRx, along with other MCO owned PBMs, are the most logical partner, and thinks MedImpact or RiteAid’s (RAD) EnvisionRx are the most logical targets.

Additionally, Wilkes noted that the innovation of utilizing Amazon would be consistent with UnitedHealth’s innovative approaches in other consumer engagement areas.

Overall, the analyst sees Amazon’s entry as negative for independent pharmacies, somewhat negative for national pharmacies and distributors, and a long term negative for PBMs. Publicly traded owners of PBMs include Express Scripts (ESRX), UnitedHealth, and CVS Health (CVS).

PERRIGO  OPPORTUNITY

Commenting on the specialty pharmaceuticals sector, Morgan Stanley analyst David #Risinger told investors in a research note of his own that after thinking through Perrigo’s (PRGO) opportunity to grow with Amazon, he does not expect much of an incremental sales opportunity.

Online purchases will likely cannibalize existing Perrigo sales via traditional retailers, he argued.

Amazon currently sells Perrigo’s GoodSense low-cost brand and Risinger sees it as possible that Amazon eventually develops its own brand and sources private label products from Perrigo and others, which would also likely cannibalize GoodSense.

The analyst reiterated an Equal Weight rating on Perrigo’s shares.

PRICE ACTION

In Thursday’s trading, shares of Amazon are fractionally up to $950.90. Shares of Express Scripts (ESRX) and UnitedHealth (UNH) are also fractionally up to $63.19 and $194.96, respectively, while CVS is fractionally down to $81.21. PRGO is down 1.4% to $84.

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Twilio Jumps on Amazon Messaging Service

Amazon two-way messaging seen as opportunity for Twilio

Amazon two-way messaging seen as opportunity for Twilio. See Stockwinners.com for details

Shares of Twilio (TWLO) are on the rise today after several analysts pointed out that Amazon’s (AMZN) launch of AWS Global SMS two-way text messaging should not be seen as a competitive threat to the company, especially since the new Pinpoint service is powered by Twilio.

AWS TWO-WAY MESSAGING

Amazon Pinpoint has launched the AWS Global SMS two-way text messaging.

Commenting on the new service, Amazon’s Randall Hunt wrote in a post to the AWS Blog: “Last week Amazon Pinpoint launched AWS Global SMS two-way text messaging and we didn’t get an opportunity to cover the launch. AWS Pinpoint users can now programmatically respond to their end-users’ text messages. Users can provision both short codes and long codes which send inbound messages to an SNS topic.”

Last night, Twilio CEO and co-founder Jeff Lawson tweeted:

“Excited that @twilio is now helping to power engagement on @AWS Pinpoint, with their launch of 2-way SMS!”

YESTERDAY’S SELLOFF OVERDONE

In a research note to investors following the news, KeyBanc analyst Brent #Bracelin argued that yesterday’s selloff in Twilio appears to be an “overreaction.”

Twilio and Amazon have had a close relationship in the past that includes a small equity stake in Twilio that Amazon acquired prior to the Twilio IPO.

Twilio has gone “all-in” on AWS and operates its global CPaaS operation on AWS’ data centers, he pointed out. Nonetheless, the analyst reiterated a Sector Weight rating on Twilio’s shares based on decelerating growth trends and margin erosion that is expected to occur in the second half of 2017.

His peer at MUFG also pointed out that while the new Amazon service may appear to be a direct competitor to Twilio’s programmable SMS Product, the company is actually helping to power engagement of the Pinpoint product.

Analyst Stephen #Bersey argued that he views this as a “broadening of the partnership” between Twilio and AWS more than direct competition. He reiterated an Overweight rating and $35 price target on Twilio’s shares.

Voicing a similar opinion, Oppenheimer analyst Ittai Kidron told investors in a research note of his own that investor fears that the new AWS two-way messaging service will compete with Twilio are incorrect.

While there is no “Powered by Twilio” branding, AWS’s new Pinpoint SMS capability is powered on the back-end by Twilio’s platform, he contends, adding that given Twilio’s presence behind the scenes, he would view the announcement as a positive for Twilio. Furthermore, the analyst said he would be an aggressive buyer on any weakness, and reiterated an Outperform rating on Twilio’s shares.

NOT COMPETING WITH VONAGE

Also commenting on the news, Needham analyst Richard Valera noted that Vonage’s (VG) shares fell yesterday due to the blog post discussing Amazon Pinpoint two-way SMS capability. However, the analyst pointed out that he believes it is “narrowly” focused on enabling user engagement campaigns for app developers and not a general purpose SMS/voice API, such as offered by Vonage. Valera reiterated a Buy rating and a $9.50 price target on Vonage shares.

PRICE ACTION

In Wednesday’s trading, shares of Twilio have jumped about 7% to $29.49. Yesterday, the stock was under pressure on concerns related to Amazon’s new product, dropping almost 7%.

Vonage (VG), which also slid late in yesterday’s trading, is up 3% this morning.


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iPhone X Coming Soon!

Watch Apple ahead of iPhone X launch

iPhone-X Coming Soon. See Stockwinners.com for details

Apple (AAPL) is expected to unveil the highly anticipated iPhone X tomorrow along with other new versions of its flagship mobile device. Commenting on the tech giant’s event, RBC Capital analyst Amit #Daryanani told investors that it may surpass expectations.

Meanwhile, his peer at JPMorgan argued that he expects the OLED based iPhone X to become available in October as Apple begins volume production in September.

APPLE EVENT

On Tuesday, September 12, Apple is expected to unveil its much anticipated 10th anniversary iPhone. According to a leak over the weekend, the new device will be called the iPhone X and will include wireless charging, facial recognition, edge-to-edge display and no home button.

Alongside the iPhone X, Apple is expected to release two other phones, namely the iPhone 8 and iPhone 8 Plus. Many also expect to see a third generation of the Apple Watch and a 4K Apple TV.

EVENT MAY TOP EXPECTATIONS

RBC Capital’s Daryanani told investors that Apple’s event tomorrow could surpass investors’ expectations, particularly as some of the new iPhone features are demonstrated live.

The analyst noted he believes the next generation flagship iPhone will feature a brand new form factor with an OLED display that spans edge-to-edge, upgraded A11 processors, wireless/inductive charging capability, a virtual home button embedded in the display, a 3-D facial recognition sensor for the front-facing camera, an augmented reality enabled rear-facing vertical dual lens camera, glass front and back with stainless steel edges, 3GB of RAM, 64GB and 256GB storage tiers, and improved water resistance.

Additionally, Daryanani expects Apple to introduce two new LCD iPhones, with pricing for the OLED device to start at $999 while the LCD models should be priced similarly to the current 7/7-plus. Alongside the new iPhones, Apple should also introduce a new Apple Watch with a cellular connection and a new TV product in addition to software updates for each device announced, he contended. The analyst reiterated an Outperform rating and $180 price target on the shares.

OLED IPHONE AVAILABLE IN OCTOBER

In a research note of his own, #JPMorgan analyst Rod #Hall told investors he currently expects the OLED based iPhone X to become available in October as Apple begins volume production in September. The specific week of October that the device begins shipping will have a few million units of impact on the December earnings forecasts, Hall noted, adding that the risk to earnings estimates is relatively small heading into the event.

The analyst pointed out that he estimates the 256GB version will cost $1,100, while the LCD models’ pricing should be similar to the iPhone 7 models. The analyst also believes that the most important thing Apple is likely to say about the Apple TV financially relates to the content available on the device, as he is expecting Amazon (AMZN) Prime Video to finally become available.

While the Apple Watch update that has been reported including LTE should be a small incremental positive, it is unlikely to move numbers, he added. Hall reiterated an Overweight rating on Apple’s shares.

SUPPLIERS TO WATCH

Here’s a look at five Apple iPhone chipmakers that should benefit from launch of iPhone X: Skyworks Solutions (SWKS), Texas Instruments (TXN), Analog Devices (ADI), Qorvo (QRVO) and Broadcom (AVGO).

PRICE ACTION

In Tuesday’s trading, shares of Apple have gained about 2% to trade near $161.50. Year-to-date, Apple shares have risen nearly 40%


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Barron’s is bullish on Infosys and Medtronics

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

 

BULLISH  MENTIONS

Broadcom ‘big run’ not over yet – In a follow up story, Barron’s notes that after Broadcom (AVGO) beat quarterly estimates for revenue and earnings per share estimates and raised its guidance, investors sent the stock almost 4% lower as they believed the beat/raise was less pronounced than those in the past six quarters. However, the publication says Broadcom big run is not over, with the chip maker gaining share in Apple’s (AAPL) new iPhone and cashing in on Arista Networks’ (ANET) success.

Infosys too cheap to ignore – The resignation of Infosys (INFY) CEO Vishal Sikka and board shake-up shed a light on the spat between the board and co-founder Narayana Murthy, concerning governance and future growth, Dimitra Defotis writes in this week’s edition of Barron’s.

However, value investors “don’t need to get mired in the drama,” the publication notes, adding that they should see Infosys stock as too cheap to ignore.

Skeptical investors may be underestimating Medtronic strength– While shares of Medtronic (MDT) have done quite well this year, the performance masks some investors’ doubts that the company can deliver consistent mid-single-digit sales growth, while still meaningfully boosting margins, Lawrence Strauss writes in this week’s edition of Barron’s. The skepticism seems overblown as Medtronic should be able to reach double-digit annual profit growth in the near-term, helped by multiple product launches, one of which automates insulin-dosing for Type 1 diabetes patients, Strauss adds.

Innovations could lift PayPal another 16%– PayPal (PYPL) shares are up 64% since eBay (EBAY) spun off the company two years ago, but despite that rise, the stock still has upside as innovations could lift it another 16%, Emily Bary writes in this week’s edition of Barron’s.

New space age offers promise for investors – SpaceX, a side project of Tesla (TSLA) founder Elon Musk, has grabbed a leading market share in commercial satellite launches, Jack Hough writes in this week’s edition of Barron’s.

Jeff Bezos, founder of Amazon.com (AMZN) and privately owned Blue Horizon, also plans to compete on launches, and has a vision of moving manufacturing to space, Hough noted. However, public investors may be best off staying clear of the upheaval in commercial satellites, and focusing instead on exposure to the U.S. defense and intelligence sectors, Barron’s argued, adding that Goldman Sachs predicts spending there will grow 6% a year, compounded, over the next five years, benefiting names like Boeing (BA), Lockheed Martin (LMT) and Orbital ATK (OA).

Yum China (YUMC) new leaders pushing digital, possible dividend – Yum China shares have received positive reviews from investors, with the stock producing gains of about 40%, Robin Blumenthal writes in this week’s edition of Barron’s. The company has revamped its management group and plans to add more than 15,000 restaurants in the next 15 years, while Pizza Hut unit experiments with new menu items, and KFC pushes ahead some of its successful tactics, such as delivery, digital engagement with customers, and more individualized restaurants, the publication notes. Additionally, Yum China has promised to decide about a dividend by year end, Blumenthal adds.

BEARISH  MENTIONS

Intel future may rest with initiatives that require patience. – The markets where Intel (INTC) dominates, servers and personal computers, do not show the growth they once did, with its future resting with initiatives that are promising, but that, like a start-up, require patience on the part of investors, Tiernan Ray writes in this week’s edition of Barron’s. Intel’s greatest start-up opportunity may be in the realm of computer-data networking, the publication adds.


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Changes to S&P 100 and 500 Indices

S&P announces changes to S&P 100, 500 indices

Stocks to buy, stocks to watch, upgrades, downgrades, earningsS&P Dow Jones Indices will make the following changes to the S&P 100 and S&P 500 indices:

Quintiles IMS Holdings (Q) will replace Whole Foods Market (WFM) in the S&P 500 effective prior to the open on Tuesday, August 29.

S&P 100 & 500 constituent Amazon.com (AMZN) is acquiring Whole Foods Market in a deal expected to be completed on Monday, August 28.

S&P 500 constituent Charter Communications (CHTR) will replace E. I. du Pont de Nemours and Co. (DD) in the S&P 100, and SBA Communications (SBAC) will replace E. I. du Pont de Nemours in the S&P 500 effective prior to the open on Friday, September 1.

S&P 100 & 500 constituent The Dow Chemical Company (DOW) is acquiring du Pont in a deal expected to be completed after the close on Thursday, August 31.

Post-merger, the combined company, which will change its name to DowDuPont and trade under the ticker “DWDP“, will remain in the S&P 100 & S&P 500.

S&P 100 INDEX

The S&P 100 Index is a stock market index of United States stocks maintained by Standard & Poor’s.

Index options on the S&P 100 are traded with the ticker symbol “OEX”. Because of the popularity of these options, investors often refer to the index by its ticker symbol.

The S&P 100, a subset of the S&P 500, includes 102 (because two of its component companies have 2 classes of stock) leading U.S. stocks with exchange-listed options.

Constituents of the S&P 100 are selected for sector balance and represent about 63% of the market capitalization of the S&P 500 and almost 51% of the market capitalization of the U.S. equity markets as of January 2017.

The stocks in the S&P 100 tend to be the largest and most established companies in the S&P 500.

S&P 500 INDEX

The Standard & Poor’s 500, often abbreviated as the S&P 500, or just “the S&P” is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.

The S&P 500 index components and their weightings are determined by S&P Dow Jones Indices. It differs from other U.S. stock market indices, such as the Dow Jones Industrial Average or the Nasdaq Composite index, because of its diverse constituency and weighting methodology.

It is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy.


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Sears Higher on Kenmore, DieHard Deals

Sears jumps after announcing latest licensing deals for Kenmore, DieHard brands

Sears jumps after announcing latest licensing deals for Kenmore, DieHard brands. See Stockwinners.com Market Radar for details

Shares of Sears Holdings (SHLD) rose in Tuesday trading after the troubled retailer announced it signed two licensing agreements intended to expand the reach of its Kenmore and DieHard brands internationally.

NEW LICENSING DEALS

Sears said in a statement this morning that Kenmore and Kenmore Elite vacuums will be manufactured by Cleva North America for distribution at retailers worldwide. Additionally, Sears said DieHard Alkaline batteries and flashlights will be manufactured by Dorcy, International for distribution in the U.S., Puerto Rico and the Caribbean plus Latin America and some locations in the South Pacific. “We will have direct and active involvement in building the business with our licensing partners,” said Tom Park, president of Kenmore, Craftsman and DieHard brands at Sears.

WHAT’S NOTABLE

The licensing deals come after Sears’ recent decision to launch a Kenmore dedicated brand presence on Amazon.com (AMZN).

The Kenmore appliance brand page went live on Amazon last week, marking Amazon’s first and only dedicated brand page for home appliances. The company also announced the integration of the full line of Kenmore Smart appliances with Amazon Alexa.

“The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.,” Sears CEO Eddie Lampert said at the time.

Sears, which is seeking a turnaround, announced last month plans to close eight more locations and 35 unprofitable Kmart stores as it continues to focus on returning to profitability.

Lampert said at the time that “This is part of a strategy both to address losses from unprofitable stores and to reduce the square footage of other stores because many of them are simply too big for our current need.” Lampert noted that Sears is “well on track” to meet its cost savings goals.

RECENT ANALYST COMMENTARY

Baird analyst Peter Benedict said last month that that the Sears, Amazon pact introduces “improved competition” from a brand Lowe’s (LOW) and Home Depot (HD) do not carry. While Amazon shouldn’t be underestimated, appliance transactions are complex and Kenmore brand equity has declined, Jefferies analyst Daniel Binder said in July that the Sears deal may not be an indicator that more appliance manufacturers will sell direct via Amazon.

PRICE ACTION

Sears is up over 3% to $8.83 in Tuesday’s trading.

OTHERS TO WATCH

Other brick and mortar home appliance retailers include Lowe’s, Home Depot and Best Buy (BBY), which are all trading higher this morning.


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Retail Stocks Continue to Slide

Retail sell-off continues with J.C. Penney report, dragging Nordstrom lower

Retail selloff continues with J.C. Penney report. See Stockwinners.com for details.

Shares of J.C. Penney (JCP) added to the retail wreckage of the last few days after reporting a larger than expected loss for the latest quarter, adding to concerns about the broader sector following disappointing reports yesterday from peers Macy’s (M) and Kohl’s (KSS).

Separately, higher-end peer Nordstrom (JWN) bucked the trend of declining sales in the sector, reporting a comparable store sales gain for its latest quarter and raising guidance.

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While Nordstrom shares briefly went into the green, they declined following the market open as the sector gives back some of the gains seen in the run-up to this week’s reports.

 

J.C. PENNEY

J.C. Penney reported an adjusted loss per share for the second quarter of (9c), compared to forecasts for a (5c) loss.

Comp sales slid 1.3%, falling below the retailer’s fiscal year guidance. The comp sales decline for the quarter resulted in a positive two-year stack of 0.9%, the company said.

Despite misses on the EPS and comp sales lines, revenue of $2.96B beat forecasts of $2.84B.

CEO Marvin Ellison said that while the broader retail sector “remains challenged,” all categories delivered improved sales results during the quarter, with beauty, home refresh and omnichannel continuing to deliver positive sales growth.

On the company’s earnings call, #Ellison said there was greater margin and EPS dilution than expected during the quarter following the liquidation of inventory in 127 closing stores, but said he believes this was “isolated” to Q2.

Looking ahead, J.C. Penney backed its guidance for fiscal 2017 adjusted EPS of 40c-65c and SSS down 1%-up 1% and said it expects improved results in the back half of the year.

Ellison said that July’s sales trend has carried into the early back-to-school season.

NORDSTROM

Nordstrom, meanwhile, yesterday reported EPS of 65c, beating analysts’ estimates of 64c, and total revenue of $3.79B also beat the $3.75B consensus. Comp sales for the quarter were up 1.7% compared to last year and followed an 0.8% decline last quarter.

Nordstrom raised its FY17 adjusted EPS view to $2.85-$3.00 from $2.75-$3.00, revenue growth view to roughly 4% from 3%-4% and backed its SSS growth view of approximately flat. Nordstrom said that its recent Anniversary Sale, historically its largest event of the year, performed better than recent trends.

WHAT’S NOTABLE

Mall-based retailers have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21 and H&M, as well as an increase in online shopping.

Nordstrom said in June that members of its founding family formed a group to explore the possibility of pursuing a “going private” transaction, but Women’s Wear Daily recently said that the retailer is not in negotiations with “anybody” regarding a potential sale.

Talks continue with potential parties to a deal, though they are described as informal, the report noted.

PEERS

Thursday August 10th, sector peer Macy’s (M) sunk after reporting another quarter of declining comps, though its EPS and revenue were above analysts’ estimates.

While Macy’s backed its guidance for FY17, it forecast third quarter comp sales on an owned plus licensed basis down 2.5% “or worse” and fall season comp sales on an owned plus licensed basis to be down 0.8% to down 2.6%. Gross margin for the year is expected to be down 50-70 bps vs. last year, better than previous guidance.

CFO Karen Hoguet said that there was “not a lot new” on Macy’s real estate initiatives since June’s investor meeting and that work on its Herald Square location “continues.”

Kohl’s also reported earnings yesterday, with EPS and revenue narrowly beating estimates, though its comp sales declined 0.4% from the year ago period. “The traffic momentum that we saw in the combined March/April period accelerated in the second quarter,” CEO Kevin Mansell said in a statement. “Though transactions for the quarter were lower than last year, July transactions increased. We are also excited by the sequential sales trend improvement in all our lines.”

Kohl’s said it is “on track” to achieve its financial goals for the year. On its earnings call, Mansell reiterated that Kohl’s sees an opportunity to capture sales from competitors’ stores that are closing, which may include closing stores from Macy’s and J.C. Penney.

Another peer, Dillard’s (DDS), also reported earnings yesterday, reporting much weaker than expected EPS on sales that missed estimates. CEO William Dillard, commented that “Significant markdowns led to a disappointing loss as we dealt with inventory, which was up 2% at quarter end.”

ANALYST COMMENTARY

Credit Suisse analyst Christian #Buss said this morning that “continued caution is in order” following J.C. Penney’s Q2 report, as he sees core operating profitability declining and underlying demand still being “tepid.”

UBS analyst Michael #Binetti said that while Macy’s results were better than expected, guidance for the second half has damaged confidence that positive trends are sustainable. The analyst maintained his Neutral rating on Macy’s but cut his price target to $21 from $23.

Meanwhile, Kohl’s was upgraded to Hold from Reduce at Gordon #Haskett and to Neutral from Underperform at Credit Suisse.

PRICE ACTION

In Friday morning trading, J.C. Penney is  down 17% to $3.91, while Nordstrom is down 2% to $44 per share.

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Disney to End Netflix Distribution Agreement

Disney to end Netflix distribution agreement in 2019

Disney to end Netflix distribution agreement in 2019. See Stockwinners.com Market Radar for details

Disney (DIS) said that following its acquisition of an additional 42% stake of BAMTech, it will end its distribution agreement with Netflix (NFLX) for subscription streaming of new releases, beginning with the 2019 calendar year theatrical slate.

Disney will launch its ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019.

BAMTech is a streaming technology provider joint venture between Baseball Advanced Media, The Walt Disney Company and the National Hockey League. The company handles streaming for #HBO, #MLB, #NHL and #WWE.

“The new service will be accessed through an enhanced version of the current ESPN app. In addition to the multi-sport service, the ESPN app will include the news, highlights, and scores that fans enjoy today. Consumers who are pay TV subscribers will also be able to access the ESPN television networks in the same app on an authenticated basis. For many sports fans, this app will become the premier digital destination for all their sports content,” it explained.

Following the news, both NFLX and DIS are down.

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