Articles from the Experts

Pinterest admits that it’s “still in the early stages” of its efforts to make money off its image-sharing platform, having only launched advertisements five years ago. The company sees opportunity with international advertisers, a mostly untapped area for Pinterest thus far. Revenue climbed to $755.9 million in 2018, up from $473 million a year prior.

The company’s user base is still growing, with international markets leading the way. The company had 265 million monthly active users (MAUs) as of the end of 2018, of which 184 million were based outside the U.S. Pinterest’s domestic MAU count rose by only 8% for the December quarter, while its international user base increased by a third.

The online scrapbooking company is not yet profitable, but it’s a lot closer than fellow unicorns like Lyft Inc. LYFT, -2.81%   and Uber Technologies Inc., both of which are bleeding cash. Pinterest managed to turn a profit during the past two holiday quarters, but it’s yet to break out of the red on an annual basis. The company lost $63 million last year, compared with $130 million a year prior.

Pinterest was privately valued at $12.3 billion in a 2017 funding round.

D.A. Davidson analyst Tom Forte recently began coverage of Pinterest’s stock, assigning a neutral rating and a $16.50 price target. While Forte likes that Pinterest’s users have strong “purchase intent,” something well regarded by advertisers, he argued that the eventual IPO price would already bake in the upside potential he sees from Pinterest’s monetization efforts.

Source: https://www.marketwatch.com/story/pinterest-prices-ipo-at-19-a-share-valuation-tops-10-billion-2019-04-17?mod=mw_theo_homepage

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Here is what analysts are saying:

JP Morgan: overweight rating, $88 target

“The agreement opens up the opportunity to resume chipset supply to Apple, ranging from a sizeable market share on iPhone units in the (Sep) 2020 models to an upside opportunity from capturing a primary position on the device if competitors are unable to deliver a 5G chipset.”

Bernstein: market perform rating, $60 target

“The resolution caps a multi-year period in which Qualcomm’s stock has broadly been viewed as virtually uninvestible, and the resolution will likely go a long way toward assuaging investors who have been terrified of the potential for negative legal and regulatory outcomes.”

Evercore ISI: Outperform rating, $90 price target

“While it is not 100% clear what the ongoing licensing payments will be and whether there are potentially any adverse implications to other customer agreements, this is clearly a meaningful positive for QCOM. We are not sure QCOM is completely out of the woods as we await a ruling from the FTC (expected imminently), though Apple’s willingness to sign an agreement today would suggest a not too negative outcome is likely. And with agreements currently in place now with Apple, Samsung, and China, it increasingly looks like this ruling will not be a terrible negative for QCOM - though clearly time will tell.”

Stifel: Buy rating, $100 target

“In our view, the settlement removes significant legal risk for Qualcomm and also clears the way for a settlement with the FTC. We believe the removal of the legal overhang, which had persisted for the last two years, allows investors to focus on Qualcomm’s core businesses which will drive a higher valuation in addition to higher earnings power. We view Qualcomm as the clear leader in 5G modem technology which should begin to ramp through CY2H2019 and 2020.”

Mizuho Securities: Buy rating, $82 target

“On the positive side for QCOM 1) the settlement will be an immediate bump to QTL license revenue starting in the JunQ and a $5-7B catchup payment with iPhone product insertion in 2H20(F21E), 2) the new six-year license agreement provides a 5G opportunity at Apple, 3) QCOM sees an incremental ~$2 EPS/year as product ramps in F21E.”

KeyBanc Capital Markets: Sector weight rating, $75 target

“We expect the 5G chip supply agreement and the resumption of ongoing licensing royalties to add ~$2.00 in EPS to our F2021 estimates for QCOM … While we view the settlement as encouraging and as removing a major overhang for QCOM, we remain Sector Weight, as we believe the economic benefit from the AAPL settlement is largely reflected in the stock.”

Canaccord Genuity: Buy rating, $89 target

“We believe Qualcomm’s strong R&D investments and leadership in 5G modems was the key factor in Apple reaching a settlement with Qualcomm. In fact, we believe Apple and Qualcomm needed to start working together by April in order for Apple to launch 5G enabled smartphones for its September 2020 iPhone launch timeframe.”

Raymond James: Outperform rating, $85 target

“Coupled with our expectation for Qualcomm to have a high share in 5G overall, we believe the deal drives in excess of $7/share earnings power for FY21. While we believe the stock’s risk/reward was favorable in the $50s even amid uncertainty prior to the settlement, the stock is still only trading at ~10x that FY21 earnings power. Given greatly reduced uncertainty given licensing agreements with Samsung, China, and now Apple, we think it’s reasonable to argue for multiple expansion, and raise our price target to $85.”

Citi: Neutral rating, $55 target

“We believe the deal could be positive for Qualcomm given the restoration of licensing and chipset revenue and we estimate the deal could total an additional $7.0 billion and $1.55 EPS accretion to our C20 revenue and EPS estimates of $22.5 billion and $3.57 respectively. We expect Qualcomm’s other customers will pursue similar royalty and chipset pricing if Apple gets a good deal.”

Oppenheimer: Perform rating

“We see Tuesday’s settlement as a positive step, clearing legal overhangs while bringing former No.1 customer back into the fold. Impact to model remains uncertain and QCOM still faces regulatory rulings from FTC and other global regulators. We remain sidelined until model implications become clearer.”

Susquehanna Financial Group: Positive rating, $95 target

“While Apple details and an FTC judgment remain, this is a huge step forward for Qualcomm, a company making silent progress behind lawsuit headlines … This settlement should ease investor fears that Qualcomm’s QTL business model is threatened, as the company has now reworked long-term deals with both Apple/Samsung and we believe is making progress with Huawei (interim agreement reached last quarter), allowing the multiple to grow.”

Bank of America Merrill Lynch: Neutral rating, $71 target

“We think the risk of changing the model to component-based licensing is muted now and going forward, the stock could start trading on its own fundamentals of strong semiconductor and licensing businesses. On the negative side, the impending FTC decision adds some risk to Qualcomm and the stock’s 28% positive move yesterday (vs SP500 +0.05%) mitigates our enthusiasm.”

Morgan Stanley: Equal weight rating, $55 target

“We think this settlement is a significant win for Qualcomm and results in a similar, if not better, outcome to a scenario we laid out in January, which would have been reached had Qualcomm achieved a win at the FTC … We think settlement with Apple provides Qualcomm some leverage with other handset OEMs to ensure future royalty compliance.”

Source: https://www.cnbc.com/2019/04/17/apple-qualcomm-settled-their-legal-battle-heres-what-wall-street-thinks.html

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CNBC’s Jim Cramer on Tuesday said the market has fooled the bears as stocks continue to power through adversity.

The major U.S. indexes all traded higher, with the Dow Jones Industrial Average and Nasdaq Composite rising about 0.30% and the S&P 500 moving north 0.05%.

“You’ve gotta admire the resilience of this market,” the “Mad Money” host said. “On a sedate day … what stands out to me is the incredible resilience of so many stocks that you expected to get hammered overtime.”

Boeing

Boeing has had its share of negative news coverage in the wake of a second crash involving its top-selling 737 Max plane. Still, the stock is up more than 18% in 2019.

Cramer noted that airlines have pulled orders for the airplane and that he expects Boeing will likely guide down because of it when the company reveals its latest quarter earnings a week from Wednesday.

“That’s when I expect the buyers to finally pause — not the buyers of the plane, but the buyers of the stock,” he said. “Now, if you want to own Boeing, I’d wait for that pullback. But the fact is, this thing has been ridiculously resilient.”

Apple

Apple’s stock has nearly reached $200 again after widespread selling, Cramer noted. Shares bottomed at $142 in early January after the iPhone maker preannounced that sales would be weak. The host said the recovery wasn’t powered by any news that confirmed sales improved or that the United States has settled trade issues with China.

Cramer reiterated that it’s a stock to own, not trade.

“And with today’s announcement of a truce with Qualcomm, my biggest worry had been that Apple would be late with 5G. It’s no longer an issue, ” Cramer said.

Shares of Apple rallied 0.1% Tuesday, compared to 23.2% at Qualcomm.

“I smell a downgrade of Apple tomorrow morning,” he said.

Nike

The stock was hammered after its last earnings report, which included weaker-than-expected sales in North America. Now the stock is within a point of where it fell from. Even with lingering China trade issues, Nike has an advantage in the country given its ties to China’s sports ministry program, Cramer said.

He thinks the athletic apparel company will have strong results in North America and Europe in its next earnings report because of better weather.

“They’ve come on strong in Europe and I am betting the U.S. will rebound this quarter,” Cramer said. “So Nike definitively deserves the benefit of the doubt, but it’s still kind of amazing … The stock’s getting it, although it was a delayed reaction.”

Caterpillar

Cramer pointed out that UBS double downgraded the stock from buy to sell in late February, but Caterpillar closed Tuesday at $142.03. That’s nearly 3% higher since UBS made that call.

The host said he wondered if the company would get hit with some bad news following the bearish indication. Instead, the water has been calm.

“In fact, the stock’s saying that Caterpillar will report a good quarter next week. Of course, stocks turn out to be wrong all the time, but I think CAT is worth owning,” Cramer said.

Home Depot

Home Depot’s stock plummeted from about $188 to $180 after the construction retailer delivered a weaker-than-expected outlook in its most recent earnings report. Cramer said, however, that he thought those results were misleading. He pointed to a few factors, including the housing market.

The stock is up nearly 20% this year and closed north of $204 on Tuesday. Home Depot delivers its next quarterly report in a little more than a month.

“If you were waiting for the company to give you some sort of all-clear, which many of you are, well I think you’ll get it when they report again because it’s lawn and garden season. But you have waited too long,” Cramer said. “Maybe next time give management the benefit of the doubt.”

Five Below

Five Below’s stock fell from about $129 in March to $117 in early April after the discount chain forecast earnings per share 8 cents below Wall Street projections.

Regardless, the stock touched an all-time high of $138.99 during the trading day.

“Talk about resilience,” he said.

Facebook

Facebook was back in the news again after an NBC News report said top brass at the social media giant considered finding “real market value” for sensitive user data, information the company has said it would protect.

The issue appears to be wrong, but the people who should care don’t care, Cramer said. Advertisers are still leaving platforms like YouTube for Facebook’s offerings.

“The truth is, as we’ve learned over the course of the past year, can we just put an end to this: none of these stories matter. It’s about earnings per share. The people who should care about Facebook and its privacy, they don’t,” he said. “The biggest issue Facebook has: they don’t want their ad rates to get out of control. Now that’s a high-quality problem.”

Source:​ https://www.cnbc.com/2019/04/16/cramer-boeing-apple-other-stocks-show-resiliency-in-the-market.html

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