For Immediate Release
Chicago, IL – March 10, 2017 –Zacks Equity Research highlights Microchip Technologies (NASDAQ: MCHP – Free Report ) as the Bull of the Day, Express (NYSE: EXPR – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook (NASDAQ: FB – Free Report ), 20th Century Fox ( NASDAQ: FOXA – Free Report ) and GoPro ( NASDAQ: GPRO – Free Report ) .
Here is a synopsis of all five stocks:
The semiconductor industry has been red hot since Election Day. A shifting tech landscape is creating huge new surges in demand, helping to boost pricing and underpin strength across the industry. There are two very popular ways to invest in semiconductors. You either buy the actual chip designing companies themselves or you can buy companies that do the manufacturing. While the reward may be greater by buying the chip designers, there is still a huge opportunity on the manufacturing side.
One of these companies that helps on the design and manufacturing end is today’s Bull of the Day Microchip Technologies (NASDAQ: MCHP – Free Report ). Microchip Technology Inc. is a leading provider of microcontroller and analog semiconductors, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality.
They just reported quarterly results exceeding the high end of original guidance in revenue, Gross Margins and EPS. About $8.8 million of revenue last quarter came from customers requesting expedited delivery of their products which had originally been scheduled for January delivery and instead were delivered in December.
Still, management guided the current quarter’s revenue in the range of $872 million to $908 million, with the low end of that guidance exceeding the top end most analysts previously had modeled. EPS looks like it will be in the range of $1.01 to $1.11 for the quarter.
The big quarter really helped spur bullishness among analysts. Three analysts increased their EPS estimates for the current quarter, next quarter, current year and next year. The bullish attitude pushed up our Zacks Consensus Estimate for the current quarter up from 83 cents to 99 cents. The most dramatic move was seen in next year’s numbers where our Zacks Consensus Estimate when from $3.63 to $4.22.
You don’t need to read this Bear of the Day to understand that retail is hurting big time right now. Eventually there will be an opportunity to come in and scoop some of these names up off the bottom but the time simply hasn’t come yet. So really, I’m not telling you anything you don’t already know. But it’s important to look at the EPS trends here to fully understand that the turnaround in retail hasn’t started for some companies.
Express ( NYSE: EXPR – Free Report ) is a Zacks Rank #5 (Strong Sell) right now and a stock that has been badly beaten and bruised over the last several months. The stock just slid to a record low yesterday after providing a very downbeat outlook for the quarter along with declines in the previous quarter’s profit and sales. Express, Inc. operates as a specialty apparel and accessories retailer. It offers apparel and accessories for women and men between 20 and 30 years across various aspects of lifestyles, including work, casual, jeanswear, and going-out occasions. The company sells its products through its e-commerce Website, express.com; mobile app; and franchisees Express locations in Latin America, the Middle East, and South Africa. As of January 30, 2016, it operated 653 stores in the United States, Canada, and Puerto Rico.
Two analysts have dropped their EPS estimates for next quarter while one has dropped their numbers looking out to next year. Next year is where the optimism really lies though as the $1.03 Zacks Consensus Estimate represents 46% year-over-year growth compared to the current year’s 70 cent number. Revenue numbers show tepid growth after this quarter’s forecast of 2.8% contraction. Next quarter is still predicted to be about 1.24% while the current year numbers look like 2.1% top line growth.
Here’s How Snap Inc. Makes Most of Its Money
Snap Inc. , the parent company of the photo-disappearing app, just had one of the biggest tech IPOs in the recent years. The company was originally priced at $17 per share but closed the day up 44% to $24.48 per share. With all the anticipation hanging heavy on its shoulders, let’s look at how Snap makes money.
The company, originally named Snapchat, Inc., was founded in September 2011 by Evan Spiegel and Bobby Murphy. They rebranded the company to Snap to include their new product, Spectacles, in Sept. 2014. Instead of calling themselves a social media company, Snap pitches itself as a camera company.
Like Facebook (NASDAQ: FB – Free Report ) and its photo-sharing app, Instagram, advertising is the main source of revenues. However, unlike Facebook and Instagram, Snapchat doesn’t just distribute the ads into users’ newsfeed; ads are also part of their features.
The Los Angeles-based company generates their revenue through these five ways: Lenses, Geo-filters, Stories, Discover and Spectacles.
When a user opens up the app to take a picture or video, the user is given the option to put an overlay filter on. Brands can pay to put their brand-related filter in Snapchat for users to use. In May 2016, 20th Century Fox (NASDAQ: FOXA – Free Report ) paid Snap to incorporate lenses featuring well-known comic characters of X-Men to promote their movie, “X-Men: Apocalypse.” The New York Times reported that the cost to takeover Snapchat lenses filter was unknown, but the usual cost to sponsor a lens is between $450,000 and $750,000.
Geo-filters operate similar as lenses. Businesses can pay Snap to have brand-specific location overlay that users can use on their picture or video.
Stories and Discover are where Snap delivers the content before they disappear after 24 hours. After users take their picture or video and edit with a lens or geo-filter, users can put the final product on his or her Story for their followers to see. Snap also goes through these snaps and puts them into one video feed, as well as put them on Discover. Discover allows brands to upload their own snaps in a video magazine form with ads in between for users to see.
Spectacles are a pair of sunglasses with a camera that automatically saves the picture or video to a user’s Snapchat Memories when it’s connected to the Wi-Fi. The camera in Spectacles is designed to mimic how humans actually see. Spectacles can be purchased online.
Though Snap posted annual revenues of $404 million in 2016, which is a tremendous growth from $54 million a year ago, the company also posted a net loss of $514 million. While their IPO was a success, experts and analysts still question Snap’s ability to generate profit.
Snap looks to be the next Facebook but it seems like there is still a long way to go before Snaps can reach that stage. One main difference is the reach. Snap reported to have 158 million daily users while Facebook crushed that number with 845 million monthly users and 483 million daily users.
It is too early to say whether or not Snap will be the next Facebook or the next GoPro ( NASDAQ: GPRO – Free Report ) . Snap certainly has the potential but it needs to branch out to more demographics. The potential growth of users is what Snap is selling to investors, as they experienced a 48% growth in users from 2016.
Snap’s stock is up 3% at $23.52 per share, just a little below its IPO price of $24.
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Microchip Technology Incorporated (MCHP): Free Stock Analysis Report
Express, Inc. (EXPR): Free Stock Analysis Report
Facebook, Inc. (FB): Free Stock Analysis Report
Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report
GoPro, Inc. (GPRO): Free Stock Analysis Report
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