Tag Archives: ETF

Corning: Riding Multiple Uptrends, Lifted By Gorilla Glass

Corning Incorporated (GLW) is a global, technology-based corporation, operating in five segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. With better-than-expected earnings and strong buyback, Corning is marching up, lifted by Gorilla Glass.

Bottom Formed

On April 25, 2013, Corning’s chairman and CEO Wendell P. Weeks told shareholders in the annual meeting that Corning’s performance over past two quarters is a strong indication that the Corning has successfully formed the bottom and is ready to march up. Despite a tough 2012, Corning is ready for growth in 2013. The growth opportunities mainly come from 1) the proliferation of mobile devices, which increases the demand for thin, tough cover glass; 2) increasing demand for bandwidth, creating needs for fiber optic networks; 3) evolution to higher-resolution display devices, requiring more specialty glass to meet rigorous technical requirements; 4) increasing demand for emissions-control products due to tighter environmental regulations; 5) increasing need for more effective drug therapies due to gaining global population. The company is progressing well and is introducing new glass compositions for high-performance displays and launching new products such as ultra-thin Corning Willow Glass.

Read MORE.

Zynga: Dumping Or Buying? A $1.7 Billion Dollar Question [Seeking Alpha]

Zynga (ZNGA) is a leading provider of social game services with 253M average monthly active users over 175 countries. With declining revenue and a disappointing forecast, it may still be too early to dump ZNGA.

The Good and Bad

For Q1, Zynga reported net income of $4.1M (break-even on a per share basis) compared with a net loss of $85.4M (loss of 12 cents per share) for the same period last year. Adjusted net income was $9.1M (1 cent per share) for Q1. However, revenues declined nearly 18% to $263.6M while bookings fell to $229.8M. Analysts were expecting revenue of $264.5M with a loss of 3 cents per share.

ZNGA generated $230M in bookings, exceeding the management’s expectations. FarmVille 2 outperformed with audience engagement and bookings hitting near peak levels in the quarter seven months after launch. The FarmVille 2 team was able to drive multiple days with growth bookings exceeding $1 million per day, including the amount retained by Facebook (FB). Web bookings were down 37% year-over-year and 15% quarter-over-quarter driven primarily by lower web user pay. On the other hand, mobile bookings were up 21% year-over-year, but down 8% quarter-over-quarter driven by a light slate of new game launches over the past two quarters that would normally offset aging live games.

Read MORE.

Yum Brands: Operation Thunder Strikes Back And Expansion Continues [Seeking Alpha]

Yum Brands, Inc. (YUM), with a market cap of $30.94B, is a quick service restaurant company based on a number of system units, including KFC, Pizza Hut, and Taco Bell. YUM took another hit with a new strain of bird flu in China while it was trying to recover from controversy over its chicken supply where unapproved levels of antibiotics were given. Despite a swift and decisive effort with “Operation Thunder,” the sales in China are still down 30 percent so far in April.

Good Profit, Missed Revenue

YUM reported Q1 earnings of $0.70 per share, beating analysts’ expectation of $0.60. However, revenue came in at $2.54B, which was below analysts’ prediction of $2.56B. Same-store sales increased 2% in the United States but dropped 20% in China. China’s sales remain a concern as 40% of YUM operating profit comes from China.

Weakness in China, but Expansion Continues

Currently, YUM remains as the largest Western fast-food chain in China with about 5,300 locations. The company is expected to open another 700 restaurants in 2013. The management is confident to overcome the bird flu issue, which happened before in 2005 causing 40 percent sales decline. The management expects its EPS growth to return to double-digit rate in 2014 and beyond. However, after 11 years of double-digit growth, YUM is expecting its EPS to decline in the mid-single digits for 2013 due to its issues in China.

Read MORE.

Abbott: Where Is Growth Coming From?

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of healthcare products worldwide, operating in four business segments: Established Pharmaceuticals Division (EPD), Medical Devices, Diagnostics and Nutritionals. Despite mixed global economy, ABT continues its growth from emerging market, led by the nutritional segment.

Strong Q1 Profit
For Q1, 2013, sales increased 1.8% to $5.38B, which was slightly below analysts’ expectation of $5.42B. However, without the research-based pharmaceuticals business, which spun out as AbbVie (ABBV) at the beginning of the year, ABT reported earnings of 42 cents a share, beating analysts’ consensus by a penny. Management also confirmed the full-year 2013 ongoing EPS outlook, which is for double-digit growth at the mid-point of the range. Despite a mixed global economy, ABT managed to deliver its current growth expectations and management expects to see some improvement in the second half of 2013.

Read MORE.

General Electric: Disappointed? Focus On Its Cash Position And Backlog [Seeking Alpha]

General Electric Company (GE), with a market cap of $226.16B, is a diversified technology and financial services company and a leader in all markets in which it competes. On April 19, 2013, GE reported in-line operating profit of $3.6B or 35 cents per share. However, GE’s share price dropped more than 4% due to declining revenue from the industrial end.

The Good and Bad for Q1, 2013

For Q1, GE reported the continuing operations revenues of $35B. Industrial sales were down 6% to $22.3B. Power and water dragged the overall results, whereas Europe services remained tough. The industrial segment profits were about $200M below the management’s expectations due to the worsening condition in Europe and some short cycle push outs from March into Q2. The gap was offset by cost control and better than expected GE Capital performance. Further, shipments should improve significantly in the second half.

GE Capital continued to improve and delivered a solid quarter. The ending ENI balance was reduced by $17B, and the earnings had increased to $1.93B as compared to $1.8B in Q4, 2012. The GECC Tier 1 common ratio had increased to 11.1%, as seen from the table below.

Read MORE.

Verizon Needs Verizon Wireless More Than Ever [Seeking Alpha]

Verizon Communications Inc. (VZ), with a market cap of $149.49B, provides communications, information and entertainment products and services. Verizon operates in two main segments, including Wireline and Verizon Wireless. While Verizon owns the majority share of Verizon Wireless, Vodafone Group (VOD) owns 45% stake in Verizon Wireless, which is the largest wireless communications services provider in the United States. On April 18, 2013, VZ reported Q1 earnings with strong profit but light revenue.

Strong Results from Wireless

For Q1, 2013, VZ’ EPS increased 15% to 68 cents per share as compared to the year-earlier period, beating analysts’ expectation of 66 cents per share. However, revenue of $29.42B was below analysts’ estimates of $29.55B. The highlight focuses on Verizon Wireless, which added 677,000 “postpaid” customers with service contracts, and the wireless revenue increased 6.8% to $19.5B. VZ also activated 4 million iPhones in the quarter, where the total smartphone activations were 7.2 million for the period. The earnings call transcript for Q1, 2013 result can be accessed here at Seeking Alpha.

Margins

The management does not expect much EBITDA wireline service margin expansion in 2013, but is positioned to improve the margin in 2014. For the wireless end, wireless margin has a target of 49-50 percent. Verizon Wireless was helped by lower costs and the popularity of its data share plans. On the down side, the management noted the cautious behavior from enterprise customers.

Read MORE.

American Express: It’s Still About Bottom Line Improvement [Seeking Alpha]

American Express Company (AXP), with the market cap of $71.41B, is the most profitable closed-loop credit card network in the U.S., providing credit and travel services to affluent customers. Although AXP missed the revenue estimates for Q1, AXP continues to improve its bottom line.

Q1, 2013 Earnings

For Q1, 2013, revenue increased nearly 4 percent to $7.88B from $7.61B a year ago, which missed the estimates of $8.03B. However, net income increased 2 percent to $1.28B or $1.15 per share, beating analysts’ estimates of $1.12 per share. EPS grew faster than net income due to share buybacks, which had reduced the outstanding shares by 5% year-over-year.

Performance

Despite one less day compared with Q1, 2012 (Leap Year), billed business came in at $224B, which grew 6% on a reported basis and 7% on an FX adjusted basis. Cards in force grew at 5% while proprietary cards grew at 2%. All segments performed consistently with Q4, 2012, except for Global Corporate Services, which had slower growth due to a slower T&E spending growth.

Increasing Provision for Losses

The total provision for losses increased 21%, whereas charge card provision increased 10%, primarily driven by higher receivables, which are 5% higher than a year ago. Card member loan provision increased 30% or $63M, reflecting a 4% increase in card member loans compared to last year. The net write-off rate remains stable and remains historically low.

Read MORE.

Enough On Da Vinci: What About Growth? [Seeking Alpha]

Intuitive Surgical, Inc. (ISRG) designs, manufactures and markets da Vinci Surgical systems and related instruments and accessories, allowing a surgeon to control up to three endoscopic instruments from a remote console while a dual camera provides a 3-D view of the operation. Despite the positive Q1, 2013 earnings, ISRG continues to face turbulence in the short term as the debate for da Vinci Surgical systems continues on, as reported by CNBC and Bloomberg.

Growth Story Continues

For Q1, 2013, ISRG reported net income of $188.9M ($4.56 a share) compared with $143.5M ($3.50 a share) for the same period a year ago. Sales had increased to $611.4M from the year ago result of $495.2M. Both earnings and income were higher than the analysts’ expectation of $3.98 a share and sales of $582.6M.

Managements View on da Vinci System

With over 1 million patients who had surgery that used a da Vinci system, the management is confident that those who invest their time in a serious review of the clinical literature on da Vinci will find ample evidence and the benefit it provides to the medical community.

Read MORE.

Celgene Could Be Turbocharged With 2 Blockbusters: Revlimid And Apremilast [Seeking Alpha]

Celgene (CELG) is a global biopharmaceutical company engaged in the discovery, development and commercialization of therapies designed to treat cancer and immune-inflammatory related diseases. Celgene’s current main products include Revlimid, Abraxane, Vidaza, and Thalomid. Investors also need to pay attention to Apremilast, which could be the next blockbuster drug.

Products Sales and Development

Celgene continued to develop positively from the product end. Below is the sales breakdown for Celgene’s main products as reported in the last quarter.

Q4 Sales Change Full Year Sales Change Highlight
Revlimid $1,002M +17% $3,767M +17% Driven by strong overall market share and increased duration of therapy.
Abraxane $106M +3% $427M +11% Affected by the restoration of the full supply of generic paclitaxel, the shortage of which benefited the fourth quarter 2011
Vidaza $216M +14% $823M +17% Driven by market share increases in most regions
Thalomid $73M -12% $302M -11% N/A

Overall, Revlimid remains as the main growth driver and contributed over 70% of sales among 4 major products.

In early February, FDA had approved Pomalyst brand therapy (pomalidomide) for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and bortezomib and have demonstrated disease progression on or within 60 days of completion of the last therapy.

Read MORE.

Why Freeport-McMoRan Is More Than A Good Copper Bet [Seeking Alpha]

Freeport-McMoRan Copper & Gold Inc. (FCX) is a leading international mining company, operating large, long-lived, geographically diverse assets with strong reserves of copper, gold and molybdenum. FCX was upgraded recently by analysts. Recent developments will be updated for FCX. By comparing to another major copper player, Southern Copper Corp (SCCO), and copper price, FCX is shown to be more than a good copper bet.

Dividend

On March 27, 2013, FCX declared a cash dividend of $0.3125 per share payable on May 1, 2013 to holders of record as of April 15, 2013.

M&A

In late March, FCX completed the transaction for 56% interest of a large scale cobalt chemical refinery located in Kokkola, Finland. FCX will be the operating for this new joint venture, named Freeport Cobalt. As reported,

“The acquisition enhances FCXs cobalt marketing position, product portfolio and product development capabilities and provides direct end-market access for the cobalt hydroxide production at Tenke.”

Analysts Calls and Estimates

On April 5, 2013, FBR Capital initiated coverage on FCX with an outperform rating and a price target of $41. The analyst, Mitesh B. Thakkar, said,

“We are launching coverage of copper producers with a cautious near‐term outlook but believe that long‐term fundamentals will continue to support copper prices around $3/lb. In the near term, we believe that copper prices could remain under pressure due to a choppy demand outlook, inventory overhang, and impending supply growth. Longer term, however, we believe that prices will remain supported above the marginal cost and should provide incentives for needed supply growth.”

Analysts currently have a mean target price of $40.00 for FCX. Analysts, on average, are expecting an EPS of $0.82 with revenue of $4.78B for the current quarter ending in March, 2013. For 2013, analysts are projecting an EPS of $4.38 with revenue of $21.39B, which is 18.80% higher than 2012. FCX is expected to release its Q1, 2013 earnings on April 15, 2013. In the last 4 quarters, FCX had 3 positive earnings surprises and 1 negative surprise.

Read MORE.