Airbnb and ConocoPhillips have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – February 21, 2023 – Zacks Equity Research shares Airbnb ABNB as the Bull of the Day and ConocoPhillips COP as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sunnova Energy International NOVA, Enovix Corp. ENVX and Enphase Energy ENPH.
Here is a synopsis of all five stocks:
Bull of the Day:
Airbnb is a Zacks Rank #1 (Strong Buy) that is a leading platform for unique stays and experiences.The company's marketplace model connects hosts and guests online or through mobile devices.
The stock is coming off 2023 highs after a very positive earnings report. Airbnb has rallied over 70% off its December lows, so investors can't be blamed for taking profits into the up move.
Going forward there is a strong argument that dips should be bought and the recent quarter supports that idea. Additionally, analyst estimates are being raised across all time-frames.
About the Company
Airbnb was founded in 2007 in San Francisco, CA. The company offers private rooms, primary homes, or vacation homes by connecting the host and the guest.
The stock has a Zacks Style Score of "A" in Value and Growth, but "F" in Value. The valuation is an issue for some investors as its PE is over 40.
Airbnb currently employs 6,800 and has a market cap of $83 billion. It pays no dividend.
Q4 Earnings Beat
In mid-February, the company reported an earnings beat of 78%. This was the 7th straight EPS beat, a streak that started back in Q3 of 2021.
Looking at the quarter, the company reported EPS of $0.48 v the $0.27 expected. Revenues came in at $1.90, which was slightly better than expected. Gross Booking Value came in at $13.5B, which was up 26% y/y. Adjusted EBITDA was $506M v the $333M last year and margins were 27%.
Q1 guidance was raised to a range of $1.75-1.82B v the 1.68B expected. The company said that FY23 EBITDA margin is "to be maintained". Airbnb pointed out that Q1 of last year was impacted by the Omicron spread, so year over year comps were easily beat.
Management added that for the rest of 2023 "we expect to maintain the strong Adjusted EBITDA margin we delivered in 2022, as we offset the headwinds from lower ADR with incremental variable cost efficiencies and fixed cost discipline".
The quarter was not only a pleasant surprise for investors, but analysts also got bullish. Since the report, analysts have aggressively hiked estimates and price targets.
Analyst Estimates
Looking at analyst estimates since earnings, we see numbers going higher across all time frames.
Over the last 7 days, estimates for the current quarter have gone from $0.00 to $0.14. For next quarter, we see a 16% jump over that same time frame.
Looking at the bigger picture and the current year, we see estimates heading 20% higher over the last month. Analyst have hiked from $2.80 to $2.86 before earnings, but then took that number up to $3.38 after earnings.
For next year, we have seen estimates over the last month go from $3.56 to $4.04. This is a move higher of 13%.
In addition to hiking estimates, analysts were quick to lift their price targets for ABNB. JPMorgan went from $105 to $135. UBS went from $114 to $130. Credit Suisse is one of the most bullish on the street, with a $160 target on the stock.
The Technicals
The stock jumped from $120 to $144 after the earnings announcement. This 20% move higher was on top of the stock's gain of 20% already on the year before the earnings report. From lows of 2022 to the recent highs, we are talking about a 75% move in just a couple months.
So it was no wonder that the stock was sold as profit takers stepped in. But investors that missed this move are wondering where they can buy a dip, instead of chasing. Let's go over some levels that potential bulls should be watching.
The gap fill would be $121, which could be followed up with a test of the 21-day MA. This level is currently at $116 and in between those levels would be a great place for a starter position.
The 200-day moving average has been known to be tested in the current market environment, especially after a big earnings move like we just saw. Bulls should be ready to buy this level, which is currently just under $108.
For those waiting for Fibonacci levels, your halfway back is $112.50 and the 61.8% retracement is $105.
Bottom Line
Airbnb has had a massive move, which is causing some investors to take profits. However, the momentum is on the side of the bulls when it comes to the fundamentals.
Those looking to buy the stock should be eyeballing the technical levels illustrated above and not be shy pulling the trigger when they come.
Bear of the Day:
ConocoPhillips is a Zacks Rank #5 (Strong Sell) that is involved in the exploration and production of oil and natural gas.The company explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids in the United States and internationally.
The stock was one of the best performers in 2022 as oil prices took off and stayed elevated. However, oil prices have been under pressure of late, which has brought down energy stocks like COP.
The company just disappointed on earnings, which has caused analysts to substantially lower estimates. Moreover, the stock just broke technical support, which is having many bulls question how low the stock may go.
About the Company
ConocoPhillips is headquartered in Houston, TX. The company was founded in 1917 and employs 9,500 people. It operates in 13 counties and is one of the world's largest independent E&P companies based on production and proved reserves.
ConocoPhillips is valued at $135 billion and has a Forward PE of 10. COP holds Zacks Style Scores of "A" in Growth and "B" in both Value and Momentum. The stock pays a dividend of almost 2%.
Q4 Earnings
The company reported earnings on February 2nd, just barely missing expectations. COP reported Q4 at $2.71 v the $2.72 expected and adjusted production fell 0.2% year over year. The miss on earnings was the first since 2020, breaking a win streak of eight quarters.
Conoco guided FY23 production at 1.76-1.80M and saw capex at $10.7-11.3B v 10.2B last year. The company guided FY23 return of capital at $11B, which was light of investors expectations.
Estimates
After the earnings report, analysts lowered their estimates across most time frames. Over the last 30 days, we see numbers going down for the current quarter, next quarter, and the current year.
For the current quarter, numbers have dropped 12%, going from $3.01 to $2.66. For Next quarter, we have seen a 3% drop.
For the current year, estimates have gone from $12.09 to $11.42, or 6%
Next year's numbers have been going higher over the last 30 days, but these are heavily reliant on oil and gas prices staying higher. Crude oil is currently under the 50-day moving average and struggling to hold the $75 level. A move under $70 would likely bring selling into oil names like COP
Technical Take
Conoco had a big year in 2022, with the stock moving from $70 to a high of $137. That is almost a double, but since those highs set in October, the stock is off by 25%.
Normally a dip like that would be a buy in the stock, but the recent drop in oil prices has brought technical selling in COP. The 200-day moving average has broken for the first time since July of last year. While the stock rallied after that, it might take a while for the stock to recover this time.
Bulls looking to be more patient should eye a move to the $95-100 area. This was a big spot of resistance early in 2022, that could be support now. If that area breaks, the stock would likely drop into the mid-$80s. Depending on where crude oil is, this would likely be a long-term support area.
Summary
So far in 2023, the stock market has seen money rotate out of oil names and into beaten down sectors like tech. Dropping prices in crude oil is part of the reason, but falling earnings estimates are adding to the reasons to sell.
Additional content:
2 Renewable Energy Stocks Set to Beat Q4 Estimates
A handful of renewable energy stocks, particularlysolar and alternative energy companies, which are part of the broader Oil-Energy sector, are set to release their Q4 numbers soon. Notably, the results of these companies are expected to reflect solid installation activities as well as an increase in the shipment of their products, backed by the economic recovery witnessed in recent times that has been boosting demand.
Amid this backdrop, we expect renewable energy stocks like Sunnova Energy International and Enovix Corp. to report favorable Q4 results.
Here's What to Expect
Per a report from the U.S. Energy Information Administration (EIA), published in January 2023, the U.S. electric power sector operated about 74 gigawatts (GW) of solar photovoltaic capacity at the end of 2022, which is about three times the capacity at the end of 2017. Moreover, U.S. wind power has grown by more than 60% since 2017 to about 143 GW of capacity.
With solar and wind energy constituting a major portion of renewable energy expansion, the aforementioned capacity enhancement is expected to get reflected in the renewable energy companies' Q4 results.
As evidence, Enphase Energy, a prominent solar stock, witnessed a solid 60.6% year-over-year growth in its microinverter shipment in the fourth quarter of 2022 and a 21.9% hike in battery shipment. Such solid shipments significantly boosted Enphase's Q4 revenues significantly, a trend expected to be reflected in the results of other clean energy stocks as well.
Notably, factors like rapidly increasing corporate investments in renewables, favorable government policies such as extended federal Investment Tax Credit (ITC) for offshore wind energy, the extension of production tax credit along with the declining price of raw materials like wind turbines and solar modules are likely to have contributed to clean energy stocks' quarterly performance.
Moreover, thanks to the economic recovery observed over the past few quarters, there has been an upward trend in installation activities for clean energy stocks, a trend expected to have driven demand in the fourth quarter of 2022 as well.
Also, growing hydropower generation has been driving revenues and earnings of clean energy stocks. In particular, hydroelectric generation in the western United States increased significantly in the 2021–22 water year relative to the 20-year low it experienced during the 2020–21 water year, as stated by EIA.
Considering all the aforementioned factors and data, both earnings and revenue projections for the broader market indicate a decent improvement from the fourth-quarter 2021 scorecard.
However, higher logistics costs and component costs as a result of global supply chain pricing pressure may have had some impact on the overall performance of the clean energy companies.
Q4 Projections
Per the latest Earnings Outlook, fourth-quarter earnings of the Oil-Energy sector are expected to improve a solid 53.5% on a 16.2% sales increase.
Zacks Methodology
Given the high degree of diversity in the clean energy space, finding the right stocks with the potential to beat estimates might be quite a daunting task.
However, our proprietary Zacks methodology makes this fairly simple.
We are focusing on stocks that have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can seethe complete list of today's Zacks #1 Rank stocks here.
Our research shows that for stocks with this combination, the chances of an earnings surprise are as high as 70%.
Earnings ESP provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Our Choices
Here we present two stocks that are expected to beat earnings estimates in this reporting cycle.
Sunnova: It is a residential solar and energy storage service provider. In October 2022, Sunnova announced that it powered the homes of over 30,000 customers with solar and battery storage in Puerto Rico during the aftermath of Hurricane Fiona, which hit the ground at the onset of the fourth quarter. This might have boosted the company's Q4 revenues as well as customer count.
The company, with an Earnings ESP of +21.28% and a Zacks Rank #3, is slated to release earnings on Feb 22. The Zacks Consensus Estimate for NOVA's Q4 sales indicates a solid improvement of 127.5% from the year-ago quarter's corresponding figure.
Enovix: It is involved in the design and manufacture of 3D Silicon(TM) Lithium-ion batteries. During the fourth quarter, the company signed a Memorandum of Understanding with one of the largest consumer electronics companies in the world. The agreement enables continued evaluation and prototyping of Enovix batteries targeted for consumer electronics. This is expected to have bolstered ENVX's Q4 performance in the electronics market.
The company, with an Earnings ESP of +7.90% and a Zacks Rank #3, is slated to release earnings on Feb 22. The Zacks Consensus Estimate for ENVX's Q4 bottom line, pegged at a loss of 15 cents, indicates a solid improvement from a loss of 60 cents incurred in the year-ago quarter.
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ConocoPhillips (COP) : Free Stock Analysis Report
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
Sunnova Energy International Inc. (NOVA) : Free Stock Analysis Report
Airbnb, Inc. (ABNB) : Free Stock Analysis Report
Enovix Corporation (ENVX) : Free Stock Analysis Report
