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Apple, Hyatt Hotels, QUALCOMM, eBay and PayPal highlighted as Zacks Bull and Bear of the Day

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Zacks Equity Research
·9 min read
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For Immediate Release

Chicago, IL – February 4, 2021 – Zacks Equity Research Shares of Apple Inc. AAPL as the Bull of the Day, Hyatt Hotels Corporation H as the Bear of the Day. In addition, Zacks Equity Research provides analysis on QUALCOMM Incorporated QCOM, eBay Inc. EBAY and PayPal Holdings, Inc. PYPL.

Here is a synopsis of all five stocks:

Bull of the Day:

Apple just posted one of the best quarters of its life. Of course it's now a Zacks Rank #1 (Strong Buy).

Apple is a personal technology company that sells across a stream of consumer products including iPhone, iPad, Mac, Apple Watch and Apple TV. It also provides experiences on services that include the App Store, Apple Music, Apple Pay and iCloud.

Best Quarter of All-Time

On Jan 27, Apple reported its fiscal 2021 first quarter earnings and blew by the Zacks Consensus by $0.27. Earnings were $1.68 versus the consensus of $1.41.

But that wasn't the big story.

Revenue jumped 21% year-over-year to an all-time record of $111.4 billion, with international sales making up 64% of that total.

It set new all-time revenue records for the iPhone, Wearables and the Services segments.

All Analysts Agree: Apple Is Crushing It

After the report, all the analysts were in agreement. Apple is operating on all cylinders.

All 12 analysts raised their fiscal 2021 full year earnings estimates after the report, pushing the Zacks Consensus up to $4.47 from $4.06.

That's earnings growth of 36.3%.

10 estimates were also revised higher for fiscal 2022, pushing that consensus up to $4.71 from $4.40.

It takes a lot of bullishness to get ALL of the Apple analysts to agree on the company at the same time.

That agreement has pushed the stock back to a coveted Zacks Rank #1 (Strong Buy).

It was last a Strong Buy stock in the third quarter of 2020 but you have to go all the way back to the third quarter of 2018 to find a time before that when the analysts were also as bullish.

Shares at Record Highs

You have a record quarter, shouldn't your stock see a record high?

Shares of Apple have soared in the last year, adding 74%.

It's no longer cheap, with a forward P/E of 30 and a P/S ratio of 7.9.

But revenue is expected to grow by 22.7% this fiscal year.

Is Apple a growth stock now?

Some of the other FAANG stocks qualify as growth stocks, including Netflix and Amazon.

With another quarter like this one, it might just qualify for that designation as well.

For investors who haven't yet bought the stock, it may be time to take another look at this technology giant.

[In full disclosure, the author of this article owns shares of Amazon in her personal portfolio.]

Bear of the Day:

Hyatt Hotels Corp.  has rebounded from the spring coronavirus lockdowns. But this Zacks Rank #5 (Strong Sell) is still facing the challenges of the coronavirus’ impact on travel in 2021.

Hyatt operates more than 950 hotel, all-inclusive and wellness resort properties in 67 countries across six continents. It operates under 21 brands including Park Hyatt, Miraval, Andaz, Hyatt Ziva, Thompson Hotels, Joie de Vivre and Hyatt Zilara, among others.

It also operates the World of Hyatt loyalty program.

2021 Earnings Estimates Are Being Cut

Over the last month, four 2021 earnings estimates have been cut, pushing down the full year Zacks Consensus estimate to a loss of $2.90 from a loss of $2.82.

One estimate was cut in the last week.

However, analysts still expect to see earnings improvement compared to 2020 of 42% as Hyatt is expected to lose $4.99 in 2020.

It reports fourth quarter 2020 earnings on Feb 17, 2021.

Improvements Off the 2020’s Lows

In the third quarter of 2020, comparable RevPar fell 72% but China was among its strongest market as it recovered quickly from the coronavirus shutdown.

Hyatt was bullish about the future in the third quarter. It opened 27 new hotels with 4300 new rooms, a new third quarter record, even as the pandemic continued to impact travel globally.  

As of Oct 31, 2020, 94% of total system-wide hotels (and 92% of rooms) were open.

Cash Situation

As of Sep 30, 2020, Hyatt had $1.778 million in cash on hand.

However, further travel shutdowns have occurred to start the new year.

Are these a temporary setback to the travel industry?

Shares Up on Vaccine Hopes

Shares have jumped 27% over the last 3 months on vaccine hopes for a return to travel.

But, they’re still down 16.4% over the last year.

Investors interested in the hotel stocks might want to wait on the sidelines until there is a clearer picture of the extent of the recovery in the travel industry.

Additional content:

Qualcomm Drops on Mixed Q1; eBay Higher on Strong Q4; PayPal Beats

Market indexes finished regular Hump Day trading sliding into the closing bell toward flat levels for the Dow (+0.12%), Nasdaq (-0.02%) and the S&P 500 (+0.10%). We saw a topsy-turvy day in general, with the Dow having fallen 166 points at its intraday low. But strength in recently dormant Energy stocks, along with Cannabis plays gaining attention on legalization efforts, helped move the needle forward on the day for the S&P 500, albeit modestly.

Qualcomm shares have dropped 7% immediately upon the release of its fiscal Q1 earnings report after the bell Wednesday afternoon, on mixed results for the top and bottom lines: earnings of $2.17 per share outpaced the Zacks consensus by seven cents, but quarterly revenues missed expectations — $8.23 billion versus $8.30 billion expected. The company never misses earnings estimates: the last time Qualcomm posted a negative earnings surprise was in its fiscal Q4 of 2014.

Guidance for fiscal Q2 were also raised on both top and bottom lines, to $1.55-1.75 per share compared to the $1.56 our analysts had been looking for, with sales now expected in a wide range of $7.2 billion - $8 billion, up from the Zacks consensus $7.17 billion. But with shares having gained 30% in just the past three months and up 80% from year-ago levels, this Qualcomm after-market activity looks at first blush to be a “sell the news” event. The company carried a Zacks Rank #2 (Buy) rating ahead of its earnings release.

eBay topped expectations by 3 cents on its bottom line to 86 cents per share, while revenues blew past expectations to $2.87 billion from the estimated $2.70 billion, swinging to a positive from year-ago revenues. Shares are up almost 8% on improved guidance for the current quarter, with Gross Merchandise Volume (GMV) growing 26.6%. The company also increased its dividend yield 13% and added $4 billion to its share buyback program.

PayPal shares are up 1% in late trading on its Q4 beat on both earnings and revenues: $1.08 per share was eight cents higher than predicted, with $6.12 billion outperforming the $6.06 billion expected. The company announced 16 million net new active users in the quarter, on total payment volume up 36% to $277 billion. The stock had already enjoyed 40% growth in just the last three months, and double its value from a year ago.

Questions or comments about this article and/or its author? Click here>>

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