For Immediate Release
Chicago, IL – November 16, 2018 – Zacks Equity Research BioTelemetry BEAT as the Bull of the Day, Ultra Clean Holdings UCTT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA NVDA and AMD AMD.
Here is a synopsis of all four stocks:
Bull of the Day:
BioTelemetry is a $2 billion maker of cardiac monitoring devices and services that just delivered an earnings report true to its name with a 65% positive surprise on the bottom line.
On October 30, BEAT reported third-quarter adjusted EPS of $0.53 vs. consensus estimates of $0.32 and sales of $100 million vs. the expectation of $98 million.
The company also raised Q4 guidance and this inspired analysts to lift their estimates going forward, pushing BEAT shares into the top tier of the Zacks Rank.
What Does BEAT Do?
BioTelemetry provides ambulatory outpatient management solutions for monitoring clinical information regarding an individual's health. It is focused on the diagnosis and monitoring of cardiac arrhythmias and other heart rhythm disorders using wireless and mobile technologies.
BEAT technology and systems, including mobile cardiac outpatient telemetry (MCOT), can give medical caregivers and patients remote information as well as historical data.
Estimates Jump for a Record Year
After BioTelemetry's Q3 report, investment bank analysts at Raymond James commented that "three straight quarters of accelerating organic revenue growth (+18% in 3Q) and 500bp of EBITDA margin expansion" made them "increasingly confident in management’s ability to execute."
Full-year 2018 revenue estimates have now climbed to $397 million, representing 38.4% growth. Next year's top line stands currently at $437 million, for 10% growth.
And on the profit line, 2018 EPS estimates were boosted 14% from $1.51 to $1.72, representing a 77% advance this year.
Next year's profit projections also rose to $1.72 which is flat year-over-year. But I suspect analysts are waiting until Q4 results before detailing their models.
Bear of the Day:
Ultra Clean Holdings is a $350 million developer and supplier of critical subsystems for the semiconductor capital equipment, flat panel, solar and medical device industries.
Ultra Clean offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component neutral design and manufacturing and component testing capabilities. The company is headquartered in Menlo Park, California.
I last wrote about Ultra Clean as the Bear of the Day on August 8 when shares were trading near $15. The stock has been smacked down by over 35% since then, especially since its earnings report last week.
Here's what I said in my August report...
Ultra Clean has crossed the $1 billion revenue threshold this year, which certainly makes it a strong value on a price-to-sales ratio basis.
But earnings estimates have dropped significantly since the company reported their Q2 on July 26 and that's why the stock is in the cellar of the Zacks Rank.
In the past 30 days, this year's consensus EPS projection has fallen 16% from $2.30 to $1.93. Next year's profit forecast also dropped buy only 11% to $2.38.
The analyst downward revisions were inspired by management commentary and guidance about the second half outlook. One of the company's top customers is Lam Research who also reported on July 26 and indicated on its earnings call that it expects September to be its trough quarter for the year in a transitory weak patch in the semi equipment cycle.
But while Lam has only gone up since earnings, the pessimism lingers for UCTT. Stifel Nicolaus analysts lowered their price target to $26 (from $30) while keeping a Buy rating on the stock, citing that most of the bad news is now priced-in.
(end of my August 8 report excerpts)
Since then, Ultra Clean has continued to disappoint in the midst of a predominantly bearish cycle for the Semiconductor sector.
Clearly the Stifel analysts were still too optimistic on the current Semi Cycle (as I have often been). We will both get our comeuppance today as NVIDIA shares make their own new 52-week lows on a big revenue guidance miss.
Back to UCTT, last week the company reported mixed results and the stock sank to new 52-week lows as earnings continue to collapse, even in the face of solid sales growth. I hope it's clear for you to see that until the earnings estimates stop going down, and start heading back up, it may be best to "stand clean" of Ultra Clean.
NVIDIA Crashes 16% After Q3 Miss, Lowered Guidance
Shares of A.I. chip giant NVIDIA have fallen in a 16.5% crater in late trading today following the company's Q3 earnings report that missed expectations on both top and bottom lines, as well as disappointing guidance looking ahead. Earnings of $1.84 per share missed the Zacks consensus by 3.66% while revenues underperformed by 1.79% in the quarter to $3.18 billion. Shares are now trading at 52-week lows.
After two years of stellar growth in its Gaming and Data Center segments, we're seeing a leveling off for NVIDIA, and expectations have suddenly come down dramatically. The company itself cites "excess channel inventory" related to the "post-crypto currency boom, which will be corrected." Thus, revenue guidance for its fiscal Q4 in January has been ratcheted way down to $2.7 billion from the $3.4 billion analysts had been expecting.
No doubt analysts will be busy re-working their models, with lower price targets and estimates going forward. NVIDIA, which had been a Zacks Rank #3 (Hold)-rated company ahead of the earnings release, will likely be taken down a peg or two in the near-term. Not only that, but investors who have remained tech-heavy may see these NVIDIA results lead the sector down in Friday's pre-market activity as well.
NVIDIA still possesses a state-of-the-art platform with its Turing products, which will keep the company viable over the longer term, but hits to its high-growth segments -- and now with companies like AMD announcing they intend to challenge NVIDIA's preeminence in the Data Center space -- are taking this recently high-flying Tech favorite down. For more on NVDA's earnings, click here.
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Ultra Clean Holdings, Inc. (UCTT) : Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
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