For Immediate Release
Chicago, IL – April 15, 2020 – Zacks Equity Research Shares of Cardinal Health Inc. CAH as the Bull of the Day, Hilton Worldwide Holdings HLT asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Cloudera CLDR, Limelight Networks, Inc. LLNW and Digital Turbine, Inc. APPS.
Here is a synopsis of all five stocks:
Bull of the Day:
Cardinal Health Inc. is a national pharmaceutical drug distributor—the second largest in the U.S.—and offers services to pharmacies and healthcare providers and manufacturers.
Q2 Earnings Impress Investors
Cardinal reported strong fiscal 2020 second quarter results back in February, with its top and bottom line beating the Zacks Consensus Estimate.
Total revenue jumped 5% to $39.7 billion, and earnings came to $1.52 per share. Earnings were significantly boosted thanks to the company’s generic pharmaceuticals portfolio performance.
Cardinal’s two business segments, Pharmaceutical and Medical, generated revenue of $35.7 billion and $4 billion, respectively.
Investors were pleased with the results, and CAH stock surged 11% the day of the earnings release.
Management also raised its full-year 2020 adjusted EPS guidance to a midpoint of $5.30 per share, up from the previous midpoint of $4.97.
Valuation & Solid Dividend
Shares of CAH are basically flat over the past three months compared to the S&P 500’s drop of 12.3%. Earnings estimates have been rising, and Cardinal Health is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, two analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up five cents to $5.38 per share; earnings are expected to increase 2% compared to the prior year period. 2021 looks strong as well, with earnings expected to see 4.2% year-over-year growth.
Like other healthcare stocks, CAH is now on many investors’ radar because of its medical equipment supply segment. The company serves as a personal protection equipment (PPE) supplier to hospitals nationwide, and as long as the COVID-19 pandemic persists, demand for these products will remain high.
CAH also offers potential investors value. It only trades at a 9X forward multiple, well below its peers (22X) and the broader market (16X).
And, CAH boasts a nearly 4% dividend yield and holds the title of Dividend Aristocrat, having increased its shareholder payout for more than 30 consecutive years.
If you’re an investor searching for a healthcare stock to add to your portfolio, make sure to keep CAH on your shortlist.
Bear of the Day:
Hilton Worldwide Holdings is a hospitality company that owns, leases, manages, develops, and franchises hotels and resorts worldwide. Its development pipeline is comprised of over 2,570 hotels, and includes chains like Hilton, DoubleTree, Waldorf Astoria, Hampton, and Embassy Suites, among others.
The Coronavirus Impact
As the coronavirus pandemic continues to rock the global economy, the broader travel industry has been essentially brought to a standstill.
Hilton, like other hotel and travel stocks, have seen its share price plunge in the past few weeks. Shares of the hotel giant are down almost 37% year-to-date, while the S&P 500 is down 12.3% in comparison.
Like restaurants, retailers, and airlines, hospitality stocks are extremely exposed to the economic effects of COVID-19. In particular, Hilton has shuttered many of its properties, furloughed workers, and taken huge steps to try and preserve liquidity.
In March, Hilton announced that it would be cutting “non-essential” costs, like capital expenditures, its share buyback program (which it had been actually expanded by $2 billion earlier in the month), and its dividend payouts.
CEO Christopher Nassetta said that he won’t take any of his salary for the rest of 2020, while the rest of the executive team will take a 50% pay cut.
“[W]ith travel at a virtual standstill, operations have been suspended across many managed and franchised hotels, and those hotels that remain open have reduced services for guests because of decreased occupancy levels,” the company said in a press release.
HLT is now a Zacks Rank #5 (Strong Sell). Five analysts have cut their full year earnings outlook, and the consensus estimate has fallen over two dollars from $4.18 to $2.61 a share.
Hedge fund manager Bill Ackman went on CNBC last month and said that “Hilton is the canary in the coal mine,” meaning that the current problems that the hotel industry is facing should be seen as a warning for other industries.
But, Ackman also said he would be buying HLT as share prices declined.
Hilton is still a well-run company and a top-performing hotel chain, and boasts strong operating margins, cash flow, and balance sheet.
However, until the coronavirus pandemic begins to stabilize, it’s probably best to remain cautious and avoid hospitality stocks for the time being.
3 Top-Ranked Cheap Tech Stocks to Buy for Market Rally
U.S. stocks climbed again through morning trading Tuesday as part of a larger rally over the last serval weeks that has seen the S&P 500 jump roughly 25% from its March 23 lows. The recent positivity comes as the Fed and the U.S. government try to support the economy amid the coronavirus downturn.
On top of that, there are signs that social distancing measures are working to flatten the curve. There are now even calls to start to reopen some parts of the economy that have been shut down to help slow the spread of the coronavirus.
Volatility could clearly remain, but the stock market is forward looking. This means that some investors might want to start to buy stocks, or at least add them to their watchlists because avoiding the market amid uncertainty can prevent you from catching some big rallies.
That said, let’s dive into three tech industry stocks trading under $10 a share that we screened for today. Stocks trading under $10 can be more volatile than their pricier peers, but investors can still scoop up solid returns with the right low-priced stocks.
Prior Close: $7.99 USD
Cloudera is an enterprise data cloud firm that completed its merger with big-data peer Hortonworks in January 2019. The firm’s new Cloudera Data Platform made its debut on Microsoft Azure Marketplace last fall, which should provide strong exposure. Then in January of this year, Rob Bearden took over as chief executive after previously co-founding and running Hortonworks.
CLDR topped our Q4 fiscal 2020 estimates in March, with the company’s annualized recurring revenue up 11% to $731.2 million. Bearden said on Cloudera’s Q4 earnings call that it “will transform from a mostly on-premise enterprise data management vendor to a true hybrid multi-cloud data platform company… CDP Public Cloud services will reflect our competitive advantage in addressing the full lifecycle of data.”
Cloudera’s consensus earnings estimates for fiscal 2021 and 2022 have soared since it reported. This helps CLDR earn a Zacks Rank #1 (Strong Buy) at the moment, alongside a “B” grade for Momentum in our Style Scores system. Our Zacks estimates call for CLDR’s revenue to jump 8% this year and another 9% in FY22 to reach $935.63 million.
Cloudera shares have failed to find their footing overall, but they have traded at nearly $12 a share in the last year. Therefore, some investors might want to take a chance on this “cheap” enterprise data cloud stock.
Limelight Networks, Inc.
Prior Close: $5.87 USD
Limelight provides digital content delivery, video, cloud security, and edge computing services. The Scottsdale, Arizona-based firm allows its customers to deliver streaming video and other digital content to “any device, anywhere.” This makes it highly attractive as people around the world are largely confined to their homes. The Wall Street Journal noted in early April that the manager of the Needham Small Cap Growth fund, Chris Retzler, which “posted the best stock-fund performance of the past 12 months,” is a Limelight fan.
Limelight, which services industries from media and broadcasting to gaming and more, has seen its stock price surge over 70% since March 16. LLNW shares have now jumped roughly 55% in 2020 and 105% in the past year, from under $3 a share to its current price. Plus, Limelight shares jumped over 6% again through morning trading Tuesday and might continue to climb amid the stay-at-home push.
Our current Zacks estimates call for LLNW’s fiscal 2020 revenue to climbed over 15% to reach $231.2 million, with sales set to jump another 8% higher next year. Meanwhile, Limelight is expected to jump from an adjusted loss of -$0.02 in 2019 to +$0.05 a share in FY20. Peeking ahead, its adjusted EPS figure is projected to soar another 115% higher to $0.11 per share in FY21.
Limelight is currently a Zacks #2 (Buy) that sports “A” grades for both Growth and Momentum in our Style Scores system. Plus, LLNW is trading at a slight discount compared to the S&P 500’s average in terms of forward 12-month Zacks sales estimates, which is rather impressive given its strong run.
Digital Turbine, Inc.
Prior Close: $4.83 USD
Digital Turbine connects OEMs, mobile operators, and publishers with advertisers and app developers. The Austin, Texas-based firm has landed on Deloitte's Technology Fast 500 list multiple times and it completed on March 3 its acquisition of Mobile Posse. The company said that Mobile Posse’s “suite of highly-engaging content discovery products is a perfect complement to our core Digital Turbine platform offering.”
Looking ahead, Digital Turbine’s adjusted Q4 2020 earnings are projected to soar 67% on over 41% stronger revenue. Meanwhile, its full-year fiscal 2020 EPS figure is expected to surge 163%, while sales are set to jump over 33% to $137.8 million. APPS is then expected to see its adjusted 2021 EPS figure surge another 83% higher, on 61% stronger revenue,
Digital Turbine’s growth outlook, which reflects the expected Mobile Posse contribution, is strong. The firm’s earnings revisions have remained positive despite the current economic conditions, which helps it earn a Zacks Rank #1 (Strong Buy) at the moment. APPS is also part of highly-ranked Zacks industry and boasts an “A” grade for Growth.
Plus, Digital Turbine’s valuation picture is solid, trading at a significant discount against the S&P 500, its industry and its own recent history. Digital Turbine shares have fallen in 2020, but are still up 40% in the last 52 weeks and they have rallied recently as part of the broader market comeback.
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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
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