For Immediate Release
Chicago, IL –July 28, 2017 – Zacks Equity Research highlights Datawatch (NASDAQ:DWCH– Free Report) as the Bull of the Day Dick’s Sporting Goods (NYSE:DKS– Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Apple (NASDAQ:AAPL – Free Report) and JPMorgan (NYSE:JPM – Free Report).
Here is a synopsis of all four stocks:
Bull of the Day:
For a while there, anything big data or cloud related was on fire. Bringing complex data analytics to the everyday company was revolutionizing the way we do business. But then, like most trends in the market, it eventually stalled out. The good news is, there’s been a bit of a resurgence in these stocks and I’ve got an emerging stock here, breaking out to new highs as my Bull of the Day.
Datawatch (NASDAQ:DWCH – Free Report) designs, develops, markets, and distributes business computer software products to self-service data preparation and visual data discovery markets in the United States and internationally. Its software solutions allow organizations to access, analyze, and visualize their information. The company’s products include Datawatch Monarch, a self-service data preparation tool to explore, manipulate, and merge new data sources; Datawatch Panopticon that enables real-time preparation of streaming data for data analysis; and Datawatch Report Mining Server, a Web-based report analytics solution that integrates with existing enterprise content management system for unlocking the corporate data.
The market got a little grumpy Thursday afternoon and put some pressure on tech stocks. This selling had little to do with fundamentals. Datawatch is still a Zacks Rank #1 (Strong Buy) based on earnings estimate revisions coming from analysts. Following their earnings report, analysts revised their earnings estimates for the current quarter, next quarter, the current year and next year to the upside. The most dramatic move was present in the current year estimates where our Zacks Consensus Estimate went from a 30-cent loss to a 15-cent loss. Next year’s numbers have increased from 5 cents to 9 cents.
Today’s Bear of the Day is another one of those retail victims. Although here the story is a little different. This isn’t a mall stock that’s getting clobbered by Amazon. Rather, this is a stock which had a great opportunity after a major competitor went under and simply failed to capitalize.
I’m talking about Zacks Rank #5 (Strong Sell) Dick’s Sporting Goods (NYSE:DKS – Free Report). Dick's Sporting Goods, Inc. operates as a sporting goods retailer primarily in the eastern United States. It provides hardlines, including sporting goods equipment, fitness equipment, golf equipment, and hunting and fishing gear products; apparel; and footwear products and accessories. The company also owns and operates Golf Galaxy, Field & Stream and other specialty concept stores; and e-commerce Websites, as well as Dick's Team Sports HQ, a youth sports digital platform that offers free league management services, mobile apps for scheduling, communications and live scorekeeping, custom uniforms and fan wear, and access to donations and sponsorships.
After rival Sport’s Authority closed their doors, Dick’s looked to be the company that would benefit the most. However, in the wake of these events analysts still remain unimpressed. Over the last week, two analysts have decreased their EPS estimates for the current year while three have dropped their number for next year. The overall impact on our Zacks Consensus Estimate isn’t overly dramatic but it’s still leaving a mark. The current year number has dropped from $3.71 to $3.67 while next year’s number is off from $4.08 to $3.97.
Here’s Why Apple (AAPL) Stock Fell Thursday
Shares of Apple (NASDAQ:AAPL – Free Report) were down nearly 2.5% through late afternoon trading hours Thursday, and it looks like a hesitation-inducing combination of market conditions and company-specific news is to blame.
First, and probably most importantly, stocks dipped nearly across the board during mid-day trading after analysts from JPMorgan (NYSE:JPM – Free Report) issued a very cautious warning about the recent decorrelation throughout the market.
“Over the past year, correlation of stocks and sectors declined at an unprecedented speed and magnitude,” said JPMorgan’s Marko Kolanovic.
Decorrelation means that, instead of stocks moving in the same directions at the same times, they are moving in sporadically different directions at different times. Markets tend to be most correlated when conditions are poor, as investors look to dump stocks universally.
When the market is calm and consistent, decorrelation occurs as investors become pickier with their decisions. And although a calm and consistent market sounds like a strong one, Kolanovic argues that extended periods of decorrelation tend to end with major corrections.
“A similar decorrelation occurred on only 2 other occasions over the last 30 years: in 1993 and 2000. Both of those episodes led to subsequent market weakness and an increase in volatility (in 1994, and 2001),” the analyst wrote.
The major indexes have been flirting with all-time highs nearly every day as of late, so it seems that JPMorgan’s caution is being met with agreement by some who think we may be due for a pullback soon.
Furthermore, Apple investors are grappling with the major announcement that one of its key suppliers, Foxconn, is setting up a manufacturing plant in the United States. Foxconn will spend about $10 billion over the next three years on the new facility, which will employ at least 3,000 people and focus on LCD screen production for TV maker Sharp .
For now, the new plant will have no effect on Apple’s supply chain, but the news comes just a few days after President Trump was quoted as saying that Apple CEO Tim Cook promised to build three new plants in the U.S. Increased investment in American manufacturing will help the domestic economy, but higher production costs could take a chunk out of Apple’s bottom line.
Finally, Apple announced Thursday that it was cutting its lineup of iPod models by discounting the iPod Shuffle and iPod Nano. According to a company statement cited by Business Insider, Apple is also updating its iPod Touch models for the first time since 2015.
The advent of music streaming services like Spotify and Apple Music has meant a shift away from MP3 players like the iPod, and that means Apple’s once-dominant devices are relatively obsolete. The discontinuation of the Shuffle and the Nano isn’t necessarily a bad sign, but it does underscore the fact that Apple is still grappling with several recent shifts in consumer behavior.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
More Stock News: Tech Opportunity Worth $386 Billion in 2017
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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