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Deere & Co, Chico's FAS, Aerpio Pharmaceuticals, TRACON Pharmaceuticals and Repligen Corp highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
·11 min read

For Immediate Release

Chicago, IL – December 4, 2020 – Zacks Equity Research Shares of Deere & Company DE as the Bull of the Day, Chico's FAS, Inc. CHS asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Aerpio Pharmaceuticals, Inc. ARPO, TRACON Pharmaceuticals, Inc. TCON and Repligen Corporation RGEN.

Here is a synopsis of all five stocks:

Bull of the Day:

Deere & Company sees a light at the end of the tunnel as agriculture demand finally picks up. This Zacks Rank #1 (Strong Buy) is expected to see double digit sales growth in Fiscal 2021.

Deere & Company makes equipment, technology and services for customers in the agriculture and construction industries worldwide.

Big Beat in the Fourth Quarter of Fiscal 2020

On Nov 25, Deere reported its fourth quarter fiscal 2020 results and beat the Zacks Consensus by $0.95. Earnings were $2.39 versus the consensus of $1.44 for a 65.9% beat.

It was the fifth consecutive beat by the company.

Sales declined 2% to $9.7 billion but the agriculture segment showed improvement in demand.

Agriculture & Turf sales jumped 8% to $6.2 billion while Construction and Forestry sales fell 16% year-over-year to $2.5 billion.

“Higher crop prices and improved fundamentals are leading to renewed optimism in the agricultural sector and improving demand for farm
equipment,” said John C. May, CEO.

Deere Bullish on Fiscal 2021

Deere gave bullish guidance about both of its largest business segments for fiscal 2021.

For the year, it expects its Agriculture & Turf sales to increase between 10 to 15 percent as industry sales of agricultural equipment in both the US and Canada are forecast to rise between 5 and 10 percent.

But Construction & Forestry is also expected to see a recovery in sales of between 5 to 10 percent.

Deere expects this due to the pandemic recovery in construction equipment, expected growth in the road building sector and continued strength in compact construction due to residential building activity, which remains hot.

Analysts Raise Estimates

The analysts loved what they heard as they dove in to raise estimates for fiscal 2021 and 2022.

10 analysts raised estimates in the last 30 days which pushed the Zacks Consensus up to $12.64 from $10.34. That's earnings growth of 45% as Deere only made $8.69 in Fiscal 2020.

7 analysts also raised for Fiscal 2022 over the last month, sending the Zacks Consensus up to $15.27 from $12.29. That's another 21% earnings growth.

Shares Soar on the Bullish Outlook

Deere has become a Wall Street darling again.

Shares have soared 46% year-to-date and are at 5-year highs.

It's so hot it's outperforming the technology-heavy Invesco QQQ ETF over those 5-years.

Deere is trading at 20.5x forward earnings. That's not at nose bleed levels but it's not cheap either.

Bear of the Day:

Chico's FAS is seeing some green shoots as its digital sales have spiked during the pandemic. This Zacks Rank #5 (Strong Sell) is still expected to see negative earnings this year and next.

Chico's is a Florida-based fashion company that operates 3 women's specialty apparel brands: Chico's, White House Black Market and Soma.

As of Oct 31, 2020, the company operated 1,310 stores in the United States and sold merchandise through 68 international franchise locations in Mexico and 2 domestic franchise airport locations.

It also sells online through all of its brands as well as through third-party channels.

A Big Miss in the Third Quarter

On Nov 24, Chico's reported its fiscal third quarter 2021 earnings and missed on the Zacks Consensus by $0.23. Earnings were a loss of $0.42 versus the Zacks Consensus of a loss of $0.19.

Sales rose 14.8% quarter over quarter to $351.4 million as digital sales took off and stores reopened.

This was still a decrease of 27.5% year-over-year which reflected a decline in store sales as well as the impact of 63 net permanent store closures.

The decline was partially offset by a 67% increase in digital sales.

There was some green shoots in the comparable sales data.

Chico's same-store-sales comparables were down 32.3% after falling 3.6% in the prior year.

White House Black Market also fell 28.7%, on top of a decline of 5.7% a year ago.

But Soma had strength, with positive comparables of 10.5% on top of last year's 11.3%. That's an impressive 2-year comp of 21.8%. Soma is their hot brand.

Chico's amended and extended its $300 million credit facility and ended the quarter with $145.2 million in cash and cash equivalents.

It also saw $65 million in rent abatement and reduction commitments as part of its lease portfolio review.

Analysts Bearish About Fiscal 2021 But See Rebound in Fiscal 2022

After the earnings report, analysts cut this year's and next year's estimates but they see some positives in next year.

The Fiscal 2021 Zacks Consensus fell to a loss of $2.89 from a loss of $2.21 in the last month. It lost $0.02 last year.

For Fiscal 2022, two analysts also lowered their estimates in the last month pushing the Zacks Consensus to a loss of $0.17 from a loss of $0.13 during that time.

But that's a big improvement over this year.

In addition to the earnings rebound, analysts believe that sales will rebound 18.8% in Fiscal 2022.

Shares Remain Under $5

Shares of Chico's plunged in the March coronavirus sell-off but they remain down 57% and are trading under $2.

Some insiders bought shares in June 2020, but since then, they have been on the sidelines.

Additional content:

3 Biotech Stocks to Buy on Covid Vaccine Optimism

Keeping the hope for faster availability of vaccines alive, the month of December finally brought in some good news as the United Kingdom granted Pfizer and its partner BioNTech’s mRNA-based vaccine candidate, BNT162b2, authorization for emergency use.

The stock markets have been rising lately, driven by positive developments on the coronavirus vaccine front in November. Leading stock market indices have been up in double-digit percentage points since October-end led by the tech-heavy Nasdaq.

Meanwhile, an advisory committee meeting has been scheduled by the FDA to discuss the emergency use authorization (“EUA”) application for Pfizer’s BNT162b2 on Dec 10. BNT162b2 achieved 95% efficacy rate in final analysis. Moderna is closely following the pharma giant as its EUA application is due to be discussed by an FDA advisory committee on Dec 17.

The company is developing a mRNA-based coronavirus vaccine, mRNA-1273, that has demonstrated a primary efficacy rate of 94.1% so far. The FDA should make its decisions soon after the meetings and the vaccines are expected to be launched in December, if approved.

Another frontrunner in the vaccine race, AstraZeneca, announced last month that its adeno-virus based vaccine candidate, AZD1222, achieved an average efficacy rate of 70% during the first interim analysis. Several other companies are developing COVID-19 vaccines in late-stage studies across the globe.

However, we note that an authorization does not guarantee the end of the pandemic any time soon. The vaccines need to be delivered to the several billion people across the globe, following their potential approvals/authorization in different countries. Vaccination of the majority of people will likely take months, if not years, due to several factors including logistics and manufacturing capacities. But still the initiation of vaccination will likely lead to normalization of daily life as well as economies toward mid-2021, creating demand across all sectors and industries.

Stocks to Consider

Here we will discuss three biotech companies that have the potential to ride the positive sentiment on the back of their promising pipeline or technologies and generate handsome returns for investors in the coming months. These stocks carry a Zacks Rank #2 (Buy), have witnessed positive estimate revisions in the past four weeks and risen at least 40% year to date.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aerpio Pharmaceuticals: This small biotech is focused on developing medicines for ocular diseases and diabetic complications. It is also developing treatment for acute respiratory distress syndrome (“ARDS”) associated with a novel strain of COVID-19 infection. The company is evaluating its pipeline candidate, razuprotafib, for the treatment of COVID-related ARDS in adult patients with critical COVID-19 in a phase II study. Data from this study is expected in the first half of 2021. Positive data will drive share prices higher.

The company’s loss estimates for 2021 have narrowed from 63 cents per share to 57 cents over the past 30 days. The stock has surged 177.5% so far this year.

TRACON Pharmaceuticals: The company is evaluating its lead pipeline candidate, envafolimab, for treating soft tissue sarcoma, in a pivotal phase II study. Interim data is expected in 2021, followed by final data in 2022. It has two other early-stage oncology candidates in its pipeline. Oncology is an attractive domain in the biotech sector and with the possibility of containing COVID-19 with vaccine approvals, the company will likely be able to continue its studies without disruptions. Positive data readout will lead share price higher.

Loss estimates for the company have narrowed from $1.47 per share to $1.35 per share for 2021 over the past 30 days. Shares have skyrocketed 299.6% year to date.

Repligen Corp.: The company develops and commercializes highly innovated bioprocessing technologies that are used to develop novel treatments including monoclonal antibodies, recombinant proteins, vaccines and gene therapies by several pharma/biotech companies. Normal life following successful vaccinations will lead to disruption-free progress of clinical studies, which will likely fuel demand for Repligen’s products.

Shares of this company are up 102.2% so far this year. The company’s earnings estimates for 2021 moved up from $1.42 per share to $1.66 over the past 30 days.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Deere & Company (DE) : Free Stock Analysis Report
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Aerpio Pharmaceuticals, Inc. (ARPO) : Free Stock Analysis Report
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