For Immediate Release
Chicago, IL – October 21, 2020 – Zacks Equity Research Shares of Quidel Corporation QDEL as the Bull of the Day, Akoustis Technologies, Inc. AKTS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix, Inc. NFLX, Snap Inc. SNAP and Texas Instruments Incorporated TXN.
Here is a synopsis of all five stocks:
Bull of the Day:
Quidel is the $11 billion provider of rapid COVID-19 antigen tests that has analysts raising revenue estimates hand-over-fist this year to $1.45 billion, representing over 170% annual growth.
And profit projections have vaulted to nearly 400% annual growth -- while 2020 EPS of $14.75 now makes the stock's P/E trade under 17X -- after Quidel received Emergency Use Authorization (EUA) from the FDA to market its new combination "ABC" kit that tests for influenza A and B as well as COVID-19.
Here's what I wrote to my TAZR Traders members on October 1st, after we were buyers of QDEL shares last month near $160...
QDEL Warns... of Massive Revenues
Let's check in with Quidel which jumped 11% to $244 this morning after management announced stunning preliminary Q3 results.
Here's a summary of the company press release...
Quidel sees Q3 revenue $475M-$477M, consensus $395M -- AND Q4 OF $800M!
"The entire team at Quidel has truly risen to the challenge of the COVID-19 pandemic, producing and shipping millions of tests to those with the greatest need, and further democratizing testing by providing affordable rapid testing to tens of thousands of communities throughout the United States. We are proud of the leading role we are playing to slow the spread of disease and, ultimately, get Americans back to work," said Douglas Bryant, president and chief executive officer of Quidel Corporation.
"Moving forward, we expect even greater success in augmenting our supply chains and production for our COVID-19 diagnostic products, resulting in $800 million or more in revenue in our final quarter of 2020."
These preliminary results are based on management’s initial analysis of operations for the quarter ended September 30, 2020. The company expects to issue full financial results for the third quarter in late October.
(end of QDEL PR notes)
Now, when I look at Q4 estimates for only $452 million on the top line Zacks Consensus -- including a high estimate of just $490M -- I can't believe the stock didn't rock above $250 on this guidance of "$800 million or more" from Bryant!
Maybe the crowd is wrong. Maybe somebody knows something we don't.
Either way, I'm staying long right now.
Bear of the Day:
Akoustis Technologies is a $300 million semiconductor designer and manufacturer of radio frequency resonators and filters. These specialty technologies facilitate signal acquisition and accelerate band performance between the antenna and the back end of mobile and other digital devices.
Akoustis applies pioneering next-generation materials science and MEMS wafer-manufacturing to address the market requirements for improved RF filters, targeting higher bandwidth, higher operating frequencies and higher output power compared to incumbent polycrystalline BAW (bulk acoustic wave) technology.
This will be crucial for the escalating demands of mobile data requiring higher frequency spectrum, such as 5G mobile, next-gen WiFi and network infrastructure, and defense markets.
Jargon Breakdown: MEMS, BAW, Piezo-Electrico
Micro-electromechanical systems (MEMS) are a process technology used to create tiny integrated devices or systems that combine mechanical and electrical components. They are fabricated using integrated circuit (IC) batch processing techniques and can range in size from a few millimeters to a few microns (one-millionth of a meter).
The Akoustis proprietary XBAW technology produces single-crystal, piezoelectric bulk acoustic wave filters (BAWF). This resonator-filter process technology drives electro-mechanical coupling and translates to wide filter bandwidth.
Piezoelectricity is the electric charge that accumulates in certain solid materials, such as crystals and ceramics, in response to applied mechanical stress. The word piezoelectricity means electricity resulting from pressure and latent heat.
By the way, Akoustis Technologies is headquartered in the Piedmont technology corridor near Charlotte, North Carolina.
A good definition of BAW comes from the UK technology research firm Absolute Reports...
"A BAW filter (Bulk Acoustic Wave) is a filter whereby the electrical input signal is converted to an acoustic wave by so-called interdigital transducers (IDTs) on a piezoelectric substrate such as quartz. The IDTs consist of interleaved metal electrodes which are used to launch and receive the waves, so that an electrical signal is converted to an acoustic wave and then back to an electrical signal."
Broadcom and Qorvo, the industry's leading manufacturers, accounted for more than 90% of revenues in 2019 as they also specialize in FBAR (thin-film bulk acoustic resonators). By region, China has the highest share of regional income, reaching 51% in 2019.
Where Does the Little Guy Fit in This Industry?
Founded in 2014 by experienced industry leaders and scientists from University of California at Santa Barbara (UCSB) and Cornell University, Akoustis went public in 2015. But the company was in a pure R&D stage for five years, unconcerned with generating revenue.
Thus, the stock spent most of that five years between $4 and $9 with its high-water mark year in revenues remaining under $2 million in fiscal year 2019 (ended June).
But 5G product roll-outs are ready this year and sales look to explode 440% to $9.7 million, as the company gains contracts with global top-tier telecom carriers and manufacturers.
Better yet, the next fiscal year (starting in July 2021) has analysts projecting sales growth to $52 million for a second annual round of whopping 440% gains!
Considering these projected advances in sales, by almost any valuation measures AKTS shares are attractive to early-stage growth-oriented investors.
Grabbing Attention from Big Customers
You might be wondering, given this estimated growth explosion, why AKTS is in the cellar of the Zacks Rank. I'll explain in a moment, but first here's how they recently described their market opportunity...
"With the shift to larger screens and larger batteries in mobile handsets, the space for antennas has been reduced and this has negatively impacted performance. In order to compensate, RF front-ends have countered by delivering an additional 1-2 dB of transmitted power – this has led to the need for RF front-ends with higher power handling."
And here was a key excerpt from their August 20 press release upon a third design win for their 5G small cell network infrastructure XBAW filters from an existing tier-1 customer...
The Company’s XBAW™ filters are uniquely suited to serve the 5G network infrastructure market given the ability to handle high frequency, wide bandwidth, and high power. In addition to the two design wins with this first customer, Akoustis has more than five active engagements with other tier-1 and tier-2 small cell network equipment OEMs which are currently evaluating the Company’s existing band n77 and n79 RF filter solutions. In addition, multiple OEMs have indicated the desire for additional new filters in the sub-6 GHz 5G bands.
Jeff Shealy, Founder and CEO of Akoustis, stated, “We are pleased to follow-up our two previous design wins with this third design win in 5G small cell network infrastructure. We are also experiencing increased customer interest in our small cell XBAWTM filter portfolio quarter-over-quarter, with over five current engagements, including multiple tier-1 OEM customers.” Mr. Shealy continued, “As we continue to expand our product catalog beyond the 14 design-locked RF filters, we expect to secure more design wins across multiple target end markets.”
5G small cell base stations are low power, short range cellular transmission devices, capable of providing extended coverage for consumers, enterprises, or to augment cellular coverage for 5G mobile service providers. They offer all the standard characteristics of a traditional tower base station and can handle high data throughput. 5G networks are expected to employ small cells in greater quantity than prior networks to help mitigate the shorter wavelengths associated with higher frequencies.
In an April 2019 report, Zion Market Research estimated the global small cell 5G network market was valued at around $381 million in 2018 and is expected to reach approximately $3.5 billion by 2025, at a CAGR of approximately 37% between 2019 and 2025.
(end of Akoustis PR from 8/26)
Why AKTS is a Zacks #5 Rank
It's just a simple case of analysts at one time this past summer-spring OVER-estimating the impact on the bottom line from all those new sales on the top line.
So in the past two months, the Zacks EPS Consensus (among 3 contributing analysts) fell from a loss of 53 cents to -69 cents for the current fiscal year 2021 where Q1 just ended in Sep.
And for the following year (starting in July of 2021), the consensus dropped from a projected profit of 13 cents to -6 cents.
So, we give a "D" for EPS growth. But clearly this company is just entering its "S" curve sales growth period and should be on the radar of anyone interested in 5G and key players like Broadcom, Qorvo or Keysight Technologies.
Disclosure: I own KEYS shares for the Zacks TAZR Trader portfolio.
Q3 Earnings: Netflix Misses, SNAP & T.I. Beat
Market indexes broke losing streaks across the board on Tuesday, with hopes for a new stimulus package passing through Congress still alight two weeks to the day ahead of the long-awaited General Election on November 3rd. The S&P 500 led the way, up 0.47% or 16.22 points, followed by the Dow +0.40% or 113 points. The Nasdaq, breaking a 5-day streak of lower closes, rose 0.33% or 37.51 points. The Russell 2000 saw small-cap names up 0.25% overall Tuesday.
Immediately after the closing bell, Netflix shares fell 6% on a disappointing Q3 earnings report. While the headline numbers were mixed — $1.74 per share missed the Zacks consensus $2.13 (though was up from $1.47 per share a year ago), though sales in the quarter came in at $6.44 billion, ahead of the $6.39 billion expected — net subscription adds were a big disappointment. Whereas a quarter ago Netflix surprised to the upside with 10 million new subscribers, the company brought in 2.2 million in Q3, well below the 3.3 million anticipated.
Paid subscribers overall are now 195 million, a tad below expectations, as we see the boon from “shelter in place” pandemic initiatives exiting the Netflix story in the past quarter. Engagement per member household is up year over year, and clearly this is a company still moving in the right direction overall, albeit more slowly (revenue guidance for next quarter also dipped a bit). Netflix had not missed an earnings projection since Q3 2017 — three full years ago.
On the other side of Q3, Snap shares were up 17% in late-market trading after its Q3 report was far better than expected. Swinging to earnings of $0.01 per share from estimates of -$0.06, on revenues of $679 million blowing the doors off the $551 million in the Zacks consensus, +52% year over year, were also positive catalysts. The company added 11 million Daily Active Users (DAU) in Q3, and the social media staple new predicts Q4 revenues up as much as 50%.
Texas Instruments joined the parade of Q3 surprises Tuesday afternoon, beating expectations on both top and bottom lines: $1.45 per share on $3.82 billion in revenues easily outpaced the $1.26 per share and $3.43 billion in sales expected. Guidance for next quarter was increased to earnings of $1.20-1.40 and revenues of $3.41-3.69 billion. Shares were up 1% in late trading, approaching the company’s all-time high share price reached just last week.
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