Sonos, Dollar General, PerkinElmer, PRA Health Sciences and Hologic highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 26, 2021 – Zacks Equity Research Shares of Sonos, Inc. SONO as the Bull of the Day, Dollar General Corporation DG asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on PerkinElmer PKI, PRA Health Sciences, Inc. PRAH and Hologic, Inc. HOLX.
Here is a synopsis of all five stocks:
Bull of the Day:
Sonos is a higher-end home audio company that competes against the likes of Bose. SONO shares have soared in the past year and its outlook appears strong as it continues to expand and diversify its portfolio.
Good Vibrations
Sonos is one of the preeminent home audio companies that specializes in wireless and multi-room sound systems. Its speakers and sound systems are often compared to Bose in terms of quality and price. The company’s speakers are not what many would consider cheap, but they are rather affordable considering the quality and important role they play in many people’s lives and homes.
Sonos’ baseline smart speaker starts at $179. The company then sells a range of sleek, connected speakers that come in black and white. Users can connect streaming music services to their Sonos speakers, and some of the models are voice-controlled, with Amazon Alexa and The Google Assistant built in.
The company also makes subwoofers, soundbars for TVs, and more, enabling people to build on their home audio collections, if they want, and connect the speakers for music or anything else throughout the living space. Sonos sells its speakers individually and in packages, such as surround sound sets that can cost up to $1,900.
The speaker firm’s quality and functionality has helped it thrive in a crowded market that includes tech titans like Apple. And SONO offers what it calls architectural speakers and sound systems that can be placed in walls and ceilings.
Growing Louder
Most recently, Sonos on March 9 announced its lower-priced entry into the widely popular portable smart speaker market. The WiFi and Bluetooth-enabled Roam costs $169 and is now the firm’s more mass appeal speaker.
Aside from speakers, Sonos back in November rolled out its new ad-free, HD streaming tier of its radio service. Sonos Radio HD costs $7.99 a month and aims to compete against Spotify, Apple Music, Amazon Music Unlimited and others.
The nearby chart showcases SONO’s early struggles after its 2018 IPO. But Wall Street tuned into Sonos and its growth story over the last year, helping send the stock up 370%, from under $10 a share to over $40. This run includes an 80% climb in 2021. At around $41.50 a share, SONO trades about 7% below its mid-April records.
Despite the speaker company’s massive run over the past year, outpacing Peloton, Shopify, Etsy and countless other high-flyers, SONO sits just above neutral RSI levels (50) at 53. This could give it plenty of more runway. And at 2.9X forward 12-month sales, SONO trades around 10% below its own year-long highs and is just above the Zacks Consumer Discretionary Sector’s 2.8X, which is solid considering its huge run.
Recent Performance and Outlook
Sonos topped our Q1 FY21 estimates on February 10. The firm’s revenue climbed 15% for the second quarter in a row, and its Free cash flow jumped 97% to $203 million in the first quarter. Plus, it added a record number of new customers and saw a record number of existing customers add to their Sonos product collections.
Sonos and its “industry-leading gross margins” jumped nearly 6% to 46.4% last quarter. And the company is actively improving its direct-to-consumer business, which could prove vital in the e-commerce age.
Zacks estimates call for Sonos Q2 revenue to surge 44% from an easier-to-compare period last year to come in at $251.5 million. This positivity is projected to help it cut its adjusted loss form -$0.48 to -$0.22 a share. Peeking further down the road, its full-year fiscal 2021 sales are projected to climb 18% to $1.6 billion, with FY22 projected to come in 10.4% higher.
These would top FY20’s 5% sales growth and compare well against 2019’s 11% expansion. Wall Street is also likely pleased to see that SONO is expected to skyrocket from an adjusted loss of -$0.18 a share to +$0.78 this year, with FY22 set to climb another 21%.
Bottom Line
SONO’s positive earnings revisions help it grab a Zacks Rank #1 (Strong Buy) at the moment, alongside its “A” grade for Growth in our Style Scores system. The company’s Audio Video Production industry also ranks in the top 21% of our over 250 Zacks industries.
On top of all of that, Sonos in November announced a $50 million share repurchase program, after it completed its previous round of buybacks. Given all the upbeat tunes, investors might want to consider Sonos, especially as millennials ramp up home buying and pent-up demand creates a spending boom.
Sonos is set to release its second quarter fiscal 2021 financial results on Wednesday, May 12.
Bear of the Day:
Dollar General shares have been a standout in the retail space for the past several years. But its near-term outlook is tough and its earnings revisions have moved in the wrong direction recently.
DG’s Quick Pitch
Dollar General strives to be even more of a true discount retailer than Walmart (WMT). DG sells everything from food to motor oil for “everyday low prices,” unlike rival Dollar Tree’s (DLTR) $1 for everything pitch.
The company has amassed over 17,000 smaller format stores across most of the U.S., often in more rural and working-class areas. The company’s locations far outnumber Target’s roughly 2,000 stores and Walmart’s approximately 5,000 in the U.S.
Dollar General has thrived in the e-commerce age by expanding its physical retail footprint in areas where Amazon boxes might not be the norm. Of course, DG has also worked to improve its digital offerings.
The retailer’s expansion and appealing business model has helped it post high single-digit revenue growth for nearly a decade.
Possible Slowdown
The coronavirus environment propelled Dollar General’s 22% sales growth in 2020 that saw it pull in $33.7 billion. Yet DG fell short of our adjusted fourth quarter earnings estimate on March 18, and analysts lowered their earnings outlooks.
Last year’s success was always going to make things a bit more difficult for Dollar General and other retailers. Zacks estimates call for DG’s 2021 revenue to come in essentially flat. At the bottom end of the income statement, DG’s adjusted fiscal 2021 EPS figure is projected to slip 11% against the hard-to-compare FY20.
That said, Dollar is expected to bounce back next year, with FY22’s revenue projected to climb 8% to help lift its adjusted earnings by 13%.
Bottom Line
Dollar General’s earnings revisions activity helps it grab a Zacks Rank #5 (Strong Sell) at the moment, alongside a “D” grade for Momentum in our Style Scores system. The stock is also part of the Zacks Retail - Discount Stores space that sits in the bottom 4% of our over 250 Zacks industries.
DG shares did fall for roughly two months starting back in January. But it has already recovered almost completely from the downturn, which helped it briefly jump above overbought RSI levels. Therefore, investors might want to hold off on DG stock for now.
Additional content:
3 MedTech Subsectors Poised to Perform Impressively in Q1
The global economy continues to grapple with the persistent crisis triggered by the coronavirus pandemic. While most sectors were hit hard by the economic turmoil, the MedTech sector was resilient enough to recover from the chaos quite swiftly.
The sector started showing signs of a turnaround from the second half of 2020, courtesy of a number of positive developments. These are regulatory clearances and the launch of several COVID-19 diagnostic tests besides the rapid consumer adoption of digital healthcare options plus critical care products and services.
Below we discuss three MedTech sub-industries, which have been performing steadily through the pandemic year and are likely to have held ground in the soon-to-be-reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Diagnostic Testing
With the recent emergence of the new coronavirus strains and the resurgence of a fresh wave of cases from the end of 2020, demand for testing witnessed a sharp spike. Lately, the diagnostic testing space is flourishing with newer and more improved tests being developed on a daily basis by several leading MedTech players.
Per a Fortune Business Insights report, the global COVID-19 diagnostics market value stood at $6.22 billion in 2019 and is anticipated to reach $11.40 billion by 2027, seeing a CAGR of 7.9%. Apart from an uncontrolled spread of coronavirus worldwide, the development of real-time tests, robust WHO recommendations to make COVID-19 diagnostics a top priority and the rising government initiatives targeted toward the implementation of mass testing are fueling the market.
In this regard, it can be mentioned that in March 2021, PerkinElmer introduced two Research Use Only (RUO) solutions, namely PKampVariantDetect SARS-CoV-2 RT-PCR Assay and Next Generation Sequencing-based NEXTFLEX Variant-Seq SARS-CoV-2 Kit to detect genomic mutations reported in connection with SARS-CoV-2 variants. Notably, laboratories can utilize these assays through nucleic acid extracted from samples that tested positive earlier.
For the first quarter of 2021, revenues are expected to be $1.19 billion, indicating a swell of 82.9% from the year-ago reported figure while EPS is estimated to be $3.03, suggesting a jump of 352.2% from the year-ago reported figure.
Over the past year, this current Zacks Rank #3 (Hold) company’s shares have soared 52.4% compared with the S&P 500 Index’s rally of 50%.
Medical Services
This sub-industry within the broader MedTech sector boasts digital healthcare options, such as remote patient monitoring among other trends. With the onset of the pandemic, digital healthcare treatment became indispensable and evidently, remote patient monitoring tools saw a steady surge in demand.
It is a form of AI-powered technology, which can be leveraged to analyze patient data outside the traditional bounds of healthcare as well as keep the patient's health under close vigilance. This was necessitated by the urgency to minimize the exposure to the deadly virus by curtailing clinic and hospital visits.
Per a Grand View Research report, the global medical services market size was valued at $7.8 trillion in 2018 and is expected to witness a CAGR of 8.1% from 2019 to 2026. Amid the pandemic, this line of healthcare is becoming a major choice for contactless healthcare services.
Here we ask investors to take notice of PRA Health Sciences. In April 2021, the company announced that Merck KGaA, Darmstadt, Germany, which is known as EMD Serono in the United States, chose PRA Health’s remote patient monitoring platform to operate along with its human growth hormone (HGH) treatment system. This development is likely to boost PRA Health’s Data Solutions segment, which offers data, analytics, technology and consulting solutions to the life sciences market.
For the first quarter of 2021, revenues are expected to be $854.9 million, indicating a rise of 9.1% from the year-ago reported figure while EPS is expected to be $1.34, suggesting an improvement of 27.6% from the year-earlier reported figure.
Over the past year, this currently Zacks #3 Ranked company’s shares have soared 87.8% compared with the industry’s increase of 23.2%.
Women’s Health Industry
Amid this prevalent public health crisis, cases of pregnancy are particularly calling for special care. The buoyancy in demand for women health solutions to address different medical challenges like infertility, postmenopausal osteoporosis, gynecologic cancers, polycystic ovary syndrome, reproductive health complications is consistently adding momentum to the market.
Diagnostic imaging tests, bone densitometry, ovulation testing and biopsies among others in the wake of the coronavirus outbreak have been aiding the expansion of the women healthcare market for a while now.
Per a Grand View Research article, the global women’s health market size was valued at around $32 billion in 2019 and is projected to see a CAGR of 4.9% over the forecast 2020-2027 period.
Given this scenario, attention can be drawn toward Hologic. This company has been making impressive progress in its Breast Health arm through the pandemic months so far. The company launched SuperSonic MACH 20 ultrasound system in January 2021, thus expanding its ultrasound portfolio.
In the same month, management announced the availability of 3D ultrasound imaging on the SuperSonic MACH 30 and 20 ultrasound systems in Europe. A notable buyout that Hologic completed in January is that of SOMATEX Medical Technologies GmbH, a well-known name in the biopsy site markers and localization technologies space.
For the March quarter of 2021, revenues are expected to be $1.54 billion, indicating a skyrocketing surge of 104.2% from the year-ago reported figure while EPS is expected to be $2.62, implying 359.7% growth from the year-ago reported figure.
Over the past year, this current Zacks Rank #3 company’s shares have soared 58.5% compared with the industry’s rise of 32.2%.
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Hologic, Inc. (HOLX) : Free Stock Analysis Report
PerkinElmer, Inc. (PKI) : Free Stock Analysis Report
Dollar General Corporation (DG) : Free Stock Analysis Report
Sonos, Inc. (SONO) : Free Stock Analysis Report
PRA Health Sciences, Inc. (PRAH) : Free Stock Analysis Report
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