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Yahoo Finance's Brian Sozzi and Emily McCormick break down the morning's biggest stock movers including Cisco, Dutch Bros. and Beyond Meat.
- Welcome back to Yahoo Finance Live. Let's hit some stock movers. Stock movers ahead of the opening bell today on Wall Street. Emily, we have to start with-- we have to start with Cisco here. Holding an investor day yesterday afternoon, you see the stock up about 1% here in the pre-market. But the shares did get a hit.
Cisco talking at length at its investor day about how they want to be seen more on the Street as a software player. And right now, they're not commanding a software type PE multiple. I mean, shares of Cisco only traded about 17 times forward earnings. That is multiples less than the likes of Amazon, Microsoft, Apple, Google, you name it. So the Street still doesn't see Cisco as a pure play software player.
And then secondarily, I think the Street was also a little disappointed with Cisco's outlook. Cisco looking for 5% to 7% sales growth over the next four fiscal years, looking for about the similar rate of growth in their earnings per share. The Street was looking for a close to 10% growth over the next four fiscal years. So some disappointment there in terms of Cisco there with its investor day.
- Yeah, you're right, Brian. And I think the two points that you make really sort of feed into one another when we think about Cisco. Of course, the company is going to be investing in order to try and become this bigger software player. And that's something that's going to actually weigh on those margins, weight on its profitability. And that's one of the big reasons that we are seeing Cisco delivering this forecast, to have that revenue and that earnings per share, excluding some items' growth rate. Actually coming in at about the same pace.
But when we think about this company overall, this still is the biggest maker of computer networking equipment. It's long time been a proxy of business IT expenditures. So seeing that we do have that 5% to 7%, at least revenue outlook forecast for the next four years, it still is pretty upbeat when we think about Cisco on the whole. Especially given that this is such a mature player here in this networking space.
And if we think about what the company is actually targeting, again, to your point on software and really building out that portion of the business, Cisco saying that it's targeting having a subscription revenue reach a total of 50% of total sales by fiscal 2025. That's going to be a target that I think analysts are really going to be focusing on as we get these next quarterly earnings calls. Really seeing whether the company is able to hit that goal post and really making progress towards that in the coming quarters, Brian.
- Yeah, absolutely and we'll put all these questions to Cisco chairman and CEO Chuck Robbins, who's coming up and later in the show. Definitely I am jacked up to talk to him. But I think overall, the Street was looking for a little bit more in terms of margin from Cisco. If they're moving to that profitable, more profitable software model, where is that extra margin? We'll talk to Chuck Robbins all about it.
We're also watching Beyond Meat. Emily, wow. Quite the aggressive downgrade by the folks over at Piper Sandler.
- That's right, Brian. If we take a look here at Beyond Meat, of course, the stock has been down 11% so far for the year to date, adding to those losses today. And if we take a look at what Piper Sandler really saying, the analysts there, Michael Lavery, saying that the company's all channel retail momentum lags consensus expectations. And one of the big concerns here is on that food service estimates side, when it comes to what Wall Street is expecting of Beyond Meat.
Now, this is a company, like a lot of these sort of dual and omnichannel food companies, that of course, has that retail side of the business, that side that goes into the grocery stores, and that has still been holding up quite well over the course of the pandemic, given the strength in grocery sales overall. But then, of course, you have that going out, going to restaurants food service portion of the business that has, as Lavery is saying here, still been lagging and likely to continue doing so.
And I think as we consider the ongoing Delta variant, the ongoing coronavirus concerns, and what looks like some more stay in place type of behaviors among consumers, this is not necessarily a good sign here for Beyond Meat going forward.
- Yeah, just further digging in here, Emily, really, I would say this is a savage downgrade. You don't normally see underweight ratings on Wall Street, especially with some of these hot buzzy food companies. But the analysts noting here, which I thought was interesting, "We believe current retail trends are running below levels needed to support consensus shipment expectations for the third quarter and potentially in the fourth quarter."
And as you mentioned, Emily, tracking a lot of the good industry data here and really suggesting that Beyond Meat sales are just not trending where they are. And if that is the case, Emily, you also have to I think get a little worried about the restaurant space. It is a Burger King. It is McDonald's. They may not necessarily be super aggressive in the plant based meat department just yet, but Beyond Meat has a lot of exposure to the sector. And if they're seeing slowing sales in this part, chances are the restaurants are also seeing slowing sales as well.
And you know, they also talk about this potential wild card that is Pepsi. Now, Beyond Meat inked to deal with PepsiCo several months ago to work on several undescribed or uncertain products, plant based products, to this point. And those products may come out over the next 12 months. But the wild card is there. When you're working with a company like PepsiCo, they are a marketing and development machine. So if Beyond Meat can ride on PepsiCo's coattails, maybe it's pretty good.
- Yeah, I think that's a good point here, Brian. And again, I think really a lot to be seen here for a lot of these reopening trades. We don't often think about Beyond Meat being a reopening trade. But given its exposure to the restaurant industry, it does seem like it shares anyway, have been trading in that category. Again, down for the year to date, after a much stronger 2020.
And staying on the food trade, I can't help but to giggle. I'm in a giggly mood today here, Emily. To see the ticker symbol BROS trending for the past 24 hours on the Yahoo Finance platform. I should have just broke out my Patagonia vest and went all bro here because it's just funny to see that ticker. Perhaps a new meme stock has been born here with Dutch Brothers stock up almost 60% yesterday. Up another 15% today. The company only operates 479 stores. It now has a market cap of about close to $2 billion according to Yahoo Finance Plus.
Really just interesting to see this market response, but not surprising. Market historically has love these food plays, especially ones they can understand. And there we have the opening bell. I don't see any Dutch Brothers coffee in their hands. That is ForgeRock ringing the opening bell there on this Thursday on Wall Street. There we go, guys. Congratulations. Enjoy your day down at the New York Stock Exchange.
But Emily, of course, the market's going to continue to watch Dutch Brothers. And we had the CEO on yesterday talking about its business, the battle with the likes of Starbucks. Here's what he told us.
I think in most markets that we're in, we're probably a half a mile to a mile away from any trading area that's been developed by Starbucks. g As we continue to row, I think one, is that our rewards app, we've had over 2.7 million people sign up for our app since February 1 and I think that's a really good indication of as we've gone into new markets and have people sign up and be part of the loyalty that is Dutch Bros, they get to experience the brand and some of the ways that we reward them for their continued support.
Two, is that we have to continue with our service model. I think the big difference for Dutch Bros is that we're a beverage company, but we're really built on the backs of our people and the service that we provide every day in our stands.
And two little fun facts, Emily, on this. One, they are not baristas at Dutch Brothers. They are bro-istas. Yes, for real, they. Are called bro-istas. And then secondarily, I need one of these. There is no shame in my game here. I need a Dutch Brothers over here in a Astoria, Queens. They're selling a drink called the Annihilator. Six shots of espresso, Emily. Sign me up for that. I'm ready to /
- Oh, I don't know if my heart could take that many shots of espresso in one go. But I mean, just taking a look at Dutch Bros right now, it looks like we are on track to have another positive session for this company. Up about 13% as we speak, now that we have had the opening bell. Stock closed higher by nearly 60% yesterday.
And to your point, Brian this coffee chain or this cafe and this beverage company, as they call themselves really, is so much smaller than a lot of these major competitors. I mean, Dunkin' for instance, has over 8,500 restaurants in 41 states across the US. Starbucks is nearly 9,000 stores in the US alone, in addition to, of course, its very major international presence. And as you mentioned, again, Dutch Brothers with 470 or so cafes across 11 states.
So definitely smaller player here. Room to grow. If we take a look at the company's stats over the past year, same store sales up about 2% in 2020 and overall revenue up 37% last year. And that's even as the pandemic did, of course, impact people's ability to go out, go in person to cafes. So the Street here at least, pretty upbeat on these prospects, at least in the first couple of days of trading.
- Long live the bro-ista. Now, the Dutch Brothers IPO, Emily, is only a small part of the 2021 IPO story. As we can see in today's Yahoo Finance stat of the day. Year to date, there have been 739 IPOs on the US stock market. That marks an all time record. Number of IPOs are up 231.4 year to date, compared to this time, this same time last year. Big year so far. Potentially a big ending too, with the likes of Rivian and Allbirds potentially nearing IPOs. Big year for IPOs, no doubt about it.