Analysts Stocks

      Daily Update - February 22, 2023

      Selected highlights of the day

      By: Matthew Otto

      Palo Alto Networks

      Has reported its Q2 earnings for the fiscal year 2022. The company’s earnings per share came in at $1.05, beating the analysts’ expectations of 78 cents per share, and the revenue was reported to be $1.66 billion, slightly exceeding the expected $1.65 billion. The revenue grew by 26% year over year in the quarter, while the net income was $84.2 million or 25 cents per share, compared to a loss of $93.5 million in the previous year.

      The company’s finance chief, Dipak Golechha, stated that the focus on driving profitable growth has resulted in the Q2 results, and the company has slowed down headcount growth. Palo Alto Networks has achieved profitability for three consecutive quarters following ten years of losses and is now three years ahead of its profitability goals. The CEO, Nikesh Arora, said that the company meets the criteria for inclusion in the S&P 500.

      Palo Alto Networks expects adjusted earnings of 90 cents to 94 cents per share on $1.695 billion to $1.725 billion in revenue for the fiscal third quarter. Management has raised its earnings guidance for the 2023 fiscal year, with a target of $3.97 to $4.03 in adjusted earnings per share. The company maintained its revenue guidance.

      The company acquired Cider Security, a startup focused on software supply chain and application security, for about $195 million during the quarter. The acquisition is the latest deal in a series that has helped Palo Alto Networks keep growing its top line in the nearly five years under Arora, costing the company over $3 billion to date.

      Wall Street Action

      • Baird analyst Shrenik Kothari maintains an Outperform rating while raising the price target from $220 to $230.
      • Roth Capital analyst Catharine Trebnick increased the price target to $230 with a Buy rating.
      • RBC Capital’s Matthew Hedberg increased his price target to $220 with an Outperform rating.
      • Piper Sandler analyst Rob Owens has his price target at $240 while maintaining an Overweight rating.
      • Wedbush analyst Daniel Ives set his rate target at $210 but with an Outperform rating.
      • Morgan Stanley’s Hamza Fodderwala remained at $255 and an Overweight
      • UBS analyst Roger Boyd set a $200 and a Neutral rating.
      • BMO Capital analyst Keith Bachman has upgraded his rating from Hold to Outperform and increased the price target from $220 to $228.
      • Stifel analyst Adam Borg price target is at $225 and a Buy rating.
      • Mizuho analyst Gregg Moskowitz also maintains a Buy rating with a price target of $235.
      • Jefferies analyst Joseph Gallo set his target price at $215 with a Buy.
      • Wolfe Research analyst Joshua Tilton maintained an Outperform and a price target of $210.
      • JP Morgan analyst Brian Essex maintained an ‘Overweight’ with a price target of $225.
      • Deutsche Bank analyst Brad Zelnick’s remains as a Buy and target price of $210;
      • Barclays analyst Saket Kalia set an Overweight and a price target of $227.

       

      Home Depot

      missed Wall Street’s revenue expectations for the first time since November 2019, according to its fiscal fourth-quarter earnings report. The home improvement retailer provided a muted outlook for the next year, blaming a tougher consumer backdrop and a pivot away from goods toward services. The flat outlook was attributed to a drop in lumber costs, which had surged in price due to nationwide shortages in fiscal 2021 but are now down about 50% year over year. Amid record levels of inflation, a shift in consumer behavior and a housing market slowdown, Home Depot repeatedly beat the Street’s expectations over the past year but fell a bit short in sales estimates.

      Home Depot’s fiscal fourth-quarter earnings report on Tuesday showed that the company’s revenue fell short of Wall Street’s estimates due to a slowdown in the home improvement category. The company also provided a muted outlook for the next year because of a tough consumer backdrop. In the quarter ended Jan. 29, Home Depot reported $35.83 billion in sales, up 0.3% from the year ago period, which saw $35.72 billion in revenue. The retailer’s net income of $3.36 billion, or $3.30 per share, was also 0.3% higher than the year ago period, which was $3.35 billion, or $3.21 per share. This is the first time Home Depot missed Wall Street’s revenue expectations since November 2019, before the Covid pandemic.

      Wall Street Action

      • Morgan Stanley analyst Simeon Gutman has an Overweight rating, albeit with a lowered price target from $360 to $340.
      • Roth MKM, David Bellinger reduced the price target to $292 while maintaining a Neutral rating.
      • Cowen & Co. analyst Max Rakhlenko lowered his price target to $360.
      • Laura Champine of Loop Capital revised her price target from $310 to $300 while maintaining a Hold recommendation.
      • Peter Benedict at Baird continues with an Outperform rating but lower his price forecast from $360 to $340.
      • Seth Basham of Wedbush also decreased his price target from $300 to $280, consistently maintaining a Neutral stance.
      • Citigroup analyst Steven Zaccone keeps  a Buy rating and drops the price target from $340 to $332.
      • Credit Suisse analyst Karen Short decreases her price target from $335 to $320 but maintains a Neutral raring.
      • Barclays analyst Seth Sigman adjusts his price prediction from  $323 to $310 with an Equal-Weight rating.
      • Telsey Advisory Group analyst Joseph Feldman reduces his price estimation from $360 to $340 keeping an Outperform rating.

      Coibbase beats expectations

      Coinbase reported a better-than-expected fourth-quarter loss of $557 million on revenue of $629 million, beating forecasts for a $585 million loss on $588 million in revenue, according to analysts surveyed by FactSet. The company reported a net loss of $124 million based on adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, which slightly edged forecasts. However, earnings per share came in at a loss of $2.46, ahead of consensus forecasts for a $2.52 loss. Net revenues rose 5% from the previous quarter, driven by a 34% increase in subscription and services revenues, but transaction revenues, which include the fees investors pay to trade, fell 12%.

      The trading platform also reiterated guidance that it expected its full-year loss, before taxes, depreciation and amortization, to fall under $500 million. In Tuesday’s report, Coinbase said that loss was $371 million. Coinbase had previously said it sought to roughly break even through a full up-and-down cycle in the crypto market. However, the company’s management has now shifted its focus towards becoming an “all-weather company.” Coinbase announced in January that it would lay off about a fifth of its workforce and reduce costs by more than 30% across various departments.

      Wall Street Action

      • Oppenheimer analyst Owen Lau has maintained an Outperform rating while raising the price target from $72 to $84.
      • JMP Securities analyst Devin Ryan has increased his price target from $80 to $90 while retaining a Market Outperform.
      • Wells Fargo analyst Jeff Cantwell has raised his price target from $34 to $40 but retained an Underweight.
      • Barclays analyst Benjamin Budish upped his price target from $57 to $63 while still retaining Equal-Weight.
      • Piper Sandler analyst Richard Repetto reiterated his Overweight rating but increased the price target from $65 to $70.
      • Canaccord Genuity analyst Joseph Vafi maintained his Buy recommendation for Coinbase and had his price target at $100, down from $120.
      • Needham analyst John Todaro reiterated and price  target of $73.

       

      Exact Sciences announced its financial results for the fourth quarter of 2022

      The company’s total revenue for the quarter was $553 million, an increase of 17% YoY, with Screening revenue of $404 million and Precision Oncology revenue of $143 million. The company’s total revenue for 2022 was $2,084 million, a YoY increase of 18%, with Screening revenue of $1,425 million and Precision Oncology revenue of $601 million. Exact Sciences also reported a net loss of $127.7 million, or $0.72 per share, compared to a net loss of $220.6 million, or $1.28 per share, during the same period last year. The company expects to generate revenue of $2,265-2,315 million and positive adjusted EBITDA for full year 2023.

       

      • Cowen & Co. analyst Dan Brennan has issued an Outperform rating and raised the price target from $56 to $76.
      • Catherine Schulte, a Baird analyst, increased her price target to $92 while maintaining an “Outperform” rating.
      • Mark Massaro of BTIG held his Buy rating and price target to $80.
      • Canaccord Genuity’s Kyle Mikson maintained his Buy rating and a price target to $75.
      • Patrick Donnelly at Citigroup revised his Neutral rating and lifted the price target from $35 to $70.
      • Credit Suisse’s Dan Leonard reiterates a Neutral rating and a price target of $70.