Daily Update - February 7, 2023

Selected highlights of the day

By: Matthew Otto

Chegg sees revenue growth but lower income

Despite inflation and wage stagnation, Chegg reported a 2% increase in net sales from the previous year. Subscription services revenue grew by 4%, accounting for 87% of total revenues compared to 82%. CEO Dan Rosenweig also lowered guidance for operating profit to $235 million; however, Q4 2022 highlights showed an overall decrease of 1% in Total Net Revenues with non-GAAP Net Income reaching $58.8 million despite a slight decline at only $1.9 million nNet income.

Dan Rosensweig, CEO of Chegg, has cautioned that enrollment in courses is likely to decline due to ongoing economic pressures. Facing the reality of accelerating inflation and wages struggling to keep pace with growth, individuals are predicted to become increasingly focused on near-term financial stability through 2023 rather than investing time in professional training programs. In response to this projection, guidance for operating profits from Chegg was adjusted downward from $270 million projected previously down to as low a possible amount at $235 million.

 

Analysts at Keybanc and the five other leading financial firms have downgraded their outlook on the stock.

  • Barrington Research’s Alexander Paris decreased his price target from $30 to $22 while still maintaining an Outperform rating.
  • Northland Capital Markets’ Mike Grondahl shifted his target from $35 to 24 yet maintained an Outperform rating.
  • Morgan Stanley analyst Josh Baer kept his Equal-Weight position despite reducing his price target down to $18 from $31.
  • JP Morgan analyst Doug Anmuth adjusted to Neutral status.
  • Piper Sandler’s Arvind Ramnani slashed his stock forecast to $17 while keeping a neutral stance.

 

ON Semiconductor achieved successes in the fourth quarter of 2022

With a year-over-year revenue increase of 14%. Record automotive revenues grew 54%, and both GAAP as well as nonGAAP gross margins were raised. Record revenue targets for $8.3 billion representing 24% growth compared to last year while also increasing free cash flow by 22% and achieving 20% relative to total sales. To usher in this period of sustained prosperity, they are launching a stock repurchase program valued at 3 billion dollars via open market transactions over time following shareholder approval.

  • Wells Fargo analyst Gary Mobley rates ON Semiconductor as “Overweight” and raised the price target from $75 to $95.
  • Benchmark analyst David Williams rates ON Semiconductor as a “Buy” and has increased his price target from $69 to $88.
  • Craig-Hallum analyst Anthony Stoss bumped his price target up from $75 to $96 while maintaining a Buy stance.
  • Baird analyst Tristan Gerra lifted his price target from $80 to $100 and upgraded his hold to an Outperform rating.
  • Truist Securities analyst William Stein increased his price target from $83 to $93 while keeping his Buy stance.
  • JP Morgan analyst Harlan Sur has moved his price target from $70 to $90 despite staying at a Neutral rating.
  • Morgan Stanley Joseph Moore maintains ON Semiconductor with a Equal-Weight and raised the price target from $70.4 to $89.
  • Needham analyst Rajvindra Gill and raised his price target to $100.
  • David Williams at Benchmark maintained a buy rating while adjusting his price target from $69 to $88.
  • Cowen & Co. analyst Matthew Ramsey upheld an outperform stance and hiked up his price forecast to $95, coming off of a previous forecast of $81.
  • Christopher Rolland from Susquehanna Group maintained a positive outlook with an upgraded prediction of $100 compared to earlier predictions of $80.
  • Mizuho analyst Vijay Rakesh has revised his price target from $72 to $88 while maintaining his ‘Buy’ rating.
  • Raymond James analyst Melissa Fairbanks changed her price target from $78 to $90  and maintained her ‘Outperform’ rating,
  • John Vinh of Keybanc analysts who adjusted his target from $80 up to $100 whilst maintaining an ‘Overweight’ rating.

 

Skyworks Solutions announced yesterday a $2 billion share buyback program

Which garnered attention from numerous analysts.

  • B. Riley Securities analyst Craig Ellis raised his price target from $95 to $115, while maintaining a Neutral recommendation.
  • Anthony Stoss from Craig-Hallum increased the price target from $120 to $130, with a Buy recommendation.
  • Wells Fargo’s Gary Mobley adjusted his price target from $90 to $110 while keeping his initial Equal-Weight ranking.
  • Harlan Sur and JP Morgan held Neutral ratings and inched their price target higher—from $95 up to $120.
  • Mizuho’s Vijay Rakesh set a $135 price target with an unchanged Buy rating.
  • Benchmark Cody Acree ascribed a Buy recommendation and raised his price target from $120 to $135.
  • Craig Hettenbach at Morgan Stanley kept his ratings at Equal-Weight and upped his stock forecast from $96 to $114.
  • Cowen & Co. analyst Matthew Ramsay has set an Outperform and an increased price target from $120 to $135.
  • Susquehanna analyst Christopher Rolland raised his price target from $95 to $110 yet maintaining a Neutral rating.
  • Chris Caso, an analyst at Credit Suisse, raised his stock forecast from $125 to $135 with Maintaining an Outperform rating.
  • Needham analyst Rajvindra Gill  has increased his price target from $110 up to $140 with a Buy rating.
  • Piper Sandler’s analyst Harsh Kumar maintained his Overweight rating  and raised his price target from $110 to $120.
  • Keybanc analyst John Vinh has a Overweight rating with price target at $130 up from $120.

 

Neurocrine Biosciences has reported impressive financial results for their fourth quarter and fiscal year 2022.

Net product sales exceeded $399 million during the fourth quarter and this figure rose to $1.43 billion for the fiscal year. Both new patient enrollment numbers and refill rates in existing patients played a major role in this impressive performance, demonstrating INGREZZA’s success as a commercial product. Their fourth quarter figures saw a 33% net product sales growth over the same time last year, while total prescriptions grew by 29%. Overall, these are very strong financial results that likely bode well for Neuroscience Bioscience’s growth next year.

 

NBIX saw its price target decrease following reviews from some of the top capital markets analysts.

  • RBC Capital’s Brian Abrahams had his price target move lower from $122 to $110 while he maintained a Sector Perform rating.
  • Wells Fargo Analyst Mohit Bansal stayed with neutral rating and a downward revised price target of $115  from previously $120.
  • Mizuho’s Uy Ear lowered the NBIX price target to $116 while maintaining a Neutral stance.
  • Wedbush’s Laura Chico raised her price target to $131 while maintaining an Outperform rating.
  • Charles Duncan of Cantor Fitzgerald also stood by his Overweight rating but lowered his own price target from $132 to $127.
  • Neena Bitritto-Garg at Citigroup set her price target at 131$, down from previously 133$.
  • Carter Gould of Barclays decreased his stock forecast from 136$ to $131
  • Piper Sandler analyst David Amsellem maintains Neurocrine Biosciences with a Neutral rating while lowering his  price target from $103 to $95.
  • HC Wainwright analyst Andrew Fein reissued his Buy recommendation a $140 price target.

 

Intapp announced its second quarter financial results in the 2023.

Second quarter software and support revenue totalled $61.6 million; this is a 31% yearly rise. Additionally, overall revenue reached $84.7 million, which is an increase of 31% from the preceding year. Fiscal 2023 economic forecasts have also been published by Intapp, with cloud annual recurring revenue estimated at $191.8 million (a growth of 42% from past years). Third Quarter projections for SaaS and support revenue are set at between $63-$64million across the 2023 financial year, cementing total expected income to be within the range of $246-$250 million until the end of FY2023. Total segment revenues will sit around $87-$88 million in the next tri-monthly period alongside projected non-GAAP operating profits of between 0.5 – 1.5 million USD while net non-GAAP income could rise or fall by up to $(0$.01) throughout this same period.

  • Truist Securities analyst Terry Tillman maintained a ‘Buy’ rating and raised his price target from $32 to $38.
  • Oppenheimer analyst Brian Schwartz issued an ‘Outperform’ recommendation together with increasing the price target to $35 from $30.
  • JP Morgan analyst Douglas Bruehl maintained an ‘Overweight’ recommendation and increased the price target to $34 from $29.
  • Credit Suisse analyst Kevin Mcveigh kept an ‘Outperform’ recommendation and also raised the price target to $40 from $33.
  • Raymond James analyst Alexander Sklar had an ‘Outperform’ tag and stepped up the price target to $34 from $25.
  • Piper Sandler analyst Arvind Ramnani kept to an ‘Overweight’ stance on Intapp, while boosting his price target to $34 from $26.

PFE

  • Daiwa Capital analyst Narumi Nakagiri upgrades Pfizer from Neutral to Outperform and announces $51 price target.