Analysts Stocks

      Daily Update - March 1, 2023

      Selected highlights of the day

      By: Matthew Otto

      Novavax

      A COVID-19 vaccine manufacturer, has stated in its quarterly earnings report that there is “substantial doubt” regarding its ability to continue operating through this year. Although the company expects to have enough cash to fund its operations through the year, this expectation is subject to significant uncertainty related to 2023 revenues and other factors. Novavax reported a net loss of $658 million in 2022, with revenues of $2 billion and expenses of $2.6 billion. The company had $1.3 billion in cash and cash equivalents at the end of 2022, and while it sold 3.2 million doses of its COVID-19 vaccine to the U.S. government last July and another 1.5 million doses in January, those contracts will likely dry up as the country switches to a commercial market for the COVID-19 vaccines. This move will force Novavax to compete directly against Pfizer and Moderna, raising significant questions over its 2023 revenues. Unlike those companies, Novavax does not have a broad portfolio of other drugs or a massive war chest to fall back on.

      • Analyst Mayank Mamtani, of B. Riley Securities, has changed the outlook for Novavax from a Buy to a Neutral and reduced his price target from $29 to $10.

      Rivian

      The electric-truck maker, reported a fourth-quarter loss of $1.87 a share on sales of $663 million, coming in a little short of Wall Street’s expectations. While earnings were slightly better than expected, Rivian’s focus remains on ramping up production, and it expects to make 50,000 vehicles in 2023. However, Wall Street was hoping that the company would produce between 60,000 to 65,000 vehicles this year.

      In March 2022, Rivian projected that it would manufacture 25,000 units; its final result was just short of meeting this goal, with 24,337 units manufactured. With these numbers, the company provided a comparative glimpse into their production level for that year. Of particular note was how close their projection came to attaining the desired number of vehicles produced.

      • Baird analyst George Gianarikas revised his price target from $44 to $35 but maintained an Outperform rating.
      • Cantor Fitzgerald analyst Andres Sheppard lowered his forecast from $30 to $27 yet kept an Overweight rating.
      • On the other hand, RBC Capital analyst Joseph Spak stayed with an Outperform rating while dropping the price target from $50 to $28.
      • Mizuho analyst Vijay Rakesh stuck with a Buy recommendation and decreased his projection from $42 to $37.
      • Needham’s Chris Pierce restarted with a Buy rating and a price target of $26 dollars.
      • Truist Securities’s Jordan Levy maintained Buy rating but adjusted lower from $50 to $44.

      NIO

      Another Chinese electric vehicle manufacturer NIO revealed a wider-than-expected loss for their 4th quarter results of 2022. It amounted to 51 cent per share on revenue of $2.33 billion, confounding expectations of Wall Street with a projected 26 cent loss per share on the same revenue of $2.5 billion.

      In terms of forward guidance to markets, the outlook is sobering: NIO expects to deliver between 31,000 and 33,000 vehicles in the 1st quarter of 2023, along with $1.6 billion revisable sales, significantly falling short against Wall Street’s forecasted projections of merely $2.5 billion in sales by spring 2022.

      MNST

      Shares of Monster Beverage, a beverage company, plummeted by 4.8% in the aftermath of its earnings report on Tuesday evening. For the quarter, the company reported an earning of 57 cents per share, coming up short against analyst forecasts of 63 cents per share. Furthermore, Monster announced $1.51 billion worth of revenue for this period—a number that failed to portray the expected projection conducted by financial analyst’s valuations which totaled at $1.6 billion.

      • Wells Fargo analyst Chris Carey has maintained with an Overweight and lowered the price target from $115 to $113.
      • Morgan Stanley analyst Dara Mohsenian rated an ‘Overweight’  and reducing his price target from $117 to $115.
      • Citigroup analyst, Filippo Falorni issued a Buy rating and decreasing the price forecast from $121 to $118.
      • BMO Capital analyst Andrew Strelzik issued a ‘Market Perform’ rating and upgraded his price target from $97 upwards to $105.

      HP reported mixed results for its Q1 FY 2023

      With revenue of $13.8 billion, down about 19% YoY, missing analysts’ consensus forecast of $14.1 billion. Its Personal Systems unit, which includes mostly PCs, saw revenue of $9.2 billion, down 24% YoY, with consumer revenue down 36% and commercial revenue down 18%. HP CEO Enrique Lores said in an interview that the macro environment remains challenging but that the company is doing well in areas it can control, such as costs, pricing, and product mix. Lores expects industry-wide PC units to decline in the high teens, with weaker demand in the enterprise and commercial segments.

      Earnings were 75 cents per share, within the company’s guidance range of 70 to 80 cents, and a penny above the Street’s estimate. For Q2, HP expects adjusted earnings of 73 to 83 cents per share, in line with the Street’s consensus of 76 cents. GAAP profits for Q2 are expected to be 40 to 50 cents per share.

      • Analyst Samik Chatterjee of JP Morgan has declared a Neutral outlook  and increased the price target from $27 to $30.

      Ross Stores

      Reported Q4 earnings per share of $1.31 on net income of $447 million, beating expectations due to customers’ positive response to improved assortments and stronger value offerings. Sales for the quarter were $5.2 billion, with comparable store sales up 1%. For the fiscal year 2022, earnings per share were $4.38 on net income of $1.5 billion, compared to $4.87 per share on net earnings of $1.7 billion in 2021. Sales for the year were $18.7 billion, with comparable store sales down 4% compared to a 13% increase in the prior year. The company’s board of directors increased the quarterly cash dividend by 8% to $0.335 per share. The company also repurchased a total of 10.3 million shares of common stock for $950 million in fiscal 2022, and expects to complete the remaining $950 million under the authorization in fiscal 2023.

      The company is planning for earnings per share in the range of $4.65 to $4.95 for the 53 weeks ending February 3, 2024, compared to $4.38 in fiscal 2022, with an estimated benefit of $0.15 from the 53rd week in fiscal 2023. For the first quarter of 2023, comparable store sales are also expected to be relatively flat, with earnings per share in the range of $0.99 to $1.05 compared to $0.97 last year. The results fell short of Wall Street’s expectations, citing increased inflation costs and their targeting of low to moderate income customers being a factor for this outcome.

      • Baird analyst Mark Altschwager has raised his rating to an Outperform and adjusting the price target from $125 to $130.
      • Credit Suisse analyst Michael Binetti maintains an Outperform rating  while leaving the price target unchanged at $123.
      • Telsey Advisory Group analyst Dana Telsey stands with her Market Perform rating and maintains her $120 price target.

       

      First Solar

      Has strong financial forecasts, which include net sales for 2023 of $3.4 billion to $3.6 billion and operating income of $745 million to $870 million, have led one analyst to suggest that the company is potentially the biggest beneficiary of the Inflation Reduction Act. The company expects to receive tax credits of $660 million to $710 million from the act, which provides tax benefits for solar manufacturers in order to incentivize solar projects.. While the company reported a loss of 7 cents per share, this was better than the consensus call for a loss of 17 cents per share among analysts tracked by FactSet.

      • Baird analyst Ben Kallo has reaffirmed his Outperform rating while also increasing his price target from $180 to $208.
      • Goldman Sachs’ Brian Lee maintains his Buy rating and upgrades his price tag from $231 to $260.
      • Guggenheim Joseph Osha holds a Buy recommendation but applied a downgrade in his price target from $260 to $255.

      LOW

      • Joseph Feldman, analyst of Telsey Advisory Group, maintains the rating of Outperform for Lowe’s Companies with a price target of $250.

      Despite falling short of Wall Street’s expectations in terms of fiscal fourth-quarter sales at $22.45 billion versus the expected $22.69 billion per Refitting estimates, efforts to control costs led to impressive adjusted earnings per share which came in higher than predicted at $2.28 against forecasts of $2.21.