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Semiconductors

Super Micro Q3 Earnings: Strong EPS Beat, But Revenue Misses; Upgraded Guidance Boosts Outlook

source:supermarco

Super Micro Earnings Release. Source: Seeking Alpha

  • Super Micro Computer press release (NASDAQ: SMCI): Q3 Non-GAAP EPS of $6.65 beats by $1.08.
  • Revenue of $3.85B (+200.8% Y/Y) misses by $50M.
  • Guidance is better: 
  • For the fourth quarter of the fiscal year 2024 ending June 30, 2024, the Company expects net sales of $5.1 billion to $5.5 billion vs $4.86B consensus, GAAP net income per diluted share of $7.20 to $8.05 and non-GAAP net income per diluted share of $7.62 to $8.42 vs $6.96 Consensus.
  • For the fiscal year 2024 ending June 30, 2024, the Company is raising its guidance for revenues from a range of $14.3 billion to $14.7 billion to a range of $14.7 billion to $15.1 billion vs $14.59B consensus and establishing guidance for GAAP net income per diluted share of $21.61 to $22.46 and non-GAAP net income per diluted share of $23.29 to $24.09.

The stock is down 1.5% to $846 after losing 3.5% during market hours.

Categories
Stocks

AMD Q1 Results: Strong Data Center Growth Amid Challenges in Gaming and Embedded Segments

AMD Quarterly Result

The Datacenter and client segments did well.

AMD’s struggles outside the Datacenter continue with gaming and embedded segments still dealing with inventory digestion, but they did come in within estimates and kept guidance in line with the previous one. 

Source: Seeking Alpha

  • Advanced Micro Devices press release (NASDAQ: AMD): Q1 Non-GAAP EPS of $0.62 beats by $0.01.
  • Revenue of $5.47B (+2.2% Y/Y) beats by $20M.
  • Record Data Center segment revenue of $2.3 billion was up 80% year-over-year driven by growth in both AMD Instinct™ GPUs and 4th Gen AMD EPYC™ CPUs. Revenue increased 2% sequentially driven by the first full quarter of AMD Instinct GPU sales, partially offset by a seasonal decline in server CPU sales.
  • Client segment revenue was $1.4 billion, up 85% year-over-year driven primarily by AMD Ryzen™ 8000 Series processor sales. Revenue decreased 6% sequentially.
  • Gaming segment revenue was $922 million, down 48% year-over-year and 33% sequentially due to a decrease in semi-custom revenue and lower AMD Radeon™ GPU sales.
  • Embedded segment revenue was $846 million, down 46% year-over-year and 20% sequentially as customers continued to manage their inventory levels.
  • For the second quarter of 2024, AMD expects revenue to be approximately $5.7 billion, plus or minus $300 million vs. $5.69B consensus. At the mid-point of the revenue range, this represents year-over-year growth of approximately 6% and sequential growth of approximately 4%. Non-GAAP gross margin is expected to be approximately 53%.

The stock is down 3% to $153, after dropping 1% to $158 during market hours.

Categories
Consumer Staples

Apple Stock Analysis: Bernstein Upgrade Signals Potential Turnaround

Apple (AAPL) $174 

Apple had an upgrade from Bernstein this morning after a spate of bad news, notably weaker China sales, and fewer iPhone sign-ups in the US. 

“AAPL has de-rated significantly amid a weak iPhone 15 cycle and fears that Apple’s China business is structurally impaired,” analyst Toni Sacconaghi wrote in a note. “We believe prevailing weakness in China is more cyclical than structural and note that historically Apple’s China business has exhibited much higher volatility than Apple overall, given its very feature-sensitive installed base.” Sacconaghi raised his rating on Apple to Outperform from Market Perform and kept his $195 price target.

While Sacconaghi acknowledges there may be short-term headwinds for Apple, the potential use of generative artificial intelligence features in the next iPhone and tailwinds from the replacement cycle could set up the company “well,” he said. It’s possible the company could top 2025 estimates of $416.9B in revenue and $7.40 in earnings per share, Sacconaghi said.

There are other positive developments.

A possibility of a tie-up with Open AI/Google Gemini for a co-pilot. Apple does have a treasure trove of data, there is no way they haven’t thought about monetizing it with AI. I suspect they are fairly advanced in the process but are as secretive as ever.

Nvidia’s omniverse is to be used with the Vision Pro – to be sure this is not revenue accretive, as the Vision Pro is still likely two years in beta before the product even becomes useful and less of a novelty. It is a step in the right direction for better use cases / commercial or other applications.

Apple steadying out around $167-$170 is a good sign for the rest of the market. They report on Thursday after the market, and while the quarter should be weak, the guidance should be key, along with product announcements or hints for announcements in their June developer conference. I don’t think they should be written off yet.

Categories
Fintech

Marqeta (MQ) at $5.35: Promising Growth Amid Challenges in a Competitive Market

Marqeta (MQ) $5.35

Marqeta is a credit card processor with clients like Block (Square), Affirm, and DoorDash.

Marqeta should grow in 2025, after two years of a slowdown in 2023 and 2024 (estimated). 

Total Bookings with new clients and expansions with existing clients are growing well at over 50% and 60%. They’ve also done a good job on cost reduction.

The stock, though, could likely stagnate since they’re far from profitability. The other negative is that this is a commodity business with a lot of strong older players and several new upstarts, without any real competitive advantages. But Marqeta has a strong business relationship with Block, (51% of business) so that’s a plus, and their contract is in place through 2028.

The valuation is around 5X sales, and once growth resumes should be seen as cheap.

I think it’s worth looking into around $5. I’ll keep an eye on updates.

Categories
Semiconductors

Intel Q1 Earnings: Solid Results Overshadowed by Weak Q2 Guidance, Stock Drops 6%

Intel’s misery continues…

Intel’s (NASDAQ: INTC) significantly weaker-than-expected guidance for the coming quarter overshadowed better-than-expected first-quarter results.

For the coming second quarter, the Pat Gelsinger-led firm expects revenue to be between $12.5B and $13.5B, well below the $13.61B analysts were anticipating.

It also anticipates earning an adjusted $0.10 per share with adjusted gross margins of 403.5% and a tax rate of 13%. Analysts were anticipating adjusted earnings of $0.25 per share.

Shares fell more than 6% in extended-hours trading.

For the period ending March 30, Intel earned an adjusted $0.18 per share on $12.7B in revenue. The quarter is Intel’s first period in changing its reporting structure to focus more on its foundry business. Intel products, which now include client computing, data center, and network and edge, came in at $11.9B, including a 31% year-over-year rise in Client Computing revenue to $7.5B.

Datacenter and AI revenue came in at $3B, while revenue attributed to Mobileye (MBLY) was $239M, down 48% year-over-year. The Network and edge segment generated $1.4B, while the company’s foundry segment saw revenue decline 10% year-over-year to $4.4B.

Analysts expected a year-over-year increase in both the top and bottom lines, with the Pat Gelsinger-led firm expected to earn $0.14 per share on $12.78B in sales.

A consensus of analysts expected Intel to earn an adjusted $0.14 per share on $12.78B in revenue.

Categories
Healthcare

Solventum (SOLV) Stock: A Wait-and-Watch Story Amidst Growth Concerns

Solventum (SOLV) $62.75

Two Wall Street firms Wells Fargo and Morgan Stanley have similar advice to what I gave about Solventum in my earlier post. Growth concerns will keep the stock flat.

It’s a wait-and-watch story.

Here’s the Barron’s link.

https://www.barrons.com/articles/solventum-stock-price-3m-spinoff-4f6025e7?mod=md_stockoverview_news

Categories
Insurance Stocks

Globe Life (GL): Navigating Short Selling Allegations and Market Volatility

Globe Life (GL) $53

Category – Financial Services – subcategory- insurance

There is a short-selling operation going on by Orso Partners, alleging insurance fraud and of course the usual denials, and the short covering, which caused the 10% bounce premarket.

https://www.cnbc.com/2024/04/11/globe-life-shares-plummet-50percent-after-short-seller-accuses-company-of-insurance-fraud.html

Historically, though higher mortality rates, mostly pandemic related, was one of the main reasons for the drop in 2022 income.

While the balance sheet is relatively OK, debt levels are elevated, which is not ideal in a high-interest rate environment. 

There is a lot depending on declining or increasing mortality rates, and this could cause a lot of volatility in its stock.

That said, the company and analyst estimates are calling for 8% earnings growth in the next 3 years, and if the fraud claims are bogus and just short seller manipulation, the valuation is quite good. It has been a profitable company in the last 5-7 years.

But without enough information on the validity of Orso’s fraud claim it would be difficult to make a call. 

Categories
Insurance

Globe Life (GL): Navigating Short Selling Allegations and Market Volatility

Globe Life (GL) $53

There is a short selling operation going on by Orso Partners, who’re alleging insurance fraud and of course the usual denials, and the short covering, which caused the 10% bounce premarket.

https://www.cnbc.com/2024/04/11/globe-life-shares-plummet-50percent-after-short-seller-accuses-company-of-insurance-fraud.html

Historically, though higher mortality rates, mostly pandemic related, was one of the main reasons for the drop in 2022 income.

While the balance sheet is relatively OK, debt levels are elevated, which, in a high-interest rate environment, is not ideal. 

There is a lot depending on declining or increasing mortality rates, and this could cause a lot of volatility in its stock.

That said, the company and analyst estimates are calling for 8% earnings growth in the next 3 years, and if the fraud claims are bogus and just short seller manipulation, the valuation is quite good. It has been a profitable company in the last 5-7 years.

But without enough information on the validity of Orso’s fraud’s claim it would be difficult to make a call. 

Categories
Fintech

MoneyLion: A Fintech with Roaring Potential but Credit Risks to Watch

source

MoneyLion (ML) $76, Fintech

Positives

Diverse base of revenue (subscription fees, interchange, interest, etc.).

Both consumer and fast-growing enterprise segments, with more than 1.1K channel partners, enterprise now accounts for about one-third of its overall revenue.

The online marketplace for third party vendors is a great idea to increase its offering options in areas like insurance, credit cards, and mortgages. At the end of Q4, about 48% of the products used by its customers were from third parties, up from 26% at the end of last year, showing its expanding marketplace.

ML management striving for GAAP profitability should be a positive catalyst.

Ernst & Young, EY partnership is also positive.

Customer acquisition costs are low at $15, they can expand without hurting profits.

Negatives and Risks

The biggest risk is credit – so far it has been under control, but as we’ve seen with Fintech, things start spiraling out of control very fast, without proper guardrails in place.

Credit quality remained steady. Its provision expense as a percentage of total originations was 3.4% for the full year – THIS MUST BE WATCHED FOR DETERIORATION. Management usually warns and expects over 4% of losses so they’re not downplaying the credit risk.

Valuation

112x adjusted earnings per share, with the hope of 300% growth in 2025. Much lower on adjusted earnings. Still high, but if earnings materialize the P/E drops to 26. Clearly the lion needs to roar.

If you have the capacity for some credit risk, this is potentially good and can return in excess of 20% per year.

Categories
Healthcare

Humana: A Healthcare Giant Facing Challenges but Offering Long-Term Value

source:humana

Humana (HUM) $302

Humana has fallen 40% in the past year to $302, after lower guidance and missing estimates, and 14% today, after a lower than expected reimbursement rate from Medicare Advantage, where it is the second largest player. Losses have extended to major players like United Health as well.

Revenue projections for the next three years on lower MA payments are already down to low single digits 2-4%.

However, Humana has better operations than most, better cost control and profit margins while low, are still better than other providers. It should have better growth in 2025, and consensus estimates are calling for $24 earnings per share and mid twenties earnings growth from such a low base. Most of this is already in the price.

That said, it is a $112Bn giant, and given how regulated this industry is and how difficult it is to make money, entrenched players like it will survive and recover, but expect 2024 to be volatile, there could be further misses.

It’s worth buying in the $270-$280 range, or starting and accumulating on dips. There is value at the current multiple of only 12x 2025 earnings of $24. It’s below their historical multiple of 15-16.

Returns should be muted though, it’s a healthcare company after all, but the discount should help get over 10% per year, including dividends over the next few years.