Weekly Market Review: Inflation News Sparks Volatile Trading

U.S. stocks bounced back sharply from earlier losses to finish the week 1%-2% lower across the board. Consumer Discretionary and Technology names led the declines after a couple of high Read More... The post Weekly Market Review: Inflation News Sparks Volatile Trading appeared first on TipRanks Financial Blog.

Weekly Market Review: Inflation News Sparks Volatile Trading

U.S. stocks bounced back sharply from earlier losses to finish the week 1%-2% lower across the board. Consumer Discretionary and Technology names led the declines after a couple of high inflation reports spooked investors.

On Wednesday, the April consumer price index (CPI) showed 4.2% headline year-over-year growth or up 3% excluding food and energy. On Thursday the producer price index (PPI) came in even hotter at 6.2% growth, or 4.1% higher, excluding food and energy.

Both of these figures were well ahead of expectations. The NFIB Small-Business Optimism survey and University of Michigan Consumer Sentiment readings also showed signs of inflationary pressures.

The Federal Reserve long believed this price growth will prove to be temporary and largely a function of restarting the global economy from scratch a couple of months ago. Even if there are no immediate plans to raise interest rates, we believe the situation should be monitored in the second half of 2021.

The Week Ahead

Retailers dominate the earnings calendar this week, led by Home Depot (HD) and Wal-Mart (WMT) on Tuesday. Lowe’s (LOW) and Target (TGT) will report Wednesday, along with tech stalwart Cisco Systems (CSCO).

On the economic front, we’ll get several readings about the state of the housing market next week. On Wednesday the FOMC will release the minutes from their latest meeting. We will also see some initial May data from regional manufacturing reports. It all culminates with the preliminary reports of the IHS Markit PMI indexes on Friday.

Following the snap-back recovery in stocks from pandemic lows, we believe that investment gains will be harder to come by in 2021.

As a result, deciding what and when to buy can be challenging for any investor. However, the fact remains that attractive investments are out there if you’re willing to dig a little deeper.

One such Technology name is worth a closer look and is our Stock of the Week.

Stock of the Week: NortonLifeLock ()

The company produces cyber safety products for consumers, protecting various modes of digital threats.

The stock gained more than 23% last week. We believe this momentum can continue into the second half of 2021. Here’s why:

Management announced quarterly results on Monday that exceeded the consensus analyst estimates. NortonLifeLock earned $0.40 a share in the March quarter, as revenue increased 9% from a year ago, to $672 million.

Upside in the period was driven by 17% growth in consumer billings. This helped management expand the operating margin by nine percentage points. The company also boosted guidance for the June quarter, to earnings of $0.40 to $0.42 a share, on $680 to $690 million of revenue.

In addition, NortonLifeLock added $1.5 billion (57.5 million shares) to its stock buyback program. The company also pays a quarterly dividend of $0.125 a share (1.9% yield).

Following the results, Barclays boosted its price target to a Street-high of $31 a share (32.8% upside potential). Analyst Saket Kalia cited expectations for double-digit annual revenue growth over the next three-five years. He believes that over this time earnings will increase by more than 100%.

Kalia is rated in the top-7% of the nearly 7,500 analysts tracked by TipRanks, which adds weight to the call.

The company also carries a Smart Score of 10/10 on TipRanks. This proprietary score utilizes Big Data to rank stocks based on 8 key factors that have historically been a precursor of future outperformance.

On top of the positive aspects mentioned already, the Smart Score indicates that shares have seen improving sentiment from individual investors and financial bloggers.

FYI: This is just 1 of the 20+ stocks selected for the Smart Investor portfolio. That’s where we share more detailed insights on our weekly stock picks.

The post Weekly Market Review: Inflation News Sparks Volatile Trading appeared first on TipRanks Financial Blog.

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Palantir Stock: This One Could Require Some Patience

Palantir Technologies (PLTR), which is a top provider of analytics and AI (artificial intelligence) services and technology, saw its stock drop ten days in a row prior its earnings report Read More... The post Palantir Stock: This One Could Require Some Patience appeared first on TipRanks Financial Blog.

Palantir Stock: This One Could Require Some Patience

Palantir Technologies (), which is a top provider of analytics and AI (artificial intelligence) services and technology, saw its stock drop ten days in a row prior its earnings report this past week.

Of course, this is nothing new for high-growth stocks lately. Wall Street has been dumping most of these securities.

Palantir stock did get some relief when it reported its Q1 results on May 11. On the news, shares jumped nearly 10% to $20.21. 

Yet it was not able to hold on, and the stock price has since sunk to around $20, bringing the market capitalization to $37 billion.

Q1 Results

So, let’s get a rundown on the Q1 numbers. The company reported a net loss of $123 million or 7 cents a share. On an adjusted basis, the earnings per share was 4 cents, which was in-line with the consensus forecast. 

As for revenues, they soared 49% to $341.2 million, which handily beat the Street estimate of $332 million. The biggest driver was the U.S. government business, which saw an 83% spike. (See Palantir Technologies stock analysis on TipRanks)

Note that when Palantir was founded – back in 2003 – the focus was generally on contracts for the CIA and the Defense Department. However, over the past decade, the company has been moving more aggressively into the commercial sector. In Q1, commercial segment revenues were $133 million.

Something else to consider about the quarterly results: Palantir said that it will accept Bitcoin from its customers and might even add this digital asset to its balance. As seen recently with Tesla (), this may prove to be a challenge. Tesla recently indicated it will no longer accept Bitcoin for orders because of concerns about the environmental impact of the digital mining.

Palantir's Technological Advantage

Palantir generally caters to larger enterprise customers, as the average revenue per customer is about $8.1 million. In fact, the top 20 customers are at a hefty $36.1 million.

Additionally, the company has been able to scale its operations with proprietary technologies. The latest offering is Apollo for Edge AI. Launched in April, it is already getting traction. At the heart of this system is micro models, which are similar to microservices that allow for modern cloud computing. The technology essentially makes it much easier and more effective to deploy AI models across complex environments. 

This technology holds enormous potential. For example, it can allow for the automation of factories, the use of sensors on oil rigs or even applications in space. All in all, Apollo for Edge AI should expand the company’s addressable market opportunity.  

Wall Street’s Take

Turning to the analyst community, the consensus rating is a Hold, with 2 Buys, 3 Holds and 4 Sells logged over the past three months. The average analyst price target is $21.75, which implies 8.3% upside potential.

Bottom Line on Palantir

Palantir has built a powerful platform and is positioned to benefit from the secular trend of AI. Few companies have a similar level of experience, set of strong technologies and team of data scientists.  

On the other hand, in today’s environment, Wall Street is not particularly interested in growth plays – especially those with high valuations. Consider that Palantir is trading at about 17 times sales, even with the recent drop-off in the stock price.

Therefore, it may be best to hold off and wait for things to settle before making a purchase.

Disclosure: Tom Taulli does not have a long or short position in Palantir stock.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post Palantir Stock: This One Could Require Some Patience appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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