Twitter, GNC Holdings, Facebook, Amazon And Deutsche Bank Highlighted As Zacks Bull And Bear Of The Day

For Immediate Release

Chicago, IL – November 1, 2017 – Zacks Equity Research highlights Twitter (NYSE:TWTR) as the Bull of the Day and GNC Holdings (NYSE:GNC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook (NASDAQ:FB) , Amazon (NASDAQ:AMZN) andDeutsche Bank (NYSE:DB) .

Here is a synopsis of all five stocks:

Bull of the Day:

Despite the recent growth in digital advertising—and gains throughout the red-hot tech sector—Twitter has struggled to emerge as a consistent stock pick. However, the company’s latest earnings report has underscored the thesis that this social media giant has finally turned things around, and now might be the best opportunity to scoop up TWTR in years.

Twitter is a microblogging platform that allows users around the world to quickly create, distribute and discover content. Led by co-founder and CEO Jack Dorsey, the company has recently made investments in livestreaming and doubled down on its effort to be the one-stop-shop for interacting with current events.

Right now, Twitter is a Zacks Rank #1 (Strong Buy) after another strong earnings beat has ushered in positive estimate revisions. Shares are now up over 30% on the year and are looking to break higher on the back of its report.

Latest Earnings Results

Twitter reported its fiscal third-quarter earnings results last Thursday. Interestingly, the company revealed that it has been unintentionally over-reporting its monthly active user (MAU) figures since 2014, but this quarter’s performance still crushed estimates.

Twitter added four million MAUs in the third quarter, up 4% from the prior-year quarter. The platform now has about 330 million MAUs. What’s more, Twitter’s daily active user count jumped 14%.

Overall, Twitter reported revenues of $590 million, which were basically in-line with our consensus estimate. Nevertheless, non-GAAP earnings of 10 cents per share came in well ahead of the Zacks Consensus Estimate of 6 cents per share.

The social media company also flaunted its commitment to live video. Management said it streamed 830 live events and secured 30 new live partnerships in the quarter. This video expansion helped total ad engagements soar 99%.

Looking ahead, Twitter said that it expects fourth-quarter profits to hit $240 million—the high end of its adjusted EBITDA range. The company also said that it expects to bring in about $1.21 billion in digital ad revenue for the full year, which would bring Twitter into the top six online advertising companies in the U.S.

Bear of the Day:

The decline of brick-and-mortar stores has been well-documented, but specialty retailers like GNC Holdings are finding it particularly challenging to compete right now. Even as we head into the busy holiday shopping season, investors will probably want to avoid GNC right now.

GNC Holdings is a specialty retailer with a focus on health and nutritional supplements. In addition to its GNC-branded stores, the company also produces its own supplements under brand names like Mega Men, Ultra Mega, and GNC WELLbeING.

After posting yet another disappointing earnings report last week, shares of GNC are now down nearly 40% year-to-date. The stock currently carries a Zacks Rank #5 (Strong Sell) and catalysts for positive momentum are nowhere to be seen.

Latest Earnings Results

For the third quarter, GNC reported earnings of 32 cents per share, missing the Zacks Consensus Estimate of 31 cents and plummeting more than 45% from the year-ago period. Meanwhile, revenues of $609.5 million were down nearly 3% year-over-year and below our consensus estimate of $616 million.

Same-store sales in domestic, company-owned stores—which includes GNC.com sales—gained about 1.3% in the quarter. However, comps at domestic franchised locations declined 1.7%. Overall, revenues in the company’s U.S. & Canada segment fell about 3.5%, while sales in its manufacturing/wholesale unit slumped more than 13%.

What’s worse, gross margin contracted by 200 basis points to 32.3%, and general and administrative expenses rose 1.7%. Accordingly, adjusted operating margin deteriorated 320 bps to 7.5%.

While management’s “One New GNC” plan promised necessary changes, it has thus far resulted in deteriorating margins, sluggish revenues, and weak earnings—a cocktail that could prove to be deadly in today’s retail sector.

Additional content:

One day before Facebook is set to post its third-quarter earnings, representatives from the social media giant will testify in front of the Senate Judiciary Committee on Tuesday regarding Russia’s role in buying controversial election-related Facebook posts.

Still, despite all of the legitimate Russian concerns, along with the possibility of future government intervention and more stringent self-regulation, Facebook is an amazing growth stock.

As almost every investor knows, Facebook has been on a meteoric rise since going public. It has become—along with other tech powers like Amazon — one of the companies that growth-focused investors point to as the reason they search for outsized growth potential over many other factors.

Growth investing is often seen as more exciting, with the added possibility of massive returns compared to many value-minded strategies. Some investors might think that Facebook is past the point of being a growth stock, but that is hardly the case.

Facebook is currently a Zacks Rank #1 (Strong Buy) and sports and an “A” grade for Growth in our Style Scores system. Now, one day before Mark Zuckerberg’s company announces its Q3 earnings, let’s take a look at some of its growth-based fundamentals.

Fundamentals

Recently, Deutsche Bank mentioned to investors that Facebook could be set to experience a 42% year-over-year jump in advertising revenue. Advertising revenues are something all Facebook investors should pay close attention to, as selling ads is how Facebook makes a majority of its money. The Deutsche Bank note also mentioned that the social media giant has continued to invest heavily in video content, which could help drive further long-term growth.

The Zacks Consensus Estimates also help to show potential Facebook investors that its growth prospects are as strong as ever.

Facebook revenues are projected to surge almost 41% in the third quarter, based on our current consensus estimates. For its full fiscal year, the company’s revenues are set to soar 42% to reach an upward estimate of $40 billion.

These massive revenue growth projections are something that investors should be relatively giddy about, especially for a company of Facebook’s size. On top of Facebook’s top-line growth, the company’s earnings are set to jump as well.

Facebook’s earnings are set to gain almost 19% in Q3. For the full fiscal year, Facebook’s earnings are set to pop over 26% to reach $5.35 per share.

And a couple of key factors might help boost investor confidence in Facebook’s ability to match or top Q3 and full-year projections. First, Facebook has received 11 upward earnings estimate revisions for its third-quarter, all within the last 60 days. During this same timeframe, the company has earned 12 positive revisions for its full-year earnings against no downward changes.

What’s more, Facebook has topped earnings estimates in each of the trailing eight quarters.

Facebook, Inc. Price, Consensus and EPS Surprise | Facebook, Inc. Quote

Shares of Facebook have climbed over 56% since the start of the year. This movement destroys both the S&P 500’s 12.58% growth and the “Internet – Services” industry’s average.

Facebook did touch a new 52-week high on Tuesday, as it prepares to report Q3 earnings. This might make some investors cautious about jumping on Facebook right now, but if the social media company beats or matches its third-quarter projections, shares of Facebook could easily cruise to new highs for weeks to come.

It seems relatively clear that investors with growth on their minds might look no further than one of the biggest tech companies in the world.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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