For Immediate Release
Chicago, IL –July 21, 2017 –Zacks Equity Research highlightsVertex Pharma (NASDAQ: VRTX – Free Report) as the Bull of the Day A10 Networks, Inc. (NYSE: ATEN – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft (NASDAQ: MSFT – Free Report ), Visa (NYSE: V – Free Report) and eBay (NASDAQ: EBAY – Free Report).
Here is a synopsis of all five stocks:
Cystic Fibrosis (CF) is a rare genetic disease that causes persistent lung infections and limits the infected person’s ability to breathe. According to the CF Foundation, “ In the lungs, the mucus clogs the airways and traps bacteria leading to infections, extensive lung damage, and eventually, respiratory failure. In the pancreas, the mucus prevents the release of digestive enzymes that allow the body to break down food and absorb vital nutrients .” Our Zacks Bull of the Day, Vertex Pharma (NASDAQ: VRTX – Free Report) has created a new drug that improves lung functions in patients.
This Zacks Ranked #1 (Strong Buy) company discovers, develops and markets small molecule drugs that address major unmet medical needs. The company has eight drug candidates in clinical development to treat viral diseases, inflammation, cancer, autoimmune diseases and neurological disorders. Vertex has created its pipeline using a proprietary information-based approach to drug design that integrates multiple technologies in biology, chemistry and biophysics aimed at increasing the speed and success rate of drug discovery.
Recent Announcements
On Tuesday July 18, management announced that three of their four next-generation correctors in development to treat cystic fibrosis (CF) patients had positive Phase 1, and Phase 2 data. Highlighting the report was the efficacy and safety that was shown by the three triplet regiments. The data showed consistency across many regiments and patient populations, and is viewed as a game changer for the disease. Given this positive data, it is expected that the company will be granted Breakthrough Therapy Designation (BTD) for their triplet regiment; cutting the 12 month timeline to 6 months. It is estimated that the 24-week Phase three trials will begin in the first half of 2018, and potentially be launched in the late part of 2019.
This breakthrough therapy is expected to deliver increased sales and earnings growth over the next 5 years if and when it eventually gets full approval. Further, it is estimated that this triplet regiment will penetrate almost 100% of the $9 billion CF market.
The company is reporting Q2 17 earnings after the market closes on July 26th.
Streets Response
After the Phase I and II trial results, several brokerage firms made significant upgrades to their ratings and target prices; Citigroup (NYSE:C) maintained their Buy rating, and raised their target price from $135 to $190, Oppenheimer increased their rating from Perform to Outperform, and set their target price to $150, and Stifel reiterated their Buy rating and lifted their target price from $154 to $182.
Most Accurate Estimate Versus Zacks Consensus
According to the Zacks models, the most accurate estimates for the current and future quarters are well above the consensus estimates; Q2 17 most accurate is $0.10, above the $0.06 consensus (+66.7% upside), Q3 17 most accurate is $0.11, ahead of the $0.06 consensus (+83.3% upside), FY 17 most accurate is $0.74, above the $0.50 consensus (+48% upside), and FY 18 most accurate is currently at $1.69 ahead of the consensus of $1.38 (+22.5% upside).
Bear:
This Zacks Ranked #5 (Strong Sell) company provides software based application networking solutions. Its solutions enable enterprises, service providers, Web giants, and government organizations to enhance, secure, and optimize the performance of their data center applications and networks. The company delivers its solutions on optimized hardware appliances and as virtual appliances across its Thunder Series and AX Series product families. A10 Networks, Inc. (NYSE: ATEN – Free Report) is headquartered in San Jose, California.
Recent News
On July 13th management preannounced their Q217 results; both earnings and revenues are now expected to come in significantly below the Zacks consensus estimates. Revenues are now expected to be in a range of $52.5-53.5 million, about $10 below the Zacks expectation. Earnings EPS will now be in a range between -$0.06 and -$0.05, well below the expected $0.02 level.
Management blamed delayed deals in North American, and in Japan. Most believe that many large service provider deals were the main cause of the negative revision of both earnings and revenues. It is estimated that about 40% of the company’s revenues are derived from the service provider segment. Further, these segment deals typically suffer from unpredictable timing, and tend to be lumpy throughout the year.
Management’s Comments
According to Lee Chen, President and CEO, “ We are disappointed with our preliminary results. Revenue came in below our guidance as a number of opportunities in our pipeline did not close primarily in North America and to a lesser degree in Japan. Key deals remain in our pipeline and we are diligently working to improve our execution. We remain confident that our investments in security and cloud will serve as a strong foundation to penetrate these faster-growing segments of our market .”
Additional content:
Microsoft Posts Big Beat, Visa & eBay Also Report
Microsoft (NASDAQ: MSFT – Free Report ) blew the doors off earnings estimates after the bell today, posting EPS of 98 cents per share in its fiscal Q4, easily surpassing the 71 cents per share expected in the Zacks consensus estimate. Revenues were also better than expected, albeit less so, putting up $24.7 billion as opposed to the $24.2 billion in our consensus.
Poking into the earnings report a little, Microsoft's Azure revenue growth stands out at +98% year over year. Azure is the company's enterprise cloud-computing platform. Commercial cloud revenues overall came in at $18.9 billion. Productivity revenue rose 21% year over year to $8.4 billion, which was in-line with estimates. Windows PC revenue gained 1%, whereas Surface slipped 2% in the quarter.
Microsoft shares are trading up in the after-market today, but currently by less than a full percentage point. Keep in mind this stock has been strong in 2017 -- +19.5% year to date -- as well as year over year -- +38%. Yet at 21x earnings, Microsoft does not appear to be a stock priced for perfection.
Visa (NYSE: V – Free Report ), however, may just be. The credit card giant is up roughly 25% year to date, and currently trading near all-time highs. The company also beat fiscal Q3 estimates on the top and bottom lines: 86 cents per share versus 80 cents expected, on revenues of $4.57 billion which easily outpaced the $4.36 billion in the Zacks consensus. An impressive 28.5 billion transactions were processed by Visa in the quarter. This marks at least the fifth-straight earnings beat for Visa.
Finally, eBay (NASDAQ: EBAY – Free Report) shows mixed Q2 results after the bell today. Earnings of 34 cents per share (accounting for stock-based employee compensation and other before nonrecurring items) missed the Zacks consensus of 36 cents. But $2.33 billion in sales was marginally better than the $2.31 billion expected. But Gross Merchandise Volume (GMV) came in at $20.5 billion, notably beneath the $21.4 billion analysts had been looking for. The company also reduced Q3 EPS guidance, and shares in late trading are currently down 3%.
About the Bull and Bear of the Day
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A10 Networks, Inc. (ATEN): Free Stock Analysis Report
Microsoft Corporation (NASDAQ:MSFT
Visa Inc. (NYSE:V
eBay Inc. (NASDAQ:EBAY
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