Cree (CREE) ended lower on Friday, a day after it soared on news that it agreed to sell its Wolfspeed unit to Infineon Technologies (IFNNY) for $850 million.
A few analysts weighed in on the sale—as well as Cree’s upbeat guidance—on Thursday, and most are still cautious on the stock, but see the developments as positive.
International Business Machines (IBM) reports second-quarter earnings on Monday, and Barclays’ Mark Moskowitz is still a bear on the stock, although he slightly raised his estimates on Friday.
Moskowitz reiterated an Underweight rating but lifted his price target to $140. He writes that the adjustment comes from a “teeter totter” effect, as his revenue estimates fall, but are offset by higher estimates for margin (and thereby EPS). Nonetheless, he writes that IBM is still struggling with cloud disruption, and a “decent portion” of its cloud-based revenue can have below-corporate average margin as far as two years after deployment, leading IBM to aggressively cut costs.
Teradata (TDC) is lower Friday, hurt in part by a downgrade from CLSA.
Analyst Ed Maguire and his team cut their rating from Buy to Underperform, and cut their price target yb $6, to $29. Maguire writes that the move reflects his concerns that open source and Datawarehouse as a Service (DWaaS) alternatives will have a deflationary impact on Teradata’s core business. While the new CEO and other initiatives are steps in the right direction, he argues that Amazon’s (AMZN) RedShift product is a threat to the firm.
Apple (AAPL) reports earnings on July 26, and Credit Suisse is upbeat about the tech giant’s prospects.
Analyst Kulbinder Garcha and his team reiterated an Outperform rating and $150 price target on Apple Friday, writing that they expect $41.2 billion in revenue, shy of the $42.3 billion consensus, but their earnings per share estimate of $1.39 is a penny above the Street’s expectations.
Canaccord’s Michael Graham checks in with Pandora Media (P) Friday, writing that with the company (hopefully) getting closer to its launch of on-demand service, he’s resuming his monthly ad load surveys to assess the potential for revenue per thousand hours (RPM) to expand.
Graham reiterated a Buy rating and $14 price target on the stock, writing that his research gave him confidence that Pandora can keep expanding mobile ad RPM from his $53 estimate in the second quarter to $78 by 2020.
Barclays’ Mark Moskowitz cut his estimates for Apple (AAPL) again Friday, the third cut ahead of the company’s earnings report later this month.
He’s still an Apple bull, reiterating an Overweight rating on the stock, but he lowered his price target from $121 to $115, a process he calls “tedious” but necessary, as it’s larger than his previous cuts. Nonetheless he writes that Apple can still work after any post-earnings weakness, given the iPhone 7 launch is expected this fall. Still, he expects 2017 to be Apple’s big year, when it skips to the iPhone 8 to reveal major changes, so volatility for the rest of this year could still be in the cards.
Pacific Crest’s Michael Bowen has an update on wireless carriers Friday ahead of the fall smartphone refresh cycle, arguing that T Mobile (TMUS) is the best buy of the group.
He writes that, as expected, overall activity remains slow in the second quarter, given low upgrade rates and few promotions from carriers. He expects data pricing changes to intensify and pricing to move lower over time, as evidenced by Verizon’s (VZ) latest price cut.
ServiceNow (NOW) is down nearly 19% this year, but Mizuho expects better times ahead.
Analyst Abhey Lamba upgraded the stock to Buy from Neutral and boosted his price target by $15to $85. He writes that the move comes as he’s gained more confidence in ServiceNow’s ability to execute it’s long term plan, which calls for $4 billion in revenue and about 30% free cash flow margin. For the second quarter—which ServiceNow will report on July 27—Lamba expects results to beat expectations, which should also allow management to boost its full-year guidance.
Jabil Circuit (JBL) is climbing Friday, thanks to a bullish endorsement from Raymond James.
Analyst Brian Alexander raised his rating on the stock to Strong Buy from Outperform, with a $26 price target. He writes that there is “meaningful” cash flow and capital return inflection at the firm, but that the market hasn’t taken notice because it’s focused on volatility with its top customer—Apple (AAPL), which accounts for nearly a quarter of sales—that’s been driving subpar earnings. However, Alexander writes that with fundamentals hitting a trough, sentiment should improve going into the company’s analyst day in September, where investors could be heartened by messages about diversification and discipline.
Nvidia (NVDA) is falling Friday, hurt by a downgrade from Wells Fargo.
Analyst David Wong and his team cut their rating on the stock to Underperform from Market Perform, He writes that while the company has done an “excellent job” creating value in the past two years by growing its core gaming graphics processor unit (GPU) business, as well as establishing itself in new segments in processors for other applications, renewed competition from Advanced Micro Devices (AMD) in graphics and Intel (INTC) in coprocessors could create headwinds to growth and possibly make it difficult for Nvidia to beat expectations in the near term. Moreover, the stock is well above his $30 to $36 valuation range, leading to the downgrade.
Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.
