Author

Chris Lau

Browsing

The markets are still sizzling hot, in many cases leaving behind the lesser known small-cap stocks because of their diminutive size

The markets have a big appetite for risky investments now, thanks to the Federal Reserve. Rates were slashed to zero and the injection of around $6 trillion sent the Nasdaq to new all-time highs. After erasing losses from March 2020, the S&P 500 has completely dissociated from the real-world risks of the novel coronavirus.

Investors should consider small-cap stocks whose prospects improved recently or are about to get better. Here are 7 small-cap stocks ready to rocket up the charts:

Investors who missed out on the sizzling hot FAANG stock profits may want to look at these small-cap stocks. One might erroneously assume that companies of this size will have trouble raising funds when needed or competing with larger-sized firms. But savvy investors who look deeper into a company’s prospects will fare well by investing in these picks.

AMC Entertainment (AMC)

The shutdown of movie theaters crimped AMC Entertainment’s revenue in the second quarter. Ticket sales fell 98.7% to just $18.9 million as AMC lost $5.38 a share.

On August 7, courts ruled that movie studios are allowed to own theatres again. Ahead of a potential takeover, AMC has re-shaped its business in many ways to position itself for the eventual recovery.

The company ended the quarter with $498 million in cash. AMC refinanced its debt in June, as 87% of the senior subordinated noteholders participated in the $1.46 billion exchange. As a result, net debt fell by $555 million. To further cut costs, AMC renegotiated leases at its over 900 theater locations. Landlords agreed to 75% of its leases deferred or rent abated. By running at a capex of only $26.1 million in Q2, AMC is ensuring its near-term survival.

Movie studios looking to maximize profits will want to own AMC. Direct to streaming or streaming movies 17 days after a showing in theaters have become more important revenue flows under our new socially-distanced normal. But the theater is still the biggest source of revenue. If Disney (NYSE:DIS), for example, wanted to carve out an edge over Netflix (NASDAQ:NFLX), it might buy AMC to get ahead.

A potential buyer could offer as much as double what the shares trade at currently. According to simplywall.st, AMC stock has a fair value of $15.22.

Digital Turbine (APPS)

Digital Turbine soared after reporting quarterly earnings on August 5. It posted revenue of $59 million and a GAAP net income of $9.9 million in Q1. EBITDA more than doubled to $14.1 million.

The company benefited from advertisers increasing spend on platforms that provide them with measurable results. By holding advertising suppliers accountable, customers won’t waste their limited budgets on channels that do not work. For example, Digital Turbine customers saw an increase in conversion rates. The platform benefited from increasing user engagement with applications and mobile content.

Digital Turbine forecast Q2 revenue of between $59 million and $61 million. Its non-GAAP adjusted EPS will be between 11 and 12 cents. Valuations are no longer compelling on a price-to-earnings basis. Still, APPS stock has a 96/100 quality score.

As shown above, net margins are above the industry and S&P 500 averages.

Sonos (SONO)

Ahead of its earnings report, Sonos peaked close to $18, but bullish sentiment reversed quickly after the company posted results after the market close on August 5. The speaker-maker lost 52 cents a share. It blamed the pandemic for closing retail stores, sending revenue 4% lower Y/Y to $249.3 million.

Sonos forecast revenue of $290 to $305 million in its fourth quarter, above the $282 million consensus estimate. In its shareholder letter, the company highlighted record direct-to-consumer revenue. And that strong momentum will continue.

Strong performance in the United States and the United Kingdom suggests that Sonos has a hot product that consumers want. New flagship soundbar Arc and the Sonos Move are higher-margin products. So the more units the company sells, the better its operating margins should get.

The average analyst consensus is a “buy,” according to StockRover:

[adace-ad id="5528"]

Bears are in control of SONO stock for now. Once the selling pressure ends, investors may consider re-entering a long position at a better price.

SunPower (SPWR)

SunPower posted adjusted losses for the second quarter as revenue fell by 27% Y/Y. The negative $8.8 million EBITDA may improve in the coming quarters. The company forecast non-GAAP gross margin of up to 6%, while EBITDA will be in the range of negative $38 million to negative $28 million.

The positive cash generation in Q3 is encouraging. The firm leads with Helix solar and the storage mark. For example, the attach rate for Helix storage will be over 50% in the second half of 2020. SunPower is also simplifying its structure. It is spinning off Maxeon at a valuation of over $1 billion.

SunPower itself will expand margins through Storage and Services. More importantly, it will refocus its leadership in the U.S. downstream distributed generation (DG) market. By holding SPWR stock now, investors are getting a pure-play solar power company and a global DG firm.

That being said, analysts are highly cautious about SunPower. Most analysts rate the stock as a “hold,” with an average price target of $8.39 (per Tipranks).

Waitr Holdings (WTRH)

Thanks to Uber (NYSE:UBER) buying PostMates for $2.65 billion in an all-stock transaction, Waitr Holdings stock rose sharply. And although shares dipped following second-quarter results, investors should consider adding to a position here.

Waitr reported revenue increasing modestly by 18% to $60.5 million. It earned 10 cents a share, compared to a 32 cent loss last year. Most importantly, the cash on hand of $87.3 million is despite the debt prepayment worth $10.5 million. CEO Carl Grimstad said that its pre-pandemic initiatives adapted its business to the new realities.

Specifically, CEO Grimstad said:

“Waitr continues to actively work with our local communities, diners, restaurant partners, drivers, and employees in joint efforts to mitigate risks and hardships arising from the ongoing COVID-19 pandemic.”

After trading as low as 21 cents before the pandemic, investors are paying more than 20 times more. At the higher price, investors are betting that the firm will continue to accelerate revenue while keeping sales and marketing and operations and support expenses down.

The average analyst price target is $5.70.

Applied Optoelectronics (AAOI)

Applied Optoelectronics appears to finally have turned the corner. The company reported revenue growth by 50.2% Y/Y to $65.2 million. Increased 5G mobile technology deployments are helping AOI grow again.

AOI lost $18.6 million, or 89 cents per share, in the second quarter. That’s compared to the $11.4 million, or a 57 cents a share, loss over the same quarter last year. And since non-GAAP losses will shrink to as low as a 3 cent loss a share in the third quarter, investors may want to bet on this rebound.

In the above seasonality chart, the stock is enjoying strength this summer. The stock may drop in September and October, setting up an entry point for November.

On the conference call, Executive Stefan Murry said that the company saw lots of activity in China. There are tens of millions of towers that need a fronthaul transceiver. So the total addressable market is large.

If AOI is a leading supplier in China, it might win 10% to 20% of the market share. That would squeeze out shorts, who presently have a short float of 28.2% of shares.

Arlo Technologies (ARLO)

Arlo stock has traded above $2.00 since April. But shares tripled to over $6.00 after the company posted second-quarter results. It posted a revenue decrease of 20.3% Y/Y to $66.6 million, but paid accounts rose 72% sequentially (from Q1) to 43,000.

Arlo has no debt and $205.5 million in cash. So the GAAP EPS loss of up to 41 cents in Q3 is not a concern. Chances are low that Arlo will sell shares to raise cash. If it does sell the stock, it will take advantage of the stock rally. The short float is only 5.9% of shares, so a short-squeeze lifting the stock further is unlikely.

Investors who missed the $2.00 – $3.00 entry point may want to wait for a dip before holding Arlo stock. Conservative investors should wait for another quarter of strong results to confirm the turnaround is sustainable.

Disclosure: the author owns shares of AMC Entertainment.

Author: Chris Lau

Source: Investor Place: 7 Small-Cap Stocks Ready to Rocket Up the Charts

Healthcare Digitization accelerated dramatically since the coronavirus pandemic, raising the prospects of AI stocks

The increased move to digitization is only one of several trends the healthcare industry has embraced in the past few years. Transferring paper-based information to digital formats gives health professionals faster access to data, but the benefits don’t stop there. To turn the stored information into something useful, the industry needs systems that find patterns, recognize what is important and perform predictive analysis. On that basis, investors should consider AI stocks.

The digitization of healthcare-related data will involve companies that lead in Artificial Intelligence. The rise of AI will not lead to job losses for healthcare professionals, but instead enable companies to automate repetitive tasks and free their staff to do other, more valuable things.

Here are seven AI stocks to buy for the increasing digitization of healthcare:

How might AI-powered systems contribute to a better healthcare system? Electronic Healthcare Records (EHRs) have a rich dataset to back up the benefits of AI. As medical costs for patients increase at an uncontrollable rate, the industry will want to invest in AI solutions to lessen the load.

International Business Machines (IBM)

Source: Laborant / Shutterstock.com

International Business Machines reported lower year-over-year revenue for the second quarter. Revenue fell 5.42% Y/Y to $18.12 billion, though it earned $2.18 a share. Watson is a central brand for the AI solution IBM offers, as well as a part of its hybrid cloud strategy, which IBM advertises may help its clients work through both complex and regulated workloads.

According to IBM, Watson “helps you predict and shape future outcomes, automate complex processes, and optimize your employees’ time.” For example, AI will help healthcare professionals with surface treatment, supporting user needs, and by targeting similarities and patterns.

As a tech stock, IBM trades at a steep price-to-earnings multiples well-below both industry and S&P 500 averages. Markets are punishing IBM stock for the slow growth in its legacy businesses.

IBM still has plenty of work ahead in building Watson’s AI doctor. Until it gets beyond the hype and delivers on helping such things as making diagnoses, IBM will rely on business growth from its other business units. That includes Red Hat and Cloud Paks.

Baidu (BIDU)

Source: StreetVJ / Shutterstock.com

China-based Baidu established a health internet hospital on March 18. It also recently established Baidu Health Technology. The company is committing to the online healthcare industry with strong experience in big data and AI technologies.

Baidu’s value score is on par with the index, as shown in the table below. As its role in healthcare increases, price-to-sales ratio will expand to match that of the industry average. Baidu stock will increase as a result:

Baidu said last year that it would donate AI-integrated fundus screening machines to 500 medical centers. Already, the donation is paying off. The AI-powered camera detects eye fundus and creates a screening report in mere seconds. Because China has a shortage of ophthalmologists, Baidu is helping to increase the availability of patient care.

In the near term, the company will build its Baidu Health unit. This included holding more than 100 live broadcasting events on COVID-19. Baidu Health also helps users register for doctor appointments, get information on hospitals and doctors and connect with doctors for online consultation.

On Wall Street, the average price target for Baidu stock is $146.67 (per Tipranks).

Medtronic plc (MDT)

Source: JHVEPhoto / Shutterstock.com

In 2019, Medtronic launched its first AI system for colonoscopy. The company said, “The GI Genius module uses advanced artificial intelligence to highlight the presence of pre-cancerous lesions with a visual marker in real-time – serving as an ever vigilant second observer.” A “new era of diagnostic endoscopy” should improve the detection rate that a doctor may miss, ultimately saving more lives.

Above, Medtronic stock scores a 92/100 on quality. The market is ignoring its strong gross margins relative to the S&P 500.

Chairman and CEO Omar Ishrak recently explained how the model for personalized medicine is becoming a reality. That will depend on developing AI solutions in the healthcare market. In doing so, the company will empower physicians.

By giving doctors clinical and behavioral data, providers will have more information available. Making better-informed decisions will increase the effectiveness of patient treatments.

Stryker (SYK)

Source: Shutterstock

More of Stryker’s customers are ordering robots. As robotic surgery procedures increase, the role of artificial intelligence in healthcare will rise in importance, too. Stryker is a leader in orthopedic robotics. In the second quarter, the company posted strong orders, thanks to its continued push for innovation. Joint replacement surgeries, for example, are growing above the market rate.

Stryker’s price to free cash flow ratio is below that of the industry. Given its strong role in AI in healthcare, the Stryker stock is trading at a discount.

On its conference call, Stryker’s VP of Investor Relations, Preston Wells said, ”whether they’re competitive accounts that are in or out, we’re really just going to all of those different accounts and trying to find areas to place Mako.”

Wells further implied the addressable market will get larger as customers ask for more solutions from Mako. The robotic-arm uses a 3D CT-based planning software. Surgeons will know more about the patient’s anatomy, enabling them to offer a personalized joint replacement.

Nuance Communications (NUAN)

Source: Shutterstock

Nuance shares have risen steadily from sub-$15 lows to around $27. In its second quarter, the company posted organic revenue growth of 11% Y/Y. Enterprise revenue grew 19%, the highest in 10 years. Dragon Medical One is the flagship growth driver for Nuance; demand for that service grew 46% Y/Y.

Below, most analysts rate Nuance stock with a “strong-buy” recommendation:


Nuance accelerated its AI innovation and continued the development of machine learning-based tools. This will improve the workflow and productivity in healthcare. Dragon Medical One contributed to the strong first half annual recurring revenue growth.

Nuance scaled its international markets by launching Dragon Medical One in five new European countries. The product is a speech recognition cloud solution that will improve the productivity of healthcare workers. It securely captures the patient’s narrative and reduces the workload of clinicians.

The rise in telemedicine during the global pandemic will drive Nuance’s AI business higher.

Alphabet (GOOG)

Source: rvlsoft / Shutterstock.com

Google’s mandate for Deepmind is building products that “support care teams and improve patient outcomes.” Google has expertise in cloud storage, data security and app development. It will work to develop mobile medical assistants for clinicians.

In diagnostics, Deepmind will help healthcare workers detect eye disease from scans or assist in cancer radiotherapy treatment. More recently, Google’s pending acquisition of Fitbit will accelerate the search giant’s development of wearables in healthcare. And since these devices track the wearers’ health metrics, it will have plenty of user data to work with.

That volume of data will necessitate machine learning and AI to decipher any meaningful patterns. Without AI, Google cannot perform any initial diagnoses that may potentially save a wearer’s life.

Google hasn’t gotten the European Union’s blessing on the deal, and a full-scale investigation will delay the Fitbit acquisition. But should it clear, the company’s positioning in AI in healthcare will strengthen.

Alibaba (BABA)

Source: Kevin Chen Photography / Shutterstock.com

Alibaba has all the requisite backend systems in place for AI in healthcare. Alibaba Cloud has AI-powered solutions that are solving real-world problems. And BABA is solving healthcare problems by analyzing clinical and hospital operations.

The company said that the system uses 700 core indicators that come from medical institutions and regional medical operations. By feeding real-world data to the AI, the system will have higher accuracy and reliability. Its AI platform may perform image and voice recognition. Medical institutions get diagnosis support from Alibaba’s AI.

The real-world importance of Alibaba’s new AI system will save lives. The system has a 96% accuracy in detecting coronavirus in mere seconds. By contrast, it takes humans around 15 minutes to make a diagnosis.

The fair value of Alibaba stock is $325.72. The value score is low but the growth score is 100/100:

Alibaba trained the system to detect coronavirus by introducing images and data from 5,000 confirmed coronavirus cases.

Author: Chris Lau

Source: Investor Place: 7 AI Stocks to Buy for the Increasing Digitization of Healthcare

After biotech stocks pulled off a late-year rebound, the stage is set for repeat performance in 2020

If it were not for the surge in stock prices in the fourth quarter, biotechnology stocks would have ended the year in double-digit losses. Instead, most large-capitalization biotech stocks are around break-even in 2019. The market is signaling that it has bigger expectations for profit growth in the biotech sector driven by a number of positive catalysts.

At a macroeconomic level, markets now believe the government regulators will not scrutinize drug pricing. The government is starting to realize that high healthcare costs are not due solely to rising drug prices. So, biotech companies that raise prices to offset higher research and development costs may do so in 2020. Mega mergers in 2019, like AbbVie (NYSE:ABBV) buying Allergan (NYSE:AGN), signaled the undervaluation in the sector. In 2020, price-to-earnings valuations may expand to correct the market discount.

There are seven biotechnology stocks in 2020 that investors should hone in on. Get ready to pop these in your portfolio.

Biotech Stocks to Buy: Biogen (BIIB)

Biogen (NASDAQ:BIIB) rose from $220 to $300 in October when the company said it would resume filing for approval to bring its Alzheimer’s therapy drug to market. Then on Dec. 6, the company presented Phase 3 results for Aducanumab. Over an 18-month period, it enrolled 3,285 patients over the two studies. The results showed that with a high dose over a long period of time, there was a meaningful slowing of decline in Alzheimer’s patients. And so, if the drug passes regulatory review, BIIB stock will live up to its hype.

The Aducanumab data showed mixed results. Although a higher dosage benefited patients, the side effects on the higher dosage are not clear.

Biogen reported steady revenue growth in the third quarter. Revenue grew 5% to $3.6 billion as earnings per share grew 17% to $8.39 (on a GAAP basis). Its multiple sclerosis drug portfolio is resilient. But Biogen is focused on addressing the intellectual property challenge with Tecfidera, a drug that treats relapsing forms of MS. This is offset by the launch of Vumerity, a drug also used to treat people with relapsing forms of MS.

Biogen reported revenue for Spinraza growing in the double-digits year-over-year and quarter-over-quarter. This drug treats patients with spinal muscular atrophy (SMA). Since Spinraza has a well-characterized safety profile, Biogen will run a further studies to evaluate the benefits of higher doses to achieve greater efficacy.

Analysts who offer a price target on BIIB stock have an average of a $306.75 price target.

Amgen (AMGN)

Trading at 52-week highs, Amgen (NASDAQ:AMGN) trades with analyst price targets that average $246. But at a trailing P/E of 18.6 times, the company’s Otezla acquisition from Celgene (NASDAQ:CELG) is accretive to full-year results.

Amgen raised its earnings guidance for fiscal 2019 after it completed the acquisition of Celgene’s psoriasis drug, Otezla. It now expects EPS of $14.50-$14.70 in FY 2019. Analysts had expected $14.45 in EPS. Amgen paid $13.4 billion for Otezla.

Just over a month ago, Amgen announced a collaboration with BeiGene (NASDAQ:BGNE). Forming collaborations are in Amgen’s growth strategy. Since 2011, it grew by expanding to 100 countries, including China and other emerging markets. BeiGene, which represents a strategic investment in China, offers strong oncology expertise. It also has good commercial and clinical capabilities.

In 2020 and beyond, the Amgen-BeiGene collaboration may accelerate the commercialization of Amgen’s approved oncology products in the region. It paid $2.7 billion for a 20.5% equity stake, which was a 36% premium to BeiGene’s 30-day average share price.

In Q3, Amgen reported EPS of $3.66. Revenue declined 2.9% to $5.7 billion. Despite a global sales decline, Amgen reported double-digit sales for a multitude of drugs. If generic competition lessens in 2020 and drug pricing improves, Amgen stock could continue trending higher.

Gilead Sciences (GILD)

Gilead Sciences (NASDAQ:GILD) is stuck in a wide trading range. And as investors wait for the stock to build an uptrend, they may collect a dividend that yields around 3.8%.

In the third quarter, the company reported revenue of $5.6 billion, unchanged from last year. Non-GAAP EPS was $1.75. Total HIV product sales reached a record, with quarterly revenue of $4.2 billion. In the quarter, the U.S. approved Gilead’s Descovy for PrEP (pre-exposure prophylaxis). This drug is indicated to reduce the risk of sexually acquired HIV-1. Filgotinib was validated in the European Union and the company submitted a new drug application in Japan. Filgotinib is a JAK1 inhibitor that treats rheumatoid arthritis. If approved, it will compete with AbbVie’s (NYSE:ABBV) Humira.

Investors should consider Gilead for 2020 because of its strong cash flow generation. It produced $2.6 billion in cash from operations in the third quarter and now has $25.1 billion in cash and investments. That healthy cash flow allowed the company to easily spend on R&D. It paid $5.5 billion for global research collaboration activities and it also invested in Galapagos (NASDAQ:GLPG). Galapagos gives Gilead access to many compounds, including six molecules that are in clinical trials. For example, Gilead gains rights to a Phase 3 candidate that treats idiopathic pulmonary fibrosis. GLPG1972 is a Phase 2b candidate that treats osteoarthritis.

Gilead could grow its revenue beyond the 12.7% rate. If its purchase of Kite Pharmaceuticals yields new products brought to market, the stock is set to blast off in late 2020 and beyond.

Regeneron Pharmaceuticals (REGN)

Regeneron (NASDAQ:REGN), which is getting better known for its blockbuster drug Dupixent, broke out of a downtrend in October. Investors correctly bet that it would report a strong quarter. And it did just that on Nov. 5.

The company reported an EPS of $6.67 as revenue soared 23.1% year-over-year to $2.1 billion. Markets incorrectly worried over generic pressure on Eylea, which treats advanced wet age-related macular degeneration. Eylea sales grew 14% to $1.9 billion. Dupixent sales continued to exceed estimates. Sales of the drug, which treats patients suffering from Type 2 inflammatory diseases, was annualized at over $2.5 billion in Q3. The drug treats not only atopic dermatitis, but also asthma and chronic rhinosinusitis with nasal polyps.

Dupixent has a growing addressable market. As it gains approvals worldwide, sales might even accelerate. In 2020, Regeneron will continue investing in researching activities for the drug to have additional indications. For example, late next year it will have data in combination with Aimmune’s (NASDAQ:AIMT) AR101 for treating peanut allergies. It will also have a data readout for its interleukin-33 (IL-33) antibody called Regeneron 3500 for treating atopic dermatitis and COPD (chronic obstructive pulmonary disease).

Regeneron continues to develop drugs in the oncology market. It launched Libtayo, an anti-PD-1 therapy that treats cutaneous squamous cell carcinoma. It also has new data from Libtayo in treating lung cancer.

At a P/E near 20 times, Regeneron still has plenty of upside potential. Even if the company’s revenue were to slow to the 4% range in the next five years, the stock is still worth around $526.

Crispr Therapeutics (CRSP)

Crispr Therapeutics (NASDAQ:CRSP), which is based in Switzerland, almost doubled in 2019. So after that performance, why should investors expect any more upside in 2020?

CRSP reported encouraging results for a potential immune-evasive cell replacement therapy for diabetes. From its press release, it said: “The data demonstrate that the CyT49 pluripotent stem cell line, which has been shown to be amenable to efficient scaling and differentiation, can be successfully edited with CRISPR.”

The results are further proof that regenerative medicine and gene editing may lead to cures in various diseases. Crispr is currently focusing on chronic diseases like diabetes.

Optimism for CRSP stock is so strong that a 4.3 million stock offering at $64.50 barely hurt the stock. The stock sale will add $274.1 million of cash, which Crispr may use to fund its ongoing clinical studies in sickle cell disease and beta-thalassemia.

Digging into the details, Crispr said that it successfully treated its first patient in the CLIMB SCD-121 study. The neutrophil engraftment had 46.6% hemoglobin F four months later. That suggests a curative response. Since the study is ongoing, the company will continue to inform investors of the safety profile of the treatment and its efficacy.

Crispr is ushering in an innovative form of therapy through gene editing. And markets like what the future holds.

Editas Medicine (EDIT)

Editas Medicine (NASDAQ:EDIT) has negligible revenue and is losing money. But its collaboration with Celgene gives it the resources in advancing its pipeline.

Editas reported a $70 million payment from its Celgene collaboration. This payment is in recognition of the work it did so far. It also includes contributions it will make to the collaboration. Its first patient will receive a doss of EDIT-101 by early 2020. This medicine treats subjects suffering from LCA10 or Leber congenital amaurosis. In Q3, Editas presented data for its USH2A study. It produced up to 60% corrected gene expression.

Editas added $15 million in its cash levels in Q3 and had $333 million as of Sept. 30, 2019. And since it used $29 million for operating expenses and capital expenditures, a cash raise is unlikely in the short term. Looking ahead, additional collaborations with Celgene could give EDIT stock a lift. On its conference call, the company said:

“All of that work is rolled into the new collaboration with Celgene. As you can imagine, as a leader — and we believe the leader in T cell medicines for oncology including arguably the best CD19 and the best BCMA CAR-T programs that have a strong interest in maintaining their leadership position and gene editing is certainly an important part of what are likely to be the next generation of T cell medicines for oncology.”

Editas’ collaboration with Celgene continues to progress nicely. Wall Street, which has a $42.50 price target, is also optimistic that the company will reward investors in 2020.

Innoviva (INVA)

Innoviva (NASDAQ:INVA) fell to as low as $10.03 recently but bounced back in the last month after reporting a strong Q3. The company earned 36 cents a share, while revenue grew 6.6% year-over-year to $65.8 million.

Innoviva booked $69.2 million in gross royalty revenues from GlaxoSmithKline (NYSE:GSK). This included royalties of $46.4 million connected to sales of Relvar/Breo Ellipta. This drug is a combination inhaled corticosteroid that treats patients with COPD (chronic obstructive pulmonary disease). Anoro Ellipta, which treats COPD and is taken once daily, brought in royalties of $11.6 million.

Q3 operating costs rose only slightly to $5 million, up from $4 million last year. The company had $2.8 million in legal and related fees. Theravance Biopharma (NASDAQ:TBPH) initiated an arbitration. In the final decision, the Theravance Respiratory Company would reimburse those legal costs.

Innoviva ended the third quarter with $297.2 million in cash and cash equivalents.

Global Relvar/Breo Ellipta sales fell 10% globally and by 32% in the U.S. Pricing discounts hurt revenue, and that revenue was partially offset by volume growth. Market share gains in various European markets and in Japan offset the overall revenue declines. Anoro Ellipta net sales grew 18% globally and were up 17% in the U.S. The negative impact of higher rebates was offset by higher sales volumes.

For 2020, Innoviva has a lower operating cost basis, helped by ending its Brisbane office lease. So, if the company reduces rebate offers and continues to grow its sales volume, revenue and profits may rebound.

Author: Chris Lau

Source: Kitco: 7 Biotech Stocks to Buy and Hold in 2020

A new GPU product and server chip solution make AMD stock a clear upside-ahead story

Advanced Micro Devices Stock (NASDAQ:AMD) is a solid performing stock on the Nasdaq exchange. And even after rewarding its loyal investors, AMD stock is getting hotter. The company launched a key new product in the GPU space. Even though Intel (NASDAQ:INTC) aggressively cutting chip prices to compete with AMD, AMD still has an edge.

Intel cut prices on its Cascade Lake CPU last month, which suggests the giant is facing mounting pressure from AMD in the server market. Intel’s price cuts are not trivial: its flagship Core i9-10980XE will retail at $979. This price is sharply below the pricing of its previous generation 9980XE product priced at $1,979. Prices on other i9-related chips have been halved. Although Intel will face profit margin declines, revenue could increase.

AMD EPYC a Winner

AMD’s EPYC CPU has technological advancements that Intel cannot match. EPYC’s infinity fabric facilitates data and control transmission across all linked components. So, having more associativity and more cache, plus a doubled bus width of 512-bit gives AMD an advantage. This improves scalability, lower latency, and efficiency. Getting an overall 27% efficiency gain will save data centers on the power bill while offering more performance to customers.

Enterprise customers are slowly opting for EPYC-powered servers over Xeon-powered ones. So, if AMD wins more business and keeps prices steady, expect its profit margins and revenue to grow steadily. This will happen over the next few years, too, because Intel does not have an answer to AMD’s technology.

GPU Launch

On Nov. 19, AMD launched the world’s first 7nm professional PC workstation graphics card. The W5700 workstation graphics card has GDDR6 memory that handles large datasets which are central to machine learning. By supporting PCI 4.0, professionals may render designs in a virtual reality environment with ease.

AMD needed a compelling professional GPU solution to counter Nvidia (NASDAQ:NVDA). And since the Radeon Pro is powered by the AMD RDNA architecture, it will have 1.25 times instructions-per-clock compared to the previous generation. Customers may opt for AMD over Nvidia’s GPU. The card retails for just $799.

Multiple Product Launches at SC19

At SC19 in Denver, AMD announced several products in HPC. It announced two new instances with Amazon’s (NASDAQ:AMZN) AWS. With the continued growing demand from AWS, AMD will likely reap the rewards with the new product. The EC2 Compute-Optimized instances, C5a and C5ad, will offer customers plenty of performance. This includes batch processing, distributed analysis, and web applications. Previously, Gigabyte launched five new servers that will use AMD’s second-generation EPYC.

Microsoft’s (NASDAQ:MSFT) Azure will offer high-performance computing solutions that use AMD EPYC 7742 processor. These virtual machines will give customers supercomputer performance with 200Gbps InfiniBand.

Valuation and Your Takeaway on AMD Stock

One analyst dared to downgrade AMD stock (per TipRanks) by setting a $36 price target. Still, the overall price target average is $36.68. Analysts are skeptical that the AMD stock price will hold the $40 level. Valuations continue to limit the stock’s upside potential. At a PEG of over 5 times, AMD has no margin of safety. It may be the technology leader in the server space, has products on par with Nvidia in GPUs, and has better desktop chips than Intel.

This is still not enough.

AMD needs to continue to balance applying its operating cash flow to debt repayments against investments back in the business. Intel has a massive R&D and marketing budget. It is behind technologically but it may lower prices to drive sales. And although AMD will have a hard time taking Intel’s market share, the company will eventually reach a tipping point. When profits get bigger, the marketing spending will increase exponentially. By then, Advanced Micro Devices stock will trade at higher levels than where it is today.

Author: Chris Lau

Source: Investor Place: Here’s How Red-Hot Advanced Micro Devices Stock Just Got Hotter

Ad Blocker Detected!

Advertisements fund this website. Please disable your adblocking software or whitelist our website.
Thank You!