G-III Apparel Group, Applied Optoelectronics, Advanced Micro Devices, Intel and Microsoft highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL - Jan 04, 2018 - Zacks Equity Research highlights G-III Apparel Group, Ltd GIII as the Bull of the Day, Applied Optoelectronics AAOI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Advanced Micro DevicesAMD , IntelINTC and MicrosoftMSFT .

Here is a synopsis of all five stocks:

Bull of the Day :

G-III Apparel Group, Ltd has turned it around by focusing on its strong retail brands. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in fiscal 2019.

G-III makes and distributes apparel and accessories under its own brands, private label brands and under licensed brands for department stores and specialty retailers. It operates retail stores under the DKNY, Wilsons Leather, G. H. Bass, Vilebrequin, Calvin Klein Performance and Karl Lagerfeld Paris names.

Its own brands include the powerhouses of Donna Karan, DKNY, Vilebrequin, G. H. Bass, Andrew Marc, Marc New York, Eliza J and Jessica Howard. It has fashion licenses to produce for Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan, Guess?, Vince Camuto, Ivanka Trump, Kensie, Levi's and Dockers brands.

It also has a team sports business with licenses for the NFL, the MBL, Major League Baseball, the NHL, Hands High, Touch by Alyssa Milano and more than 100 U.S. colleges and universities.

Record Third Quarter Sales

On Dec 5, 2017, G-III Apparel reported its fiscal third quarter 2018 results and beat the Zacks Consensus by 8.4%. Earnings were $1.67 versus the Zacks Consensus of $1.54.

It was the third earnings beat in a row.

Sales jumped 16% to $1.02 billion from $883.5 million a year ago. That was a new third quarter record and included approximately $88 million from the new DKNY and Donna Karan products.

It saw sustained momentum heading into the end of the year as products were selling well over the holiday season.

Who said the department store was dead?

Raised Full Year Guidance

Given the strong trends, it's not surprising the company raised full year guidance.

Full year earnings are now expected between $1.42 and $1.52, up from the prior guidance of $1.28 to $1.38.

That was above consensus which was at $1.36.

3 estimates have been raised in the last month, pushing the Zacks Consensus up to $1.46. That is earnings growth of just 2.7% however.

But the real gains are expected to come next year when the DKNY and Donna Karan brands really get humming.

The Zacks Consensus has jumped to $1.99 from $1.86 in the last 60 days, which is earnings growth of 36.1%.

Bear of the Day :

Applied Optoelectronics is still hurting from uncertainty as to its data center business. The estimates for 2018 continue to decline on this Zacks Rank #5 (Strong Sell).

Applied Optoelectronics provides fiber-optic networking products, primarily for three networking end-markets: cable television, or CATV, fiber-to-the-home, or FTTH, and Internet data centers. Applied Optoelectronics designs and manufactures a range of optical communications products at varying levels of integration, from components, subassemblies and modules to complete turn-key equipment.

80% of its sales are from data center optical transceivers with 15% from optical elements for the cable TV industry. Its three largest customers in the data center business are Amazon, Microsoft and Facebook.

The Pivot to 100G

The industry is pivoting to 100G from 40G. But it's been unclear if AAOI could handle the pivot or if its largest customers weren't going to other suppliers.

After it lowered its third quarter guidance ahead of its quarterly report, and then projected fourth quarter revenue as being flat to slightly lower, analysts and investors have been jittery on the stock.

Given the lower fourth quarter guidance of just $81 to $90 million, it has likely seen erosion from either Facebook or Microsoft in the fourth quarter.

It doesn't report earnings again until late February. Unless it gives preliminary numbers, as it did last quarter, there's nothing to do but wait.

Estimates for 2018 Continue to Fall

The analysts appear to be hedging their bets that the pivot isn't going well for AAOI.

2 estimates have been cut for 2018 in the last month pushing the Zacks Consensus Estimate down to $3.61. That's a far cry from the $5.70 estimate from just 90 days ago.

Additional Content:

AMD Stock Continues Surge as Intel Security Woes Continue

Shares of Advanced Micro Devices climbed more than 6% in morning trading Wednesday after the company announced that its processors are not affected by a major security bug that has plagued chips made by competitor Intel.

According to a report from The Register , Intel and affected software developers have been scrambling to fix a hardware issue that could let attackers access security keys, passwords, and cached files. The bug is apparently present in nearly every Intel CPU made within the last decade, and upcoming patches will negatively affect hardware performance.

The root of the problem is a fundamental design flaw that is forcing Linux programmers and Microsoft developers to overhaul Linux and Windows kernels in order to "defang" the bug. In the context of computing, the "kernel" is a core component of the operating system that is tasked with managing the communication between hardware and software.

The patches necessary to fix the bug will move the kernel into an entirely different address space, making the communication process more time consuming and less efficient.

"Really, this shouldn't be needed, but clearly there is a flaw in Intel's silicon that allows kernel access protections to be bypassed in some way," wrote The Register 's John Leyden and Chris Williams.

Intel has attempted to keep the issue under wraps, but an embargo on the specifics of the problem is reportedly set to be lifted early this month. Microsoft is expected to release a patch next Tuesday, while a Linux patch date is less clear. The Register estimates these patches will result in a 5% to 30% slow down, depending on the task and processor model.

Shares of Intel were down more 2.3% in morning trading hours Wednesday. Meanwhile, AMD shares popped more than 6% to continue a two-day surge that has watched the stock gain nearly 14%.

"AMD processors are not subject to the types of attacks that the kernel page table isolation feature protects against," AMD engineer Tom Lendacky confirmed.

Interestingly, the news comes just one day after a collaboration between Intel and AMD grabbed headlines. On Tuesday, via a post on Intel India's website, we learned that Intel's highly-anticipated upcoming CPU with AMD Radeon graphics, the Intel Core i7-8809G, will feature AMD's high-end graphics cores, as opposed to the lower grade "Polaris" GPU.

The inclusion of AMD's high-performance GPU underscores Intel's intent to make the new processor a reasonable option for serious video gamers, who need top-of-the-line hardware to power e-sports games like League of Legends and Counter-Strike: Global Offensive at competitive framerates.

AMD's recent surge follows an almost two-week downturn that coincided with volatility throughout the technology sector. Profit taking and portfolio rebalancing throughout the month of December cooled down some of the hottest tech stocks, but the space has started 2018 on a high note.

Want more stock market analysis from this author? Make sure to follow @ Ryan_McQueeney on Twitter!

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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.

About Zacks Equity Research

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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Microsoft Corporation (MSFT): Free Stock Analysis Report

Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report

Applied Optoelectronics, Inc. (AAOI): Free Stock Analysis Report

G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report

Intel Corporation (INTC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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