Micron Technology, RCI Hospitality, Pfizer, BioNTech and Moderna highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – December 9, 2020 – Zacks Equity Research Shares of Micron Technology, Inc. MU as the Bull of the Day, RCI Hospitality Holdings, Inc. RICK as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Pfizer Inc. PFE, BioNTech SE BNTX and Moderna, Inc. MRNA.
Here is a synopsis of all five stocks:
Micron Technology is a Zacks #1 (Strong Buy) that is one of the leading providers of semiconductor memory solutions. The company manufacturers and markets high performance memory and storage technologies.
Micron reported earnings back in late September, which brought buyers slowly back into the stock under the $50 level. Then last week, the company raised its guidance, which has helped the stock take off and hit all-time highs.
About the Company
Micron is headquartered in Boise, Idaho and has 40,000 full-time employees. The company operates four segments: Compute and Networking Business Unit, Mobile Business, Storage Business Unit and Embedded Business Unit. Through those segments the company provides memory products for cloud servers, enterprise, client, and consumer storage markets.
The company has a market cap that just passed $80 Billion and has Zacks Style Scores of “C” in both Growth and Vale, but “B” in Value. The stock pays no dividend and has a Forward PE of 20.
Q2 Earnings and Guide
In late September, Micron reported Q4 EPS with an 8% surprise to the upside. While the beat wasn’t substantial, it was the sixth straight surprised to the upside for the company. The company guided Q1 lower, so there was hesitancy from the bulls to buy the stock.
However, last week the company raised its guidance back to previous levels, raising numbers from $0.40-0.54 to $0.69-0.73. Additionally, the company saw revenues much higher than expected and also sees gross margins coming in above the prior guidance.
The guide was released at the Credit Suisse Technology Conference. Afterwards, Micron CEO Sanjay Mehrotra got the bulls hooked during his presentation saying the company saw strength “pretty much across the board.” Mehrotra pointed to strength in pricing, mitigating Huawei ahead of schedule, strong execution, strength in DRAM, and said the company is well positioned for both cost and performance moving ahead.
Estimates and Upgrades
Over the last 7 days, estimates have surged higher. For the current year, we have seen estimates raised by 49%, from $0.46 to $0.70. For next year, we have seen a 31% move higher in that same time frame.
Analysts have taken price targets higher since earnings, with JPMorgan giving the stock an $85 price target.
Stock Reaction and Technicals
The guide and presentation brought the bulls roaring back in, helping the stock move from $65 to $74 in just a few days. The stock had been stuck in the $40-50 range for a few years, with failed breakouts and breakdowns occurring every few months.
Micron now looks to be breaking out after surpassing the 2020 and 2018 highs. Those that like buying pullbacks can target the $64 level, where the 21-day resides. For those value players, the $56.25 level is the 50-day. We might now see those prices as the stock could extend higher to $80, which is the 161.8% Fibonacci extension drawn from 2020 highs to lows.
It’s been a long-time coming for Micron, but the breakout is now on. The stock has the chance to be the next big semi stock to make an absurd run. Can it follow the likes of AMD and NVDA? Probably not, but with the momentum and earnings growth behind the name, the stock looks to trade much higher from current levels.
RCI Hospitality Holdings is a Zacks Rank #5 (Strong Sell) that owns and operates adult nightclubs that offer live adult entertainment. While some of the business has been forced to close due to the pandemic, the stock doesn’t seem to care as it sits at all-time highs.
It's time for investors to take some profits before earnings come later this month.
About the Company
The company was founded in Houston, Texas and was formerly known as Rick’s Cabaret. In 2014, the company changed its name to RCI hospitality and since then has operated popular adult clubs like Rick’s Cabaret, Bombshells, Club Onyx, Kappa Men’s Club and Studio 80 among others.
RCI has a market cap of $250 Million and has a Zacks Style Score of “A” in. The stock has a Froward PE of 17 and pays a 0.57% dividend.
In August, the company reported a surprise miss on EPS of 7.25%. The company also reported revenues of $14.7M v the $47M from the prior year. The company had to cut the dividend, but remained optimistic as 31 locations were open.
The miss on earnings was the second this year and the third miss out over the last two years.
Over the last couple months, the company reported Q4 revenues doubled year over year from their Bombshell clubs. Sales were up 82% from Q3 with 8 of the 10 locations open. They announced expansion plans with the segment and investors are pricing in growth from the possibility of 10 new Bombshell clubs.
However, all of RCI's locations continue to limit capacity and some have had more restrictions in areas with more severe lockdown rules. The question for investors is will demand remain for these gentleman clubs when everything else opens up.
Analyst Estimates Falling
Over the last 7 days, estimates for the current year have dropped 55%, from $0.71 to 0.32. For the current year, estimates have fallen 14% over the same time frame. So while estimates look better once we get past the pandemic, they still are falling despite the optimism surrounding Bombshells.
The stock is trading above levels seen before the pandemic, which is amazing considering the business. Since bottoming in March under $7 a share, the stock has marched higher to make a 2020 high at $30.44.
RICK has held its 21-day moving average for over a month and if broken could give way to the 50-day MA at $25.
If the current lockdowns bring another miss on EPS, then investors should take caution and without lower levels. The hallway back mark from June lows is $20.30, the 61.8% retrace is $18 and the 200-day MA is $16.75.
The bulls have been “making it rain” for seven months now, but they might want to pull back on their optimism considering increasing lockdowns across the country.
Next Chapter in Covid-19 Era Underway
The next step in Covid-19 vaccinations was taken Tuesday, making it an historic time (hopefully) marking the beginning of the end of the pandemic era. What began as news reports out of China a year ago has exploded into a worldwide tragedy, with nearly 15 million reported cases in the U.S. alone, with more than 283K Americans having succumbed to the disease.
Tuesday morning in Great Britain, a 90-year-old grandmother was the first recipient of the Pfizer-BioNTech vaccine, which was approved via fast-track status in the country. Here in the U.S. a briefing on that very vaccine announced it has met the prescribed success criteria, with no safety concerns which would keep it from the domestic marketplace. The drug displayed some efficacy even after a single dose, though treatment includes a second booster shot for full immunity.
There were some side effects, most notably flu-like symptoms. These would generally be considered on-par with other immunizations, such as the shingles vaccine, which was released earlier this year. Aside from sub-zero refrigeration requirements, the Pfizer-BioNTech vaccine looks to be first in line and among the highest efficacy rates possible for a vaccine treating a novel virus, which Covid-19 is.
Next Thursday, Moderna’s vaccine briefing gets its moment in the spotlight. Early details released by the company report a similar very high efficacy rate (>90%), with a similar makeup (mRNA) to the Pfizer drug. Should the hearing bring about similar results in terms of safety, we may be looking at a two-vaccine attack on Covid-19 here in the U.S. within the somewhat near term. This is obviously very good news for the market and for the economy as a whole.
To wit, both the S&P 500 and the small-cap Russell 2000 both set new all-time highs, +0.28% and 1.4%, respectively, on the day. Healthcare as an industry rose 0.73%. The tech-heavy Nasdaq gained 0.5% Tuesday, while the Dow again scaled more than 100 points higher, +0.35% for regular-day trading.
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Micron Technology, Inc. (MU): Free Stock Analysis Report
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