Here are some things going on today in the world of tech :
Mixed Views of Pivotal IPO
Analysts this morning are initiating coverage of Pivotal Software (PVTL), the cloud software company that came public April 20. Its shares have steadily risen from a first-day close of $15.73, and are currently at $19.18.
The reviews seem evenly split : the equivalent of Buy ratings at Goldman Sachs, William Blair, KeyBanc, CreditSuisse, and Morgan Stanley, but Hold ratings at Barclays, Merrill Lynch, RBC Capital, Citigroup, and UBS.
Goldman's Heather Bellini, starting the stock at Buy with a $21 price target, writes that "we view Pivotal as a well-positions modern software development platform vendor, at the intersection of public cloud and on-premise, as the company can address both applications being refactored for public cloud, as well as new new applications being built for both on-premises and cloud."
But RBC's Matthew Hedberg assigns a Sector Perform rating, writing that while he likes the opportunity for the company's cloud-development tools - the market for "platform-as-a-service," or "PaaS," is set to rise by 22% through 2021 - the shares to him seem fairly valued were they to reach $21, which would equate to 10 times the company's software revenue based on 2019 estimates. He's looking to see "evidence of accelerating software growth," and maybe to see "more software versus services" in the company's results.
Cutting Tesla Margins
Shares of Tesla (TSLA) this morning are lower by $8.52, or almost 3%, at $283.45, after Morgan Stanley's Adam Jonas cut his price target on the stock to $291 from $376, after concluding the company's profit margin will be much lower than originally expected for a while.
He's now "prudently lowering our long-term auto gross-margin forecast to 27% from 34% previously," writes Jonas. That prompts him to also cut his operating profit margin forecast to 9.8% from 14.3%."
"This change takes our long-term view of group OP margins from best in class premium levels to margins in line with that of the German premium names or recent GM N. American margins," writes Jonas.
He still expects the company to have to raise capital this year, by the September quarter, and he now thinks Tesla has to raise$3 billion rather than the $2.5 billion he had been modeling before.
Did Tesla Scrimp on Safety?
Speaking of Tesla, an interesting piece in The Wall Street Journal yesterday by Tim Higgins: multiple unnamed sources tell him engineers urged adding sensors to the cars to detect eye motion of drivers, and whether their hands were on the wheel, but Tesla management, including Chief Executive Elon Musk, "rejected the ideas because of costs and concerns that the technology was ineffective or would annoy drivers with overly sensitive sensors that would beep too often."
This follows a crash in March that is being investigated by the National Transportation Safety Board.
In response, Musk yesterday tweeted that the article was false, that eye-tracking technology is ineffective, and that's why it was rejected, not because of its cost. Musk also scolded the Journal for not noting Tesla's is the "safest car on road."
Micron's NAND Undervalued
Shares of DRAM and NAND chip maker Micron Technology (MU) are higher by 92 cents, or 1.8%, at $53.92, after Kevin Cassidy of Stifel Nicolaus this morning related that prices of DRAM keep rising, while NAND flash is being undervalued, making Micron stock an attractive bet.
"Once again, DRAM prices are tracking above our previous estimates quarter-over-quarter for the May ending quarter," writes Cassidy. "NAND Flash is tracking roughly in line with our estimates […] What we can conclude is that the NAND Flash market is growing and far from collapsing as the bear case has it."
Cassidy, who has a Buy rating on Micron, raises his price target to $101 from $95, writing that a "brief sum-of-parts analysis" suggests Micron's revenue from NAND "has been discounted to below 1x revenue at best and negative valuation at worst," and thus "the NAND Flash negativity is overdone and is creating buying opportunities in Micron," along with peer Western Digital (WDC) and Smart Global Holdings.
Cassidy's note follows a similarly upbeat note yesterday from Evercore ISI's CJ Muse.
Is Symantec Management at Risk?
Shares of venerable security technology firm Symantec (SYMC) are higher by 58 cents, or 2.6%, at $21.98, after the company yesterday afternoon held a conference call with analysts to comment on a company statement last Thursday that its board of directors is investigating its accounting "in connection with concerns raised by a former employee."
The good news, analysts note today, is the company said the investigation is unlikely to lead to revisions of past financial statements. However, the investigation is scrutinizing some payments to executives, which raises the specter that some in the executive team could be in trouble.
Anne Meisner with Susquehanna this morning reiterates a Neutral rating on Symantec, writing, "While the apparent lack of significant risk to historical GAAP financials might be reassuring to investors, if at the conclusion of the investigation some execs are found to have presented misleading non-GAAP metrics in order to achieve target metrics (and therefore receive target incentive comp), it could potentially result in yet another new management team for the Symantec Corporation in our view."
That tone of uncertainty seems to be shared by most analysts on the stock this morning.
Apple's Services Headed for Speed Bump
Apple's (AAPL) services business, an increasingly important part of its future, will probably slow down in terms of revenue growth this quarter and next, after surging last quarter by 31% to $9.2 billion, according to a report this morning by Toni Sacconaghi of Bernstein.
Sacconaghi sees the services business up against " tough comps " from the year-earlier period, but also the "lapping" of its contract with Alphabet's (GOOGL) Google, which pays Apple billions of dollars for the privilege of being the search service on the iPhone.
Despite that warning, Sacconaghi is actually upbeat about the business. He thinks CEO Tim Cook will get to a promised $49 billion in services revenue come 2020.
Apple shares this morning are down $1.68, or 0.9%, at $186.47.
Why's Nokia so Chipper?
Why is Nokia's (NOK) CEO Rajeev Suri so happy? Is the question posed by Raymond James's Simon Leopold. And especially given, as he sees it, prices are coming down aggressively in his market.
Leopold, who has a Market Perform rating on Nokia shares, spent some time traveling with Nokia's investor-relations team lately, meeting with investors, during which he "gained a better appreciation" for Suri's upbeat attitude: Leopold concludes that it's 5G wireless that's making Suri perky.
"From our discussions, we believe 2Q18 remains challenging, but 5G orders (including 4.5G and 4.9G) provide the basis for Nokia's optimism."
"We think the leading opportunities come from T-Mobile and Sprint, yet Sprint could slow with the pending merger. To Nokia, FirstNet is not a meaningful driver, but AT&T and Verizon should grow."
However, Leopold professes to being "surprised how few questions Nokia received regarding new price aggressions, a hot topic among our inbound calls."
He thinks peers such as Infinera (INFN) are competing aggressively on price. Nokia, he writes, sees pricing in the industry as "challenging," but also already "baked into current guidance."
Nokia shares today are down 10 cents, or 1.6%, at $6.20.
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