Tag Archives: Earnings Projections

Business

Alibaba stock heads for worst day in 11 months after earnings fall short, company cuts forecast

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A previous version of this report incorrectly stated the dollar figure for Alibaba’s net income.

U.S.-listed shares of Alibaba Group Holding Ltd. are off 9.6% in morning trading Thursday after the Chinese e-commerce giant fell short of expectations with its latest financial results and reduced its full-year revenue outlook.

The shares are on track to post their largest single-day percentage decline since Dec. 24, 2020, when shares dropped 13.3%. They are also on pace for their second-worst percentage drop on record.

The company reported fiscal second-quarter net income of RMB5.4 billion ($833 million), or RMB1.97 per American depositary share, down from RMB28.8 billion, or RMB10.48 per ADS, in the year-earlier quarter. On an adjusted basis, Alibaba
9988,
-5.34%

BABA,
-11.12%
earned RMB11.20 per ADS, down from RMB17.97 per ADS a year prior and below the FactSet consensus, which called for RMB11.86 per ADS.

“This quarter, Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” Chief Executive Daniel Zhang said in a release.

Revenue increased to RMB200.7 billion from RMB155.1 billion, while analysts tracked by FactSet had been modeling RMB204.1 billion

Alibaba noted that it saw 1.24 billion annual active customers in the 12 months that ended Sept. 30. That marked a roughly 62 million increase from what the company recognized in the June quarter. Alibaba’s active-customer total consisted of 953 million customers in China and 285 million customers overseas.

The company said that it now expects to grow fiscal 2022 revenue by 20% to 23%. At the beginning of the fiscal year, Alibaba targeted over RMB930 billion in revenue, which would have marked an increase of at least 29.7% from its fiscal 2021 total.

The company disclosed in its earnings report that the outlook reflects its “current view of macroeconomic conditions and the competitive landscape.”

Chief Financial Officer Maggie Wu said in response to a question on the company’s earnings call that “if you look at our guidance and then try to derive the second-half growth,” that would imply “revenue growth at the teens.” She noted that growth in overall gross domestic product and consumption in China has slowed but also said that Alibaba has been diversifying its revenue streams to include greater contributions from areas like cloud computing and international markets.

Alibaba’s cloud business saw revenue increase 33% in the most recent quarter, outpacing the company’s overall 29% revenue growth.

U.S.-listed shares of fellow Chinese e-commerce company JD.com Inc.
JD,
+3.19%
are up 3% in morning trading Thursday after JD.com exceeded expectations with its own results.

Alibaba’s U.S.-listed shares are off 15.3% over the past three months as the S&P 500
SPX,
-0.26%
has risen 6.7% and as the KraneShares CSI China Internet ETF
KWEB,
-4.18%
has added 6.4%.

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Business

Peloton Stock Is Tumbling. A Disappointing Report Sinks Another Pandemic Play.

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Peloton stock is down double-digits in after-hours trading after the at-home fitness company reported a big loss and cut guidance.


Courtesy Peloton


Peloton Interactive

was the latest pandemic-play stock casualty this earnings season. Shares were diving in premarket trading Friday after the at-home fitness firm reported a wider-than-expected net loss for the September quarter, and cut its full fiscal-year outlook.

Peloton reported a fiscal-first-quarter net loss of $376 million, or $1.25 a share. Total revenue grew 6% year over year to $805.2 million. Wall Street’s consensus estimate called for a net loss of $1.10 a share on revenue of $808.7 million, according to FactSet.

The company, which sells bikes and treadmills that pair with $39.99 a month subscriptions, said average monthly workouts per connected fitness subscription dropped to 16.6 from 20.7 a year ago. Investors watch that metric for signs of engagement.

Peloton stock dropped 33.5% to $57.27 early Friday. The stock set a 52-week intraday high of $171.09 in January. The company joins


Roku

(ROKU) and


Chegg

(CHGG) as popular pandemic plays that are now disappointing investors with reports this week.

Peloton now expects the 2022 fiscal year to end in June with 3.35 million to 3.45 million connected fitness subscribers, down from a prior forecast of 3.63 million. Its outlook for fiscal-year revenue ranges from $4.4 billion to $4.8 billion, down from a prior forecast of $5.4 billion.

For the fiscal second quarter, which includes the all-important holiday season, the company expects to hit connected fitness subscribers of between 2.8 million to 2.85 million. It expects revenue in the range from $1.1 billion to $1.2 billion for the quarter, below Wall Street’s consensus estimate of $1.49 billion, according to FactSet. The company said that so far, the fiscal second quarter has been softer than expected.

“With the benefit of adequate inventories and order-to-delivery windows that are now back to pre-pandemic levels, we expect a healthy holiday selling season,” the company added in a prepared statement. “Our forecast assumes unit sales modestly ahead of last year’s Q2 levels, driven by growing consumer interest in the Connected Fitness category and a resumption of our marketing and promotional activity.”

Write to Connor Smith at connor.smith@barrons.com

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Health

Moderna Stock Plunges as Vaccine Sales, Earnings, Miss Forecasts

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Vials of the Moderna Covid-19 vaccine.


Guillaume Souvant/AFP via Getty Images


Moderna

shares plunged 12.3% in premarket trading on Thursday after sales of the company’s Covid-19 vaccine fell short of Wall Street analysts’ estimates by more than a billion dollars.

The company reported total revenue of $5 billion for the third quarter of the year, 20% short of the FactSet analyst consensus estimate of $6.2 billion. Spikevax,


Moderna

‘s (ticker: MRNA) Covid-19 vaccine, is the company’s only product.

The report comes two days after


Pfizer

(PFE) said it had sold $13 billion of its Covid-19 vaccine in the third quarter, blowing past the $10.9 billion FactSet analyst consensus estimate.

Moderna’s third-quarter disappointment further cements


Pfizer

‘s place as the dominant player in the Covid-19 vaccine market in the U.S. and Europe. Pfizer said Tuesday that its share of the Covid-19 vaccine market in the U.S. is now 75%, up from 56% in April.

Pfizer has snapped up the first authorizations for Covid-19 booster shots, and the vaccination of teenagers and of children. While Moderna’s booster is now authorized, Pfizer’s remains the only vaccine available in the U.S. for people under 18.

“We will not rest until our vaccine is available to anyone who needs it, and we are working hard to ensure our vaccine is available in low-income countries with approximately 10% of our 2021 volume and significantly more of our 2022 volume going to low-income countries,” said Moderna’s CEO, Stéphane Bancel, in a statement. “It is promising to see the real-world evidence showing that the Moderna COVID-19 vaccine shows sustainably high, durable efficacy.”

Moderna reported diluted earnings of $7.70 per share, well short of the S&P Capital IQ Consensus estimate of $9.42. The company reported net income of $3.3 billion.

Moderna now expects sales of between $15 billion and $18 billion this year, down from its previous estimate of $20 billion. The company attributed the drop to some deliveries being shifted to early 2022, and to “prioritization of deliveries to low-income countries.” It said it plans to deliver between 700 million and 800 million Covid-19 vaccine doses this year.

Moderna shares were up 231.1% so far this year as of the close of the market on Wednesday, and 383.9% over the past 12 months.

The company highlighted its deep bench of pipeline programs in its earnings release, though investor focus will likely be on the shortfalls on the top and bottom lines.

Moderna said it has signed $17 billion worth of purchase agreements for delivery of its Covid-19 vaccine in 2022. It also said it expects booster sales of up to $2 billion on the commercial market next fall. So far, all Covid-19 vaccine sales have been to governments; there is currently no Covid-19 vaccine commercial market.

The company said it expects 2022 sales of between $17 billion and $22 billion, in line with the FactSet consensus estimate of $21.4 billion.

Also on Thursday, Moderna announced that the Food and Drug Administration had granted priority review status for its application for full approval for Spikevax under an FDA program that accelerates the review of an application. The company said the FDA will aim to decide on full approval for the vaccine by April.

Moderna also announced initial data from a Phase 2/3 study of the Covid-19 vaccine in children aged 6 to 11. The company said that two weeks after a single dose of the vaccine, efficacy against symptomatic disease was 100%, while efficacy against asymptomatic infection was 65%. Details on the data were scant.

On Tuesday, the Centers for Disease Control and Prevention recommended a pediatric formulation of Pfizer’s vaccine for use in children aged 6 to 11, initiating a rollout that will be fully under way next week. Moderna’s vaccine remains available only to adults aged 18 and above.

On Sunday, company said that the FDA had told it Friday that it needs more time to assess its application for emergency use authorization for its Covid-19 vaccine in teenagers aged 12 to 17, as it evaluated new data on the risk of myocarditis after vaccination with messenger RNA-based vaccines.

The FDA review of myocarditis data won’t be complete before January, Moderna said.

A conference call for investors is scheduled for 8 a.m. Eastern time.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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Business

Micron Earnings Beat Estimates. Why the Stock Is Falling.

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Memory chip maker Micron grew revenue 37% in its latest quarter, to $8.27 billion.


Dreamstime

Shares of


Micron Technology

were down in late trading Tuesday after the company beat expectations for its quarterly earnings but failed to impress Wall Street with its outlook.

The memory maker reported fiscal fourth-quarter net income of $2.72 billion, which amounts to $2.39 a share, compared with a net profit of $988 million, or 87 cents a share, in the year-ago period. Adjusted for stock-based compensation, among other things, earnings were $2.42 a share. Revenue rose 37%, to $8.27 billion.

The consensus estimate for adjusted earnings was $2.33 a share on revenue of $8.2 billion.

Micron (ticker: MU) said that it expected fiscal first-quarter earnings of roughly $2 a share, on revenue of about $7.65 billion. Analysts have been forecasting earnings of $2.53 and revenue of $8.54 billion.

Shares were down 3.4% in premarket trading.

Micron chief executive Sanjay Mehrotra said in prepared remarks that the demand for memory in 2022 is strong, and will grow in the “mid-to-high teens.” Flash storage, which Micron also makes, will grow roughly 30%, he said. The company expects a “healthy industry supply-demand balance” and strong profitability next year.

“Industry trends like the broad integration of artificial intelligence into all computing, proliferation of the intelligent edge, continued data center growth, and deployments of 5G networks create new and expanding opportunities for Micron,” Mehrotra said.

But strong demand wasn’t enough to assuage investors.

Semiconductors of all kinds have been in short supply, which has led investors to expect outsize returns for the companies in the business. Because chip companies should be able to sell basically everything they are capable of producing, investors have expected companies to report a healthy earnings beat followed by guidance that also tops expectations.

Some research analysts had started to pare back expectations heading into Tuesday’s quarterly report. As Barron’s noted Monday, Citi Research analyst Christopher Danely said he remains bullish on the company but expects memory prices to drop in the coming months. Cheaper memory could impact Micron’s profit margins, though Danely expects prices to recover in the second half of next year.

Micron said it planned $11 billion to $12 billion of capital spending in fiscal 2022. The company also said it plans pay its first dividend payment of 10 cents a share next month to shareholders of record as of Oct. 1.

Micron shares are down 2.8% this year. The


PHLX Semiconductor index,
or SOX, has advanced 19% on the year, while the


S&P 500
index is up 16%.

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Business

Nvidia stock jumps as analysts say data-center growth ‘has some room to run’

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Nvidia Corp. shares rallied Thursday as more than half the analysts who cover the chip maker hiked their price targets following the company’s record quarter and forecast for more new highs based on data-center gains.

Nvidia
NVDA,
+6.13%
shares rallied more than 7% in morning trading to hit an intraday high of $204.95, while the PHLX Semiconductor Index
SOX,
+1.20%
gained more than 1%, and the S&P 500 index
SPX,
+0.32%
gained 0.4%. Nvidia shares last closed at a split-adjusted record high of $206.99 back on July 6, and are up 68% over the past 12 months.

For more on today’s market action, see Market Snapshot

Nvidia forecast revenue of $6.66 billion to $6.94 billion Wednesday, above Wall Street estimates at the time, and said that the “lion’s share” of the $500 million increase will come from data-center sales. That follows new records for total, gaming and data-center revenues that Nvidia reported for the quarter.

What many analysts picked up on is that demand for graphics processing units (GPUs) for cryptocurrency mining didn’t factor that much into the outlook. That came as a relief to analysts, who noted a lower crypto risk compared with 2018 when a fall in cryptocurrency values prompted many miners to sell their gaming card-powered rigs, flooding the market with second-hand cards.

Full earnings coverage: Nvidia reports record data-center and gaming revenue, but supply constraints still a concern

Nvidia broke out sales of its Cryptocurrency Mining Processors, or CMPs, which are intended to divert mining demand away from GPUs made for gamers and not expected to be material in revenue gains.

Data-center sales took up much more of the attention from analysts, however. Bernstein analyst Stacy Rasgon, who has an outperform rating on the stock and raised his price target to a $230 from $180, said that while “the company is having absolutely no trouble continuing to crush gaming,” Nvidia’s data-center story “still feels like it has some room to run.”

“The data-center story is really coming into its own now, with a sizable inflection in the near term and with prospect for the segment to equal, and potentially exceed, gaming in the not-too-distant future,” Rasgon said.

For more: Nvidia’s ARM acquisition is stalled, and there’s a deadline with more than a billion dollars at stake

Evercore ISI analyst C.J. Muse, who has an outperform rating and a $250 price target, called data-center sales a “key for the stock.”

“Data Center revenues were guided to accelerate in 3Q off a very strong comp based on strength across hyperscale and vertical customers, training and inference applications, and compute and networking technologies – the democratization of AI workloads continues to be a front and center theme here, and one we see Nvidia driving and benefiting from over for the foreseeable future,” Muse said.

Cowen analyst Matthew Ramsay, who has an outperform rating and raised his price target to $220.00 from $176.25, said that the data-center acceleration was “the most important takeaway” from the earnings call.

“We expect sustainable data-center and gaming product cycles that should drive >50%+ organic growth for the company in F’2022,” Ramsay said.

Jefferies analyst Mark Lipacis, who has a buy rating and raised his price target to $223 from $214, addressed the lower risk of another crypto-mining debacle.

Read: Crypto is reshaping the world economy, 50 years after Nixon ended the dollar’s peg to gold. Here’s how some are playing it

“We think crypto-miners are 1/10th the gaming GPU sales vs 2018,” Lipacis said. “We continue to believe the risk of a crypto-driven gaming bust is low, and expect Nvidia’s ecosystem moat and increasing software revenues to lead to additional upside surprises.”

Of the 41 analysts who cover Nvidia, 34 have buy ratings, five have hold ratings, and two have sell ratings. Of those, at least 24 analysts hiked their price targets in response to the earnings and one lowered their target, according to FactSet. That resulted in an average price target of $219.23, up from a previous $204.24.

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Business

Barrick Gold Earnings Beat Forecasts. Its Stock Is Falling.

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Photograph by Carla Gottgens/Bloomberg

Shares of

Barrick Gold

slipped Monday morning despite beating earnings forecasts as gold prices slide.

Barrick Gold (ticker: GOLD) reported a profit of 29 cents a share, beating forecasts for 28 cents, on revenue of $2.89 billion, missing expectations for $3.06 billion. Barrick stock dropped 1% to $20.58 at 10:48 a.m. easter.

Barrick’s revenue miss hurt, but so did an overnight decline in gold prices, which saw the precious metal drops about $60 an ounce in just a few minutes. Gold dropped more than 4% but has rebounded to $1,738.40 an ounce, off 1.4% on the day.

Barrick has dropped 8.7% in 2021 after declining 13% during the past three months. It has underperformed the

S&P 500,

which has gained 18% this year after rising 5.9% during the past three months.

Write to Ben Levisohn at ben.levisohn@barrons.com

 

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