Bounce idea - >>> MEI Pharma, Inc. (MEIP), a clinical-stage pharmaceutical company, focuses on the development and commercialization of various therapies for the treatment of cancer. The company develops Zandelisib, an oral phosphatidylinositol 3-kinase delta inhibitor for the treatment of patients with relapsed/refractory follicular lymphoma; and Voruciclib, an oral cyclin-dependent kinase 9 inhibitor, which is in Phase I clinical trial for acute myeloid leukemia and B-cell malignancies. It also develops ME-344, a mitochondrial inhibitor targeting the oxidative phosphorylation complex which has completed Phase I clinical trial for the treatment of human epidermal growth factor receptor 2 negative breast cancer. MEI Pharma, Inc. has a license agreement with Presage Biosciences, Inc. The company was formerly known as Marshall Edwards, Inc. and changed its name to MEI Pharma, Inc. in July 2012. MEI Pharma, Inc. was incorporated in 2000 and is headquartered in San Diego, California.
Jan effect bounce ideas - >>> Enanta Pharmaceuticals, Inc. (ENTA), a biotechnology company, discovers and develops small molecule drugs for the treatment of viral infections and liver diseases. Its product pipeline comprises EDP-514, which is in phase 1b clinical development for the treatment of chronic infection with hepatitis B virus or HBV; EDP-938 and EDP-323, which is in phase II clinical development for the treatment of respiratory syncytial virus; EDP-235, which is in phase II clinical development for the treatment of human coronaviruses; and Glecaprevir, which is in the market for the treatment of chronic infection with hepatitis C virus or HCV. The company has a collaborative development and license agreement with Abbott Laboratories to develop, manufacture, and commercialize HCV NS3 and NS3/4A protease inhibitor compounds, including paritaprevir and glecaprevir. Enanta Pharmaceuticals, Inc. was incorporated in 1995 and is headquartered in Watertown, Massachusetts.
Jan effect bounce ideas -- >>> Revance Therapeutics, Inc. (RVNC), a biotechnology company, engages in the development, manufacture, and commercialization of neuromodulators for various aesthetic and therapeutic indications in the United States and internationally. The company's lead drug candidate is DaxibotulinumtoxinA for injection, which has completed phase III clinical trials for the treatment of glabellar (frown) lines and cervical dystonia; is in phase II clinical trials to treat upper facial lines, moderate or severe dynamic forehead lines, and moderate or severe lateral canthal lines; and has completed Phase II clinical trials for the treatment of adult upper limb spasticity and plantar fasciitis. It is also developing OnabotulinumtoxinA, a biosimilar to BOTOX. The company also offers Resilient Hyaluronic Acid (RHA) dermal filler for the correction of moderate to severe dynamic facial wrinkles; RHA Redensity, a dermal filler for the treatment of moderate to severe dynamic perioral rhytids; and OPUL Relational Commerce Platform, a financial technology platform. It has a collaboration and license agreement with Viatris Inc. to develop, manufacture, and commercialize onabotulinumtoxinA. The company was formerly known as Essentia Biosystems, Inc. and changed its name to Revance Therapeutics, Inc. in April 2005. Revance Therapeutics, Inc. was incorporated in 1999 and is headquartered in Nashville, Tennessee.
Re-post -- Ally Financial - >>> Buffett's Berkshire Hathaway sees opportunity in Ally Financial amid rate hikes
By: Investing | November 22, 2023
Warren Buffett's investment conglomerate, Berkshire Hathaway (NYSE:BRKa), maintains a significant stake in Ally Financial (NYSE: NYSE:ALLY), valued at approximately $798 million. Despite the auto financing sector being hit by rising interest rates, which has led to a decline in Ally's stock value, Berkshire Hathaway owns nearly 10% of the company. This move signals Buffett's recognition of an undervalued opportunity in the market.
Ally Financial operates a branchless digital banking model, which has been instrumental in offering competitive interest rates to customers while keeping operational costs low. This strategy has contributed to the company amassing over $161 billion in assets and achieving an impressive customer retention rate of 96%. The bank's innovative approach was rewarded with a top industry accolade this year.
Buffett is drawn to Ally due to its valuation at just 86% of tangible book value, along with its strong dividend history. Since mid-2016, Ally has increased its dividend payouts by 275%, showcasing robust financial health even as challenges persist. These challenges include tighter net interest margins and a rise in loan delinquencies, which are indicative of broader economic strain.
Nonetheless, analysts remain optimistic about Ally's future profitability, projecting an increase in earnings per share (EPS) from $3.16 in 2023 to $3.83 in 2024. The bank has also set aside $508 million for credit losses, reflecting prudent financial management during uncertain times.
Berkshire Hathaway itself boasts an impressive annual yield of around 20%, translating to cumulative returns of 3,787,464%. The firm's substantial investment in Ally Financial comes amid a period where the company's value has been slashed by half due to the impact of high-interest rates on the auto loan industry. Despite these headwinds, the consensus among Wall Street analysts supports a positive outlook for Ally Financial's path to profitability recovery.
>>> Why NextEra Energy Stock Plunged to 3-Year Lows This Week
By Neha Chamaria
Sep 29, 2023
NextEra Energy's subsidiary slashed its long-term dividend growth guidance to 5% to 8%.
NextEra Energy itself, however, still expects to grow annual dividend by 10% through 2024 at least.
The stock's fall appears unjustified and offers investors a great opportunity to buy.
Shares of NextEra Energy (NEE -8.97%) crashed this week to three-year lows and were trading 15% lower through 1:30 p.m. ET Friday, according to data provided by S&P Global Market Intelligence.
The utility giant reaffirmed its long-term earnings and dividend growth guidance through 2026, but the markets and analysts are spooked after NextEra Energy's subsidiary gave investors a nasty shock this week.
NextEra Energy Partners (NEP -16.70%), a wholly owned subsidiary of NextEra Energy, slashed its annual dividend growth outlook to 5% to 8% through at least 2026, with a target growth rate of 6%. Until last month, the company was confident of growing its dividend payout by 12% to 15% through at least 2026. Management said higher interest rates were making it difficult for the company to fund its growth plans, and it can focus on "higher-yielding growth opportunities" by reducing its dividend growth target.
So while it's easy to understand why NextEra Energy Partners stock tanked this week, what does this have to do with NextEra Energy? There could be three reasons why investors are worried.
First, NextEra Energy's management also manages the subsidiary, and investors perhaps believe the latter's dividend outlook cut is a reflection of NextEra Energy's growth struggles as well.
Second, NextEra Energy Partners typically acquires renewable energy assets from its parent to grow. This week, though, it said while it'll continue to acquire assets from NextEra Energy, it'll primarily focus on revamping its existing wind energy portfolio for growth. Investors in NextEra Energy believe this will mean fewer drop-down transactions for the company and will hurt its own financing plans.
Third, lower dividends from the subsidiary will also mean less extra income for NextEra Energy.
Several analysts cut their price targets on NextEra Energy stock this week, but I believe the sharp drop in the share price is unwarranted, especially after the two announcements from the company this week that makes the stock appealing right now.
First, NextEra Energy said it will sell its Florida natural gas assets to Chesapeake Utilities for $923 million in cash. It wants to redeploy capital into core business (which could mean its electric utility and renewable energy businesses), and that sounds like a smart move.
Second, NextEra Energy is sticking with its financial goals. It expects to earn at least $2.98 and $3.23 in adjusted earnings per share (EPS) in 2023 and 2024, respectively. The company's adjusted EPS was $2.90 per share last year. For 2025 and 2026, it sees 6% to 8% growth in adjusted EPS off its 2024 range.
NextEra Energy even stated, yet again, that it will be "disappointed" if it cannot deliver numbers at or near the "top end" of its guidance range through 2026. The company also expects to grow its dividend per share by around 10% annually through at least 2024.
>>> RTX Corporation (RTX) -- Considering that RTX Corporation (NYSE:RTX) is near 52-week lows, it might be an opportunity to buy one of the best defense stocks. After announcing its second-quarter results, the stock declined by over 10%. The negative reaction was triggered by an issue with its Pratt & Whitney engines.
Reuters reported that RTX had discovered a defect in 1,200 engines. Microscopic contaminants in the powdered metal in high-pressure turbine discs could cause micro-cracks. As a result, the affected engines must be grounded for inspection over the next year. This was a setback for the company’s ambition to conquer the jet engine market.
But looking at the rest of the second quarter report, the results were impressive. Sales were up 12% YOY and 13% on an organic basis. The Collins Aerospace, Pratt & Whitney and Raytheon Missiles & Defense segments reported 17%, 15% and 12% YOY growth rates, respectively. Meanwhile, the total backlog was a healthy $185 billion — $112 billion commercial and $73 billion defense.
Net income from continuing operations was 1.3 billion, a 2% YOY increase. Additionally, adjusted EPS grew 11% YOY to $1.29. The company also repurchased $596 million of RTX shares in the quarter.
Management highlighted the strong momentum and raised their outlook. “Based on the strong performance year-to-date and strong end-markets, we are raising our full year sales outlook and tightening our adjusted EPS* outlook,” said CEO Greg Hayes.
For FY2023, management expects adjusted EPS of $4.95 – $5.05. Considering a midpoint EPS of 5, the stock trades at 16 times forward price-to-earnings. Buy the world’s largest aerospace and defense company at these bargain prices.
>>> The Hershey Company -- Halloween is just around the corner, and kids will be eager to fill their bags with candy, including some from one of the world's largest chocolate manufacturers, The Hershey Company (HSY). Despite experiencing a nearly 7% decline in 2023, Hershey's stock has delivered an impressive total return of 122% over the past five years, far outpacing the S&P 500's 68% total return.
Management recently raised its quarterly dividend by 15% to $1.192 per share, resulting in an impressive yield of 2.3%. And Hershey has raised its quarterly dividend every year since 1972, except for 2009, during the Great Recession.
In recent years, Hershey has expanded its portfolio into snacks by acquiring SkinnyPop and Dot's Homestyle Pretzels. As a result, the company's revenue and net income are hitting record highs. Management recently reaffirmed its guidance for 8% revenue growth for 2023 versus 2022, resulting in net sales of roughly $11.2 billion, compared to $10.4 billion in 2022.
Despite Hershey's strong projected revenue growth, the stock might be experiencing a sell-off because the source of this growth is primarily price increases rather than increased sales volume. The company's second-quarter results show an average price increase of 7.7% for its products, coupled with a 2.7% decrease in sales volume from a year ago.
These price hikes are a result of the historically high costs of essential ingredients such as cocoa and sugar. However, Hershey boosted its gross margins by an impressive 3.4% year over year, reaching 45.5%.
This margin expansion could indicate that Hershey is becoming more efficient in managing its cost of goods sold. If cocoa and sugar prices return to normal levels, this efficiency could lead to further margin expansion, resulting in increased profitability for the company.
In summary, Hershey faces notable inflationary pressures and a potential decrease in consumption. Nevertheless, the stock currently looks undervalued when considering its historical P/E, which has averaged 26.3 over the past five years. With a forward P/E of 22.2, Hershey presents a potential investment opportunity at an attractive valuation.
>>> Aspen Technology, Inc. (AZPN) provides enterprise asset performance management, asset performance monitoring, and asset optimization solutions worldwide. The company's solutions address complex environments where it is critical to optimize the asset design, operation, and maintenance lifecycle. It offers artificial intelligence of things, aspen hybrid models, asset performance management, OSI digital grid management, and performance engineering; production optimization for commodity polymers, olefins, refining, and specialty chemicals; subsurface science and engineering; and value chain optimization for energy and polymers and specialty chemicals solutions. The company serves bulk chemicals, consumer packaged goods, downstream, food and beverage, metals and mining, midstream and LNG, pharmaceuticals, polymers, pulp and paper, specialty chemicals, transportation, upstream, and water and wastewater industries; power generation, transmission, and distribution industries; and engineering, procurement, and construction industries. Aspen Technology, Inc. was incorporated in 2021 and is headquartered in Bedford, Massachusetts.
>>> StoneCo (STNE) is a leading provider of payment-processing services in Brazil. Admittedly, it's also been a provider of lending services that have heavily underperformed. While it occupies a very small position in Berkshire's total stock portfolio, the company has the distinction of being one of the few fintech companies that the investment conglomerate is invested in.
In addition to macroeconomic pressures that have generally been quite hard on fintech stocks, StoneCo's valuation has been pressured due to bad debt held by its credit business. The company had been relying on Brazil's national registry system to guide its loan underwriting, and this created issues as the COVID-19 pandemic and other issues drove business failures and pushed the value of StoneCo's loan book into negative territory.
As a result of these challenges, the company's share price is down approximately 88% from its all-time high. But at current prices, the stock looks like a worthwhile buy for risk-tolerant investors.
At the end of the fourth quarter, StoneCo estimated that it still had 398.7 million Brazilian reals (roughly $79 million based on today's exchange rate) in bad debt on its books, but the company has discharged or sold off most of its bad debt. More importantly, its core payment-processing services segment continued to serve up strong results.
Primarily driven by its payments business, StoneCo managed to grow revenue 44% year over year in Q4. The company's non-GAAP (adjusted) net income also came in ahead of expectations at $46.4 million, up from a loss of $6.4 million in Q4 2021.
While the business has been growing at a rapid clip, it's still valued at roughly 18 times this year's expected earnings and 1.5 times expected sales. Based on its recent earnings trajectory, StoneCo's adjusted earnings could feasibly cover the remaining bad debt on its books this year, and the business still has plenty of room for growth ahead.
>>> Better AI Stock: Nvidia vs. C3.ai
By Leo Sun
Apr 18, 2023
C3.ai has a catchy ticker symbol, but its business has some glaring problems.
Nvidia will remain one of the best chip plays in the AI market, but a lot of that optimism has already been baked into its share price.
Both of these stocks are pricey, but one is clearly a better long-term investment.
Nvidia (NVDA 3.09%) and C3.ai (AI -0.57%) both believe they will benefit from the expansion of the artificial intelligence (AI) market, which recently gained a lot of attention with the rise of "generative AI" platforms like ChatGPT. Nvidia's top-tier GPUs are used to process complex machine learning and AI tasks in data centers, while C3.ai's algorithms add AI capabilities to an organization's existing applications.
Nvidia and C3.ai have rallied about 83% and 96%, respectively, so far this year as the bulls rush toward AI-related stocks. But will those gains be sustainable over the long term? Let's take a closer look at these two companies to decide.
C3.ai: A catchy name with a shaky business
C3.ai was previously known as C3 Energy and C3 IoT (Internet of Things) before it rebranded itself as C3.ai in 2019. It subsequently generated a lot of buzz with that catchy name and its "AI" ticker symbol when it went public in late 2020.
But underneath those rebrandings, C3's core business hasn't changed all that much since its days as C3 Energy and C3 IoT. It still generates most of its revenue from the energy sector, and a massive joint venture with Baker Hughes still accounts for more than 30% of its revenue. That's deeply troubling because that agreement will expire in fiscal 2025 (which will end in April 2025), and there's no guarantee it will be renewed.
Last year, C3 also pivoted from subscriptions toward a usage-based model, which only collects fees when its services are accessed. The company insists that move will counter the macroeconomic headwinds that are discouraging enterprise customers from locking themselves into sticky subscriptions, but it's also severely throttling its near-term growth.
C3's algorithms can be plugged into an organization's software to automate tasks, cut costs, improve employee safety, and detect fraud -- but those optimization tools aren't comparable to OpenAI's ChatGPT or other generative AI platforms. C3 gained a lot of attention this January when it announced the development of new tools for generative AI platforms, but that merely means its algorithms are compatible with those platforms and doesn't guarantee any future revenue.
C3's revenue rose 38% in fiscal 2022, but it only anticipates 4% to 5% growth in fiscal 2023. It's still deeply unprofitable by both generally accepted accounting principles (GAAP) and non-GAAP measures, and it isn't cheap, with an enterprise value of 7 times its estimated sales for fiscal 2023. In that light, C3 still seems like a risky stock that could easily be cut in half once the AI hype dies down.
Nvidia: The pick-and-shovel play of the AI market
Nvidia's business is built on a much firmer foundation than C3. It's the largest producer of discrete GPUs in the world, and its top-tier GPUs are widely used by generative AI platforms like ChatGPT to accelerate their AI processing capabilities.
Nvidia experienced a major growth spurt during the pandemic as consumers upgraded their gaming PCs to play more video games, sales of pre-built PCs soared as more people worked remotely and attended remote classes, and data centers upgraded their servers to process more cloud-based data. The spike in cryptocurrency prices amplified that surge as crypto miners upgraded their mining rigs with Nvidia's latest GPUs.
The company's growth cooled off after the pandemic waned. PC sales withered, macro headwinds forced data centers to rein in their spending, and the collapse of the cryptocurrency market caused miners to flood the market with secondhand GPUs.
Nvidia's revenue came in flat in fiscal 2023 (which ended this January), compared to its 61% growth in fiscal 2022, as its adjusted EPS fell 25%. However, analysts expect its revenue and earnings to grow 11% and 35%, respectively, in fiscal 2024 as it laps that slowdown, the growth of the AI market boosts its data center sales, and the crypto market recovers.
That outlook is encouraging, but Nvidia's stock still looks pricey at 60 times forward earnings. That frothy valuation suggests it's also being buoyed by all the recent generative AI hype -- and a harsh reality check could easily crush its shares. But looking beyond the valuation, Nvidia's core business is still stable, it has a wide moat, it's firmly profitable by both GAAP and non-GAAP measures, and it will likely remain an essential pick-and-shovel play on the high-end gaming and AI markets.
The obvious winner: Nvidia
I wouldn't touch either of these stocks until their valuations cool off. But once that happens, Nvidia will obviously be a better buy than C3.ai. C3 isn't doomed yet, but it raises too many red flags given its habit of chasing hot trends, decelerating growth, lack of profits, and overwhelming dependence on Baker Hughes.
C3.ai (AI) - >>> If the AI industry does create $90 trillion in enterprise value by 2030, C3.ai (AI) could be set for explosive growth given the company is valued at just $2.5 billion right now. It's a first-of-its-kind enterprise AI company -- in fact, it pioneered the industry.
C3.ai develops AI applications for its business customers, whether they need a ready-made solution or something entirely custom. Those customers operate across 14 industries including oil and gas, manufacturing, healthcare, financial services, and even the U.S. government. By using C3.ai, companies can accelerate their adoption of this advanced technology rather than building it from scratch, which can consume a significant amount of time and resources.
C3.ai's progress in AI is also recognized by some of the world's largest tech giants. It now sells AI applications jointly with Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud. Those cloud providers use C3.ai to improve their own product offerings to customers. For example, a business can develop AI applications 26 times faster with C3.ai on AWS compared to using AWS alone.
Investors should be aware of a couple of things before buying C3.ai stock. First, its revenue growth has stalled because the company is in the middle of transitioning away from subscription-based pricing to consumption-based pricing. It will eliminate lengthy negotiations and convoluted onboarding processes when acquiring new customers, and C3.ai expects revenue growth to come in at 30% from fiscal 2024 onward.
Second, the company was recently called out by a short seller for discrepancies in its financial statements, mainly relating to how revenue is being recorded. C3.ai hasn't responded yet, and it may feel confident enough in its position that a response isn't warranted, but it's something to be wary of, nonetheless.
C3.ai has been a volatile stock since it listed publicly in December 2020, quickly reaching an all-time high of $161 amid the red-hot tech market. But it has since crashed by 85% as investors began to sour on technology stocks, and because the company failed to deliver on growth expectations. For investors seeking exposure to the potential value creation AI has to offer, and who have an appetite for risk, it might be worth taking a small position in C3.ai stock.
>>> Omnicell, Inc.(OMCL), together with its subsidiaries, provides medication management solutions and adherence tools for healthcare systems and pharmacies the United States and internationally. The company offers point of care automation solutions to improve clinician workflows in patient care areas of the healthcare system; XT Series automated dispensing systems for medications and supplies used in nursing units and other clinical areas of the hospital, as well as specialized automated dispensing systems for operating room; Omnicell Interface Software that offers interface and integration between its medication-use products or supply products, and a healthcare facility's in-house information management systems; and robotic dispensing systems for handling the stocking and retrieval of boxed medications. It also provides central pharmacy automation solutions; IV compounding robots and workflow management systems; inventory management software; and controlled substance management systems. In addition, the company provides single-dose automation solutions that fill and label a variety of patient-specific, single-dose medication blister packaging based on incoming prescriptions; fully automated and semi-automated filling equipment for institutional pharmacies to warrant automated packaging of medications; and medication blister card packaging and packaging supplies to enhance medication adherence in non-acute care settings. Further, it offers EnlivenHealth Patient Engagement, a web-based nexus of solutions. The company was formerly known as Omnicell Technologies, Inc. and changed its name to Omnicell, Inc. in 2001. Omnicell, Inc. was incorporated in 1992 and is headquartered in Santa Clara, California.
Omnicell - >>> Should You Hold Omnicell (OMCL) for the Long-Term?
March 17, 2023
by SOUMYA ESWARAN
Meridian Funds, managed by ArrowMark Partners, released its “Meridian Growth Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund returned 4.69% (net) compared to a 4.72% return for the Russell 2500 Growth Index. Positive factors during the quarter helped the fund’s performance. An emphasis on quality was beneficial for the fund in the upmarket. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Meridian Growth Fund highlighted stocks like Omnicell, Inc. (NASDAQ:OMCL) in the Q4 2022 investor letter. Headquartered in Mountain View, California, Omnicell, Inc. (NASDAQ:OMCL) is a medication management solutions and adherence tools provider for healthcare systems. On March 16, 2023, Omnicell, Inc. (NASDAQ:OMCL) stock closed at $56.97 per share. One-month return of Omnicell, Inc. (NASDAQ:OMCL) was 5.48%, and its shares lost 58.47% of their value over the last 52 weeks. Omnicell, Inc. (NASDAQ:OMCL) has a market capitalization of $2.563 billion.
Meridian Growth Fund made the following comment about Omnicell, Inc. (NASDAQ:OMCL) in its Q4 2022 investor letter:
“Omnicell, Inc. (NASDAQ:OMCL), develops medication management systems for healthcare systems and retail pharmacies in the U.S. and internationally. Its offerings consist of hardware and software components and are used by customers ranging from robot central pharmacies to hospitals that deploy automated dispensing systems such as bedside cabinets. We believe Omnicell’s market-leading position holds attractive growth potential, especially as we anticipate healthcare systems and pharmacy operators will remain aggressively cost-conscious. The stock slumped during the quarter as the company lowered its near-term revenue and profit targets due primarily to two key factors. First, the implementation of completed deals slowed, bogged down by industry labor shortages and an overly active respiratory illness season that prompted customers to extend their plans by three to six months. Second, the company experienced a slowdown in capital budgeting decisions by over-stressed hospitals, which resulted in a decline in new bookings and awarded contracts. Despite the near-term challenges, we continue to believe in Omnicell’s potential and maintained our position during the quarter.”
Omnicell, Inc. (NASDAQ:OMCL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Omnicell, Inc. (NASDAQ:OMCL) at the end of the fourth quarter which was 23 in the previous quarter.
>>> Should You Hold Omnicell (OMCL)?
by Soumya Eswaran
Mar 20, 20233
Brown Capital Management, an investment management company, released its “The Brown Capital Management Mid Company Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. The Mid Company Fund returned 5.43% in the quarter compared to a 6.90% return for the Russell Midcap Growth Index. For the full year, the fund declined 37.12% compared to a -26.72% return for the benchmark. In addition, check the fund’s top five holdings to know its best picks in 2022.
The Brown Capital Management Mid Company Fund highlighted stocks like Omnicell, Inc. (NASDAQ:OMCL) in the Q4 2022 investor letter. Headquartered in Santa Clara, California, Omnicell, Inc. (NASDAQ:OMCL) is a medication management solutions and adherence tools provider for healthcare systems. On March 17, 2023, Omnicell, Inc. (NASDAQ:OMCL) stock closed at $55.60 per share. One-month return of Omnicell, Inc. (NASDAQ:OMCL) was 2.94%, and its shares lost 59.47% of their value over the last 52 weeks. Omnicell, Inc. (NASDAQ:OMCL) has a market capitalization of $2.563 billion.
The Brown Capital Management Mid Company Fund made the following comment about Omnicell, Inc. (NASDAQ:OMCL) in its Q4 2022 investor letter:
"Omnicell, Inc. (NASDAQ:OMCL) provides medication-management automation solutions for healthcare providers and pharmacies. Its tools include both hardware and software. Omnicell shares underperformed as the company took down fiscal year 2022 guidance 8% due to implementation delays and elongated sales cycles. More importantly, fiscal year 2022 bookings guidance was reduced $400 million, or 28%, as product bookings related mostly to one of the company’s products failed to materialize. However, our research suggests that this slowdown is being driven by a market-wide freeze in hospital capital expenditures, rather than by a company-specific issue. In addition, the mission-critical nature of Omnicell’s products that will replace/upgrade older versions is a priority over the next few years for hospitals. The company is well-positioned longer-term to become hospitals’ trusted partner for pharmacy safety, automation, earnings and strategy. Omnicell has one of the leading platforms for acute-care pharmacy services in the market. Moreover, November volumes for hospitals did improve, but we are not yet calling this the turning point for Omnicell. In short, inflation and lower hospital capital expenditures will likely weigh on the company in the near term. As care moves to retail and ambulatory sites, hospitals will need to partner with innovative companies like Omnicell in order to compete effectively. The company has an addressable market of about $90 billion and has created one of the largest and probably the best product suite on the market.
Omnicell operates primarily in the U.S., which has an aging population and the highest pharmaceutical spending per capita in the world. Omnicell’s products are positioned across the continuum of care, which gives it unique access to patient and hospital data. Nevertheless, we are revisiting our initial investment thesis to ensure that the company can deliver on our longer-term expectations."
Omnicell, Inc. (NASDAQ:OMCL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Omnicell, Inc. (NASDAQ:OMCL) at the end of the fourth quarter which was 23 in the previous quarter.
We discussed Omnicell, Inc. (NASDAQ:OMCL) in another article and shared Meridian Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
>>> Stanley Black & Decker, Inc. (NYSE:SWK) - Number of Hedge Fund Holders: 25
6-Month Performance as of March 30 (Relative to SPY): -11.73%
One of Cramer's top stock picks from October was Stanley Black & Decker, Inc. (NYSE:SWK). He called the stock a "fantastic brand name" and "everybody's go-to toolmaker". As of March 30, Stanley Black & Decker, Inc. (NYSE:SWK) has lost 11.73% over the past 6 months, relative to the SPDR S&P 500 ETF Trust (NYSEARCA:SPY).
25 hedge funds held stakes in Stanley Black & Decker, Inc. (NYSE:SWK) at the end of the fourth quarter of 2022. The total value of these stakes amounted to $493.9 million. As of December 31, D E Shaw is the largest investor in the company and holds a position worth $111.3 million.
Ariel Investments made the following comment about Stanley Black & Decker, Inc. (NYSE:SWK) in its Q3 2022 investor letter:
“Shares of Stanley Stanley Black & Decker, Inc. (NYSE:SWK) sharply declined in the quarter as inflation and rapidly rising rates drove a swift deterioration in consumer demand. In response, SWK is laser-focused on reducing inventory to generate cash flow and re-sizing the cost base through simplifying its corporate structure, optimizing operations and transforming the supply chain. Though the macroeconomic backdrop remains challenging, we have conviction in SWK’s experienced executive management team and think the balance sheet is well-positioned to weather the storm. At current levels, SWK is trading at a substantial, historically-high discount to our estimate of private market value.”
While Stanley Black & Decker, Inc. (NYSE:SWK) has underperformed over the past 2 quarters, Cramer's picks that have outperformed the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) over the past 6 months include ServiceNow, Inc. (NYSE:NOW), Yum! Brands, Inc. (NYSE:YUM), and JPMorgan Chase & Co. (NYSE:JPM).
>>> Generac Holdings Inc. (NYSE:GNRC) - Number of Hedge Fund Holders: 31
6-Month Performance as of March 30 (Relative to SPY): -47.00%
One of Jim Cramer's top picks from October 2022 was Generac Holdings Inc. (NYSE:GNRC). The company is an American manufacturer of backup power generation facilities Cramer said that the he liked how low the stock was, enough to add it to his charitable trust. Shares of Generac Holdings Inc. (NYSE:GNRC) have lost 47% over the past 6 months, relative to the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), as of March 30.
At the end of Q4 2022, 31 hedge funds were bullish on Generac Holdings Inc. (NYSE:GNRC) and held stakes worth $588.2 million in the company. Of those, Ariel Investments was the top investor in the company and held a stake worth $132 million.
Meridian Funds made the following comment about Generac Holdings Inc. (NYSE:GNRC) in its Q4 2022 investor letter:
“Generac Holdings Inc. (NYSE:GNRC), is a manufacturer of power generation equipment with a leading position in home standby generators. Generac also offers consumers a home energy management system that harnesses and stores power from the sun to be used for backup during utility power outages. Severe weather events that strained already-overburdened power grids in California, Texas, and other key markets have created a significant opportunity for home power generation equipment manufacturers. Moreover, with the future potential to aggregate these distributed energy resources through the company’s grid services business, homeowners have the potential to monetize these assets. The stock declined during the quarter as the company reduced its full-year revenue guidance due largely to labor shortages in Generac’s dealer network which resulted in a slowdown in installations and implementations. As a consequence, dealers have reduced their on-site inventory. During the period, we exited our position in the company.”
>>> StoneCo stock has explosive potential -
Keith Noonan: StoneCo (STNE 3.09%) is a Brazil-based payment processing and lending company that's seen volatile trading over the last few years. To be more descriptive, it's a fintech services provider with thriving payment solutions for small and medium-sized businesses and a credit business that was crushed by headwinds related to the coronavirus pandemic and flaws in Brazil's national registry system, which was used for loan underwriting.
Even after discharging or selling off much of its credit portfolio at basement-level prices, StoneCo still carries roughly $79 million in bad debt on its books. Due to macroeconomic pressures and the collapse of the credit business, the company's share price is down approximately 91% from its high. But there's an opportunity here.
StoneCo's fourth-quarter earnings report arrived with strong performance for the core payments business and signs the company is emerging from challenges created by its credit business. Sales and earnings performance for the period beat both internal guidance and the average analyst estimates, with revenue growing 44% year over year and non-GAAP (adjusted) net income swinging into positive territory at $46.4 million from a loss of $6.4 million in the prior-year period.
While StoneCo shouldn't be thought of as a low-risk stock, the market appears to be too pessimistic about the company, and it trades at multiples that leave room for explosive upside.
Valued at less than 15 times expected earnings for this year and less than 1.3 times expected sales, the Brazilian fintech services provider offers an attractive risk-reward proposition at current prices. If macroeconomic pressures ease and the company maintains solid footing in its corner of Brazil's payment-processing space, the stock stands a very good chance of delivering strong returns.
>>> GE stock has skyrocketed 80% in 5 months — JPMorgan says that's a problem
March 7, 2023
JPM thinks GE's stock (GE) could power down in the months ahead after a sizzling five-month run.
"While we see an excellent business in aerospace and potential in Vernova, GE is up ~80% over the past five months vs. 13% for the S&P 500," JPMorgan analyst Seth Siefman wrote in a client note on Tuesday ahead of a hotly anticipated March 9 GE investor day. "Our sum of the parts-based December 2023 price target therefore leaves limited upside."
Siefman has a Neutral rating on the stock of the industrial icon, which is in the process of splitting up into several parts. Long-time market-moving GE analyst Steven Tusa is no longer running point on the name.
The company is being divided into three separate companies — aviation, healthcare, and energy — in a plan unveiled late in 2021. GE Healthcare (GEHC) was spun off into a public company in January of this year. The energy business — dubbed Vernova — is slated to debut on the public market by early 2024.
"This is my one-year anniversary with the company, and people have been super energized about our opportunity to be separate," GE Healthcare CEO Peter Arduini told Yahoo Finance Live on January 4. "It's brought more employees of capabilities into the company."
Siefman thinks investors may be overlooking a few important risks on GE's stock as they plow into a re-vamped company which on paper should be more focused and leaner, potentially leading to better profits.
"On the aerospace side, GE and others are clearly benefiting from a Goldilocks environment for maintenance where global travel demand is surging and Boeing and Airbus cannot build enough new planes," Siefman explained. "Air travel demand has been quite resilient but if it comes under pressure, the aftermarket growth outlook would suffer and there is also a threat from the gradual ramp in new aircraft deliveries eating into maintenance activity."
In terms of the energy business, Siefman added, "the scale of the EBITDA and FCF growth required at Renewables is a natural focus for investors, particularly with near-term challenges likely to persist and Vernova’s success will depend to some degree on yet-to-be-determined mechanisms of the IRA. Lingering Insurance exposure is another risk — and an opaque one — in part because GE may be unable to unload Insurance, leaving the potential for incremental contributions."