For Immediate Release Chicago, IL – September 23, 2015 – Zacks Equity Research highlights Amazon (AMZN) as the Bull of the Day and Exxon Mobil (XOM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc. (AAPL), Tesla Motors, Inc. (TSLA) and Nissan Motor Co. Ltd. (NSANY).
Here is a synopsis of all five stocks:
Bull of the Day:
Amazon (AMZN) isn't priced like a normal stock, and that has a lot to do with the fact that it is not a normal company. There have been a few negative stories of late in the news about the e-commerce giant, but there are a lot of positives as we approach the end of the third quarter. Analysts have recently increased their earnings estimates and that has helped push the stock to a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.
Recent Analyst Action
I like to think that price targets are not really that important as an analyst can really make that number fit any slot he or she wants. All they have to do is note in the report how they derived the price target and there is no set means of doing so. Often times, they will take an earnings estimate for a future year and then apply a "multiple" for it to reach a nice round number.
The two most recent recommendation changes were both upgrades, as Raymond James moved the stock to Strong Buy from Outperform on August 27. Just before that, and frankly maybe a just a few after the most recent earnings report on July 23, Stifel upgraded the stock to Buy from Hold and slapped a $700 price target on the stock as of July 29.
That $700 number isn't the highest price target out there, but it matched the number that Credit Suisse placed on the stock the day after 2Q15 earnings. It was quite a move up from $480 and it ranks as the highest price target increase in dollar terms. The biggest bull on Wall Street is Morgan Stanley who increased their price target to $740 from $520 while maintaining an overweight recommendation.
Needless to say, the price targets are pretty lofty so let's take a look at why they are up so high and how to think about earnings that are just about one month away.
Description
Amazon.com operates as an online retailer and serves developers and enterprises through Amazon Web Services that provides compute, storage, database, analytics, applications. Amazon.com was founded in 1994 and is headquartered in Seattle, Washington.
The Big Driver
Of late, the driving force behind strong earnings from AMZN has been the Amazon Web Services (AWS). Amid dozens of price drops, the company has still be able to push a meaningful portion of those sale dollars to the bottom line.
Bear of the Day:
Exxon Mobil (XOM) missed the Zacks Consensus Estimate last quarter, but the slumping price of oil has made analysts rethink their estimates for the coming quarter. Today the stocks is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.
Company Description
Exxon Mobil's principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crude oil, natural gas and petroleum products.
Estimates
Earnings estimate revisions, which is the primary component of the Zacks Rank, have fallen over the course of the year. The Zacks Consensus Estimate was at $4.27 at the start of this year, but is now $4.01. That is a good sized drop in the 2015 Zacks Consensus Estimate.
The thing that seems to be keeping the stock with the lowest Zacks Rank is that estimates for 2016 are falling even more. That number started the year at $5.40 and is now down to $4.23.
Additional content:
Auto Companies That Should Fear an iCar Launch
Apple Inc. (AAPL) started off as a computer company. Following the launch of the iPhone, it now dominates the global smartphone market. With the arrival of the iPod, Apple revolutionized the entire music industry.
Every product line launched by this technology company has turned out to be a game-changer for a particular industry. With rumors of an iCar in the cards, it is only natural for automakers to be worried.
Project Titan
Apple is reportedly speeding up its endeavor to develop an electric car – code-named Project Titan – and has targeted a shipping date of 2019, per the Wall Street Journal. The company is planning to triple the strength of the 600-member team currently working on this project.
However, the report clarified that Apple could be referring to “the date that engineers sign off on the product’s main features,” while mentioning the shipping date, rather than the more common meaning, which is the date when the product goes on sale. It also stated that the first iCar may not be a fully autonomous vehicle.
While Apple has not officially confirmed the project, preferring to maintain secrecy as usual, reports about its vehicle development plans have been doing the rounds since February. The tech giant has also been hiring people with a background in automotive and battery design, adding further fuel to the rumors.
Recently, The Guardian reported that Apple is scouting for a secure location in the San Francisco Bay area to test its rumored car. Back in May, Apple representatives from Project Titan met with officials from GoMentum Station, a 2,100 acre former naval base near San Francisco that is currently being converted into a secure testing ground for driverless vehicles.
Should Automakers Worry?
If Apple indeed launches an electric car, it will pose a significant threat to existing players in the market. The technology giant is not only a design leader, but also has a robust financial position necessary for entering a capital-intensive sector like transportation. Its ample financial resources easily overshadow those of the largest automakers.
Additionally, Apple has mastered the art of developing cutting-edge technology, thus ensuring high customer satisfaction and strong brand loyalty. With the increasing focus on vehicle safety, development of advanced driver-assist features and rising importance of in-car connectivity, advancement in technology has become a necessity for automakers. Needless to say, Apple will have an upper hand in this area.
No doubt Apple will face several challenges with its foray into the auto market. However, judging by the company’s history, automakers should be prepared for tough competition ahead.
Let us take a look at 3 electric car producers that should fear the launch of an iCar:
Tesla Motors, Inc. (TSLA) – which currently carries a Zacks Rank #3 (Hold) – is the first name that comes to mind when we think of electric cars. Not only does the company focus solely on electric vehicles, but it has been compared many a time to Apple due to its unwavering focus on product excellence as well as the strong brand name and customer loyalty it has earned.
Tesla’s luxury electric cars enjoy a unique market position that has been secured over the years by the company’s constant endeavor to offer impressive products that undergo further improvements via free over-the-air software updates. These updates not only remove snags, but also add new features. In order to popularize electric vehicles, the company even developed a network of Superchargers that provide free and fast charging to vehicle owners.
Nissan Motor Co. Ltd. (NSANY) produces the highest selling electric car in the world – the Nissan Leaf. Since its launch in Dec 2010, the Leaf had sold 172,000 units as of Mar 2015. Sales volume of this popular electric car is approaching 200,000 units this month. Nissan currently carries a Zacks Rank #3.
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AMAZON.COM INC (AMZN): Free Stock Analysis Report
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APPLE INC (AAPL): Free Stock Analysis Report
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NISSAN ADR (NSANY): Free Stock Analysis Report
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