Upgrades Are Moving The Market, But Beware The High Hurdles
Among the biggest risks
to the market, today are the number of upgrades we're seeing. The consensus estimate for S&P 500 (NYSEARCA: SPY
) Q1 earnings has nearly doubled in the last six months and is likely to keep rising into the end of the reporting season. What this means for near-term market movement is upward price pressure. What it means for long-term market movement is yet to be determined but can be summed up like this; if the market fails to meet the expectations we could be in for a big correction. Results from companies like Fastenal (NASDAQ: FAST
) only highlight this view
. Fastenal reported exactly what the market was expecting, gave no guidance, and shares are moving lower because of it.
Microsoft Diversification Strategy Is Paying Off
Microsoft (NASDAQ: MSFT
) has been working hard to diversify itself for long-term sustainable growth
and those efforts seem to be paying off. The latest move was only announced in the last week and already garnering the attention of analysts. Microsoft announced a definitive agreement to acquire Nuance Communications in an effort to build out its business services. Nuance Communications is an AI company focused on the healthcare industry worth nearly $20 billion according to the terms of the deal.
"Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI," says Satya Nadella, CEO, Microsoft. "AI is technology's most important priority, and healthcare is its most urgent application."
Analyst Joseph Bonner of Argus sees Microsoft benefiting from reopening tailwinds in addition to its acquisitions growth worth another 17% to share prices. Argus maintained its Buy rating but raised the price target to $300 from $275. The target is 15% above the current consensus and reflects a growing trend. The trend of upwardly revised price targets and a consensus target that's been steadily rising over the past three months.
NVIDIA Guides The Market Higher
NVIDIA (NASDAQ: NVDA
) caught the analyst's attention on Mondy when it issued a pre-report on Q1 earnings. In it, the company guided the market to better than expected results that has shares up more than 7% in the last two days. At least three major sell-side firms have come out since the news to sing the company's praises and raise their price targets. Rosenblatt Securities was impressed with the breadth of the revenue strength, Deutsch Bank the "rich pipeline of opportunities", and Cowen the surprise Grace CPU announcement. The consensus among them is for shares of NVDA to trade near $675 versus the broader consensus of $600. Rosenblatt is the high-price holder of the group matching the Wall Street high price target of $800. NVIDIA is now trading at the all-time-high
Coinbase IPO Is Causing A Buzz
The Coinbase (NASDAQ: COIN
) IPO is slated for today and likely to cause a big stir
in the market. The latest valuations have it trading far above any comparable financial institution and are pricing in the robust growth we ourselves see for the cryptocurrency market. Analysts at MoffetNathanson are the first to officially initiate coverage of the company, even before the official direct listing, and have it rated a buy. In their view, this company will be trading around the $600 level in one year's time which is double the original listing price when the company listed on NASDAQ Private Markets. In our view, the $600 price target is a little on the low side considering this company is the #1 portal
to cryptocurrency and defi worldwide. This company will benefit from any and all advances in cryptocurrency technology including the digitization of traditional assets like stocks and bonds.
“We view Coinbase as a leading technology infrastructure provider for the cryptocurrency ecosystem, providing essential building blocks to facilitate the use of cryptocurrencies, including market-leading crypto storage and exchange capabilities,” MoffettNathanson wrote in a research note.
Featured Article: What economic reports are most valuable to investors?7 Semiconductor Stocks Set to Gain From the Chip Shortage
Who knew that something so tiny could create such a big problem? However, that’s the case with the semiconductor industry. Chip manufacturers are facing supply chain disruptions due to the Covid-19 pandemic.
Semiconductors are in high demand for the big tech companies who need the chips to power the servers for their data centers. But they are also needed for much of the technology we take for granted including laptops, tablets, mobile phones, gaming consoles, and automobiles – a sector that seems to be at the root of the current crisis.
Any weekend mechanic knows that even traditional internal combustion cars are heavily reliant on electronics. In fact, electronic parts and components account for 40% of a new, internal combustion vehicle. That’s more than doubled since 2000.
However as it turns out, some manufacturers may have overestimated how soon consumers would be ready for an “all-electric” future. And that meant that they didn’t forecast how much demand there would be for the kind of chips needed to do the mundane, but vital tasks of steering, braking, and even powering windows up and down.
Part of the problem is that U.S. businesses are heavily reliant on countries like China and Taiwan for their semiconductors. In fact, only about 12.5% of semiconductor manufacturing is done in the United States.
Of course, this creates a tremendous opportunity for the companies that manufacture these chips. And it comes at a good time. The semiconductor sector is notoriously cyclical and was coming down from the elevated demand for the 5G buildout.
In this special presentation, we’ll give you a list of seven semiconductor companies that you can invest in to take advantage of this opportunity.
View the "7 Semiconductor Stocks Set to Gain From the Chip Shortage"
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