For Immediate Release
Chicago, IL – January 27, 2021 – Zacks Equity Research Shares of Himax Technologies, Inc. HIMX as the Bull of the Day, International Flavors & Fragrances Inc. IFF as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix, Inc. NFLX, Discovery, Inc. DISCA and ViacomCBS Inc. VIAC.
Here is a synopsis of all five stocks:
Bull of the Day:
Himax Tech is a Zacks Rank #2 (Buy) preannounced the quarter on January 7 and the stock has been on a big run since then. The company noted that there would be some “noise” in the bottomline number, but the topline was going to come in ahead of expectations and gross margins were going to exceed guidance as well. All of this has driven the stock to nearly double digits and now it is the Bull of the Day.
I am not sure I can remember the last time I saw a smaller name like this meeting the number in each of the last four quarters. No beats isn’t great, but I really like the idea of no misses. All in all, I would rather see a few beats but there is no negative news to report on this front.
Of course part of the reason for this is the company guiding before the print, so that gives the analysts a chance to really narrow in on the number.
I see some good revisions here, with this quarter moving higher in the last month or so. The Zacks Consensus Estimate moved from $0.16 to $0.20 over the 30 days.
Next quarter saw a move from $0.06 to $0.13, but that was a move from 90 days ago and thus will not impact the Zacks Rank.
The Zacks Rank cares the most about the annual numbers and while 2020 is over, it has yet to be reported. I see the number moving up from $0.24 to $0.30. That is good to see.
The 2021 number has inched higher to $0.45 from $0.44 over the last 30 days, but up from $0.35 over the last 90 days which suggests there is some good estimate momentum here.
I like the valuation here with a forward PE of 19x when the company showed top-line growth of 46% on an annual basis last quarter. Next year, estimates are calling for 20% topline growth and that could be on the low end of things. The price to book is only 3.3x, which is just about the range that will keep the value players interested. The 1.9x price to sales is also very low here, so I like that too.
Margins are thin here, so a small improvement in execution could result in much higher EPS. That is something that we could see when HIMX reports again in early February.
Bear of the Day:
International Flavors & Fragrances is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today. Does that mean that I think the stock will trade lower? No… not really. The Bear of the Day is all about why the stock has reached the lowest of the Zacks Rank. Let’s take a look at this stock in the same way we would a name that is the bull of the day.
New York-based International Flavors & Fragrances Inc., together with its subsidiaries, engages in the creation and manufacture of fragrance and flavor products in the United States and internationally.
I see a really good earnings history here for IFF. There are three beats and one miss of the Zacks Consensus Estimate over the last four quarters. That is certainly not what I expected to see, and by itself, it isn’t enough to make this stock a Zacks Rank #5 (Strong Sell).
I am seeing some negative earnings estimate revisions of late.
The Zacks Consensus Estimate for the current quarter moved from $1.30 to $1.17 over the 90 days, but that is outside of the window that the Rank looks at. Only estimate movements over the last 60 days will impact the Zacks Rank.
Next quarter saw a move from $1.45 to $1.51, but that was a move from 90 days ago and thus will not impact the Zacks Rank. So a bad move and a good move in estimates, but it is important to know that the annual
The Zacks Rank cares the most about the annual numbers and while 2020 is over, it has yet to be reported. I see the number moving from $5.64 to $5.58. That is not good to see.
The 2021 number has slipped from $6.09 to $6.06 over the last 60 days.
Those are some weak moves lower… and it tells me that most stocks are seeing positive estimate revisions.
The valuation for IFF is not crazy. I see a 19x forward earnings multiple… but comes after the company reported a quarter with no growth on an annual basis. The estimates are calling for low single digit growth for 2021.
Price to book at 2x is pretty low… so value investors will still be interested in this stock regardless of where estimates are headed. The 2.4x price to sales multiple is also pretty low.
In the end, this stock doesn’t stink… it might actually smell good in your portfolio when estimates start moving higher.
Netflix (NFLX) Renews Period Drama “Bridgerton” for Season 2
Netflix recently renewed its hit regency era drama, Bridgerton for a second season slated to return to production in spring of 2021.
Season 2 will showcase the pursuit of a suitable marriage for the eldest Bridgerton sibling, Anthony (Jonathan Bailey) as chronicled in the second book of Julia Quinn’s Bridgerton series, The Viscount Who Loved Me.
Markedly, the Bridgerton book series consists of eight novels, each revolving around the love life of one of the Bridgerton siblings. Van Dusen, who is the executive producer of the show with Shondaland’s Shonda Rhimes and Betsy Beers, has indicated that he would like to follow the format with a season dedicated to each of the brothers and sisters.
Markedly, season 1, based on the first book in Quinn’s series, The Duke and I, centered on the complicated romance between the eldest Bridgerton daughter, Daphne (Phoebe Dynevor) and the Duke of Hastings Simon Bassett portrayed by Regé-Jean Page.
Redefining period drama and romance genres while breaking conventions on race, season 1 of Bridgerton is anticipated to have gained viewership from 63 million households within 28 days of its release on Dec 25, 2020.
Diversified Content Aids Subscriber Growth
Netflix is benefiting from the strong popularity of its original content portfolio that has helped the streaming service to attract subscribers amid coronavirus-induced shelter-in-place practices.
Per a research from JustWatch cited by 9TO5 Mac, Netflix dominated the streaming market with 31% market share in the fourth quarter of 2020 in the United States compared with streamers like Amazon’s Prime Video service and Hulu which captured 22% and 14% of the market share, respectively. Meanwhile, new entrants such as Apple’s Apple TV+, Comcast’s Peacock, HBO Max and Disney+ recorded 3%, 6%, 9% and 13% of market share, respectively.
Markedly, Netflix added 8.51 million new subscribers globally in the fourth quarter, well ahead of the company’s guidance of 6 million additions. Netflix now has 203.7 million paid subscribers worldwide, up 21.9% year over year. This is the first time that the company topped 200 million streaming subscribers. For the full year, Netflix added 36.6 million streaming customers — its highest annual gain — beating its previous record of 28.6 million in 2018.
Netflix’s fourth-quarter content slate included the new season of The Crown as well as Bridgerton and The Queen’s Gambit. Regional content included Barbarians (Germany), Sweet Home (Korean), Selena: The Series and Alice in Borderland (Japan).
Markedly, Selena: The Series made to the top 10 list in 23 countries and stayed on that list in Mexico for 26 consecutive days. Also, it was ranked #1 on the top 10 list in the first week of its release in the United States.
Moreover, Netflix released its original film The Midnight Sky in the reported quarter. Other movies included were Over the Moon, We Can Be Heroes, Holidate and The Christmas Chronicles: Part Two.
Original Content to Help Netflix Sustain Momentum in 2021
Netflix is expected to strengthen its original content offerings of TV series, documentaries and feature films across various genres and languages in 2021 to combat intensifying competition in the steaming space, which is expected to reach $184.2 billion by 2027, per Grand View Research.
Solid growth prospects of the streaming market have attracted prominent tech and media companies including Discovery, which joined the online streaming market earlier this month with Discovery +, featuring content from channels including Animal Planet, Food Network, HGTV and TLC.
Moreover, ViacomCBS recently announced that it will relaunch its CBS All Access service as Paramount+ on Mar 4 in the United States. The company will leverage the combined portfolio of content from CBS, Viacom and Paramount Film Studios.
Markedly, Netflix plans to release at least one new original film every week in 2021. Netflix’s releases for the first quarter of 2021 include season 3 of Cobra Kai, Lupin as well as To All the Boys I’ve Loved Before 3, the finale of the trilogy.
Additionally, the content portfolio includes Fate: The Winx Saga, Yes Day, Sky Rojo and Space Sweepers slated for 2021 release.
Moreover, earlier this month, Netflix established two new production facilities in Korea, which further boosts its international presence. Notably, from 2015-2020, the company invested $700 million in Korean content with more than 80 shows produced in the country.
Further, the company announced that it will be the exclusive streaming platform for Taiwan’s highest-grossing movie of 2020, Little Big Women, which will be available to the audience from Feb 5.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that have beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks “Terms and Conditions of Service” disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
International Flavors & Fragrances Inc. (IFF) : Free Stock Analysis Report
Discovery, Inc. (DISCA) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
ViacomCBS Inc. (VIAC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research