In today’s briefing:
- Pullback Begins; How Low Can Indexes Go?; High Yield Spreads & DXY Following Treasury Yields Higher
- Palo Alto Networks: Even Better Than Crowdstrike?
- Nitro Software: Potentia’s Tiered-Bump. Expect Alludo To Cash In
- The Walt Disney Company: First Ever Subscriber Decline Story For Disney+ & Other Drivers
- Yum! Brands Inc.: Major Drivers
- Fiserv Inc.: Major Drivers
- Lattice Semiconductor Corporation: Major Drivers
- US 10yr Yield (USGG10YR): We Have to Focus on the Big Picture (Multi-Year Uptrend)
- CVS Health Corporation: Acquisitions Of Oak Street Health & Signify Health
- ASRT: Updated Q4 Results Puts 2023 in Focus
Pullback Begins; How Low Can Indexes Go?; High Yield Spreads & DXY Following Treasury Yields Higher
- Since January, our expectation for 2023 has been for 4165 (and 4165-4200) to cap upside on the S&P 500.
- We’ve been preaching caution with the indexes testing resistance, and we are now getting confirmation that suggests a pullback has officially begun
- SPX, QQQ, and IWM all demonstrating false breakouts, alongside bullish inflections in Treasury yields, high yield spreads, and the U.S. dollar. Defensives also display bullish RS reversals
Palo Alto Networks: Even Better Than Crowdstrike?
- Huge operating margin and FCF beat as PANW is maintaining efficiency with slower headcount growth and supply chain issues abating supporting gross margins.
- Deal sizes continue to grow dramatically: $1M deals grew 20% YoY, and transactions size grew nearly 60%. $5M+ deals grew 84% YoY and $10M+ deals grew 140%.
- Prisma’ Access’ SASE product continues to be the catalyst driving 2.5x revenue lift vs. legacy firewalls.
Nitro Software: Potentia’s Tiered-Bump. Expect Alludo To Cash In
- After Alludo stated its $2.15/share Offer price was ‘best and final’, even if a superior proposal emerges, the ball was in Potentia’s court to just sneak in above those terms.
- And so they have, with a $2.17/share unconditional Offer for Nitro (NTO AU), increasing to $2.20 if they get to 75% interest, and $2.25 if ≥25% tendering opt for scrip.
- Expect Nitro’s board to announce its unanimous support for Potentia’s revised Offer. Expect Alludo to cash in as tendering nears 75%.
The Walt Disney Company: First Ever Subscriber Decline Story For Disney+ & Other Drivers
- Despite a challenging quarter, Walt Disney managed to deliver an all-around beat and expanded internationally.
- The sequential improvement was driven by lower SG&A costs and higher revenue at DTC.
- At Domestic Parks and Experiences, significant operating income and revenue growth in the quarter was achieved.
Yum! Brands Inc.: Major Drivers
- Yum Brands delivered a decent growth in 2022 despite labor shortages and commodity inflation.
- It ended the year with an all-around beat in the last quarter and more than 55,000 restaurants operating globally.
- We give Yum Brands a ‘Hold’ rating with a revised target price.
Fiserv Inc.: Major Drivers
- Fiserv had a decent 2022 and managed to surpass the revenue expectations of Wall Street in its last result.
- The company’s better-than-expected growth against the challenging backdrop was a result of growth in organic revenue, improvement in operating margin, and adjusted earnings per share.
- Fiserv also advanced its core banking cloud roadmap for its new and existing clients with the acquisition and integration of Finxact.
Lattice Semiconductor Corporation: Major Drivers
- Lattice Semiconductor had a solid 2022 and ended the year on a positive note with an all-around beat.
- The company increased its product portfolio and its core strategic markets for industrial, automotive, communications, and computing had a 28% increase in annual revenue.
- Besides, the industrial and automotive market experienced double-digit growth for the third year as full-year revenue grew by 41%.
US 10yr Yield (USGG10YR): We Have to Focus on the Big Picture (Multi-Year Uptrend)
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- USGG10YR traded in a perfectly structured downtrend from 1981 to 2020. This downtrend was clearly broken in Q2 2022, confirming a dominant multi-year uptrend.
- A mere 38.2% retracement of the 1981/2020 downtrend targets 6.24 in the coming 1-2 years. This is our big picture outlook. February may confirm the next leg in this uptrend.
CVS Health Corporation: Acquisitions Of Oak Street Health & Signify Health
- CVS Health has been on an acquisition spree lately and has been in the news for the acquisitions of Oak Street Health and Signify Health.
- The company delivered strong financial results that exceeded the revenue expectations as well as earnings expectations of Wall Street with high single-digit top-line growth.
- CVS recently announced that it has entered into one definitive agreement to acquire the outstanding shares of Oak Street Health.
ASRT: Updated Q4 Results Puts 2023 in Focus
- ASRT issued preliminary fourth quarter 2022 results highlighting the continued growth in revenue. We assume the increase in revenue was due to uplift in Indocin usage in the quarter.
- Heading into 2023, ASRT is carrying a larger than expected cash balance to deploy in making acquisitions
- ASRT is forecasting fourth quarter sales of $49 to $50 million compared to our estimate of $47.1 million
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