In today’s briefing:
- Teladoc Health Inc (TDOC US): Q2 Revenue Beat Expectations; Here Is Why the Stock Toppled
- Facebook 2Q22: Network Effects Are Yesterday’s News, AI Is the Future
- Microsoft: Growth Bulls Versus Value Bears
- TMT Earnings Quick Hits: Spotify and ServiceNow
- Nocera Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 07/22
- EzFill Holdings Inc. – Investment Thesis
- Arista Networks Inc.: Initiation of Coverage – Market Position
- NTGR: Catalysts for Growth, Buy
- IRDM: Calling Home with Free Cash Flow
- Earnings Quality Short Candidates: Fox Factory, Beyond Meat, Coupa SW, Beacon Roofing
Teladoc Health Inc (TDOC US): Q2 Revenue Beat Expectations; Here Is Why the Stock Toppled
- Teladoc Health, Inc. (TDOC US) reported mixed Q2 results, with revenue and adjusted EBITDA coming in above the midpoint of guidance range. However, EPS came significantly below consensus and guidance.
- Teladoc has already took $9.8 billion hit from impairment charge in H1 2022. Moreover, the company now expects results to be toward the lower end of already reduced guidance range.
- Since publishing Q1 results in April, the stock plummeted 23% in three months. From its peak in February 2021, the stock is now down 85%. No immediate recovery is expected.
Facebook 2Q22: Network Effects Are Yesterday’s News, AI Is the Future
- Optically weak earnings and guidance due to FX and macro headwinds aren’t as bad as it seems… Meta’s ad business grew faster QoQ than Google’s Search.
- Zuckerberg downplayed the social graph as core to Meta’s LT competitive advantage. AI is the future.
- At $160, we think Meta is preposterously undervalued. 2023 revenue acceleration and margin expansion means the stock is trading 9x forward P/E ex-cash.
Microsoft: Growth Bulls Versus Value Bears
- Microsoft Corporation is the most widely held stock among active US equity investors. Of the 297 active strategies in our analysis, 80.1% own Microsoft at an average weight of 5.10%
- There is a growing dispersion between Value and Growth managers in MSFT. Growth managers are at record levels of ownership, whereas Value managers are running their largest underweight on record.
- US Growth managers are relying on Microsoft to deliver an increasing proportion of the Growth within their portfolios. The cost of that growth is coming under scrutiny by Value managers
TMT Earnings Quick Hits: Spotify and ServiceNow
- Spotify’s earnings were not as impressive as they seemed. Revenue beats driven by huge FX tailwinds, while MAU beats are coming from low ARPU regions.
- ServiceNow’s earnings were not as weak as seemed. Uberbullish CEO Bill McDermott had already guided to elongated sales cycles, but we think reiterated margin targets and 130% NRR matter more.
- Inverse results…Spotify jumped without any evidence of progress towards an unbelievable LT operating model, while ServiceNow fell without evidence that its (superb) LT model is in question.
Nocera Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 07/22
- This is our first report on Nocera and we look to provide a detailed account of the various industries that the company operates in and the key macro-economic factors.
- While Nocera did report a net loss and incurred one-time costs related to its listing last year, things ought to be entirely different in 2022.
- However, given how quickly the company’s revenues are increasing, the stock price should also rise quickly.
EzFill Holdings Inc. – Investment Thesis
- This is our first report on EzFill Holdings and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
- However, it is trading at a revenue multiple of around 1x whereas it can easily command a 5-6x revenue multiple.
- EzFill’s current share price does not reflect the potential upside of its huge revenue growth potential as well as its attractiveness as an acquisition target for oil majors.
Arista Networks Inc.: Initiation of Coverage – Market Position
- This is our first report on cloud networking solutions provider, Arista Networks.
- The company had a strong quarter and generated record quarterly revenues of $877.1 million backed by a strong performance in software support renewals and services.
- Cloud titans were their strongest and largest vertical for the last quarter, followed by enterprise, cloud specialty providers and financials tied for second place, and service providers in fourth.
NTGR: Catalysts for Growth, Buy
- NTGR is reaching the inflection point of rebalancing its channel inventory after deciding to transition away from lower priced wireless routers
- Upgrading to Buy Rating from Neutral with inventory rebalancing near the end, strong SMB sales trends momentum, and growth within service provider
- The higher sales performance from the SMB segment was not expected and should contribute to NTGR growing revenue in 2023 with upcoming release of WiFi 7 on deck
IRDM: Calling Home with Free Cash Flow
- IRDM continues to benefit from the momentum in consumer adoption of personal communications devices embedded with capabilities to use IRDM’s satellite network
- The quarterly results were overshadowed by IRDM’s disclosure of entering into a technology sharing relationship for using IRDM’s satellite network as backup connectivity to smartphones
- During the second quarter 2022, IRDM added approximately 80 thousand new commercial IOT subscribers to bring the total to over 1.3 million
Earnings Quality Short Candidates: Fox Factory, Beyond Meat, Coupa SW, Beacon Roofing
- This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.
- They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts. When the company’s issues become well-known, there is often multiple compression as well as a rerating.
- These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.
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