Author: Cornelio Ash

Cornelio Ash is a senior equity analyst and member of the U.S. Focus List and the Global Focus List Committees, which approves all equity recommendations for developed, emerging, and frontier markets. He is also a lead for the Technology sector and specializes in the Americas region. Cornelio joined the firm in 2005 and received his B.A. in Finance from California State University, Northridge. He holds a Series 65 securities license.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Buenaventura (BVN), Equinox Gold (EQX), Nordson Corp (NDSN), Clorox (CLX), Firstcash Inc (FCFS), Incyte (INCY), Mimecast Limited (MIME).

 

Developed: Anhui Conch Cement (ANH.HK; 914 HK), Bae Systems (BA.GB; BA/ LN), China Resources Cmt. Hdg. (CRCH.HK; 1313 HK), Nagoya Railroad (NGYR.JP; 9048 JP), Nissin Foods Holding (NIFP.JP; 2897 JP), ASX Ltd (ASX.AU; ASX AU), Grifols (PROB.ES; GRF SM), Hornbach Holding (HBHX.DE; HBH GR), Inwit (INW.IT; IMW IM), Itochu Techno-solutions (ITOS.JP; 4739 JP).

 

Emerging: Tenaga Nasional (TENN.MY; TNB MK), Qatar National Bank (QNB.QA; QNBK QD), Siam Makro (MAKR.TH; MAKRO TB).

Veeva Systems

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock broke out from a 17-week consolidation on above average volume. Buy
  • Vault is the key growth driver: targeting a five-year CAGR of ~30% and contributing $2B in revenue (67% of total) by 2025.
  • By 2025, the company expects total revenue of $3B (five-year CAGR: 22%); commercial cloud is expected to have a CAGR of 13% to $1B and Vault is expected to have a CAGR of 30% to $2B. The company expects an adjusted operating margin of 35%+.
  • Market leader in an expanding TAM: Veeva estimates a TAM of $12B+ which includes Veeva Vault (for life sciences): $5B, Commercial Cloud: $3B, Data Cloud: $2B, Vault (outside life science): $1B+, and Patient Data & Analytics: $1B.

 

Dassault Systemes

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock gained ~5% on better-than-expected Q4 results and made a new high. Buy.
  • Better-than-expected Q4 FY20 results. Dassault Systemes reported adjusted EPS of €1.22 (+6% y/y cc) and revenue of €1.2196B (+5% y/y cc including Medidata acquisition), both above estimates of €1.18 and €1.2068B, respectively.
  • Operating income and margin. Adjusted operating income increased 12% y/y to €438.5M, above estimates of €423.1M. This translated to a margin expansion of 230bps y/y to 36%.
  • Life Sciences vertical growing by double digits due to Medidata acquisition. Dassault’s Life Sciences vertical now contributes 18% of total revenue, up from 4% two years ago. As a result of this acquisition, the company is a market leader in clinical trials and data management (market share: 11%).

Global Laggards

Posted on by Cornelio Ash

Attached is the latest Global Laggards report from our analysts. You can also access the report here.

 

This report has been curated by our sector analysts to find stocks showing technical weakness. We believe these stocks are laggards relative to their own domestic markets. We recommend that they be underweighted as they may be vulnerable to further downside risk and underperformance.

 

Highlighted Charts

 

U.S.: Barrick Gold ( GOLD ), Nordson Corp ( NDSN ), Firstcash Inc ( FCFS ), Humana ( HUM ), Amphenol ( APH ), Intnl Business Machines ( IBM ), Verisign ( VRSN ).

 

Developed: Symrise ( SY1X.DE; SY1 GR ), Iliad ( ILD.FR; ILD FP ), Kojamo ( KOJO.FI; KOJAMO FH ), Berkeley Group Hdg. ( BKG.GB, BKG LN ), Melco International ( MELO.HK; 200 HK ), Christian Hansen Holdings ( CHR.DK;CHR DC ), Petrochina ( PECH.HK; 857 HK ), Grifols ( PROB.ES; GRF SM ), Joyful Honda ( JOYH.JP; 3191 JP ), Inwit ( INW.IT; IMW IM ), Otsuka ( OTSK.JP; 4578 JP ).

 

Emerging: Unilever Indonesia ( UNI.ID; UNVR:IJ ), Thai Union Group ( TUFP.TH;TU TB ), Tenaga Nasional ( TENN.MY; TNB MK ), Qatar National Bank ( QNB.QA; QNBK QD ), Siam Makro ( MAKR.TH; MAKRO TB ).

 

ServiceNow

Posted on by Cornelio Ash

Attached is an update on ServiceNow (NOW) from Director, Research Analyst Cornelio Ash and William O’Neil India Equity Research Analyst Sayali Pradhan.

 

  • The stock is breaking out of a seven-week flat base on above average volume after reporting strong Q4 results last week. Buy.
  • ServiceNow reported better-than-expected Q4 FY20 results on January 27: adjusted EPS of $1.17 (+22% y/y), well above expectations of $1.06, and revenue of $1.250B (+31% y/y), including subscription revenue of $1.184B (95% of total, +32% y/y), both above expectations of $1.215B and $1.158B, respectively.
  • Increasing million-dollar deals. As of Q4, ServiceNow’s total number of deals with annual contract value greater than $1M stands at 1,093 (+23% y/y; +8% q/q). The company plans to increase the deal count to 2,000+ by 2023.
  • Guidance:
    • Q1 FY21: Expects subscription revenue of $1.2775B (+29% y/y), above street estimates of $1.244B and subscription billings of $1.3125B (+25% y/y), above consensus of $1.299B.
    • FY21: Expects subscription revenue of $5.490B (+28% y/y), above street estimates of $5.350B. Subscription billings of $6.215B (+25% y/y), above consensus of $5.977B.

Microsoft

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock is breaking out of a 21-week consolidation on an excellent Q2 FY21 earnings print. Buy.
  • Strong Q2 FY21 results led by accelerating growth in Azure and gaming. Microsoft reported EPS of $2.03 (+34% y/y) and revenue of $43.1B (+17% y/y), both above expectations of $1.64 and $40.2B, respectively. The company beat on all metrics for the quarter; highlights were Azure (+50% y/y) and gaming (+51% y/y).
  • Azure: Intelligent cloud remained the fastest-growing segment, led by Azure, which grew 50% y/y, well above estimates of 44% and above the prior quarter’s growth (48%). Azure contributed an estimated 17% of total revenue.
  • Gaming surpassed $5B in revenue for the first time: Xbox hardware revenue grew 86% y/y, driven by the new console launch. The launch of the Xbox Series X and Series S was the most successful in the company’s history, with the most devices ever sold in a launch month.