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.

ServiceNow Inc

Posted on by Cornelio Ash

Key points from this report:

 

  • ServiceNow provides SaaS solutions to help enterprises manage, automate, and streamline IT operations and services.
  • The stock is consolidating after finding support along ~$250, which coincides with the lows of its prior base. Look for the stock to regain its 50-DMA and form the right side of a base. The stock is buyable post positive print on April 29.
  • ServiceNow’s SaaS based platform is resilient amid the COVID-19 disruption, as 94% of revenue is subscription-based.
  • Focus on Q1 FY20 (April 29) commentary around deal closures, billing growth, and guidance.

Software – Security

Posted on by Cornelio Ash

Key points from this report:

 

  • The work-from-home theme extends far beyond quality enterprise applications—Docusign (DOCU), Zoom (ZM), Atlassian (TEAM)—and includes cybersecurity
  • Cybersecurity is long-term beneficiary of the secular shift to the cloud, but the COVID-19 outbreak accelerates the need for enterprise cybersecurity as large businesses expand and/or develop a long-term work-from-home policy.
  • Annual global spending on cybersecurity software and services is poised to increase 52% over the next four years, from $124B to $189B in 2023, a CAGR of 11%.
  • Top picks: Fortinet (FTNT), Okta (OKTA), Qualys (QLYS), Crowdstrike (CRWD).

Tencent Holdings

Posted on by Cornelio Ash

Key points from this report:

 

  • Tencent is a global internet company with a 14% share of the global gaming market, a 39% share of the Chinese payment services market, and an 18% share of the Chinese cloud market.
  • The stock is emerging out of a one-year consolidation on volume and remains near pivot. Buy.
  • The COVID-19 disruption has been a tailwind for mobile gaming developers, including Tencent. See our recent Software–Gaming note.
  • Tencent’s fastest growing segment includes cloud computing and payments, which accounts for 27% of total revenue.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Packaging Corporation of America ( PKG ), OSI Systems ( OSIS ), Colfax ( CFX ), Proto Labs ( PRLB ), Allison Transmission ( ALSN ), Ormat Technologies ( ORA ), Apache ( APA ), Avalonbay Communities ( AVB ), Avantor ( AVTR ), Dunkin Brands ( DNKN ), SVMK ( SVMK ), Ryanair Holdings ( RYAAY ).

 

Developed: Brenntag (BNRX.DE; BNR GR), Schneider Electric (QT@F.FR; SU FP), Makita (ML@N.JP; 6586 JP), Barry Callebaut (BARN.CH; BARN SW), Henderson Land Development (HELD.HK; 12 HK), Mani (MAII.JP; 7730 JP), Rocket Internet (RKETX.DE; RKET GR), Ibiden (IBIN.JP; 4062 JP), China Mobile (CHT.HK; 0941 HK), Atos (ATO.FR; ATO FP).

 

Emerging: Klabin Units (KLU.BR; KLBN11 BZ), LG Household and Healthcare (LHH.KR; 051900 KS).

Software: Gaming

Posted on by Cornelio Ash

Key points from this report:

 

  • Due to the COVID-19 outbreak, gaming downloads are up 30% in Q1 FY20 versus Q4.
  • Daily time spent on mobile in China, the largest gaming market in the world, spiked 30% to five hours per day in February. This has been the highest increase compared with any other country including South Korea, 3.9 hours (+7%); Japan, 3.5 hours (+7%); Spain, 2.6 hours (+5%); and France, 2.5 hours (+7%).
  • Top gaming picks: Tencent ( TCNT.HK ), NetEase ( NTES ), and Sea Limited ( SE ).

Amazon

Posted on by Cornelio Ash

Key points:

 

  • The stock is emerging from a long consolidation after bouncing back from a recent pullback. It is under accumulation with an RS Rating of 92 and A/D Rating of B. Buy.
  • Focus on the significant increase in earnings growth, which is poised to accelerate further in the back half of FY20 and beyond.
  • Earnings improvement is due to the retail segment, both in North America and internationally, quickly approaching profitability.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Kennametal (KMT), News Corporation (NWSA), Sanderson Farms (SAFM), Cosan Ltd Cl A (CZZ), Everest RE (RE), Avanos Medical (AVNS), Echostar Corp (SATS), Appian Corp (APPN).

 

Developed: Nitto Denko (IF@N.JP; 6988 JP), Sandvik (SAND.SE; SAND SS), Relo Group (RESE.JP; 8876 JP), Beirsdorf (BEIX.DE; BEI.GR), Citic Securities (CSCY.HK; 6030 HK), H Lundbeck (LUN.DK; LUN DC), Ohsho Food Service (OSHO.JP; 9936 JP), Ibiden (IBIN.JP; 4062 JP), Telstra (TLS.AU; TLS AU).

 

Emerging: LG Household & Healthcare (LHH.KR; 051900 KR), Hua Nan Financial (HNB.TW; 2880 TT), Telekomunikasi Indonesia (RLK.ID; TLKM IJ).