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3 “Strong Buy” Stocks With Double-Digit Upside — At Least According to Needham

3 "Strong Buy" Stocks With Double-Digit Upside — At Least According to Needham

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The second quarter of 2020 started with a slide in the markets, as the glum mood came after President Trump acknowledged publicly that the first two weeks of April are likely to see a rise in deaths from COVID-19, as the epidemic intensifies.

In one way, this is to be expected – the disease has an incubation period up to 14 days, and course of illness lasting up to 14 cases, in cases with notable symptoms. The majority of cases are reported as mild, but the disease, as we know can be deadly in more severe cases. The social distancing moves, imposed through lockdowns and quarantines, are pounding the economy – but also slowing the spread of COVID-19. But they were implemented some two to three weeks ago, so the natural course of the disease, in those exposed before the lockdown policies took hold, is reaching its peak now, The good news is, the success of social distancing policies is slowing the disease spread, allowing hospitals to cope.

Downturns can present buying opportunities for contrarian-minded investors. Investment firm Needham has recently been thinking along these lines and came out with reports on stocks that should rally when the spread of COVID-19 will stabilize, or actually benefit from the current situation.

We’ve taken three of Needham’s top picks and looked them up in the TipRanks database. These are investments that TipRanks reveals as “Strong Buys” and, more importantly, all three offer robust upside potential. Let’s take a closer look.

EverQuote, Inc. (EVER)

Everything is available online these days. It’s one of the wonders of the internet information age in which we live, as just about any product or service can be researched and purchased with the click of a mouse and a simple online search. Some products are more amenable to online service than others, and insurance is clearly in that category.

Online insurance firm EverQuote connects customers and providers through its platform, and has expanded from its beginnings in the car insurance sector to also offer life and home policies. EverQuote’s services are free for site visitors – insurance customers don’t pay any fee for using the site. The company brings in profits from charging referral fees to the policy providers – but those fees are only assessed when policies are purchased.

EverQuote shares have underperformed the broader markets recently, having lost half of their value since the current bear trend began. This came after a Q4 that saw the company outperform expectations, with a net loss of 4 cents per share against a forecast of 6 cents – a loss that was less than one-third the year-ago figure of 15 cents. Revenue growth was strong in Q4, reaching $73.8 million, 8.2% over the estimates and up 85% year-over-year.

With the coronavirus pandemic in full swing, older forward guidance is of little use. But it’s important to note that as restrictions are lifted and business begins to resume in 2H20, customers will need to renew lapsed insurance policies – or may have been ‘scared straight’ by the downturn, into putting their insurance protections in order.

5-star Needham analyst Mayank Tandon agrees, seeing a clear path forward for the company. The analyst noted, “In our view, EVER's business model should remain largely resilient given that it is run through a digital marketplace and ~85% of the revenue comes from auto insurance, which is a nondiscretionary expense… we believe that demand should remain strong as consumers look for ways to save money in a difficult economic environment and carriers/agents compete for share by leveraging highly measurable marketing channels.”

Tandon reiterates his Buy rating here, and sets a price target of $45, suggesting an upside 95%. (To watch Tanon’s track record, click here)

EVER’s Strong Buy analyst consensus rating is based on a 6 to 1 split of Buys versus Hold. Shares are priced low, at $23.03, and the $46.57 average price target suggests an upside potential of 102%. (See EverQuote’s stock analysis at TipRanks)

Livongo Health, Inc. (LVGO)

Moving to the health industry, we find an interesting company with a unique niche. Livongo is a biotech – that develops systems for the treatment of chronic health conditions. Specifically, the company works with patients with diabetes, using a combination of medical treatment and real-time data analysis technology to give customers a personalized approach to disease management. The connection here to COVID-19 is apparent: the coronavirus disease is dangerous to patients with preexisting chronic conditions, and better management of those is key to maintaining good health.

At the beginning of March, LVGO reported a strong Q4. Earnings were positive, at 2 cents per share, versus the 5-cent loss expected, and revenue, at $50.2 million, was 1.8% better than forecast. The revenue total also represented 137% year-over-year, a clear testament to the company’s valuable niche. In another clear sign that LVGO is well-suited to current conditions, the stock has posted 12% gains year-to-date, while the overall market has dropped sharply.

Writing for Needham, 5-star analyst Scott Berg notes these points, saying of Livongo, “We note shares of Livongo have significantly outperformed the broader market including the Russell 2000 significantly since they reported 4Q results on March 2... We want to highlight our belief Livongo's success in FY20 is not perfectly correlated with the broader economy and they may actually benefit from some recent economic trends related to COVID-19.”

Berg sets a $42 price target to back his Buy rating, implying an upside of 51%. (To watch Berg’s track record, click here)

With 5 Buy-side reviews, Livongo holds a unanimous Strong Buy analyst consensus rating. The stock has an average price target of $39.40, which suggests a strong 40% upside potential from the current share price of $23.22. (See Livongo’s stock analysis at TipRanks)

Monolithic Power Systems (MPWR)

While its name suggests a utility, this is actually a tech company. Monolithic Power is maker of power circuits and converters, for digital, analog, and mixed-signal systems, used in portable electronics, wireless devices, computer systems, cars… and medical equipment. That last is a segment in high demand, as hospitals and medical providers are seeking expand their inventories in expectation of increased near-term need due to COVID-19.

Where most companies have lost heavily recently, MPWR has managed to outperform the market. While the stock is still down in the bear market, the loss is only 13%, compared to the 23% to 26% losses in the S&P 500 and Dow Jones indexes. Monolithic entered 2020 after an in-line Q4 report. Specifically, EPS, at $1.04, edged over the estimates by 1 cent, while revenue, at $166.74 million, was 2.23% higher than expected.

Strong customer orders powered the quarter, and MPWR finished 2019 with a backlog of work orders. That was noted by Needham’s 5-star analyst Quinn Bolton, who sees the backlog as a firm foundation for the company going forward, despite an overall gloomy economic outlook. Bolton opined, “Monolithic Power Systems has a consistent track record of execution and faster growth than its analog/mixed-signal peers. Targeting a growth rate 10-15 pts higher than the overall market, MPS is the fastest growing company in the attractive catalog analog segment, in our opinion. We believe MPS will continue to grow faster than the analog market in 2020 and 2021 driven by market share gains, the ramp of new products/design wins and co-development projects with tier-one customers.”

Bolton maintains his Buy rating on this stock, and while he lowered his price target considering current economic declines, he still sees the stock gaining 23% in the coming year, to reach $190 per share. (To watch Bolton’s track record, click here)

Monolithic is another company with a unanimous analyst consensus rating. The Strong Buy rating is based on 9 Buys, while the $201.11 average price target implies an upside potential of 29% from the current share price, $155.80. (See Monolithic stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

The post 3 "Strong Buy" Stocks With Double-Digit Upside — At Least According to Needham appeared first on TipRanks Financial Blog.

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int


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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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