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โ Dimitry Nakhla | Babylon Capitalยฎ
An update on $NKE ๐๐ฝ โฆ the most recent post is attached below so you can compare the pre-earnings & post-earnings expectations:
PRE-EARNINGS EXPECTATIONS
2024E: $3.72 (15.0% YoY)
2025E: $3.86 (3.9% YoY)
2026E: $4.31 (11.5% YoY)
POST-EARNINGS EXPECTATIONS
2024A: $3.72 (15.0% YoY)
2025E: $3.44 (-7.3% YoY)
2026E: $3.80 (10.2% YoY)
Letโs assume $NKE ends 2026 with $3.80 in EPS & see its CAGR potential assuming different multiples:
25x P/E: $95.00๐ต โฆ ~14.5% CAGR
24x P/E: $91.20๐ต โฆ ~12.2% CAGR
23x P/E: $87.40๐ต โฆ ~9.9% CAGR
22x P/E: $83.60๐ต โฆ ~7.5% CAGR
As you can see, $NKE appears to have attractive return potential if we assume a >24x multiple which is well below its 10-year average of 29.54x (albeit elevated due to valuation spike between 2020-2022 & partly why Iโm not willing to rely on this assumption)
25x earnings used to be a solid level of fundamental support, however given its slowdown $NKE may not be able to demand that multiple anymore until earnings are expected to grow in the 11% - 13% range once again
Today at $75๐ต I consider $NKE a decent purchase (assuming 22x as base case) with a small margin of safety & great deal with a large margin of safety at $70๐ต where I can reasonably expect ~11% CAGR when assuming a 22x multiple
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ."
A sober valuation analysis on $NKE ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 25.36x
โข10-Year Mean: 29.58x
โขNTM FCF Yield: 4.55%
โข10-Year Mean: 3.21%
As you can see, $NKE appears to be trading below fair value
Going forward, investors can receive ~16% MORE in earnings per share & substantially MORE in FCF* per share ๐ง ***
Before we get into valuation, letโs take a look at why $NKE is a great business
BALANCE SHEETโ
โขCash & Short-Term Inv: $10.57B
โขLong-Term Debt: $8.93B
$NKE has a strong balance sheet, an AA- S&P Credit Rating & 26x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 35.7%
โข2020: 14.2%
โข2021: 27.3%
โข2022: 22.1%
โข2023: 20.9%
โขLTM: 21.0%
RETURN ON EQUITYโ
โข2019: 42.7%
โข2020: 29.7%
โข2021: 55.0%
โข2022: 43.1%
โข2023: 34.6%
โขLTM: 36.4%
$NKE has strong return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2014: $27.80B
โข2024E: $51.65B
โขCAGR: 6.39
FREE CASH FLOWโ *
โข2014: $2.12B
โข2024E: $5.64B
โขCAGR: 10.27%
*FCF isnโt the most reliable figure in assessing $NKE valuation, despite how high the FCF Yield may be today
NORMALIZED EPSโ
โข2014: $1.49
โข2024E: $3.72
โขCAGR: 9.58%
SHARE BUYBACKSโ
โข2014 Shares Outstanding: 1.81B
โขLTM Shares Outstanding: 1.54B
By reducing its shares outstanding ~14.9%, $NKE increased its EPS by ~17.5% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 44.3%
โขLTM Operating Margins: 11.6%
โขLTM Net Income Margins: 10.1%
***NOW TO VALUATION ๐ง
As[...]
An update on $NKE ๐๐ฝ โฆ the most recent post is attached below so you can compare the pre-earnings & post-earnings expectations:
PRE-EARNINGS EXPECTATIONS
2024E: $3.72 (15.0% YoY)
2025E: $3.86 (3.9% YoY)
2026E: $4.31 (11.5% YoY)
POST-EARNINGS EXPECTATIONS
2024A: $3.72 (15.0% YoY)
2025E: $3.44 (-7.3% YoY)
2026E: $3.80 (10.2% YoY)
Letโs assume $NKE ends 2026 with $3.80 in EPS & see its CAGR potential assuming different multiples:
25x P/E: $95.00๐ต โฆ ~14.5% CAGR
24x P/E: $91.20๐ต โฆ ~12.2% CAGR
23x P/E: $87.40๐ต โฆ ~9.9% CAGR
22x P/E: $83.60๐ต โฆ ~7.5% CAGR
As you can see, $NKE appears to have attractive return potential if we assume a >24x multiple which is well below its 10-year average of 29.54x (albeit elevated due to valuation spike between 2020-2022 & partly why Iโm not willing to rely on this assumption)
25x earnings used to be a solid level of fundamental support, however given its slowdown $NKE may not be able to demand that multiple anymore until earnings are expected to grow in the 11% - 13% range once again
Today at $75๐ต I consider $NKE a decent purchase (assuming 22x as base case) with a small margin of safety & great deal with a large margin of safety at $70๐ต where I can reasonably expect ~11% CAGR when assuming a 22x multiple
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ."
A sober valuation analysis on $NKE ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 25.36x
โข10-Year Mean: 29.58x
โขNTM FCF Yield: 4.55%
โข10-Year Mean: 3.21%
As you can see, $NKE appears to be trading below fair value
Going forward, investors can receive ~16% MORE in earnings per share & substantially MORE in FCF* per share ๐ง ***
Before we get into valuation, letโs take a look at why $NKE is a great business
BALANCE SHEETโ
โขCash & Short-Term Inv: $10.57B
โขLong-Term Debt: $8.93B
$NKE has a strong balance sheet, an AA- S&P Credit Rating & 26x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 35.7%
โข2020: 14.2%
โข2021: 27.3%
โข2022: 22.1%
โข2023: 20.9%
โขLTM: 21.0%
RETURN ON EQUITYโ
โข2019: 42.7%
โข2020: 29.7%
โข2021: 55.0%
โข2022: 43.1%
โข2023: 34.6%
โขLTM: 36.4%
$NKE has strong return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2014: $27.80B
โข2024E: $51.65B
โขCAGR: 6.39
FREE CASH FLOWโ *
โข2014: $2.12B
โข2024E: $5.64B
โขCAGR: 10.27%
*FCF isnโt the most reliable figure in assessing $NKE valuation, despite how high the FCF Yield may be today
NORMALIZED EPSโ
โข2014: $1.49
โข2024E: $3.72
โขCAGR: 9.58%
SHARE BUYBACKSโ
โข2014 Shares Outstanding: 1.81B
โขLTM Shares Outstanding: 1.54B
By reducing its shares outstanding ~14.9%, $NKE increased its EPS by ~17.5% (assuming 0 growth)
MARGINSโ
โขLTM Gross Margins: 44.3%
โขLTM Operating Margins: 11.6%
โขLTM Net Income Margins: 10.1%
***NOW TO VALUATION ๐ง
As[...]
Offshore
โ Dimitry Nakhla | Babylon Capitalยฎ An update on $NKE ๐๐ฝ โฆ the most recent post is attached below so you can compare the pre-earnings & post-earnings expectations: PRE-EARNINGS EXPECTATIONS 2024E: $3.72 (15.0% YoY) 2025E: $3.86 (3.9% YoY) 2026E: $4.31โฆ
stated above, investors can expect to receive ~16% MORE in EPS & substantially more in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $NKE has to grow earnings at a 12.68% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than the (12.68%) required growth rate:
2024E: $3.72 (15.0% YoY) *FY May $NKE reports earnings today After Market Close
2025E: $3.86 (3.9% YoY)
2026E: $4.31 (11.5% YoY)
$NKE has a good track record of meeting analyst estimates ~2 years out, so letโs assume $NKE ends 2026 with $4.31 in EPS & see its CAGR potential assuming different multiples:
26x P/E: $112.06๐ต โฆ ~10.7% CAGR
25x P/E: $107.75๐ต โฆ ~8.6% CAGR
24x P/E: $103.44๐ต โฆ ~6.5% CAGR
23x P/E: $99.13๐ต โฆ ~4.4% CAGR
As you can see, $NKE appears to have attractive return potential if we assume a >26x multiple which is well below its 10-year average of 29.54x (albeit a bit elevated due to valuation spike between 2020-2022 & partly why Iโm not willing to rely on this assumption)
With 25x earnings being a solid level of fundamental support, $NKE appears to have decent growth potential but not enough to get me interested
Yet, even assuming 25x, weโre not left with much of a margin of safety
Iโd consider $NKE a strong purchase with a substantial margin of safety closer to 23x NTM earnings or closer to $85๐ต (~9% below todays price)
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ. "- Dimitry Nakhla | Babylon Capitalยฎ
tweet
Using Benjamin Grahamโs 2G rule of thumb, $NKE has to grow earnings at a 12.68% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than the (12.68%) required growth rate:
2024E: $3.72 (15.0% YoY) *FY May $NKE reports earnings today After Market Close
2025E: $3.86 (3.9% YoY)
2026E: $4.31 (11.5% YoY)
$NKE has a good track record of meeting analyst estimates ~2 years out, so letโs assume $NKE ends 2026 with $4.31 in EPS & see its CAGR potential assuming different multiples:
26x P/E: $112.06๐ต โฆ ~10.7% CAGR
25x P/E: $107.75๐ต โฆ ~8.6% CAGR
24x P/E: $103.44๐ต โฆ ~6.5% CAGR
23x P/E: $99.13๐ต โฆ ~4.4% CAGR
As you can see, $NKE appears to have attractive return potential if we assume a >26x multiple which is well below its 10-year average of 29.54x (albeit a bit elevated due to valuation spike between 2020-2022 & partly why Iโm not willing to rely on this assumption)
With 25x earnings being a solid level of fundamental support, $NKE appears to have decent growth potential but not enough to get me interested
Yet, even assuming 25x, weโre not left with much of a margin of safety
Iโd consider $NKE a strong purchase with a substantial margin of safety closer to 23x NTM earnings or closer to $85๐ต (~9% below todays price)
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ. "- Dimitry Nakhla | Babylon Capitalยฎ
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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: โInvestors who expect to be ongoing buyers of investments throughout their lifetimes should adopt a similar attitude toward market fluctuations; instead many illogically become euphoric when stock prices rise and unhappy when they fall.
They show no such confusion in their reaction to food prices:
Knowing they are forever going to be buyers of food, they welcome falling prices and deplore price increases. (It's the seller of food who doesn't like declining prices)โ
โ Warren Buffett ๐ฃ๏ธ
#stocks #investing
Source: Berkshire Hathaway 1990 Shareholder Letter ๐
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RT @DimitryNakhla: โInvestors who expect to be ongoing buyers of investments throughout their lifetimes should adopt a similar attitude toward market fluctuations; instead many illogically become euphoric when stock prices rise and unhappy when they fall.
They show no such confusion in their reaction to food prices:
Knowing they are forever going to be buyers of food, they welcome falling prices and deplore price increases. (It's the seller of food who doesn't like declining prices)โ
โ Warren Buffett ๐ฃ๏ธ
#stocks #investing
Source: Berkshire Hathaway 1990 Shareholder Letter ๐
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Offshore
Photo
โ Dimitry Nakhla | Babylon Capitalยฎ
$NKE is trading near its lowest multiple in the last 10 years:
NTM P/E: 22.58x
LOW P/E: 20.90
This means that $NKE is trading just 8% above its lowest multiple in the last 10 years
Do you think $NKE is a buy, sell, or hold?
#stocks #investing https://t.co/xgRsBF5a0P
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$NKE is trading near its lowest multiple in the last 10 years:
NTM P/E: 22.58x
LOW P/E: 20.90
This means that $NKE is trading just 8% above its lowest multiple in the last 10 years
Do you think $NKE is a buy, sell, or hold?
#stocks #investing https://t.co/xgRsBF5a0P
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AkhenOsiris
$SNOW
Snowflake added to Americas Conviction List at Goldman Sachs.
The firm sees an attractive entry point for a company that focuses on data storage and analytics. Increasing use cases for Snowflake's data will enable the next phase of the artificial intelligence revolution platform and eventually the application phase, the analysts tell investors in a research note. Goldman has a Buy rating on the shares with a $220 price target.
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$SNOW
Snowflake added to Americas Conviction List at Goldman Sachs.
The firm sees an attractive entry point for a company that focuses on data storage and analytics. Increasing use cases for Snowflake's data will enable the next phase of the artificial intelligence revolution platform and eventually the application phase, the analysts tell investors in a research note. Goldman has a Buy rating on the shares with a $220 price target.
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AkhenOsiris
$NVDA Raised to $144 at Morgan Stanley following Asia trip
"We had positive data points from both our Taiwan trip and our China trip that keep us confident on near term #s," said analysts at Morgan Stanley. The data doesn't surprise the bank, which is mindful of just how much market cap NVDA has added since the last earnings report, which they state does point to a higher bar.
However, "the catalyst path remains strong, as the very strong surge in H20 builds and demand removes any concern for us about a pre-Blackwell pause," add analysts at Morgan Stanley.
While the bank acknowledges that it is clear we are at the tail end of the Hopper cycle, and the frothiness and visibility are lower than it was, they state that demand side indications remain robust for Hopper.
"Hopper builds continue to go up, as H100 starts to transition to H200 (bringing better memory bandwidth from HBM3e as well as higher memory content), and we are hearing confidence that sales of both products will remain strong," state analysts at Morgan Stanley.
When assessing the current share price, while the bank isn't "pounding the table at these levels given the sharp appreciation since the last earnings report," they believe Nvidia "remains the most compelling narrative in the AI semis space," and that as the transition from H100 to H200 and then Blackwell progresses, "visibility and backlog will improve materially."
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$NVDA Raised to $144 at Morgan Stanley following Asia trip
"We had positive data points from both our Taiwan trip and our China trip that keep us confident on near term #s," said analysts at Morgan Stanley. The data doesn't surprise the bank, which is mindful of just how much market cap NVDA has added since the last earnings report, which they state does point to a higher bar.
However, "the catalyst path remains strong, as the very strong surge in H20 builds and demand removes any concern for us about a pre-Blackwell pause," add analysts at Morgan Stanley.
While the bank acknowledges that it is clear we are at the tail end of the Hopper cycle, and the frothiness and visibility are lower than it was, they state that demand side indications remain robust for Hopper.
"Hopper builds continue to go up, as H100 starts to transition to H200 (bringing better memory bandwidth from HBM3e as well as higher memory content), and we are hearing confidence that sales of both products will remain strong," state analysts at Morgan Stanley.
When assessing the current share price, while the bank isn't "pounding the table at these levels given the sharp appreciation since the last earnings report," they believe Nvidia "remains the most compelling narrative in the AI semis space," and that as the transition from H100 to H200 and then Blackwell progresses, "visibility and backlog will improve materially."
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AkhenOsiris
@LizThomasStrat says
"I still think we are in late cycle, although an elongated late cycle"
So we were or still are basically mid-cycle? Word salad?
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@LizThomasStrat says
"I still think we are in late cycle, although an elongated late cycle"
So we were or still are basically mid-cycle? Word salad?
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Offshore
Photo
โ Dimitry Nakhla | Babylon Capitalยฎ
A sober valuation analysis on $TMO ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 24.31x
โข5-Year Mean: 24.64x
โขNTM FCF Yield: 3.96%
โข5-Year Mean: 3.60%
As you can see, $TMO appears to be trading slightly below fair value
Going forward, investors can receive ~1% MORE in earnings per share & ~10% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $TMO is a quality business
BALANCE SHEET๐
โขCash & Short-Term Inv: $7.25B
โขLong-Term Debt: $31.00B
$TMO has a decent balance sheet, an A- S&P Credit Rating, & 6.23x FFO Interest Coverage
RETURN ON CAPITAL๐*
โข2019: 8.3%
โข2020: 13.4%
โข2021: 12.8%
โข2022: 10.3%
โข2023: 8.7%
โขLTM: 8.9%
*ROIC relatively low partly due to $TMO growth strategy (acquisitions, capital allocation, etc)
RETURN ON EQUITYโ
โข2019: 12.9%
โข2020: 19.9%
โข2021: 20.5%
โข2022: 16.4%
โข2023: 13.1%
โขLTM: 13.6
$TMO has solid return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $13.09B
โข2023: $42.86B
โขCAGR: 12.59%
FREE CASH FLOWโ
โข2013: $1.73B
โข2023: $6.93B
โขCAGR: 14.88%
NORMALIZED EPSโ
โข2013: $5.42
โข2023: $21.55
โขCAGR: 14.80%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 0.37B
โขLTM Shares Outstanding: 0.39B
MARGINSโ
โขLTM Gross Margins: 40.4%
โขLTM Operating Margins: 17.4%
โขLTM Net Income Margins: 14.2%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~1% MORE in EPS & ~10% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $TMO has to grow earnings at a 12.16% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be less than the (12.16%) required growth rate:
2024E: $21.72 (0.8% YoY) *FY Dec
2025E: $24.30 (11.9% YoY)
2026E: $27.12 (11.6% YoY)
$TMO has a great track record of meeting analyst estimates ~2 years out, so letโs assume $TMO ends 2026 with $27.12 in EPS & see its CAGR potential assuming different multiples
25x P/E: $678.00๐ต โฆ ~10.1% CAGR
24x P/E: $650.88๐ต โฆ ~8.3% CAGR
23x P/E: $623.76๐ต โฆ ~6.5% CAGR
22x P/E: $596.64๐ต โฆ ~4.7% CAGR
As you can see, $TMO needs to trade above 25x to have attractive return potential
While possible, I wouldnโt want to rely on that assumption as it doesnโt leave us with much margin of safety
Today at $536๐ต $TMO is JUST starting to get interesting but not a buy for me yet
Given its moat & historically strong growth in EPS & FCF, Iโd be happy to re-consider $TMO closer to 23.50x NTM earnings, or at ~$500๐ต (~6% below todayโs price)
At that price, I can reasonably expect ~9.5% CAGR while assuming 23x & ~11.4% CAGR while assuming 24x, a multiple I view as more than fair for $TMO
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐.
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A sober valuation analysis on $TMO ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 24.31x
โข5-Year Mean: 24.64x
โขNTM FCF Yield: 3.96%
โข5-Year Mean: 3.60%
As you can see, $TMO appears to be trading slightly below fair value
Going forward, investors can receive ~1% MORE in earnings per share & ~10% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $TMO is a quality business
BALANCE SHEET๐
โขCash & Short-Term Inv: $7.25B
โขLong-Term Debt: $31.00B
$TMO has a decent balance sheet, an A- S&P Credit Rating, & 6.23x FFO Interest Coverage
RETURN ON CAPITAL๐*
โข2019: 8.3%
โข2020: 13.4%
โข2021: 12.8%
โข2022: 10.3%
โข2023: 8.7%
โขLTM: 8.9%
*ROIC relatively low partly due to $TMO growth strategy (acquisitions, capital allocation, etc)
RETURN ON EQUITYโ
โข2019: 12.9%
โข2020: 19.9%
โข2021: 20.5%
โข2022: 16.4%
โข2023: 13.1%
โขLTM: 13.6
$TMO has solid return metrics, highlighting the financial efficiency of the business
REVENUESโ
โข2013: $13.09B
โข2023: $42.86B
โขCAGR: 12.59%
FREE CASH FLOWโ
โข2013: $1.73B
โข2023: $6.93B
โขCAGR: 14.88%
NORMALIZED EPSโ
โข2013: $5.42
โข2023: $21.55
โขCAGR: 14.80%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 0.37B
โขLTM Shares Outstanding: 0.39B
MARGINSโ
โขLTM Gross Margins: 40.4%
โขLTM Operating Margins: 17.4%
โขLTM Net Income Margins: 14.2%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~1% MORE in EPS & ~10% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $TMO has to grow earnings at a 12.16% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be less than the (12.16%) required growth rate:
2024E: $21.72 (0.8% YoY) *FY Dec
2025E: $24.30 (11.9% YoY)
2026E: $27.12 (11.6% YoY)
$TMO has a great track record of meeting analyst estimates ~2 years out, so letโs assume $TMO ends 2026 with $27.12 in EPS & see its CAGR potential assuming different multiples
25x P/E: $678.00๐ต โฆ ~10.1% CAGR
24x P/E: $650.88๐ต โฆ ~8.3% CAGR
23x P/E: $623.76๐ต โฆ ~6.5% CAGR
22x P/E: $596.64๐ต โฆ ~4.7% CAGR
As you can see, $TMO needs to trade above 25x to have attractive return potential
While possible, I wouldnโt want to rely on that assumption as it doesnโt leave us with much margin of safety
Today at $536๐ต $TMO is JUST starting to get interesting but not a buy for me yet
Given its moat & historically strong growth in EPS & FCF, Iโd be happy to re-consider $TMO closer to 23.50x NTM earnings, or at ~$500๐ต (~6% below todayโs price)
At that price, I can reasonably expect ~9.5% CAGR while assuming 23x & ~11.4% CAGR while assuming 24x, a multiple I view as more than fair for $TMO
#stocks #investing
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๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐.
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โ Dimitry Nakhla | Babylon Capitalยฎ
$V & $MA are arguably two of the greatest businesses in the world & are both trading at a slight discount to historical valuations & growth estimates more than justify their respective multiples ๐ธ
#stocks #investing
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$V & $MA are arguably two of the greatest businesses in the world & are both trading at a slight discount to historical valuations & growth estimates more than justify their respective multiples ๐ธ
#stocks #investing
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AkhenOsiris
$AMZN
FT:
Amazon's international unit is expected to report an annual profit as the retailer's logistics operations bear fruit after years of losses. The $131B unit could report an operating profit of $1.6B this year, according to analysts in a recent Refinitiv poll, after posting a $2.7B operating loss last year. Amazon has worked to better organize its warehouses and delivery operations in key overseas markets, such as Germany and the U.K., leading to faster delivery times and cheaper local operations.
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$AMZN
FT:
Amazon's international unit is expected to report an annual profit as the retailer's logistics operations bear fruit after years of losses. The $131B unit could report an operating profit of $1.6B this year, according to analysts in a recent Refinitiv poll, after posting a $2.7B operating loss last year. Amazon has worked to better organize its warehouses and delivery operations in key overseas markets, such as Germany and the U.K., leading to faster delivery times and cheaper local operations.
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AkhenOsiris
$CRWD Downgrade on Valuation at Piper Sandler
"Shares have deservedly risen to the highest revenue multiple of any public software company above $75B in market cap," the analysts note, adding they "do not see a near-term catalyst for raising" their $400 price target.
This downgrade is a "valuation call," according to Piper Sandler. They acknowledge CrowdStrike's strong performance and momentum but believe the current stock price has already priced in much of this future growth.
The firm adds that by reaching an annual recurring revenue (ARR) of $3.6 billion and a fiscal 2025 revenue forecast exceeding $4 billion, CrowdStrike's large scale makes significant upside more challenging as growth rates face the "law of large numbers." This could lead to returns lagging behind other cybersecurity companies.
Further, Piper Sandler highlights CrowdStrike's premium valuation. Compared to similar software companies, CrowdStrike boasts the highest valuations in terms of both forward-year sales (18.9x) and free cash flow (57x).
Despite the downgrade, Piper Sandler remains "excited about the second act for CRWD," citing its cloud, identity, logging, and IT offerings. They acknowledge CrowdStrike's impressive execution and strong metrics but believe the current price reflects this optimism.
"We are optimistic about the company longer term as well as the opportunity, just not the stock over our 12-month investment horizon," concludes Piper Sandler.
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$CRWD Downgrade on Valuation at Piper Sandler
"Shares have deservedly risen to the highest revenue multiple of any public software company above $75B in market cap," the analysts note, adding they "do not see a near-term catalyst for raising" their $400 price target.
This downgrade is a "valuation call," according to Piper Sandler. They acknowledge CrowdStrike's strong performance and momentum but believe the current stock price has already priced in much of this future growth.
The firm adds that by reaching an annual recurring revenue (ARR) of $3.6 billion and a fiscal 2025 revenue forecast exceeding $4 billion, CrowdStrike's large scale makes significant upside more challenging as growth rates face the "law of large numbers." This could lead to returns lagging behind other cybersecurity companies.
Further, Piper Sandler highlights CrowdStrike's premium valuation. Compared to similar software companies, CrowdStrike boasts the highest valuations in terms of both forward-year sales (18.9x) and free cash flow (57x).
Despite the downgrade, Piper Sandler remains "excited about the second act for CRWD," citing its cloud, identity, logging, and IT offerings. They acknowledge CrowdStrike's impressive execution and strong metrics but believe the current price reflects this optimism.
"We are optimistic about the company longer term as well as the opportunity, just not the stock over our 12-month investment horizon," concludes Piper Sandler.
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AkhenOsiris
$AMZN
Mizuho analysts see Amazon on the cusp of an AI inflection point, citing a recent customer survey with a leading channel partner.
The investment firm's survey revealed several key trends that point to accelerated growth for Amazon's cloud computing arm, Amazon Web Services (AWS).
"We see an accelerated sales cycle from increased demand of ECB meetings and incremental exits of data center contracts," the note states. Enterprises are said to be seeking to finalize proposals and prepaying contracts to exit data centers, leading to a faster sales cycle for AWS.
While the spending mix by category remains largely unchanged, with infrastructure spending still dominant, Mizuho highlights a crucial shift: "cost optimization being offset by new services such as app monitoring, chatbot deployments, and large migration programs." This indicates a move towards higher-value services on AWS.
The most exciting finding, according to Mizuho, is the progress on Generative AI (Gen-AI) projects.
"The survey shows external-facing models (20% of total) are only 6 months away from commercial deployment," the report notes. This suggests a potential surge in inferencing activity as these models are rolled out to a large external customer base.
Based on these findings, Mizuho has increased its conviction on AWS revenue growth, forecasting 20% YoY growth compared to the consensus of 17.5%. They maintain AMZN as a Top Pick with a price target of $240.
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$AMZN
Mizuho analysts see Amazon on the cusp of an AI inflection point, citing a recent customer survey with a leading channel partner.
The investment firm's survey revealed several key trends that point to accelerated growth for Amazon's cloud computing arm, Amazon Web Services (AWS).
"We see an accelerated sales cycle from increased demand of ECB meetings and incremental exits of data center contracts," the note states. Enterprises are said to be seeking to finalize proposals and prepaying contracts to exit data centers, leading to a faster sales cycle for AWS.
While the spending mix by category remains largely unchanged, with infrastructure spending still dominant, Mizuho highlights a crucial shift: "cost optimization being offset by new services such as app monitoring, chatbot deployments, and large migration programs." This indicates a move towards higher-value services on AWS.
The most exciting finding, according to Mizuho, is the progress on Generative AI (Gen-AI) projects.
"The survey shows external-facing models (20% of total) are only 6 months away from commercial deployment," the report notes. This suggests a potential surge in inferencing activity as these models are rolled out to a large external customer base.
Based on these findings, Mizuho has increased its conviction on AWS revenue growth, forecasting 20% YoY growth compared to the consensus of 17.5%. They maintain AMZN as a Top Pick with a price target of $240.
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