On May 5, Activision Blizzard reported Q1 2016 GAAP Earnings per share of $0.45 and Revenue of $1.46 billion. They reported non-GAAP EPS of $0.23 and Revenue of $812.1 million, exceeding analyst’s expectations of $0.12 and $812.12 million, respectively. The company reported strong Monthly average users (MAUs), totaling 544 million. Total MAUs can be broken down as follows: Activision- 55 million, up 10% from last year, Blizzard- 26 million, up 23%, and King- 463 million, up 3% from the previous quarter. Activision also continues to have four of the top 10 games on next-gen consoles, and King had three of the top 15 grossing titles in U.S. mobile app stores for the ninth consecutive quarter. Activision Blizzard didn’t have any major new releases during the first quarter, but did issue a second expansion pack for its highly popular “Call of Duty: Black Ops III”. ATVI shares were up 4.1% at $36.35 in after-hours trading, up from its closing price of $34.85. The stock ended the week strong, closing the post earnings trading session at $37.45.
Tuesday, May 10, 2016
Post market close on April 26th, AT&T reported first quarter adjusted earnings per share of $0.72. This represents a year over year increase of 10.8%, and exceeded analyst estimates of $0.69. They reported Revenue of $40.54 billion, up 24% year over year- largely attributed to the acquisition of DIRECTV in July of 2015. They continue to show margin growth, reporting an operating margin of 17.6%, up from 17.1%, with margin expansion in every domestic business segment. Operating cash flows were up more than $1 billion from Q1 2015, reporting free cash flow of $3.2 billion, representing a year over year increase of 17%. They reported operating expenses of $33.4 billion, up from $27 billion in the same quarter last year. Operating income was reported at $7.1 billion, up 28% from Q1 2015. Despite an otherwise successful quarter, the wireless business lost 363,000 mainstream phone connections, exceeding the 200,000 mainstream phone loss that had been expected. They also lost 54,000 video subscribers, even with gains at DIRECTV. The stock opened the following day slightly lower at $37.95, but hit an intra-day high at $38.89, and then ended the day at $38.73.
Monday, May 9, 2016
April Monthly Report & Current Outlook
I reiterate a BUY rating a Cerner.
Cerner released Quarter 1 earnings results on May 5th, 2016. Cerner opened on the market at $53.25 on May 6th, 2016. They missed their revenue guidance due to the fact that their hardware sales didn’t materialize as expected. Cerner decreased their guidance for revenue next quarter by 25 million to ensure that they will not miss earnings. Management has expressed difficulty in the ability to predict hardware sales so that is why they wanted to go with a conservative outlook. Cerner has strong revenue visibility as 79% of backlog is going to be realized. Since this signifies the majority of Cerner’s business, it provides a lot of room for revenue deriving from technology resale to beat expectation by.
On April 8th, 2016, we bought 60 shares of Cerner at a price of $56.40. Cerner closed the month of April at $56.14, representing a -0.46% decrease in the stock price. With a price target of $72.41, 29.98% upside still remains. Again, with a price target of $72.41, buying in at the current price of $55.43 would generate 30.63% upside. I believe this is an ideal time to complete our full position Cerner.
The main reasons include the organic growth of the business, competitive advantage, and untapped markets. Organic growth represents that many of their key recent partnerships and acquisitions will materialize and see the market in future quarters. I believe these have not been priced into the stock and when these revenues are realized, it will result in the price of the stock increasing. Cerner announced on April 20th, an acquisition of Universal Health Systems. Universal Health systems provide great expertise from a billings perspective. Cerner has a lot of experience with the service and development portion of the business so this strategic acquisition supplements Cerner’s model perfectly. As the industry digitalization of the healthcare industry continues to evolve, consumers will need an integrated clinical and financial system together. This will ultimately lead to the development and implementation of bundle payments and at risk models.
There are opportunities in untapped markets in the industry that Cerner is putting itself in as strong position to take advantage of. The main untapped market is state and local governments. Management expressed confidence that the public is due to hear about key business in this market. Cerner takes pride in their data liquidity. Data liquidity is their ability to easily access and handle the diversity of the data. For example, technology systems within companies vary drastically.