For Immediate Release
Chicago, IL – January 3, 2023 – Zacks Equity Research shares DocuSign
DOCU
as the Bull of the Day and Ford Motor Co.
F
as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Roche
RHHBY
, AstraZeneca
AZN
and Pfizer
PFE
.
Here is a synopsis of all five stocks.
Bull of the Day
:
DocuSign
is a Zacks Rank #1 (Strong Buy) that provides electronic signature software in the United States and internationally. DocuSign became very popular during the pandemic as it was a great solution to sign documents when not physically present. The company became a go to for many businesses that needed to digitally prepare, sign, act on, and manage agreements.
COVID helped the stock surge to $315 from the $80 level and now the stock is trading at $55. From a long-term perspective, current levels look attractive after the company posted a solid earnings beat.
More About DocuSign
The company incorporated in 2003 and is headquartered in San Francisco, California. It employs over 7,000 people and has a market cap of $11 billion.
DocuSign serves enterprise, commercial, and small businesses to whom it sells its products through direct, partner-assisted, and Web-based sales.
The stock has a Zacks Style Score of “B” in Growth, but “F” in Value. The Forward PE is 29 and the stock pays no dividend.
2022 Stock Slide
DocuSign posted big numbers during the pandemic, beating earnings by triple digit percentages multiple times. The momentum continued until late 2021, when the stock crashed after a disappointing Q4 earnings beat of 26%.
For most companies, a beat of that magnitude would be a positive. However, DOCU investors priced in the best possible scenario so when growth appeared to slow, the stock was sold aggressively.
2022 has not been kind to investors as the stock continued to slide as earnings disappointed. In June, the company posted a 17% earnings miss. This brought the stock down to pre-pandemic levels.
Earnings Turnaround
While 2022 was very tough, 2023 could be shaping up to be a much better year. Earlier in December, the company posted a 39% EPS beat. This was the biggest surprise to the upside since Q2 of 2021.
Looking into the quarter, DocuSign guided Q4 revenues at $637-641M v the $640M expected. The company raised their FY23 revenue guide to $2.49-2.50B v the $2.48B expected.
Billings were up 17% y/y, while subscription revenue was up 18% y/y.
Estimates Rising
Analysts are starting to take their numbers higher after the most recent quarter.
Over the last 30 days, the current quarter estimates have gone from $0.40 to $0.53, or 32% higher. Expectations for next quarter have been lifted as well, with estimates going up by 17%.
Looking down the road, estimates continue to tick higher. For the current year, we have seen estimates go from $1.63 to $1.92 over the last month, or 17%. For next year, estimates spiked to $2.15 from $1.80, or 19%.
After earnings, analysts for the most part remained neutral on the stock. Multiple firms stuck with the “Hold and “Neutral” ratings. But more recently CitiGroup reiterated its Buy rating and took its price target to $72 from $59. This target is about 30% higher from current prices.
The Technical Take
The stock won’t be making a full recovery anytime soon, but the current technical setup is favorable.
After posting that 39% EPS beat earlier this month, the stock went from $41 to $61. That is a big move and the stock retraced to the halfway back mark at $51. Sideways trading has set in, but the stock could see a scenario early next year where the stock runs back over the recent highs to the $66 area. This is where the 200-day MA resides and where bulls should target.
In Summary
2022 is over and it’s time to look for beaten down stocks that could bounce back in 2023. After a big earnings beat, DocuSign could be one of those names.
Watch for a rally early in the year and if that is sustained, look for bulls to buy the stock up to the 200-day moving average.
Bear of the Day
:
Ford Motor Co.
is a Zacks Rank #5 (Strong Sell) that designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide.
The stock is trading near 2022 lows after a handful of earnings misses that has forced analysts to lower estimates. The stock is still well off its pre-COVID lows and investors should be nervous that the stock could break $10.
About the Company
For is headquartered in Dearborn, MI. The company was founded in 1903 and currently employs over 180,000 people. Ford operates through three segments: Automotive, Mobility, and Ford Credit.
Ford is valued at $46 billion and has a Forward PE of 6. The company holds Zacks Style Scores of “A” in Value, but “C” in Growth. The stock has a nice dividend, paying 5%, which should draw investors into the name.
Q3 Earnings
In late October, the company reported earnings of $0.30 v the $0.31 expected. Revenue came in light and the company cut their FY22 adjusted EBIT to $11.5B
In the company’s outlook, Ford sees 10% year over year growth in wholesale shipments and higher earnings in North America. In post-earnings comments, the CFO said they are expecting a mild to moderate recession in 2023.
Estimates
When looking at estimates, we see a slight downward trend across all timeframes.
Next quarter is the most concerning for Ford, with estimates falling to $0.24 from $0.49 just 60 days ago. This 50% drop is fairly large and investors might want to stay away from the stock until Ford gets through that quarter.
Looking to next year, estimates have fallen from $1.94 to $1.81, or 7%.
Technical Take
Ford made 2022 lows of $10.61 back in July. From there, the stock rallied to $16 and is now trading under the $12 level.
The $16 resistance was the 200-day MA, which has fallen below $14. Sellers will likely show up there on any rally. But before the bulls can even consider that, they must contend with the 50-day at $13 and the 21-day at $12.50.
If the sellers show up under $11, the stock will likely break the $10 level and head to the 2019 trading range between $8 and $9. At those prices, the dividend will likely offer support to the stock.
In Summary
Ford is a popular brand that had a good run during the pandemic. However, a weakening economy and inflationary trends are hurting earnings. The stock will likely face a couple more quarters of pressure so investors should shy away until the environment improves.
Additional content:
Big Pharma Roundup: FDA Decisions & More
This week, the FDA approved
Roche
’s Lunsumio, a first-in-class bispecific antibody, for relapsed or refractory follicular lymphoma (FL), the most common slow-growing form of non-Hodgkin lymphoma. The FDA also accepted
Pfizer
’s biologics license application (BLA) for a pentavalent meningococcal vaccine candidate (MenABCWY). The Japanese regulatory authority approved a combination of
AstraZeneca
’s immunotherapies, Imfinzi (durvalumab) and Imjudo (tremelimumab), for two cancer types, advanced liver and lung cancer.
Recap of the Week’s Most Important Stories
FDA Approves Roche’s Lunsumio (mosunetuzumab):
The FDA approved Roche’s CD20xCD3 T cell engaging bispecific antibody,
Lunsumio (mosunetuzumab) , for treating relapsed or refractory follicular lymphoma
. The accelerated approval is for adult patients who have been treated with two or more lines of systemic therapy. Lunsumio was approved for a similar indication in the European Union earlier this June. Off-the-shelf cancer immunotherapy, Lunsumio will help treat patients who do not respond to multiple lines of treatment and help them achieve disease remission. A commercial launch of the therapy is expected in the coming weeks.
FDA’s Accepts Pfizer’s Meningococcal Vaccine BLA:
The
FDA accepted and granted standard review
to Pfizer’s biologics license application (BLA) seeking approval of its pentavalent meningococcal vaccine candidate (MenABCWY). The BLA seeks approval of MenABCWY for adolescents and young adults, 10-25 years of age, for the prevention of meningococcal disease caused by five meningococcal serogroups that cause the majority of invasive meningococcal disease: serogroups A, B, C, W and Y. The FDA assigned a standard review to the BLA, with a decision expected in October 2023. A pentavalent vaccine, if approved, can simplify what is currently a complex meningococcal vaccination schedule in the country.
Pfizer’s phase III study on hemophilia B gene therapy candidate, fidanacogene elaparvovec, met its primary endpoint. The primary endpoint of the study was non-inferiority and superiority in the annualized bleeding rate (ABR) of total bleeds post-fidanacogene elaparvovec infusion versus prophylaxis regimen with Factor IX (FIX), administered as part of regular care. In the study, a single dose of 5e11 vg/kg of fidanacogene elaparvovec resulted in a 71% reduction in ABR. Key secondary endpoints demonstrated a 78% reduction in treated ABR and a 92% reduction in annualized infusion rate. Pfizer plans to share this data with regulatory authorities in early 2023.
AstraZeneca’s Imfinzi+Imjudo Gets Japan Nod for 3 Cancers:
The Japanese Ministry of Health, Labour and Welfare (MHLW) approved AstraZeneca’s dual immunotherapy regimen, comprising PD-L1 inhibitor Imfinzi plus CTLA-4 antibody Imjudo (tremelimumab), in combination with chemotherapy, for treating unresectable, advanced or recurrent non-small cell lung cancer (NSCLC). The MHLW also approved the Imfinzi+Imjudo combination for patients with unresectable hepatocellular carcinoma (HCC), the most common type of liver cancer. Imfinzi plus Imjudo was approved by the FDA for advanced liver and NSCLC cancers in October/November. The Japanese regulatory authorities also approved Imfinzi as monotherapy for unresectable HCC and curatively unresectable biliary tract cancer in combination with chemotherapy.
The MHLW also granted approval to AstraZeneca’s BTK inhibitor, Calquence as a first-line treatment for adult patients with chronic lymphocytic leukemia (CLL) (including small lymphocytic lymphoma). Calquence is already approved in Japan for treating relapsed or refractory CLL. It is approved for both treatment-naïve and relapsed or refractory settings in several countries, including the United States and Europe, and also for mantle cell lymphoma in the United States and some other countries.
The NYSE ARCA Pharmaceutical Index rose 0.25% in the last five trading sessions.
Large Cap Pharmaceuticals Industry 5YR % Return
In the last five trading sessions, Novartis rose the most (0.8%), while Roche declined the most (0.9%).
In the past six months, Merck rose the most (19.9%), while Roche declined the most (5.8%).
(See the last pharma stock roundup here:
LLY’s 2023 View, MRK-MRNA Joint Cancer Vaccine Data & More
)
What’s Next in the Pharma World?
Watch out for regular pipeline and regulatory updates next week.
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