For Immediate Release
Chicago, IL – August 13, 2020 – Zacks Equity Research highlights Tivity Health TVTY as the Bull of the Day and GrafTech Interneational EAF as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Moderna, Inc. MRNA, Glaxo GSK and AstraZeneca AZN.
Here is a synopsis of all five stocks:
Bull of the Day:
Tivity Health is a Zacks Rank #1 (Strong Buy) and it has solid Zacks Style Scores with a B for Value and an A for Growth. The Zacks site shows it under its old name, Healthways and it is the parent of Nutrisystem.
I saw this stock destroyed earnings very recently and new customer growth was very impressive. I think the lock down had a lot of people gaining weight and more recently with summer’s arrival they realized they need to take the weight off.
Let’s take a deep look at this stock in this Bull of the Day article.
Description
Tivity Health, Inc. provides health management services. The company offers services which include chiropractic services, physical therapy, occupational therapy, speech therapy, acupuncture, massage and complementary and alternative medicine services. Its network comprises SilverSneakers(R), Prime(R) Fitness and WholeHealth Living (TM). Tivity Health, Inc., formerly known as Healthways, Inc., is based in Franklin, Tennessee.
M&A And Research
The company has said that it is looking to sell the Nutrisystem arm after acquiring it in March of 2019. Add to that I see some new coverage from Guggenheim and an upgrade from Craig Hallum. The upgrade moved the recommendation from hold to buy and Craig Hallum put a $20 price target on the stock.
Earnings History
I see an ok earnings history with two beats and two misses in the last four quarters. The last quarter was a huge beat, with the company posting 79 cents when 25 cents was expected. The 54 cent beat translates into a 216% positive earnings surprise. New customer growth of 28% drove the out performance.
Estimate Movement
Estimates soared after this beat.
This quarter moved from 12 cents to 28 cents.
Next quarter moved from 15 cents to 27 cents.
The full year flipped from a loss of 73 cents to a gain of 84 cents.
Next year bumped from $0.95 to $1.39
Certainly some dramatic moves there.
Valuation
I see a forward PE of 31x and that is a lot, but the earnings growth is real. The price to book is 22x and that is high for any company, but like HLF, the asset slim business model results in a higher book multiple. The topline contracted, but that should change in the coming quarters. Operating margins are bouncing around a bit, but they should kick back to double digits soon.
The wildcard here is the sale of Nutrisystem. Is TVTY looking for a fast buck on this business or are they in it for the long haul? To me, the move looked like a reminder to Wall Street that they owned this business and it was doing well as the pandemic wears on.
Bear of the Day:
GrafTech Interneationalis a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today. The company recently posted a solid beat, but estimates came down so let’s take a deeper look to see if there is a silver lining to this cloud.
Description
GrafTech International Ltd. manufactures and provides natural and synthetic graphite and carbon based products and services. The Company offers graphite electrodes, petroleum needle coke, crystalline form of carbon and energy solutions for manufacture of steel, aluminum, silicon metal, automotive products and electronics. GrafTech International Ltd. is based in Independence, United States.
Recent Earnings
I see the most recent earnings report coming in ahead of the Zacks Consensus Estimate. The company reported $0.35 when $0.21 was unexpected. The 14 cent beat translates into a positive earnings surprise of 66%, which is good to see.
This was the second beat in the last four quarters, which is still not enough to make a stock a Zacks Rank #5 (Strong Sell).
Estimates
The Zacks Rank is really focused on earnings estimate changes. I see a few increases for this quarter and for next and both of those revisions help the full year number.
The problem is that next year is looking at lower estimates. I see the number for 2021 was $1.97 60 days ago and is now $1.86.
When estimates fall, the Zacks Rank goes down as well.
Valuation
Despite having the lowest Zacks Rank,there are a few things to like about the valuation. I see a 5x forward earnings multiple which is super cheap, but it probably is that way since the top line contracted by 33%. There is no price to book multiple on the Zacks site… and the price to sales multiple is 1.2x.
I see net and operating margins in the 40% range, which makes me think that I need to look much deeper into this name as a candidate Stocks Under $10 when the Zacks Rank moves up for this stock.
Additional content:
Moderna (MRNA) Up on New Federal Funding for Coronavirus Vaccine
Shares of Moderna, Inc. were up 11.6% in pre-market trading on Wednesday after the company received an award of up to $1.53 billion from the U.S. government for supplying 100 million doses of its mRNA-based coronavirus vaccine candidate, mRNA-1273. The funding is for the manufacturing and delivery of initial 100 million doses of mRNA-1273 including incentive payments for timely delivery of the product.
The agreement is part of the U.S. government’s Operation Warp Speed (OWS), which aims to secure early access to safe and effective COVID-19 vaccines for its people. Per the agreement, the country’s government also has an option to purchase up to an additional 400 million doses of mRNA-1273 from Moderna.
Notably, the government in recent times made similar deals with companies like Glaxo to acquire hundreds of millions of doses of potential COVID-19 vaccines as part of its OWS program. AstraZeneca and the University of Oxford’s COVID-19 vaccine candidate is also funded and supported by OWS. Last week, J&J announced an agreement with the U.S. government to supply 100 million doses of its investigational COVID-19 vaccine candidate Ad26.COV2.S following approval or an emergency use authorization by the FDA.
Earlier, Moderna had received federal funding of up to $955 million from the Biomedical Advanced Research and Development Authority (BARDA) for mRNA-1273. With this latest development, the company now has at least $2.48 billion of funding from the U.S. government.
Apart from BARDA, Moderna’s coronavirus development progress attracted partnerships from other national governments as well as global organizations namely, Coalition for Epidemic Preparedness Innovations (CEPI) and the U.S. National Institute of Allergy and Infectious Diseases (NIAID). These alliances provided grants to support the different stages of development of mRNA-1273.
Shares of Moderna have skyrocketed 252.6% so far this year compared with the industry’s increase of 4.5%.
We remind investors that in July, Moderna initiated a phase III study on mRNA-1273 for COVID-19. The analysis is evaluating 100 micrograms dose of mRNA-1273 administered on a two-dose vaccination schedule, given 28 days apart for safety and reactogenicity. Enrollment is expected to be completed in September.
Additionally, in July, Moderna reported positive updated interim data from a phase I study on mRNA-1273. The results demonstrated that participants vaccinated twice with mRNA-1273 led to rapid and strong immune responses against SARS-CoV-2 through day 57 across all three dose cohorts.
The data also showed that all participants were seroconverted (producing antibodies against SARS-CoV-2 Spike protein) by day 15. The safety profile of the vaccine looked promising as no adverse events were reported through day 57 while unfavorable events were generally transient and mild to moderate in severity.
However, we note that the presence of several large companies in the coronavirus vaccine field is likely to stiffen competition for Moderna even if it is able to successfully develop a vaccine against COVID-19.
Zacks Rank
Moderna currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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