Financial Trading Blog
Stock of the day 17/04/2015 – Yahoo Inc/Facebook Inc/eBay Inc
First up is Yahoo Inc on Tuesday. Big gains at the end of 2014 led the stock to start the New Year at $50.76; by the end of January it had reached a high of $53.59, and things were looking up for the company. However, by the start of March Yahoo had fallen to $41.89, and has only managed to recover to a current trading price of $45.66.
(Source: IT-Finance.com 17/04/2015)
Yahoo’s first quarter results will take place in a post-Alibaba share spin-off world, leaving Yahoo to brave earnings season on its own merits and its own merits alone. The biggest news from the company came this week, and it was a move that should inspire some tentative hope in investors. Yahoo has adapted its search-engine agreement with Microsoft in a rather interesting way. Whereas previously Yahoo’s search traffic would be routed solely to Bing, the company can now ‘experiment’ with 49% of its searches, including Google as a potential option. Yahoo’s CEO Marissa Mayer is trying to reposition the company in the search-engine landscape, an area where the company has significantly slipped since its inception, now only holding 13% of the market share.
In terms of its first quarter results, analysts are expecting $1.08 billion in revenue, a slip from last year’s $1.09 billion alongside a big fall in earnings per share from $0.38 to $0.18. Despite this, Yahoo has a consensus rating of ‘buy’ with an average target price of $55.58.
Wednesday then sees news from one of the hottest stocks on the market, as Facebook Inc tries to clear the high bar it set itself back in December 2014. Since that blockbuster Q4 2014 earnings release, Facebook has continued is steady growth, opening the year at $78.63 and quickly recovering from its $73.48 February low to reach a brand new record high of $85.80 at the end of March. Since then the company has fallen off slightly to $81.97; however, Facebook is always looking ready to reach new records of late, especially during earnings season.
(Source: IT-Finance.com 17/04/2015)
The key figures on Wednesday, as always, will be Facebook’s users and engagement data, with a sprinkling of mobile user scrutiny added into the mix. Its fourth quarter results saw 13% growth in users year-on-year, whilst monthly mobile active use grew by 26%. It remains to be seen how investors will deal with a potential slowdown, a realistic prospect for a company that has grown with such rapidity. Regardless, any slowdown in user growth will likely be compensated for by the estimated 43% increase in revenue, from $2.5 billion in 2014 to $3.57 billion this quarter, alongside an earnings per share jump from $0.24 to $0.40.
Unsurprisingly, Facebook has an overwhelming analyst consensus of ‘buy’, with 38 out of the 46 polled giving it that rating, alongside an average target price of $89.05.
Finally, eBay Inc will be competing for the limelight with Facebook on Wednesday, as it announces its own first quarter results. eBay has been displaying some very erratic market movements in the past few years, and 2015 has been no different. After opening the year at $56.28, eBay’s volatile start to the year was capped off with a sharp intraday fall to a low of $50.60 towards the end of January. The stock then managed a steady increase from January onwards, leading to a high of $60.95, its best price in around a year. However, eBay has begun to slip after this peak, with the stock currently trading at $56.63.
(Source: IT-Finance.com 17/04/2015)
The biggest news around the company continues to be the upcoming PayPal spin-off. eBay just added three new executives to ease the transition, with Harry Lawton, Marie Oh Huber and Scott Culter all hired to be key members in the new, and extremely streamlined, iteration of eBay. The company claims it is expecting $9 billion in annual revenue once PayPal is spun-off, whilst also stating that it is putting together a plan to ensure that PayPal sees annual profits in its first 5 years.
Opinion on the stock is fairly split, with 23 ‘buys’ and 21 ‘holds’ out of 48 analysts polled leading to a consensus rating of ‘hold’; this mixed analysis had led to an average target price of $59.51.
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