Connect with us

Financial News

Gen Digital Was Overlooked This Year, Will Things Change in 2023?

Published

on

Perhaps this is the first time you’ve heard of Gen Digital (GEN), formerly known as NortonLifeLock (and before that, Symantec). In a year when tech stocks have been hammered, this cybersecurity expert is down 17%, compared to a 19% drop for the S&P 500 and a roughly 32% drop for the Nasdaq Composite.

Despite its relative outperformance, Gen Digital is not a fast-growing company. However, it has some big plans for increasing profits over the next few years, which has some investors enthusiastic. Is the stock a good investment in 2023?

After merging with sister cybersecurity company Avast, Gen Digital (an abbreviation for Generation Digital, a reflection of the company’s objective to keep consumers throughout the world secure in what has become a very digital environment) has completed its redesign. Until recently, the company was known as Symantec. Broadcom (AVGO), a semiconductor designer and corporate software company, purchased Symantec’s enterprise security segment, leaving the remaining consumer security brands as NortonLifeLock. Gen Digital is now a pioneer in individual and small company security software and has partnered with Avast’s consumer software.

Norton, Avast, LifeLock, Avira, AVG, and CCleaner are among the brands under Gen Digital’s umbrella. The company has offices in both Arizona and the Czech Republic.

In Gen Digital’s Q2 fiscal 2023 earnings release, the merger with Avast, which was previously a publicly traded firm in Europe, was disclosed to cost $6.55 billion net of cash on Avast’s balance sheet (for the three months ended September 2022).

How is the stock outperforming the market?

Gen Digital is not the fastest-growing cybersecurity firm. When eliminating the effects of currency exchange rates, sales climbed 12% year over year in the last quarter (which includes a few weeks at the end of the year with a contribution from Avast). Avast accounted for 7 percentage points of that rise, so revenue would have increased by 5% in constant currency if the merger had not occurred.

Advertisement

Accounting for the historic run-up in the US dollar, actual reported revenue for the second quarter of fiscal 2023 was $748 million, an 8% increase over the previous year. The adjusted operating profit increased by 7% to $388 million, and the adjusted profits per share increased by 5% to $0.45. Slower growth rates are consistent with the consumer cybersecurity market. The major growth these days is in big enterprise cloud security.

Nonetheless, although this business keeps consumer data safe from unscrupulous actors, the market is bullish on Gen Digital’s potential for profitability. During the most recent earnings call, management stated that the NortonLifeLock and Avast tech systems had been integrated, resulting in annualized savings of more than $300 million. Marketing initiatives and other brand linkages are also being developed, giving the company’s C-suite confidence that it can save an additional $200 million over the next two years.

At the time of writing, Gen Digital shares were trading for just under 22 times trailing-12-month earnings per share, or just under 17 times trailing-12-month free cash flow. A boost from integrating revenues and profits from two security software companies will be in effect until the autumn of the calendar year 2023, thus the stock could become fairly inexpensive throughout that time if the share price remains constant.

Is Gen Digital a good investment?

This corporation believes in stable sales growth but rapid profit growth. Gen Digital generated $0.90 in adjusted earnings per share for the first half of 2022. (EPS). The projection for fiscal Q3 2023 is for another $0.45 in adjusted EPS, so let’s suppose Gen Digital ends the year with $1.80 in adjusted EPS.

Management expects to generate $3 in annualized adjusted EPS (or $0.75 each quarter) by the end of fiscal 2025 (midyear calendar 2025). That is 67% greater adjusted EPS on a quarterly basis than it is now posting.

This means that Gen Digital’s average adjusted earnings-per-share growth in fiscal 2024 and fiscal 2025 will be over 30%. If the company can pull it off and settle into a mid-single-digit percentage growth rate after that, it could be a good time to buy a cybersecurity stock.

However, there are a few hazards to consider.

Advertisement

As previously stated, consumer security software is not a growing business. Gen Digital intends to reinvest some of its savings in the development of new products, notably those for small enterprises. Despite the fact that this market is slow, there is plenty of competition in this arena. Profitable expansion is far from certain, particularly once the synergies from the merger with Avast are achieved.

Gen Digital’s balance sheet is also a little sloppy, with $1.1 billion in cash and short-term investments and slightly over $10 billion in total debt. However, Gen Digital has enough cash in hand to complete its goals. In the most recent quarter, shareholders received a $0.125-per-share dividend (for a current annualized yield of 2.3%), and $73 million in stock was repurchased.

I don’t believe Gen Digital will be a major market-beating investment over the next few years. If the global economy recovers from what is predicted to be a minor recession in 2023, I believe faster-growing and more profitable cybersecurity stocks will skyrocket.

However, if you’re looking for more protective cybersecurity investment, Gen Digital could be a cheap company with a clear route to unlocking a lot more profit in the next two to three years. Keep an eye out for this one.

For More Financial News, Click Here.

 

Advertisement

Financial News

TSMC to Continue Pushing in 2023

Published

on

By

TSMC to Continue Pushing in 2023

Still has momentum.

We still issue a buy rating on the Taiwan Semiconductor Manufacturing Company (NYSE: TSM). Our optimistic outlook on TSMC is based on our belief that the firm is better positioned to outperform now, as the semiconductor industry slowly but steadily improves and the company accounts for lower demand in FY2023. TSMC’s fourth-quarter earnings reports were mixed; the company beat profitability projections but fell short on sales. Despite this, the stock climbed roughly 5% when earnings were released. We believe TSM is attempting to counteract reduced end-market demand and inventory corrections, which have hurt sales and lowered forecasts for the upcoming quarter. It is likely that a bottom in TSM and the semi-space in 1H23, followed by a significant recovery in the year’s second half.

We feel that TSM’s stock is a good entry place before the semi-space rebounds. Since our last post on TSMC in late October, the company has already gained 41%, surpassing the SOX index, which has gained only 21%. The graph below depicts our rating history for TSMC.

We urge that investors disregard the market hype surrounding fears of a Chinese invasion of Taiwan and instead focus on the company’s industry-first approach. We believe that TSMC is best positioned to benefit from chip demand once the semiconductor market recovers. Furthermore, we anticipate the company will have the additional power to raise ASP in the second half of 2023. We recommend that investors purchase the stock at current levels in order to benefit from TSM’s rising growth trend in 2023.

The leading pure foundry space allows for ASP gains.

We favor TSMC’s position in the foundry industry, with a 60% market share in 4Q22, and expect it to boost ASP on advanced nodes. We predict TSMC’s market share will expand significantly in 2022 as a result of the increased manufacture of smaller, more sophisticated 5nm wafers. Nanometer size is at the heart of technical developments in the semiconductor industry and, by extension, the world. To be more specific, nanoscale size refers to the distance between transistors on a chip; the smaller the chip, the more advanced and high-performing it is. Our positive outlook on TSM is predicated on our expectation that the company’s growth would be driven by increased adoption of advanced nodes, which are gradually accounting for a larger portion of TSMC’s revenue by technology. TSM has also begun the manufacture of 3nm processors for Apple (AAPL), sustaining Moore’s Law and looking ahead to next-generation technologies.

We anticipate that the rising global adoption of advanced nodes to meet the surging demand for semiconductors will fuel TSMC’s medium- to long-term growth. As a result, we anticipate that TSMC’s position will allow it to improve ASP on advanced nodes in 2H23, owing to the fact that it retains big semi-players as top clients, including Nvidia (NVDA), Advanced Micro Devices (AMD), and AAPL, among others.

Headwinds still persist

TSMC is not immune to the demand slowdown caused by macroeconomic headwinds, as seen by a dip in 1H23 followed by a fast recovery in 2H23. In Thursday’s results call, TSMC CEO C.C. Wei clarified, stating he anticipates 2023 to be a “slight growth year.” We expect TSMC will face inventory corrections in 1H23 as a result of the deteriorating chip-demand environment. We estimate CAPEX reduction in TSMC during 2023, largely as major client AAPL forecasts reduced demand despite weaker consumer spending. TSMC management warned that revenue would fall by roughly 5% in 1Q23, and that annual spending would be reduced. TSMC announced a CAPEX of $36.3B in 2022 and expects CAPEX to be $32-36B in 2023. We are not concerned by TSMC’s lower 1Q23 prediction because we believe the firm is de-risking guidance due to the challenging macro environment.

Despite the macroeconomic challenges, we expect TSMC to continue growing its foundry operations outside of Taiwan in order to mitigate the risks of geographically concentrating manufacturing on the disputed Island. We believe TSMC will play a larger role in the global shift to manufacturing chips in the United States after the CHIPS Act is implemented in 2022. The business intends to more than increase its investment in US foundries to $40 billion by 2026, establishing the US as a hub for advanced chip manufacturing. We estimate that it will take three to four years for US semiconductor companies Intel (INTC) and TSMC to meaningfully produce chips on US territory. Nonetheless, we anticipate that TSMC’s US fabs will be a long-term growth driver.

Advertisement

We predict TSMC stock to rise in the second half of 2019 as the semiconductor sector recovers from a 15-month slump. We anticipate that product introductions and expanded manufacturing of 5nm wafers will help the semiconductor industry recover.

Valuation

We feel TSMC is a value investment since it is selling at a discount to its peer group average. The company is trading at 14.4x C2023 P/E, compared to the peer group average of 21.9x. The company is currently selling at 0.2x EV/C2023 Sales, compared to the peer group average of 4.8x. We believe TSMC stock offers an appealing entry point at current levels, and that investors who purchase the stock now will be well rewarded in 2023.

What should be done with the stock?

We remain optimistic about TSMC. We believe the stock is reacting to lower chip demand in 2023. While we expect the stock to remain volatile in 1H23 as the semiconductor space bottoms, we believe TSMC will benefit from demand tailwinds as the semi-space recovers in 2H23. We also anticipate that TSMC’s growth will be fueled by higher 5nm production and the company’s capacity to boost ASP on advanced nodes in 2H23. We feel the stock offers a good entry point at the current price and propose that investors acquire it.

For More Financial News, Click Here.

Continue Reading

Financial News

Solana is Coming Back to Life With a Massive Surge

Published

on

By

Solana is Coming Back to Life With a Massive Surge

It’s a true comeback: the triumphant return of Solana that many experts and industry insiders had written off after the bankruptcy of Sam Bankman-Fried’s FTX on November 11.

They predicted that SOL would not be able to withstand the earthquake symbolized by the collapse of the FTX cryptocurrency exchange and its sister company Alameda Research, a hedge fund that also serves as a trading platform for institutional investors.

In the crypto world, FTX and Alameda were the major corporations representing the Bankman-Fried crypto empire, abbreviated SBF.

“Sam Coin”

Solana did, in fact, have intimate ties to Bankman-Fried. Sol, also known as “Sam coin,” is a token produced by the Solana Blockchain that enables the development of decentralized finance or DeFi projects that provide financial services such as loans, mortgages, financial products, and so on.

The coin is linked to an on-chain crypto exchange dubbed project Serum, which was founded by Bankman-Fried, who resigned on November 11 when his enterprise declared bankruptcy.

Serum is one of the infrastructure’s pillars, as it is the protocol and ecosystem that enables Solana DeFi’s fast speed and low transaction cost. It provides an on-chain central limit order book and matching engine, allowing institutional and retail investors to share liquidity and use strong trading features.

It allows developers the freedom to create trading applications without limitations, as it is not tied to any specific assets. This allows them to utilize Serum’s liquidity and ecosystem advantages in their trading application.

Advertisement

As if to prove Cassandra correct, Sol prices plunged by 73% between the onset of FTX’s issues on November 6 and December 31.

They finished the year at $9.96, down from $32.72 on November 5.

SOL has increased by 79%.

However, as quickly as they fell, so did the prices of Sol. According to monitoring firm CoinGecko, they are up 79% in the last seven days. Sol is currently knocking on the doors of the top ten cryptocurrencies in terms of market value. Before the club’s demise, the token belonged to it.

Prices are currently trading at $23.39, a 134% increase from the beginning of the year.

After a statement of support from Vitalik Buterin, one of the most important voices in the crypto world, sentiment toward Solana shifted.

Some clever people tell me there is a sincere brilliant developer community in Solana, and now that the nasty opportunistic money people have been washed out, the chain has a bright future,” Buterin, one of the co-founders of Ethereum, the most powerful crypto platform, wrote on Twitter on December 29.

Hard for me to know from the outside,” he said, “but I hope the neighborhood gets a fair shot to grow.

Short Squeeze

According to numerous industry sources, the resurrection of SOL is also attributable to an increase in demand for decentralized financial projects. The Solana blockchain enables developers to create decentralized apps, or dApps, at a low cost and provides fast transaction execution.

Advertisement

Its scalability, speed, and affordability make it an appealing alternative for DeFi initiatives that require significant volumes of transactions to be processed rapidly and at a cheap cost.

While traders are cheering the return of Bitcoin (back over $21,000), and Ethereum (back over $1,550), #Solana is the real star as the weekend begins,” said Santiment, an on-chain analytics business. “$SOL has gained +22% in the last two hours alone, fuelled by liquidated shorts.”

According to Santiment, the significant comeback in Sol prices is the result of a “short squeeze,” which is a fast increase in the price of an asset caused by investors who bet against the product, being forced to purchase it in order to limit their losses.

For More Financial News, Click Here.

 

 

Advertisement
Continue Reading

Financial News

Is Alibaba Now Poised to Rally?

Published

on

By

Is Alibaba Now Poised to Rally?

After reaching record lows not seen since 2016, 2022 was merciless for Alibaba Group Holding (NYSE: BABA). This comes as no surprise given all of the recent China-related news. A zero-COVID policy has stifled output and demand, while antitrust laws from the ruling party have targeted its tech companies. The continued supply chain and labor constraints haven’t helped matters either. Was 2022 always a difficult year with such headwinds?

Maybe, but things are starting to turn around, and it appears that the bulls have returned. Major tailwinds are expected to carry Alibaba into 2023. Let’s look at a few of them.

Positive Outlook

For openers, analysts have identified numerous stocks as poised for a comeback bounce in the coming year. Alibaba is one of the most recent example. On Monday, Morgan Stanley named the e-commerce behemoth their favorite in the tech sector. According to Gary Yu and his team, investors have “underappreciated Alibaba’s leverage to a Chinese consumption rebound.” This is mostly owing to its retail success in areas such as consumer products.

Yu also anticipates an improvement in China’s regulatory environment, which will go a long way toward reversing the selling pressure that has brought shares down as much as 80% from their 2020 highs. But it isn’t all. Founder Jack Ma recently announced his intention to step down as CEO and pass over the reigns to someone else.

With his name now being disassociated with Alibaba, one more risk and possible headwind has been removed.

Along with the bullish outlook, Morgan Stanley reiterated its Outperform rating and set a $150 price objective for Alibaba shares. This indicates a 30% upside from current levels based on where they closed on Wednesday. Shares are already up almost 100% from their lows in October, so this outlook,  simply adds gasoline to the belief that a significant recovery rally is in the works.

Additional tailwinds exist in the shape of the zero-COVID policy being reversed, which will finally allow the Chinese economy to recuperate after living in constant dread of a lockdown. This comes after widespread rallies caused the government to cave, which is unusual in China.

Advertisement

Alibaba’s Risk Factors

There are risks, the most visible of which are geopolitical tensions. When compared to a decade ago, the United States and China are no longer on good terms. The conflict in Ukraine and escalating tensions with Taiwan have not helped the relationship.

This has filtered down to corporations, with the United States refusing to transfer semiconductor chips to China for fear that they may be used against them in the future. Chinese retaliation is not ruled out and would almost certainly aggravate the situation.

Furthermore, the delisting risk that has dogged Alibaba and its counterparts in recent years has not materialized as many bears predicted. It still exists, but the longer Alibaba remains on the good side of US auditors, the more likely its shares will become a permanent fixture on the New York Stock Exchange.

Indeed, there was news on this front as recently as the last week of December, when it was reported that numerous US-listed Chinese companies had abandoned intentions to list in Hong Kong. This approach was positioned as their backup option for remaining listed outside of China if the US followed through on the threat of delisting.

Still, this is the beast from the east, Alibaba. While shares have been heavily discounted in recent years, a specter of their former self remains, as indicated by the stock’s doubling in value in less than three months.

For More Financial News, Click Here.

 

Advertisement
Continue Reading

Trending

© Copyright 2022 | All Rights Reserved RISK DISCLAIMER There is a very high degree of risk involved in trading. Past performance is not necessarily indicative of future results. Financial Wars and all individuals affiliated with this site assume no responsibility for your trading and investment results. All the material contained herein is believed to be correct, however, Financial Wars will not be held responsible for accidental oversights, typos, or incorrect information from sources that generate fundamental and technical information. Options trading carries significant risk. Futures and futures options trading carries significant risk. Trading securities, security options, futures and/or futures options is not for every investor, and only risk capital should be used. You are responsible for understanding the risk involved with trading options. Prior to trading any securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options. The indicators, strategies, columns, and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Financial Wars may have a position or affect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. All of our partners or affiliated companies are in no way associated with the proprietary information provided by the Financial Wars Trading Method or software. All returns are based off buy side analysis and do not include commission costs. All projections are based on current returns. The projections do not account for any possible draw down effects on performance and performance projections. Actual returns and projected returns may fluctuate over the course of the service. "VIP" or "Lifetime" designation refers to the lifetime of the product only and not to be assumed to be the lifetime of any individual. Any person who chooses to use this information as a basis for their trading assumes all the liability and risk for themselves and hereby and absolutely agrees to indemnify and hold harmless Financial Wars, its principals, agents and employees. As a Student and Chat Subscriber, we ask that you please cross check the information posted here. We ask that you challenge any information you feel is incorrect. We do not guarantee any of the information that is posted in the chat. All company names are trademarks or registered trademarks if their respective holders. Use of a mark does not imply any affiliation or endorsement by them.

Social Media Auto Publish Powered By : XYZScripts.com