FactSet: Bear Case Gaining Steam as Pressure on Buy Side Mounts

FactSet is a data provider to financial service firms. If you work at a bank or on the buy-side, you're probably familiar with their products. FactSet's core desktop platform is used widely by analysts to pull data for research purposes or to monitor a portfolio. Sentiment among the Wall Street investors has declined significantly; among the major brokers, there's 1 buy, 10 holds, and 5 sells. The stock has held in relatively well, but has had significant drops around earnings as the company has missed revenue expectations. While the company fundamentals and its stock has performed well on an absolute basis, there is growing evidence supporting the bear-case around the stock.

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Tesla: Model 3 Trade On Track, but Is S/X Demand Slowing?

Tesla reported 1Q deliveries of just over 25,000, of which 13,450 were for the Model S, while 11,550 were for the Model X. The deliveries announcement today will add fuel to the bull thesis, as the company's deliveries were above consensus estimates of ~24,000 units for the quarter, suggesting that the company is on track to meet the high end of their 1H deliveries guidance of 47,000 - 50,000 target. The results were positive overall for the company, and the stock is currently trading up 5% as of this writing. 

However, many investors remain skeptical of Tesla. Looking beyond the Model 3 trade, many investors are debating what is happening to underlying demand for Tesla's older models.

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Adobe: Benefiting from Shift to Cloud, but Is Risk/Reward Favorable?

Adobe has shot through the roof, gaining 279% over the last 5 years. The stock has benefited primarily from the ongoing shift of marketing/media to the internet, as well as Adobe's product shift towards the cloud. As people's eyeballs move towards our screens, advertising and content creation is increasingly following it. In turn, people are increasingly demanding more tools to create, distribute, and analyze/optimize content. Adobe's suite of products are perfectly positioned to address these issues.

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Mylan: Investors Focused on Advair Generic, Not EpiPens

Many of us know of Mylan due to the EpiPen controversy, which became the poster child for healthcare and its out-of-control pricing in America. In late August of 2016, the media began reporting on the significant price increases on the EpiPen, which had increased from $100 in 2007 to $609 in mid-2016. Up to that point, the drug had become the primary component of Mylan's earnings, with a significant portion of profitability coming from the business (with some estimates placing it at 40% of its operating profit).

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The Looming Technology That Could Crash the Auto Part Party

The auto part retailers have long been the darlings of the retail industry with consistent earnings growth, the highest margins in the sector, and protection from online players. And as a result, the stocks have been rewarded with a high valuation and market outperformance. However, there's a looming technology that could disrupt the industry that I don't think is being accounted for by investors. 

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Johnson and Johnson: Pharma Segment Key to JNJ Performance in 2017

Johnson and Johnson stumbled a bit in the second half of 2016. The stock declined slightly 11% from July to late January as investors began to focus in on the Pharmaceutical segment and its growth trajectory. The segment, which represents 47% of sales, has driven much of JNJ's top-line growth over the last four years with over 10% organic growth each year. However, growth in this segment began to slow noticeably to 2% in 4Q16. Additionally, management gave segment guidance that implied growth of just 2-3% in 2017. In turn, street estimates were lowered. 

What has been driving the growth moderation and the investor concerns?

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Chipotle: Will Customers Come Back to Chipotle?

A lot has happened to Chipotle since I last wrote on the stock back in October of last year. As is well known, Chipotle faced a number of health-related issues that forced the closure of numerous stores. Many restaurants have faced similar outbreaks in the past, but those restaurants did not have consecutive strings of outbreaks, nor did it happen during a time when social media allowed news to spread quickly. As a result, sales dropped off a cliff and the stock has declined by 45% since the initial reports. For those who hold very strong beliefs on the future of a company, the outbreaks serve as a stark reminder that the future for any company is never certain.

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Restoration Hardware: One of the Few Exciting Transformations in Retail

Restoration Hardware is currently undergoing a massive real estate transformation. The company is in the early innings of a shift from small, 7,000 foot stores to large, 35,000 - 60,000 square foot "full line design galleries" (FLDGs). The company eventually hopes to triple or quadruple its square footage over time as it adds 70 of these massive stores throughout the country.

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Facebook: What Investors are Focused on Ahead of FB's 3Q Results

Have you ever seen a company beat consensus EPS estimates, but the stock still goes down? This happens because institutional investors focus on many other line items besides earnings. Here are the key issues (beyond the obvious EPS estimate of $0.52) that investors will be focused on.

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Facebook: Detailing FB's Longer-Term Revenue Drivers and Bear Case

Facebook is a widely loved stock among both the buy-side and sell-side analysts. One of the reasons for the optimism is Facebook's near-term revenue growth drivers in video and Instagram, as I detailed yesterday. Beyond these factors, the company also has a number longer-term sources that hold a significant amount of potential. Specifically, Facebook's messaging apps, Facebook Messenger and WhatsApp, have an even greater number of users than Instagram and could unlock further growth beyond 2016. Additionally, Facebook's virtual reality company, Oculus, holds potential beyond PC and mobile as the next computing  platform.

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Facebook: Detailing FB's Near-Term Revenue Drivers

The FB bull thesis is made up of a number of revenue drivers that could drive advertising revenue and EPS upside. In the near-term, investors see a number of positives that could benefit sales, including easing comparisons and FX headwinds. Beyond these superficial tailwinds, investors are most  bullish on the opportunities from video and Instagram, which are not fully baked into consensus estimates for next year.

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Apple: 4Q15 Results Largely As Expected; 1Q16 Guidance Positive

Apple reported fiscal 4Q15 results after market close yesterday, and investors reacted positively (Apple is currently up +1% in the premarket). While the quarter's results were largely in line with investor expectations, investors were generally positive on Apple's 1Q16 guidance for positive iPhone revenue and unit growth. However, many investors remain concerned that growth could decline the rest of the year in fiscal 2016. A key question going forward will be whether Apple will be able to grow iPhone units and revenue in 2016 on top of the highly successful prior year.

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Chipotle: 4Q Guidance Disappoints Investors

Chipotle reported 3Q earnings after market close, and the pre-market is indicating an opening price down 8%. The company reported 3Q EPS of $4.59, which fell slightly short of consensus estimates of $4.62. Results were short largely due to lower-than-expected operating margins. However, the investor focus was primarily on management's commentary on sales trends.

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Lowe's: Back-Half Guidance in Focus

Key Issue 1: Confidence in comp guidance for the back-half of the year

Key Issue 2: Confidence in margin guidance for the back-half of the year

Key Issue 3: Closing the HD/LOW Gap

Key Issue 4: Invest in HD or LOW?

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