Author: Noah Kiedrowski

Visa: The Disconnect Between Perceived Growth And Valuation?

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

As expected, Visa Inc. (NYSE:V) reported another great quarter with beats on both the top and bottom lines. EPS and revenue estimates were beaten by $0.05 and $200 million, respectively. Since its earnings release, Visa has set new to all-time highs, currently sitting at ~$100 per share. The Visa Europe acquisition has been a tailwind for the company, translating into phenomenal transaction and volume growth. However, this was expected and beginning with the initial quarter Visa started reporting the fully integrated company these numbers have been fantastic. Visa has been posting great growth across all segments of its enterprise further accentuated by the Visa Europe acquisition. Meanwhile, the company continues to grow its dividends and engage in consistent share repurchases. It’s noteworthy to point out that Visa has been buying back its own stock at near all-time highs as of recent. Visa has continued to be a best in-class large-cap growth stock, however, does this translate into a compelling investment opportunity for a great long-term position? I always felt that Visa was a great long-term holding that offered growth and stability independent of banks and/or interest rates. The fully integrated Visa enterprise in conjunction with major client wins will likely enable sustained and durable growth now and into the future, however, I feel that Visa is overvalued based on the first nine months of revenue from FY2017 and a pullback may be coming. Continue reading "Visa: The Disconnect Between Perceived Growth And Valuation?" →

Upcoming Facebook Earnings - A Nonevent Long-Term

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Upcoming Earnings

Facebook Inc. (NASDAQ:FB) is due to announce earnings on July 26th after the market closes. Facebook tends to be volatile after earnings are announced and typically pop to the upside as Facebook’s earnings have continued to post robust growth. Back on June 2nd, 2017, I authored an article “Facebook Will Hit $175 By Year End” and with five more months to go before the end of the year, I think Facebook has a good chance of breaking through this number. Facebook has been on an uptrend heading into earnings and currently sits at $160 per share and while the stock is up 39% YTD. These numbers may seem staggering, and some would state that buying at these levels would be cashing the stock. Normally I would agree with this approach. However, I think Facebook is an exception to this situation. Even at these levels and YTD appreciation, factoring in Facebook’s projected growth with tech comparators such as Alphabet Inc. (NASDAQ:GOOG), Netflix Inc. (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN), collectively known as the FANG stocks, Facebook is superior with a lower risk profile. Facebook’s projected growth is greater than Google’s and just shy of Amazon’s yet has a P/E ratio that’s lower than Google’s and a fraction of Amazon’s and Netflix’s. Regardless of the upcoming earnings announcement, this will be an immaterial event to the long term narrative for Facebook investors. I feel that Facebook represents value even after this massive run YTD and continue my long thesis. Continue reading "Upcoming Facebook Earnings - A Nonevent Long-Term" →

IBB - Biotech Catches Fire... Finally

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

Biotechnology has been a difficult space to deploy capital over the previous ~18-24 months. This cohort plummeted over and over again from both sides of the political isle as the 2016 presidential race unfolded. Between Hillary Clinton, Bernie Sanders and Donald Trump taking aim at drug pricing via speeches, Twitter, and other social media platforms, largely attributed to the entire cohort selling off. The sustained sell-off lead to the entire cohort to sell off from all-time highs of $400 to $240 or 40% in only six months as measured via the iShares Biotechnology Index ETF (NASDAQ:IBB). From February of 2016 through June of 2017 IBB traded in a tight range from $250 to $300 while Donald Trump continually fired shots against the healthcare sector. Any healthcare related stocks became volatile on the heels of any statement or tweet from Donald Trump. Shortly after the inauguration, Trump stated that drug companies are “getting away with murder” when speaking to the drug pricing issue. Now he’s come out and stated that he’s working on a “new system where there will be competition in the drug industry.” Every time any of these remarks were tweeted, they immediately resulted in a downtrend across the entire biotech cohort. As the new proposed health care legislation enters its initial stages in Congress, a level of certainty has entered the picture, and the drug pricing threats are not perceived to be as bad as initially feared. Recently the index has had a resurgence moving from $284 to $321 or 13% over the past month. As the political headwinds continue to abate, I feel the index has room to continue its upward trend. Continue reading "IBB - Biotech Catches Fire... Finally" →

Disney Quietly Retreats - Buying Opportunity

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


The Quiet Buying Opportunity

The Walt Disney Company (NYSE:DIS) has quietly retreated from its recent highs of $116 to sub $104 thus presenting a buying opportunity in this media juggernaut heading into earnings. We’ve all heard the endless bickering over its slumping ESPN franchise. Although ESPN makes up a disproportionate amount of the company’s revenue, all of its other franchises are posting healthy growth hence Disney will be relying less and less on its ESPN franchise over the coming years. Disney’s perpetual stock slump leading up to its recent resurgence was almost entirely attributable to the decrease in ESPN subscribers and subsequent revenue and profit declines from that franchise. The ESPN franchise within the Media Networks segment generates revenue/operating income that is disproportionate to the amount of the company’s overall revenue and operating profit. Thus, one can see why investors were spooked after consecutive significant declines in ESPN subscribers and thus financial numbers over the past three years. Excluding ESPN, Disney has been executing well and reporting record numbers throughout all of its other business segments. Disney has a deep and diversified enough entertainment portfolio that makes a compelling case that these ESPN fears are overblown. Disney offers a compelling long-term investment opportunity considering the growth, pipeline, diversity of its portfolio, share repurchase program and dividend growth in light of this recent retreat.

Long-Term Narrative and Positive Analyst Sentiment

I’ve been a long bull of Disney (DIS) stock, particularly since the post-ESPN induced sell-off throughout 2016. Since the lows of October 2016, Disney has seen a huge appreciation in stock price, breaking out to above $116 per share before this current downtrend. This upswing has been on the heels of multiple catalysts such as of reporting record annual results, breaking the all-time worldwide box-office record, witnessing a slew of analyst upgrades, Iger extending his contract as CEO, ESPN woes subsiding, Shanghai Disney opening and Disney’s movie line-up announced through 2020. This inflection point coincided with Doctor Strange, Moana and Star Wars Rouge One in calendar Q4 of 2016 followed by record openings for its live action film, Beauty and the Beast and Guardians of the Galaxy 2. The stock fell from the $120s in late 2015 to the high $80s and had been stuck in the $80-$90 range all throughout 2016. That stock slump offered investors an opportunity to purchase a high-quality company at a significant discount. Continue reading "Disney Quietly Retreats - Buying Opportunity" →

Is Amazon Threatening CVS Health?

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

CVS Health Corporation (NYSE:CVS) has been stuck in a sideways trend since selling off over 24% from August through November 2016. CVS fell from an all-time high of ~$112 per share in 2015 to ~$70 in November of 2016 wiping out 38% of its enterprise value. Since its high of $112 in 2015, a slew of issues negatively impacting its growth and marketplace have plagued the stock. Firstly, the political backdrop was a major headwind for the entire pharmaceutical supply chain from drug manufacturers to pharmacies/pharmacy benefit managers (i.e. CVS and Walgreens) and the drug wholesalers in-between (i.e. McKesson and Cardinal Health). Secondly, recent marketplace trends forced CVS to cut guidance for Q4 2016 and the full-year 2017 numbers. CVS stated that “unexpected marketplace actions that will have a negative impact on our Q4 2016 results and a more meaningful impact on our outlook for 2017”. Thirdly, CVS lost a contract with the Department of Defense which carries tens of millions of prescriptions on an annual basis. A new restricted network relationship between Prime Therapeutics and Walgreens impacts CVS Pharmacy’s participation in selected fully-insured networks in several key states and in many cases make CVS Pharmacy a non-preferred provider for Medicare Part D as well. These prescriptions tend to be the most profitable prescriptions as well. Lastly, Amazon’s purchase of Whole Foods has incited rumors that Amazon is looking to gain entry into the pharmacy space via leveraging the Whole Foods physical footprint of store fronts. I’ve written several articles contending that CVS presents a compelling investment opportunity in the ever expanding healthcare space. My investment thesis was based on proposed sector consolidation (Rite Aid and Walgreens), aging population and growth in long-term care facilities and the pharmacy benefit management segment. All of this in a backdrop of CVS being highly acquisitive, continuing to deliver robust earnings growth, revenue growth, growing dividends and has an aggressive share buyback program in place. It’s a matter of time before CVS will trend higher and in the meantime investors will be paid to wait via dividends and share buybacks. The wildcard may be the Amazon threat with its first real pivot after acquiring Whole Foods with subsequent potential in entering the pharmacy space as well. Continue reading "Is Amazon Threatening CVS Health?" →