Yahoo Finance Baidu and Tutor Perini have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 17, 2023 – Zacks Equity Research shares Baidu BIDU as the Bull of the Day and Tutor Perini TPC as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix NFLX, Disney's DIS and Apple's AAPL.
Here is a synopsis of all five stocks:
Bull of the Day:
Baidu, the $45 billion provider of search, advertising and cloud services often referred to as the "Google of China," has always been a leader in artificial intelligence for its nation as well.
Under the leadership of Robin Li, Baidu has orchestrated key government partnerships to utilize technology parks in Beijing and Shanghai for the development of autonomous driving.
Now that ChatGPT is all the rage, it's not surprising that Li & Co. had already been working on their own chatter-bot for advanced research, simulation, and content creation.
Here's what my colleague Andrew Rocco wrote in mid-March as a new venture was set to launch...
Breaking into Artificial Intelligence
Open AI's artificial intelligence chatbot called ChatGPT launched in 2022. Though artificial intelligence has been around for years, ChatGPT is the first AI chatbot to go viral. The service reached 100 million daily active users just two months after launch and already has a valuation of around $30 billion and investments from notable tech juggernauts such as Microsoft.
Now, Baidu is looking to follow suit and drive growth through a chatbot dubbed "Ernie Bot," which the company announced last month. With the announcement of Ernie Bot, Baidu is the front runner in the Chinese race to make a ChatGPT competitor and is positioning itself well to do so. In Baidu's last earnings call, management underscored the importance of AI for BIDU by saying:
"2022 was a challenging year, but we used this period to prepare the company for better times. In 2023, we believe we have a clear path to reaccelerate our revenue growth, and we are now well positioned to make use of the opportunities that China's economic recovery offers us," said Robin Li, Co-founder and CEO of Baidu. "With our long-term investments in AI, we are poised to capitalize on the imminent inflection point in AI, unlocking exciting new opportunities across our entire business portfolio -- from mobile ecosystem to AI Cloud, autonomous driving, smart devices, and beyond."
Analysts Raise Estimates and Price Targets
When Andrew wrote about BIDU, upward EPS revisions from Wall Street had already made the stock a Zacks #1 Rank, taking full year 2023 growth to a 35% advance.
And 2024 estimates are already projecting 25%+ growth, making the stock trade under a 10X P/E. Meanwhile, revenue growth remains robust at 10% for both this year and next, with 2024 projected to eclipse $22 billion.
What still surprises me is the discount on a price-to-sales basis as most US-based software and semiconductor companies trade between 5X and 15X revenues: Baidu trades at barely over 2 times sales.
In March, using Zacks Research System (ZRS) institutional data, Andrew noted "From a price-to-sales perspective, Baidu's valuation is nearly the lowest it has been since inception."
While the launch of Ernie has been given a lukewarm reception thus far, we have seen before that Baidu always remains a key innovator in China and will be a difference-maker with this new AI technology that enhances their search, user experience, and development engines. Here were some recent analyst reactions...
Baidu price target raised to $215 from $167 at Loop Capital: Firm remains bullish on Baidu, and sees structural forces improving Baidu's position among ad platforms, signs of improvement across key verticals and strong initial demand from enterprise developers for new AI solutions.
Baidu price target raised to $215 from $200 at Daiwa: Analysts tested the company's ERNIE Bot AI for two weeks. After having run a comparative test of ERNIE Bot, GPT-4 and ChatGPT, the firm says its view is that ERNIE Bot ranks below GPT-4 but is comparable to ChatGPT and it also thinks ERNIE Bot generates better Chinese language output than the other two. "This performance is encouraging and exceeded our expectations."
Bottom line for BIDU: While the unknowns of China scare many investors away -- and there is new controversy with lawsuits against the Apple app store for fake Ernie bots and worries that Washington vectors against TikTok could spill over -- the growth/value equation right now for the premier AI/cloud company of China is so attractive as to make accumulating shares an exercise in investor intelligence.
Disclosure:I own BIDU shares for the Zacks TAZR Trader portfolio.
Bear of the Day:
I last wrote about Tutor Perini as the Bear of the Day in November of 2021 when shares were trading near $15.
With a $275 million market cap, this diversified general contracting and global construction management firm topped $5.3 billion in revenues in 2020, but declining quarterly sales at the time, for the consecutive year, projected a drop below $4 billion going forward.
Fast-forward to early 2023 and the construction analysts had it pegged correctly. 2022 revenues came in under $3.8 billion and this year is forecast for barely 1% growth to $3.83 billion. Meanwhile, shares trade below $5.50 this year.
On the bottom line, the situation could be foreshadowing a recovery with the 2022 loss of $-4.09 vaulting over 100% to a profit of $0.45.
While we wait to see if the trough has been seen for this builder -- especially given the recent tremors in regional banking and commercial real estate -- let's review the business model and segments of this small-cap engineer...
Tutor Perini operates in four segments: Civil, Building, Specialty Contractors, and Management Services.
The Civil segment engages in public works construction activities and the repair, replacement, and reconstruction of infrastructure.
The Building segment offers services in specialized building markets, including hospitality and gaming, transportation, healthcare, municipal offices, sports and entertainment, education, correctional facilities, biotech, pharmaceutical, industrial, and high technology.
The Specialty Contractors segment provides plumbing, HVAC, electrical, mechanical, and concrete services for the industrial, commercial, hospitality and gaming, and transportation markets.
The Management Services segment offers construction and design-build services to the U.S. military and government agencies, and multi-national corporations.
Bottom line for TPC: This smaller player may have been a canary in the coal mine of commercial real estate in 2022. Now it may become the harbinger of a bottom soon to come.
Additional content:
What to Expect from Netflix (NFLX) Earnings in Q1?
Netflix is set to report its first-quarter 2023 results on Apr 18.
Netflix expects its first-quarter earnings to be $2.82 per share, suggesting a year-over-year decline of 20%.
The Zacks Consensus Estimate for earnings is currently pegged at $2.81 per share, unchanged over the past 30 days. The figure indicates a 20.4% decline from the year-ago quarter.
Netflix expects total revenues to increase 4% year over year (8% on a forex-neutral basis) to $8.172 billion. The consensus mark for first-quarter revenues is currently pegged at $8.18 billion, suggesting 3.93% growth from the figure reported in the year-ago quarter.
The company's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing in the remaining one, the average surprise being 0.92%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Netflix's first-quarter 2023 results are expected to reflect the negative impact of paid sharing launch on user engagement. Its projection includes prospects of some cancellations similar to what it witnessed in Latin America. However, the company expects engagement levels to improve gradually, driven by strong content.
Moreover, ad-supported low-priced plans are expected to have a modest incremental benefit toward top-line growth in the to-be-reported quarter.
Stiff competition from streaming services like Disney's Disney+, HBO Max, Peacock, Paramount+, Apple's Apple TV+ and Amazon Prime Video has been a headwind for Netflix.
This Zacks Rank #3 (Hold) company is also facing competition for consumer time from linear TV, YouTube, short-form entertainment like TikTok, and gaming. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Nevertheless, Netflix's strong content portfolio is expected to have helped keep the subscriber base intact in the first quarter of 2023.
Netflix's sprawling games portfolio is also expected to have boosted user engagement in the to-be-reported quarter.
The company's shares have gained 17.4% year to date, outperforming the Zacks Broadcast Radio and Television industry's gain of 9.6%, benefiting from an impressive content portfolio. First-quarter 2023 launches included The Night Agent, Luther: The Fallen Sun, The Glory and more.
Top-Line Growth Estimates for Q1
The Zacks Consensus Estimate for paid total streaming net membership gain is pegged at 3.719 million. Netflix gained 7.66 million paid subscribers globally, higher than its estimate of 4.5 million users in the fourth quarter of 2022.
The consensus mark for first-quarter 2023 APAC revenues is pegged at $928 million, indicating 1.2% growth from the figure reported in the year-ago quarter.
Our estimate for Asia-Pacific is pegged at $923.2 million, indicating 0.7% year-over-year growth.
The Zacks Consensus Estimate for Latin America (LATAM) revenues is pegged at $1.06 billion, suggesting almost 5.8% growth from the figure reported in the previous quarter.
Our estimate for LATAM revenues is pegged at $1.05 billion, indicating 5.4% year-over-year growth.
Moreover, the consensus mark for Europe, Middle East & Africa revenues is pegged at $2.57 billion, suggesting 0.4% growth from the figure reported in the year-ago quarter.
Our estimate for Europe, Middle East & Africa revenues is pegged at $2.52 billion, suggesting a 1.7% year-over-year decline.
The Zacks Consensus Estimate for the United States and Canada revenues stands at $3.590 billion, indicating 7.2% growth from the figure reported in the year-ago quarter.
Our estimate for the United States and Canada revenues stands at $3.64 billion, indicating 8.7% year-over-year growth.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Apple Inc. (AAPL) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Baidu, Inc. (BIDU) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
Tutor Perini Corporation (TPC) : Free Stock Analysis Report
