News and Views

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Amazon.com (AMZN) saw substantial growth this past year, outperforming the S&P 500 and rising by approximately 93.4% compared to the S&P’s gain of about 35% and reaching record highs over the past couple of weeks. Despite hedge funds selling, the stock rose on the WhaleWisdom Heatmap to a ranking of twelve.

Amazon is a multinational technology company with a powerful presence in e-commerce and the cloud computing market. The company also offers digital streaming services and artificial intelligence solutions. Amazon Web Services includes machine learning services and supporting cloud infrastructure to aid its customers in increasing productivity and improving business outcomes. As a result of the coronavirus pandemic, more businesses sought to move away from internal management of technology infrastructure and moved to the cloud. Understandably, Amazon saw a boom in business during the coronavirus pandemic. Stay-at-home government orders led to increased online shopping, greater demand for streaming entertainment, and a push towards remote work.

Hedge Funds Adjust Portfolios

Amazon lost some traction in the first quarter of 2021, as hedge funds and institutions were decreasing shares in their portfolio. The aggregate 13F shares held by hedge funds decreased to about 56.4 million from 56.3 million. Of the hedge funds, 44 created new positions, 298 added to an existing holding, 62 exited, and 271 reduced their stakes. Overall, institutions were selling and decreased their aggregate holdings by about 0.8% to approximately 287.2 million from 290.0 million. The long-term 13F metrics between 2001 and 2021 demonstrate that Amazon’s investment potential maintains on an upward trend. The company saw a rise in ranking on the WhaleWisdom WhaleIndex to a rating of twelve from thirty-six.

(Whale Wisdom)

Encouraging Multi-year Estimates

Analysts expect to see earnings rise over the next two years, increasing from 2021 to 2022 from an estimated $55.13 to $72.60. Revenue estimates were also highly encouraging, with consensus forecasts reaching $489.6 billion by December 2021 and $576.5 billion by December 2022.

(Whale Wisdom)

Favorable Outlook from Analysts

Analysts appear to recognize Amazon’s strength in the e-commerce market, sharing optimistic price targets and opportunities for future growth. Tigress Financial Partners’ analyst, Ivan Feinseth, maintained a Buy rating on the stock and initiated a twelve-month target price of $4,370. Doug Anmuth of JP Morgan Chase & Co. views Amazon as a top pick, giving it a $4,600 target price and an Overweight rating. Anmuth believes that Amazon’s e-commerce penetration will continue to increase. However, despite optimistic stock values, Amazon must also work through leadership changes as its founder, Jeff Bezos, is replaced by Andy Jassy.

Optimism Beyond 2021

Amazon ushers in a new CEO in 2021, though the potential impact of leadership change has not stopped analysts from being optimistic for the future. Customer demand for Amazon’s products and services remains very strong, and the technology company continues to see upward growth. Multi-year earnings estimates should be strong enough to continue to attract long-term investors.

DocuSign Inc. (DOCU) has seen soaring growth over the past year and significantly outperformed the S&P 500. The electronic signature technology company’s stock rose by approximately 289.6% as of July 9, 2021, compared to the S&P 500’s gain of about 33.7% since the start of 2020. Despite this growth, hedge funds were selling, and DocuSign lost traction on the WhaleWisdom Index, landing at 33 after a previous ranking of 14.

Demand for DocuSign’s subscription services has understandably increased during the coronavirus pandemic due to the need to stay connected during remote telework. DocuSign offers companies a method for remote preparation and sharing contracts and other agreements while electronically recording e-Signatures and approval notes. In particular, the company’s flagship e-signature product saw a boom in popularity from remote work during the pandemic. Even with vaccination rollouts and many pandemic restrictions lifted, DocuSign continues to see momentum for its services. Many businesses move to a hybrid workforce with a portion of remote work remaining.

Hedge Funds Are Selling

DocuSign has temporarily lost favor with hedge fund managers and institutions. Looking at activity by the top hedge funds in the first quarter of 2021, the aggregate 13F shares held declined to about 40.0 million from 40.7 million, decreasing approximately 1.9%. Of the hedge funds, 33 created new positions, 82 added to an existing position, 41 exited, and 67 reduced their stakes. Aggregate holdings by institutions experienced a slight decrease of about 0.1% to approximately 139.5 million from 139.6 million.

(WhaleWisdom)

Encouraging Multi-year Estimates

Analysts expect to see earnings rise in the next two years, bringing earnings to approximately $2.17 by January 2023. Revenue estimates are also favorable, with a year-over-year forecast showing revenue rising from $2.1 billion by 2022 and $2.6 by 2023.

(WhaleWisdom)

Analysts Are Optimistic

Analysts shared optimistic outlooks after the first-quarter results were released. William Blair & Co. anticipates a strong year for DocuSign. Oppenheimer & Co., Inc. shared that DocuSign is “strategic technology for the new digital future of work” and maintained an Overweight rating on the stock while lowering their price target to $260 from $300 due to industry compression. Morgan Stanley recognized the continuing forward momentum for DocuSign, which was not simply a one-time benefit from the coronavirus pandemic. Morgan Stanley maintained an Overweight rating on the stock and gave it a price target of $295.

Favorable Outlook

DocuSign’s future looks promising as the company continues to run with the boost in momentum garnered during the pandemic. Hedge funds may have recently decreased holdings, but optimistic estimates from analysts should be encouraging to investors.

Netflix, Inc.’s (NFLX) stock experienced steady growth over the past year, outperforming the S&P 500 as of July 2, 2021. The stock saw gains of approximately 64.9% compared to the S&P 500’s increase of about 33.7%. Netflix saw a rise in ranking on the WhaleWisdom Heatmap to an impressive level of five from 43, and hedge funds were buying.

Netflix is an entertainment service company that provides subscription services for customers to enjoy movies and television shows through streaming and DVDs by mail. Netflix initially saw subscriber growth soar during the earlier months of the coronavirus pandemic in 2020, when the government issued stay-at-home orders left customers seeking additional in-home entertainment. However, while Netflix remains a popular service, the rate of increase in their subscriber base ultimately slowed.

Hedge Funds Were Buying

Investors may be encouraged by first-quarter activity as hedge funds were adding to their portfolios. The aggregate 13F shares held by hedge funds increased to about 72.9 million from 71.6 million, a rise of approximately 1.8%. Of the hedge funds, 31 created new positions, 166 added holdings, 49 exited, and 115 reduced their stakes. Overall, institutions were selling and decreased their aggregate holdings by about 0.8% to approximately 353.6 million from 356.5 million.

(WhaleWisdom)

Encouraging Estimates for 2021 and 2022

Analysts expect to see profits rise over the next two years, with increases in growth from 2021 to 2022 that could bring earnings to $13.05 per share in 2022, up from $10.59 for 2021. Revenue is predicted to reach $34.2 billion by December 2022, up from an estimated $29.7 billion in 2021. Also, a historical look at 13F metrics between 2002 and 2020 demonstrates that Netflix’s stock value continues to gain despite plateaus in total 13F shares held.

(WhaleWisdom)

Favorable Ratings

Several investment firms gave Netflix an Outperform rating while maintaining price targets at favorable levels. Credit Suisse Group upgraded the company’s rating to Outperform from Neutral, expecting that subscriber growth will normalize in the fourth quarter. Credit Suisse kept a $586 price target on the stock noting its strong position among competitors. Cowen & Co. maintained an Outperform rating with a $650 price target.

Positive Outlook

Overall, there is a positive outlook for Netflix’s streaming future. Netflix and its competitors have all been beneficiaries of pandemic lockdowns. However, beyond the lockdowns, Netflix has a great business model with a continued strong interest in content from its customer base, leaving its long-term growth and future revenue estimates appealing to investors.

Facebook Continues Upward Trajectory

Posted on June 28th, 2021

Facebook, Inc. (FB) saw continued growth over the past year, outperforming the S&P 500 and rising by approximately 66.3% compared to the S&P’s gain of about 32.5% since the beginning of 2020. However, hedge funds were actively selling the stock in the first quarter. Still, the company climbed to a ranking of sixteen on the WhaleWisdom Heatmap.

Facebook is a multinational conglomerate and provider of communication services that offer an online application and technologies to connect friends, families, and businesses. Facebook also provides products and services beyond its social networking platform and has acquired other companies such as Instagram, WhatsApp, and Giphy over the past several years.

Hedge Funds Are Selling

Despite solid growth, Facebook saw declines in share ownership, with hedge funds and 13F filers dumping the stock in the first quarter of 2021. Overall, hedge funds decreased their aggregate holdings by about 1.5%, to approximately 439.2 million shares from 446 million. Likewise, the aggregate 13F shares held fell to about 1.85 billion from 1.89 billion. Of the hedge funds, 60 created new positions, 283 added to an existing holding, 40 exited, and 264 reduced their stakes.

(WhaleWisdom)

Additionally, long-term 13F metrics demonstrate an overall upward trend in stock prices over the past fifteen years, indicated investors have not only bought shares in Facebook but have held for the long-term.

(WhaleWisdom)

Encouraging Multi-year Figures

Analysts expect to see earnings rise over the next three years, with growth rates spanning 15.5% to 29.6%. These year-over-year estimated increases could bring earnings per share up to $17.69 in 2023, from $13.07 for 2021. In addition, it is estimated that year-over-year revenue growth will range from 16.9% to 34.2% between 2021 and 2023; this could bring revenue to $160.8 billion by 2023.

Analysts Share Favorable Price Targets

Facebook recently held its annual F8 developer conference, which brought together developers across the globe to celebrate innovation and share the latest on Facebook technologies. Following the annual meeting, analyst Brent Thill of Jefferies Equity commented that Facebook is building a comprehensive toolset beyond core advertising to bring greater value. Thill maintains a Buy rating on the stock and a $385 price target. Ivan Feinseth of Tigress Financial Partners LLC also gave Facebook a Buy rating and initiated a twelve-month target price of $430. Feinseth noted that Facebook continues to benefit from the massive growth in digital advertising.

Positive Outlook

Facebook’s potential continues to grow. Hedge funds may be selling, but analysts are optimistic about the stock, and investors appear to be long-term oriented. Moreover, estimates through 2023 are encouraging for investors, making the company an attractive investment for investors willing to hold shares long-term.

ADP Stocks Rebounds from Pandemic Slump

Posted on June 21st, 2021

Automatic Data Processing Inc. (ADP) stocks rose over the past two years, though it underperformed the S&P 500. By mid-June 2021, ADP rose by approximately 15.8% compared to the S&P’s gain of about 30.7%. Though hedge funds were selling, the company was added to the WhaleWisdom WhaleIndex 100 on May 19, 2021.

ADP is a provider of cloud-based human resources (HR) and payroll management software, data processing, and services, including analytics and compliance expertise. Their information technology solutions unite HR, payroll, talent, time, tax, and benefits administration. ADP has been weathering the coronavirus pandemic as many of its customers initially faced government shutdowns and were forced to lay off or furlough employees, and in some instances, close businesses. For ADP’s customers that forged through the pandemic, tax changes and payroll nuances presented new challenges, creating more demand for ADP’s services and expertise.

Hedge Funds Are Selling

ADP had a challenging first quarter with hedge funds actively selling the stock. The aggregate 13F shares held by hedge funds decreased to approximately 1.2% to 83.4 million from 84.4 million. Overall, 25 hedge funds created new positions, 96 added to an existing holding, 25 closed out their stakes, and 104 reduced their positions. Institutions decreased their aggregate holdings by about 1.3%, to 335.9 million from 340.4 million.

(WhaleWisdom)

Positive Multi-year Estimates

Analysts expect to see earnings rise over the next four years, with growth from 2021 to 2025 spanning approximately 0.6% to 10.0%. These year-over-year estimated increases could bring profits to $8.60 per share by 2025, up from $5.96 in June of 2021. Revenue predictions include strong year-over-year growth that could bring estimated revenue of approximately $19.5 billion in 2025, up from about $14.9 billion in 2021.

(WhaleWisdom)

Analysts Raise Price Targets

Barclays’ analyst, Ramsey El-Assal, raised ADP’s price target to $212 from $197, maintaining an Overweight rating on the shares. Peter Christiansen from Citigroup also raised their firm’s price target on ADP to $212 while keeping a Buy rating. Christiansen noted that the economy’s reopening from the pandemic should have a positive benefit for ADP. Mizuho Financial Group’s analyst, Dan Dolev, is also optimistic about the stock with a Buy rating. Dolev raised Mizuho’s price target on ADP to $220 from $210 in part due to ADP’s strong execution of services.

Favorable Outlook

ADP continues to experience growth and come back from the initial pandemic-related slump it experienced in February and March 2020. The company has an extensive history in the payroll software and workplace management field, and demand remains strong. With optimistic estimates from analysts, the stock may prove a good long-term acquisition for patient investors.