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Analyst Insight News: Apple Inc., Alibaba Group Holding Ltd, Shake Shack Inc, TubeMogul Inc

There has been a lot of action on Wall Street this week with new earnings reports and events. Find out the latest analyst news on the tech giant Apple Inc. (NASDAQ:AAPL), Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA), burger giant Shake Shack Inc (NYSE:SHAK), and video ad tech giant TubeMogul Inc (NASDAQ:TUBE).

Apple Inc.

Technology giant Apple Inc. posted its fiscal third quarter earnings results in July, missing Wall Street’s iPhone sales expectations. The stock has fallen over 13% since as some investors have begun to question if the company’s biggest sales driver is beginning to lose its novelty.

To add fuel to the fire, multiple U.S mobile carriers such as AT&T, Verizon, and T-Mobile have transitioned from offering two-year contracts, which offers a subsidy for a new phone, to monthly contracts which do not come with the same subsidy. In the new month-to-month plans, consumers will pay the full price for a new phone in monthly installments. “The plans sell the benefit of enabling customers to pay no money down and, in some cases, upgrade their devices earlier instead of the typical two-year subsidized window,” according to Piper Jaffray analyst Gene Munster. Some believe this poses a threat to future iPhone sales because many consumers are not accustomed to paying the full price.

Gene Munster believes the new month-to-month mobile contracts “could result in a compressed upgrade window for some iPhone users,” but “there may not be one specific quarter where the tailwind is recognized and it may be a more gradual and consistent slight tailwind for multiple quarters until the majority of users transfer to those types of installment plans.”

With the launch of the new iPhone 6S right around the corner, Munster believes those who upgrade their current iPhones and service provider contracts early could have an impact on iPhone sales over the next few quarters. The analyst noted, “If iPhone users are upgrading every cycle, it would imply that a significant number of one-year-old devices, which typically become the mid-tier phone in Apple’s pricing structure, should enter the market.”

Furthermore, “carriers could potentially sell those at rates lower than Apple’s mid-tier offering for an unused device, thus potentially impact Apple’s sales of mid-tier devices.” Munster believes “the mid-tier typically provides between 15-25% of device sales in a given quarter” and “overall this could mean a lower percentage of device sales in the mid and even lower tiers and a greater percentage from the high-tier devices, yielding a higher ASP.”

On another note, Munster also weighed in on the recent speculation that Apple is planning to launch a new streaming service on Apple TV. The analyst noted, “The timing and features of the new [Apple TV] box are in-line with our previous expectations and the long-awaited streaming content offering still appears a wildcard.” With that said, Munster believes the new streaming service “will likely have limited impact on revenue” even if the product improves “Apple’s position in the living room.”

As such, the analyst maintained an Overweight rating on the stock with a $172 price target on August 13.

Out of 32 analysts polled by TipRanks within the past 3 months, 22 analysts are bullish on Apple, 9 are neutral, and 1 is bearish. The average 12-month price target for Apple is $150.24, marking a 32.38% potential upside from where the stock last closed. On average, the all-analyst consensus for Apple is Moderate Buy.

Alibaba Group Holding Ltd

Chinese e-commerce giant, Alibaba Group Holding Ltd, posted disappointing earnings results yesterday, August 12. Shares slid -6.25% in pre-market trading to $72.50 before hitting a new record low of $71.03. Shares later rebounded slightly and closed at $73.38.

Alibaba posted quarterly revenue of $3.265 billion, missing the analyst estimate of $3.4 billion. Although this marked a 28% year-over-year increase, it is evidence of decelerating growth as the company has posted revenue growth averaging 56% over the last 12 quarters. Alibaba also posted disappointing gross merchandise volume of 34%, missing the analyst consensus of 38%. Gross merchandise volume measures how much money consumers spend on the website and is seen as a key metric of business growth for online retailers. Other than decelerating sales, the company posted non-GAAP diluted earnings per share of $0.59, slightly ahead of the analyst estimate of $0.58.

As a result of the stagnating Chinese economy and concerns over dropping share prices, Alibaba announced it will buy back up to $4 billion worth of shares over a two-year period.

Management was optimistic about the report. CEO Daniel Zhang commented, “We had a strong quarter and we continued to build the foundations for future growth. We focused our efforts on building healthy GMV growth, delivering the best consumer experience, and improving the quality and sustainability of merchants doing business on our marketplaces.” The company also highlighted its growing cloud computing segment, which grew 106% year-over-year and is now considered to be the “No. 1 market leader in cloud computing services in China.”

The report also briefly addressed concerns surrounding Alibaba’s counterfeit goods scandal, noting that the company is taking steps to ameliorate the issue by using “proprietary data technology and [collaborating] with government agencies in China.”

Analysts were eager to weigh in on Alibaba following earnings. Youssef Squali of Cantor Fitzgerald maintained a Buy rating on the stock but lowered his price target from $110 to $95 after earnings. Squali noted that the results were “mixed” due to “strong growth in mobile commerce,” but “offset by the suspension of the Lottery business and the transfer of the SME loan business.” The analyst noted that user growth was “still healthy,” but slower than expectations. Even though the overall monetization rate in China was 2.33% compared to 2.52% in the same period last year, Squali is encouraged by the substantial growth in mobile monetization, which was 2.15% compared to 1.49% in the same period of last year. Squali concluded, “We expect Alibaba to continue to dominate the rapidly growing Chinese ecommerce market for years to come, but we also believe that near-term predictability of growth and margins has deteriorated given the macro backdrop in China.”

Youssef Squali has a 61% overall success rate recommending stocks with a +20% average return per rating when measured over a one-year horizon and no benchmark.

Separately on August 12, Mark Mahaney of RBC Capital maintained an Outperform rating on Alibaba though he cut his price target from $105 to $91. The analyst acknowledged that the company’s earnings report had “mixed” results, as it missed top-line estimates but “beat on bottom.” Mahaney touched on several key points, first pointing out that BABA beat the consensus for mobile and desktop trends, in turn leading to impressive mobile revenue. The analyst continued, “We think BABA’s view on logistics has shifted, and we expect greater emphasis/investments in enhancing service options/ improving delivery speeds.” Mahaney concluded, “We are less Bullish, at the margin… Positively, Mobile Monetization improvements are significant, given this is clearly a key Consumer Demand trend. And growth, while decelerating, is robust… And we see BABA as having significant option value in non-retail revenue streams in China, int’l expansion, and a series of major strategic investments.”

When measured over a one-year horizon and no benchmark, Mark Mahaney has a 64% success recommending stocks with a +23.1% average return per rating.

According to the 10 analysts polled by TipRanks in the last 3 months, 9 are bullish on Alibaba and 1 is neutral. The average 12-month price target on the stock is $99.00, marking a 35% potential upside from where shares last closed.

Shake Shake Inc

Famous hamburger chain Shake Shack Inc posted second quarter earnings results on August 10 after market close, beating the Street’s expectations on both the top and bottom line. The stock proceeded to surge approximately 8% in after-hours trading as a result.

Highlights from the report include $0.09 adjusted earnings per share on $48.5 million in revenue, crushing the Street’s estimates of $0.03 earnings per share on $42.8 million in revenue. Same store sales were also better than expected, increasing 12.9% in the second quarter. Average weekly sales rose 7% from the same quarter a year prior to $102,000.

Additionally, the company raised its full year revenue outlook from a range of $161-$165 million to $171-$174 million. Shake Shack also raised its same-store sales outlook to mid-to-high single digits from low-to-mid single digits.

The company had previously forecast to open 10 new company-owned locations in the United States earlier this year. Now, Shake Shack has raised its forecast and expects to open 12 new locations in the U.S. by the end of the year and 12 locations per year starting in 2016.

Randy Garutti, Shake Shack CEO, stated, “As we execute our strategic growth plan, we continue to identify favorable development opportunities and we have therefore added two new Shacks to our development schedule, raising our previous guidance to 12 new domestic company-operated Shacks for 2015. Looking ahead to 2016 and beyond, we now expect to open at least 12 domestic company-operated Shacks annually.”

Despite Shake Shack’s earnings beat, Longbow Research analyst Alton Stump proceeded to maintain a Neutral rating on the stock on August 11. Stump reasons his rating with the fact that most of Shake Shack’s locations are concentrated in the New York City region and “it remains to be seen how well the concept will succeed (or not) in other regions in the U.S.”

Overall, Alton Stump has a 67% success rate recommending stocks and a +6.4% average return per recommendation when measured over a one-year horizon and no benchmark.

Barclays analyst Jeffrey Bernstein also reiterated a Hold rating on Shake Shack with a price target of $44 following the company’s Q2 earnings results.

On average, Jeffrey Bernstein has a 77% success rate recommending stocks and a +10.1% average return per recommendation when measured over a one-year horizon and no benchmark.

Out of 5 analysts polled by TipRanks within the past 3 months, 3 are neutral on Shake Shack and 2 are bearish. The average 12-month price target on Shake Shack is $44.75, marking a 34.73% downside from where the stock last closed. On average, the all-analyst consensus on Shake Shack is Moderate Sell.

TubeMogul Inc

Enterprise software company TubeMogul Inc posted second quarter 2015 earnings results on August 10 and beat the Street’s estimates. The stock has increased over 12% since.

Highlights from the report include $45.4 million in revenue, marking a 58% year-over-year increase and $6 million above the analysts consensus. The company posted a net loss of ($0.04) per share, beating the Street’s expectations by $0.13. The company’s total spend for the second quarter was $105 million, marking a 72% increase from the same quarter last year.

CEO Brett Wilson said of the earnings beat, “Our strong Q2 results were driven by our unwavering focus on brand advertisers and the tools they need to transform their media planning, buying and measurement. Revenue from our expansion into Programmatic TV contributed to our outperformance in Q2 and we are excited to begin offering brand advertisers cross-screen planning and buying, with TV as the centerpiece of this effort.”

TubeMogul has forecast revenue between $39 million and $41 million for the third quarter and a range between $164 million and $170 million for the full year. The Street currently estimates that the company will post $36.6 million in revenue for the third quarter and $154 million in revenue for the full year.

Piper Jaffray analyst Gene Munster maintained an Overweight rating on TubeMogul with a price target of $25 on August 10 following the company’s Q2 earnings results. The analyst noted that the company’s “Q2 beat and Q3 raise leave[s] [him] comfortable in [his] view that the company remains one of the strongest public adtech plays given the company’s self-serve model that has elements of higher visibility than typical I/O driven online ad sales models.”

Furthermore, the analyst feels “the company’s vision to create a platform where video buyers can manage all video related inventory, including TV, is key to generating larger digital video ad budgets as the largest portion of the ad dollars remain with TV.”

Overall, Gene Munster has a 64% success rate recommending stocks and a +23.4% average return per recommendation when measured over a one-year horizon and no benchmark.

Similarly on August 11, Citigroup analyst Mark May reiterated a Buy rating on TubeMogul with a price target of $21, citing the company’s “continued efficiency in the sales force and general operating leverage.” As such, the analyst raised his 2015 estimates for the company to $397.4 million in total client spend, $168.5 million in revenue, and a ($0.74) loss per share. That’s up from his previous estimates of $376.9 million in total client spend, $153 million in revenue, and an ($0.82) loss per share.

On average, Mark May has a 57% success rate recommending stocks and a +8.6% average return per recommendation when measured over a one-year horizon and no benchmark.

Out of 6 analysts polled by TipRanks within the past 3 months, 5 analysts are bullish on TubeMogul and 1 is neutral. The average 12-month price target for TubeMogul is $20, marking a 55.76% upside from where the stock last closed. On average, the all-analyst consensus for TubeMogul is Moderate Buy.