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Align Technology, Tesla, Apple, Starbucks and Unilever highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – November 3, 2017 – Zacks Equity Research highlights Align Technology ALGN as the Bull of the Day and Tesla TSLA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc. AAPL, Starbucks Corp. SBUX and Unilever UL.

Here is a synopsis of all five stocks:

Bull of the Day:

In early May I wrote Align Technology is one of the strongest medical technology success stories of the past year, with 27.8% sales growth in 2016 and an expected 25%+ top line ramp in 2017."

That story was upgraded in July after another strong quarterly report from the maker of the revolutionary Invisalign "teeth straighteners."

On July 27, Align delivered a nearly 4% revenue beat and a 16% EPS beat. Q2 revenue increased 32.3% year-over-year and 15% sequentially to $356.5 million.

Invisalign case shipments for North America and international were up 27.6% and 37.4% y-o-y, respectively.

And guess what Align Technology did again when they reported their Q3 results on October 26?

You guessed it, they beat on the top and bottom lines and raised guidance yet again. 

On these numbers, which exceeded all Wall Street analysts expectations, ALGN shares jumped 16% higher the next day and have flirted over $240 on several days.

In the few days that fresh analyst estimate revisions have had a chance to filter into the Zacks Rank, all growth projections are rising with 2017 revenues expected to see a 33% advance while EPS looks to climb 47.6%.

And 2018 estimates see 24.6% and 21.4% growth on the top and bottom, respectively. I expect to see those numbers rise into the new year, but right now this is sustained high growth that institutional investors want to sink their teeth into and they will gladly pay over 30 times for it on a P/E multiple basis.

Sales Growth is Clearly Aligned with Global Trends

This kind of growth is what made me buy ALGN for my Healthcare Innovators portfolio in early May.

In 1999, Align Technology pioneered the invisible orthodontics market with the introduction of the Invisalign system and by 2001 had manufactured one million unique clear aligners.

The company is well-established as the leader among US dental professionals for alternatives to traditional braces. So it's the international growth that has me and other investors so excited.

As the emerging middle classes of China and India are exposed to Invisalign solutions, that 30%+ sales growth is expected to continue.

Bear of the Day:

I just wrote about Tesla as Bear of the Day two weeks ago and outlined how the stock's ability to maintain lofty expectations near $350 was all dependent on the company's ability to maintain lofty expectations for production of the new Model 3.

When the company reported Q3 earnings on Thursday, we already knew they had fallen short of a Model 3 production goal of 1,500 cars in the quarter. Tesla produced its first Model 3 cars in Q3 and reached 260, which led to 222 deliveries versus Wall Street expectations ranging from 1,000 to 2,000.

But what investors were now hoping to hear this past week was that the company was still on pace to meet their goal of 5,000 cars per week in December -- even though many analysts felt that was becoming increasingly unrealistic.

On November 1, the company revealed that this goal should now be achieved by March as they fix certain known and manageable "bottlenecks" in the production logistics.

Why is the Model 3 production ramp so important to Tesla?

Because it's what investors are betting will turn the company into a huge cash-generating machine. Here's what I wrote last month...

Where's the Growth?

Some of the bulls had expected Tesla to turn consistently profitable in 2018. Others have anticipated production delays with the new Model 3 and see the company as able to deliver its first profitable year in 2019.

The shifting sands here are typical not only of a new car company but also of one with such a transformational business model.  

What the bulls hope is that Model 3 demand will be strong and that Tesla is able to generate 25% gross margins on the vehicle at a price point in the mid-$40,000s.

Despite the big Q2 earnings beat in August which helped propel shares back to the all-time highs above $385 that were first achieved in June, earnings estimates have been headed down.

Two months ago, the consensus EPS projection for this year was a loss of $6.39. That has since fallen back to ($6.84).

The 2018 consensus dropped from a loss of $1.12 to ($1.23) in the past 60 days.

Oppenheimer analysts felt compelled to drop their 2017 EPS estimate from ($4.95) to ($7.02).

And yet they remain in the camp of seeing a profitable 2018, sticking with their far-above-consensus profit projection of $1.64 next year.

Additional content:

Apple Smashes Estimates, Starbucks Lukewarm

Apple Inc. posted another big beat on both top and bottom lines after today's closing bell, with earnings of $2.07 per share easily surpassing the $1.87 expected. Revenues reached $52.6 billion, easily ahead of the $51.2 billion in the Zacks consensus estimate. Fiscal Q4 2017 sales of iPhones -- which don't include new iPhone X sales; those numbers will register in fiscal Q1 2018 -- reached 46.7 million, above the 46.4 million estimate and 45.5 million a year ago.

Revenue guidance for fiscal Q1 is $84-87 billion, which will have a lot to do with both holiday season sales and iPhone X sales hitting the tape. Gross margin estimates are for between 38-38.5%; gross margins in Q4 hit 37.9%. Apple Services (Apple Pay, iTunes, etc.) surprised in the quarter with $8.5 billion in revenues, up 34% year over year. Shares are up 3% on this news, following nearly 7% gains just in the past 5 trading days.

For more info on AAPL's earnings, click here.

Starbucks Corp. reported in-line results on its Q3 bottom line this afternoon, at 55 cents per share (a penny below the year-ago quarter). Revenues, however, posted a slight miss at $5.70 billion instead of the $5.73 billion analysts were looking for. Global comps reached 2%, but comps in the U.S. of 3% fell short of the 3.4% estimate.

The Zacks Rank #3 (Hold) coffee shop giant announced rising dividends and stock buyback programs for investors, while stating it looks for a 3-5% comps target annually. Starbucks is also planning to buy Unilever's Tazo business for $384 million. Shares are falling in the post-market to the tune of 5% on the news, sending SBUX shares into the red year to date. For more information of SBUX's earnings report, click here.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Tesla Inc. (TSLA): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Unilever PLC (UL): Free Stock Analysis Report
 
Align Technology, Inc. (ALGN): Free Stock Analysis Report
 
Starbucks Corporation (SBUX): Free Stock Analysis Report
 
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