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Eric Volkman, Author at Elite Stock Chat

Author: Eric Volkman

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CCO – Why Clear Channel Stock Was Clearly an Investor Favorite This Week

What happened

Not all activist investors are successful in pushing for changes at their companies. But judging by the investor reaction to an activist’s latest move with Clear Channel Outdoor Holdings (CCO -2.42%), that shareholder might just carry the day. As of early Friday morning before the market open, according to data compiled by S&P Global Market Intelligence, Clear Channel’s share price had shot 12% higher week to date.

So what

On Tuesday, that activist investor, Legion Partners Asset Management, sent Clear Channel’s board of directors a letter urging the company to put itself up for sale. 

Bloomberg, which said it had reviewed the letter, quoted Legion managing directors Chris Kiper and Ted White as writing, “We believe both financial and strategic parties could be interested in acquiring the entire company, with potential regulatory hurdles solvable through divestitures and/or partnerships.”

Legion has had more than enough time to develop a view on Clear Channel’s future; it has been a shareholder of the outdoor advertising company since 2021. It currently holds an equity stake of slightly more than 5%.

Clear Channel, as is fairly common in such situations, struck a probably-not-but-maybe note in reaction to Legion’s idea. In a press release published after market hours Tuesday, the company admitted that while it’s looking at a number of “strategic opportunities” for its business, it is “confident in Clear Channel’s strategic direction and will continue to act in the best interests of all shareholders to drive maximum value creation.”

Now what

It’s too soon to tell whether Clear Channel will be genuinely in play. The wide-ranging company has quite a few assets it can sell, either piece by piece or as a whole, should it choose to accept Legion’s proposal. Investors should keep a sharp eye on how this situation develops.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

APLD – Why Applied Digital Stock Zoomed Higher Again Today

What happened

Applied Digital (APLD 4.82%) stock continued its encouraging run on Thursday, gaining nearly 5% to keep its multiday price appreciation streak going. Bolstering sentiment on the niche tech company was a price target lift from an analyst tracking its stock.

So what

That raise was quite significant; Needham & Co.’s John Todaro cranked his fair-value estimation on Applied Digital stock nearly 55% higher. He now feels the shares are worth $8.50 apiece, well above his previous $5.50 price tag. In making the change, he maintained his buy recommendation on the stock.

Applied Digital has enjoyed a surge of attention in recent days. Earlier in the week, the tech company, which has traditionally concentrated on designing and running data centers, announced that it is plunging into the white-hot artificial intelligence (AI) business. It launched a set of AI cloud services, which are technically being offered via subsidiary Sai Computing

It wasn’t clear whether Todaro’s revised assessment of Applied Digital stock was based in any part on this development. Regardless, pushing into AI — a segment investors can hardly get enough of these days — has inarguably brought Applied Digital a lot of attention. Therefore, a new look at the stock is warranted.

Now what

All that said, market participants should be very cautious here.

AI is indisputably world-changing technology, but this does not mean every company harnessing it will meet with glorious success. Many tech businesses are vying to make money from the technology, and more than a few are sure to stumble as they attempt to do so. The proof is in the pudding, as they say, so in many instances, it’s wise to wait a bit for early indications of what a company is able to do with the opportunity.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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ZBRA – Why Zebra Technologies Stock Flopped This Week

What happened

Zebra Technologies (ZBRA 3.32%) was hardly the most impressive animal on the stock exchange this week. According to data compiled by S&P Global Market Intelligence, the company’s share price slid by nearly 5% during the period. The finger of blame can be pointed squarely at its first-quarter earnings report. 

So what

Zebra edged past analyst estimates on both the top and bottom lines in said quarter, the figures for which it published on Tuesday. That wasn’t the problem, however.

As investors typically look forward with stocks instead of gazing into the past, they were concerned more with the retail tech company’s guidance.

Uncomfortably for them, Zebra reduced its outlook for the full year; it now anticipated a single-digit decline in net sales compared to 2022. Previously, it was guiding for a modest drop at best, if not a slight increase. Worse, it shaved at least $100 million off its forecast for annual free cash flow (FCF).

Now what

Analysts were quick to pounce on this, with a clutch of them reducing their price targets on Zebra stock in the wake of the earnings report.

One of the more aggressive reducers was Atlantic Equities’ Richard Radbourne, who sliced $64 off his target to reach a new fair value estimation of $350 per share. His peer James Ricchiuti of Needham & Company also took out a pair of scissors, reducing his level to $340 from the preceding $385.

This doesn’t mean that the prognosticators following the stock have become generally bearish on its potential, however. Both Radbourne and Ricchiuti, in addition to most of the post-earnings target cutters, maintained their equivalents of a buy recommendation on the shares.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zebra Technologies. The Motley Fool has a disclosure policy.

COMM – Why CommScope Stock Tanked by 15% This Week

What happened

Giant publicly traded companies can often withstand negative takes from analysts, but that isn’t always the case with relatively smaller players.

That’s what happened this week with the relatively under-the-radar CommScope Holding (COMM -0.22%). On the back of two prognosticator price cuts plus one downgrade, the telecom equiment maker’s stock slid by 15% in price, according to data compiled by S&P Global Market Intelligence

So what

Of the pair of adjustments, one was quite drastic and the other relatively modest. 

The drastic one came from Jefferies‘ George Notter, who downgraded his recommendation on CommScope stock one peg, to hold from his previous buy. Notter now feels that CommScope stock is worth only $5.50 per share; previously, he had placed its value at $15.

Northland Capital Markets’ Tim Savageaux wasn’t as severe, reducing his price target to $6 per share from the preceding $9 while maintaining his market perform (read: hold) recommendation. 

The reasoning behind Notter’s aggressive move wasn’t immediately apparent. As for Savageaux, he cited recent data indicating that telecoms are slowing down the pace of their spending in certain equipment categories. He feels that this is applicable to the entire telecom sector, from small fish to major component customers like AT&T.

Now what

Perhaps not coincidentally, CommScope announced the date for its next earnings release this week.

The company has set Thursday, May 4 for the unveiling of its first-quarter figures; this will occur shortly before market hours that day. Interestingly, as a group, analysts are projecting earnings growth for the company — collectively, they are modeling more than 30% year-over-year improvement in per-share earnings, although they believe revenue will slip by 3%. 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group. The Motley Fool has a disclosure policy.

QIPT – Why Quipt Home Medical Stock Got Rocked Today

What happened

Quipt Home Medical (NYSE:QIPT) had a gloomy day on the stock market Tuesday. Investors weren’t pleased to hear news of a fresh share issue, and signaled their displeasure by trading the stock down by nearly 12%. By contrast, the S&P 500 index moved marginally higher on the day.

So what

After market hours Monday, Quipt announced that it is selling in excess of $37 million worth of its common stock.

This will shake out in a pair of issues. The first is a bought deal, meaning that an investor or investors has agreed to purchase the entire amount. This will total just over $35 million, and the buyer is a syndicate of underwriters led by Beacon Securities and Canaccord Genuity (CCORF -0.49%). And the company has granted those underwriters a collective 30-day option to buy an additional 15% of those shares in the offering.

The second issue is a private placement totaling roughly $2 million. Quipt did not provide specific information about the purchasing party. 

In its regulatory filing detailing the stock offerings, the healthcare company said that it aims to use the raised funds to retire debt, finance potential acquisitions, supply working capital, and provide monies for “general corporate purposes.” 

It said the offerings should close on or about next Tuesday, April 25.

Now what

At the moment, Quipt has around 35.6 million shares outstanding and a market cap of slightly under $218 million. Looking at those numbers and the ones involved in the offerings, investors are surely worried about dilution.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

CTLT – Why Catalent Stock Dove More Than 7% Today

What happened

Extending its streak of declines, Catalent (CTLT -7.37%) stock fell again on Tuesday. The contract drug manufacturer’s shares lost more than 7% of their value on a day when the S&P 500 index essentially traded flat. A pair of analysts’ price target cuts were the apparent catalysts for this latest slide.

So what

On Tuesday morning, prognosticators from Barclays (BCS 0.52%) and Deutsche Bank (DB 1.02%) made downward adjustments to their Catalent targets.

Of the two, the change by Barclays’ Luke Sergott was by far the more dramatic. Sergott chopped his price target to $40 per share — quite the downshift from his previous target of $70. He didn’t, however, adjust his recommendation on the specialty healthcare stock, which remains at equal weight (hold, in other words).

Not surprisingly, the Barclays analyst cited as a key factor in his decision Danaher‘s (DHR 0.15%) Monday announcement that it would not pursue an acquisition of Catalent at this time. That, in turn, was likely heavily influenced by Catalent’s Friday announcement that revenue for its fiscal third quarter will probably come in well below both the company’s guidance and analysts’ consensus estimates.

The reasons behind the price target cut from Deutsche Bank’s Justin Bowers weren’t immediately clear. He made a relatively modest move, trimming his target to $72 per share from $78 per share. He’s more bullish than his Barclays colleague, as he’s keeping his buy recommendation on Catalent intact.

Now what

The twin cuts contributed to the gloom currently hanging over Catalent stock. Few investors seem interested in buying into a business that’s taking big revenue hits and has been abandoned at the altar.

NKLA – Why Nikola Stock Was Thrown Violently Into Reverse Today

What happened

Retirements and replacements in a company’s board of directors are fairly standard, and typically not excessive causes for concern. But investors have a habit of getting very worried when several directors head toward the exit door at the same time. That was the dynamic behind the queasy 15%-plus dive in Nikola‘s (NKLA -15.45%) stock price on Friday to a new all-time low of $0.82 per share.

So what

Not one, not two, but three Nikola directors are bowing out, the company revealed late Thursday. These are Gerrit Marx, Lynn Forester de Rothschild, and Mark Russell. The trio will formally step down from the board at the electric vehicle (EV) and hydrogen-powered engine company’s annual general meeting (AGM), as they have decided not to stand for re-election. The AGM is scheduled for this coming June 7.

All three carry much auto industry and/or financial sector experience with them. This particularly applies to Russell, who served as Nikola’s CEO until stepping down in 2022. Marx is the CEO of veteran truck maker Iveco Group, while Rothschild is a member of the eponymous banking and finance family, and serves as CEO of the E.L. Rothschild investment company.   

Steve Girsky, Nikola’s chairman of the board, was quoted as saying that “As the Company evolves, the size and composition of the Board will as well. We are grateful for the many contributions that Gerrit, Lynn and Mark have made to Nikola over the years and wish them well.”

Now what

At the AGM, a total of seven Nikola directors are to be elected to the 10-member board. Hopefully for shareholders, these will be individuals with the outgoing board members’ depth and breadth of experience. 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.