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Palo Alto Networks is betting on the field of cloud security
Palo Alto Networks is betting on the field of cloud security On September 13, Palo Alto Networks held an Analyst Day conference, where management presented an overview of the company's growth strategy, as well as its long-term financial goals. During the event, management confirmed the guidelines for the first quarter, as well as for the full fiscal year 2022, which were previously published on August 23. In addition, management revised its expectations for the adjusted free cash flow margin from 30% to 32-33%.Palo Alto Networks also presented its development strategy for the next three years and stated that it expects annual revenue to increase by more than 50% over the next two years due to the constant demand from companies for additional security services in the cloud infrastructure. The transition to a remote and hybrid format of work and the accelerated process of implementing cloud technologies require new security measures to combat the growing number of cyber threats. Currently, organizations spend more than $150 billion on migrating to the cloud. This amount is expected to exceed $300 billion over the next three years, which gives the company huge opportunities to develop its products in the field of cloud security. The growth rate of the addressable market in the direction of security in the cloud is on average 30% per year. At the same time, the company is also actively developing in the field of attack surface management and prevention of cyber threats. The target market in this area will grow at an average annual rate of 15% in the coming years.These trends suggest that Palo Alto Networks' revenue will increase by an average of 23% per year and reach $8 billion in fiscal year 2024, and the total amount of invoices issued per year will be $10 billion. The company stressed the importance of previously made strategic investments in M&A, while noting that in the coming years it will focus on organic development. Taking into account these factors, stable gross margin and increased productivity, the company expects an increase in operating margin by 50-100 basis points after the 2022 fiscal year.The ability to recognize structural changes in the field of cybersecurity, combined with constant investments in updating the portfolio of solutions, allowed Palo Alto Networks to successfully consolidate its position as a market leader. We look positively at the company's operational prospects, taking into account strong demand and development in fast-growing market niches. Taking into account the updated issuer's guidance for the coming years, we raise the target price to $509 per share and maintain the "buy" recommendation.
Sep 16, 2021
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Amazon will compete with PayPal and Shopify due to the new POS system
Amazon will compete with PayPal and Shopify due to the new POS system On September 8, the media reported that Amazon is developing its own POS (point-of-sale) software for accepting payments online and offline. The POS system will allow the seller to choose payment methods, as well as provide him with business intelligence functionality. This service will be closely integrated with the issuer's related solutions, including Prime, Flex and the Amazon One biometric product. The management expects that the launch of its own POS system will allow faster execution of orders, which will increase the value proposition for customers.This initiative looks logical in the light of the recent acquisition of Selz (functionality for creating an online store), since the development of a new POS system will allow Amazon to present a comprehensive product for small businesses seeking to develop an online sales channel. The POS system also fits into the development strategy of Amazon's offline direction, where the IT giant is actively developing the Just Walk Out shopping format (fully automated retail outlets without personnel).At the same time, we note that the project is under development, so it is too early to judge its possible effectiveness compared to competitors and the final effect for Amazon. At the moment, we do not expect that Selz's revenues will exceed $1 billion by 2025, since the product's potential for creating online stores is limited.According to Grand View Research, global sales of POS software in 2020 amounted to $9.26 billion and could reach $19.56 billion by 2028. The CAGR will be 9.5%. Thus, we can talk about good prospects for the market, but also about its significant maturity, which may limit the potential for Amazon to develop its own product from scratch.
Sep 13, 2021
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Workday intends to increase its market share
Workday intends to increase its market share Workday (NASDAQ: WDAY) reported better than expected for the second quarter, showing growth in both key sub-segments. At the same time, the management raised the guidance for the full year 2021.Workday's revenue increased by 18.9% YoY, 1.6% exceeding the forecast and 3.2% exceeding the actual figure of the previous quarter. Diluted non-GAAP EPS increased by 46%, significantly exceeding the consensus. Subscription revenue (89% of sales) increased by 19.5% compared to an increase of 17% in the previous quarter. The CEO noted an improvement in demand for both HCM and financial products. At the same time, the head of the company pointed out that the share of sales in the corporate segment has also increased. The company managed to attract several new large customers (CVS Health, Iberdrola, California Pizza Kitchen and HeidelbergCement AG), which also had a positive impact on revenue indicators.As for individual products, Workday management notes an increase in demand for Workday Adaptive Planning for the second quarter in a row, with the ACV (annual contract value) increased by 50%. Demand for Workday (core finance) financial solutions, including from companies such as KeyBanc North America and Fox Corporation, has also increased. Another driver of business growth was the increase in cross-sales, including through the purchase of the Peakon platform. The professional services segment continued to show an acceleration in growth: sales increased by 12.7% compared to an increase of 4.7% in the previous quarter.The management of Workday outlined plans to expand its presence in foreign markets. For example, the Workday Payroll solution will be available to customers in Australia and Germany. One of the important positive aspects of the reporting is the receipt of a status that will allow the company to participate in the FedRAMP state program, which, according to management expectations, will allow Workday to provide services to state agencies starting from 2022.Non-GAAP operating margin decreased by 1.1 p. p. yoy, amounting to 23.2%. However, in our opinion, this is due to a very significant reduction in marketing expenses in 2020 and in the first quarter of 2021. Therefore, we estimate the increase in these costs in April-June as normalization. The company is also actively recruiting staff in the marketing and sales departments, which, in our opinion, is the right step, since Workday intends to accelerate the growth rate of the business. During the year, the issuer plans to hire 2.5 thousand employees, expanding the current staff of 13.4 thousand.The management raised the annual forecast of subscription revenue growth to 19%. At the same time, it is expected that this figure will be 20% in the next quarter. The annual guidance for the professional services segment (11.3%) was not revised. According to the results of the reporting period, the portfolio of orders for subscription services increased by 23% YoY, to $10.58 billion.In general, we assess the quarterly results of Workday positively: the company demonstrates accelerated organic growth, improved cross-sales and focuses on marketing and sales, which will help expand its market share. The acceleration of sales growth compared to the previous quarter confirms the thesis of management and Gartner's forecasts for accelerating demand for HCM products. The share of renewable contracts was 95%.we raise the growth forecast and the target price for the company's securities to $284 per share. The recommendation is "buy".
Sep 06, 2021
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Shotify will be promoted in TikTok
Shotify will be promoted in TikTok The online trading platform Shotify and TikTok are launching a joint project that will allow users to make purchases directly through the video service after viewing ads. Previously, TikTok relied on the visualization of advertising information. Popular accounts rarely place direct advertising in the video series. To do this, use URL links and UTM tags in the account description. The so-called partner materials unobtrusively tell about goods and services. And this is a free way to promote the product. You can run direct advertising on a paid basis. It is possible to do a long-term (compared to the standard TikTok video) paid integration. Popular bloggers are usually invited to do this. Such integrations, hosted on the TikTok for Business platform, are available mainly to large companies, such as eBay, Zalora, Kia, Maybelline and Puma.The uniqueness of cooperation with Shopify is that the creation of an advertising message in TikTok will take only a few minutes. This will greatly simplify the creation of advertising content and make it accessible to small companies. The service is ready to provide a loan in the amount of $300 to launch the first advertising campaign.The project looks extremely promising for the Canadian Shopify. The agreement with one of the leaders of Big Tech will allow the company's quotes to update the historical maximum of $1,650 per share in the near future. For TikTok, interaction with a Canadian company is another opportunity to solve the problem of relatively weak content monetization. The parent company for the ByteDance video service, in case of successful implementation of the joint project, will be able to receive a much higher market assessment when entering the IPO in late 2021-early 2022.
Sep 03, 2021
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Zoom shares fell by 12% despite a good report. What is the reason
Zoom shares fell by 12% despite a good report. What is the reason The popular platform for remote conferencing using cloud computing has reported financial results for the second quarter of 2021.In the postmarket, Zoom shares reacted with a 12% drop. Investors could be scared by the slowdown in the company's growth rate.The main thing in the reportThe results exceeded analysts' expectationsThe number of customers with a subscription of more than $1 million increased by 77% YoY to 156Revenue amounted to $1.02 billion (+54% YoY)The company expects a decrease in the growth rate YoY in the third and fourth quartersDetailsRevenue in the second quarter increased by 54% YoY, to $1.02 billion from $0.66 billion. Earnings per share amounted to $1.36 and increased by 46%. Free cash flow increased by 22% YoY to $455 million. The figures were better than analysts ' forecasts, which expected revenue in the region of $ 0.99 billion and earnings per share of $1.16.The number of customers with a subscription cost of more than $1 million ($1M+ ARR) increased by 77% YoY to 156. The number of paid subscriptions worth $100 thousand ($100k+ ZP ARR) on Zoom Phone increased to 317 (+241%). About 66% of the company's customers are in the North American region.What's nextZoom expects that revenue for the third quarter will be in the range of $1.01-1.02 billion, which will actually mean a halt in QoQ growth rates and a significant slowdown in YoY dynamics. The company said that earnings per share will also decrease to $1.07-1.08.The company raised its revenue expectations for the year from $3.98-3.99 billion to $4-4. 01 billion. Earnings per share should be $4.75–4.79. But this did not impress investors.As noted earlier, the growth rate of Zoom's business will continue to slow down. The company is trying to adapt to the changing conditions, but at the moment the revenue from Zoom Phone and the acquisition of Five9 do not give the indicators that were previously. The decline process looks quite expected due to the fact that the restrictions caused by the pandemic are almost lifted. It would be quite difficult to expect from Zoom the same explosive growth rates that were in the pandemic.You can return to the question of purchasing a company's shares for long-term investment when the price reaches the $280-290 zone. At the moment, neither the fundamental nor the technical picture gives signals to buy.The consensus forecast for Zoom shares is at $406 per share, which is 31% higher than the last close.
Aug 31, 2021
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NVIDIA shares are once again updating historical records
NVIDIA shares are once again updating historical records Last week, NVIDIA shares moved to a new phase of growth and were able to update historical highs. On August 20, the quotes rose by 2.6% during the main trading session, and lost 0.4% on the postmarket.In total, since the beginning of the year, the shares have risen by 73.4%, which very much bypasses the dynamics of the semiconductor index and the S&P 500. Over the past 5 years, NVIDIA shares have grown by more than 1300%.Will the shares be able to grow further? Let's look at the latest events in the company and the near-term prospects of the shares.Recent eventsThe acquisition of ARM continues. The EU intends to conduct an inspection in early September. First, the regulator will conduct a 25-day preliminary review of the request. Then, if NVIDIA does not make concessions, a 90-day full-scale investigation will be conducted.The UK has already expressed its concern about the takeover, so its approval is still expected. The regulators of China and the United States still have to give their "good". There are also no clear deadlines for the completion of the transaction now. Earlier, NVIDIA promised to complete the transaction in March 2022, now this deadline may be shifted to September 2022.While this issue does not particularly affect the shares, investors are focused on current activities. The approval of the deal will be a strong driver for continued growth. If the takeover fails, the shares may suffer, but in the long term it will not get worse, since NVIDIA has many drivers for growth.The largest GPU-based Polaris supercomputer at the Argonne National Laboratory of the US Department of Energy will run on the NVIDIA accelerated computing platform.Such contracts improve the attractiveness of the company and confirm its technological superiority. This may have a positive impact on the main business segments due to the expansion of market share. First of all, this applies to the already extensive data center market.What are the prospectsThe pandemic stimulated the demand for semiconductors, so the 2 main NVIDIA segments were able to significantly increase revenue over the past year. This applies to sales of products for the video game market and data centers.Both directions are able to continue growth in the long term, but the company has other opportunities:Development of cloud gamingIncreasing the scale of your car segmentImprovement and implementation of artificial intelligence technologiesIt is entering new markets like robotics, automated factories and other advanced technologiesTechnical pictureNVIDIA shares have entered an active growth phase since mid-March after a long sideways consolidation. At the beginning of July, there was another pause and correction, which ended last week.At the moment, the price is above EMA21 and buyers are starting to test $230, overcoming the level from the bottom up will open the way to $240 and higher.At the same time, the daily RSI has already come close to the overbought zone, and the weekly one is already there. The MACD curves are directed upwards, which signals the continuation of the growth phase. If there is a rebound down from $230, then the shares can go sideways. The situation will become negative when going down below $210, which in the future may turn into a full-fledged correction below $200.Is it worth investingThe long-term outlook remains moderately positive due to technological superiority, continuing high demand against the background of a shortage of chips and entering new markets and strengthening positions in the current ones.In the short term, the growth may still continue, but entering a position right now looks risky in view of the beginning of overbought stocks from the technical side. If the investor already had a position, it makes sense to partially fix the profit, otherwise the shares should be considered from a speculative point of view for a short period.The growth may support the overall positive mood in the US market due to the local easing of tension on the issue of curtailing the QE program. This issue remains and is postponed, so investors can still take risks, which will support the growth of shares in the short run. The recent strong financial report may also support the upward trend.
Aug 30, 2021
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The US dollar collapsed after the speech of the head of the Fed in Jackson Hole
The US dollar collapsed after the speech of the head of the Fed in Jackson Hole The dollar fell on Friday, reacting to the head of the US Federal Reserve at a symposium in Jackson Hole.Jerome Powell did not indicate any time frame for the start of the reduction of QE programs.The dollar index fell to its lowest level in a week and a half after Fed Chairman Jerome Powell said that the central bank could start curtailing asset purchases this year, but did not specify a specific time frame for such a curtailment.In a virtual speech at the Jackson Hole symposium, Powell noted that the Fed will continue asset purchases at the current pace until it sees "significant additional progress" in achieving maximum employment and price stability.Despite the obvious progress in achieving these goals, maximum employment is still far away, and only "time will tell" whether inflation will stabilize at the level of 2%.Powell spent much of his speech explaining why he remains confident that the recent spike in inflation will prove temporary. He sees no sign that the growth of wages can fuel the growth of inflation. If the growth of inflation turns out to be stable, the Fed will undoubtedly take measures to reduce price pressure, he noted.According to the head of the Fed, a premature tightening of policy now would be "especially disastrous". Progress in the labor market continues, but the delta strain of coronavirus and the increase in cases of infection creates risks in the short term. The COVID-19 pandemic still poses a threat to the recovery process.The next Fed meeting will be held on September 21-22, and some representatives of the Central Bank have already said that they will offer to start curtailing bond purchases shortly after the meeting if the strong trend in employment continues.Powell's speech did not contain a strong signal about the timing of the start of such a curtailment. This suggests that it is unlikely to be expected before the Fed meeting, which will be held in early November.
Aug 28, 2021
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Correction ahead of Powell's speech
Correction ahead of Powell's speech  At the auction on August 26, American stock markets showed negative dynamics. The S&P 500 index fell 0.58% to 4,469. 91 points. The Dow Jones consolidated by 0.54%, and the Nasdaq lost 0.64%. Only the real estate sector closed in the green zone (+0.10%). The leaders of the decline were energy companies (-1.51%), as well as the communications sector (-0.73%) and cyclical consumer goods (-0.73%).Company newsLordstown Motors (RIDE: +17.8%) has announced the appointment of Daniel Ninivaji as CEO. ·The manufacturer of cosmetic products Coty (COTY: +14.7%) reported EPS worse than expected, but revenue and EBITDA exceeded forecasts. The company announced plans to conduct a partial IPO of the Brazilian division in order to raise funds to repay the debt. ·The insurance company SelectQuote (SLQT: -45%) published weak reports and presented a forecast for the next financial year worse than market expectations.ExpectationsToday, global stock markets are showing mixed dynamics. The focus of market players' attention is today's speech by Fed Chairman Jerome Powell at a symposium in Jackson Hole. Most likely, there will be no additional information on the timing of the QE program curtailment today or tomorrow, which will shift the focus of investors to the September FOMC meeting. Nevertheless, Bloomberg notes a possible increase in volatility in the markets this evening due to the flow of treasury options, which expire on Friday.In addition to Powell's speech and the Fed's policy in general, the data on employment in the non-agricultural sector for August, which will be published on September 3, are of interest to the investment community. In addition, next month, the attention of market players will also be focused on fiscal measures and the situation around the infrastructure bill, which, apparently, the Democrats intend to adopt through a budget reconciliation tool. At the moment, signals are beginning to appear on the market, indicating that in the absence of new drivers in the equity securities segment, a suspension of growth or even a downward turn is possible this fall.Asian stock markets showed mixed dynamics. Hong Kong's Hang Seng fell by 0.04%, China's CSI 300 added 0.53%, Japan's Nikkei 225 lost 0.36%. EuroStoxx 50 is growing by 0.04%. ·The risk appetite is uncertain. The yield of 10-year treasuries is 1.34%. The price for Brent futures rises to $71.2 per barrel. Gold rises to $1,802 per troy ounce.The S&P 500 will hold the upcoming session in the range of 4450-4500 points.MacrostatisticsToday, the basic and general price indices of personal consumption expenditures in the United States will be published (forecast: +3.5% yoy and +4.1% yoy, respectively, against +3.5% and +4.0% yoy in the previous period).Technical analysisThe S&P 500 continues to move in an uptrend. Last week, the benchmark showed a rebound from support at the level of 4370 points and resumed growth. In the near future, the "bulls" will test the level of 4490-4500 points. To reverse the trend, the S&P 500 should consolidate below the support at the level of 4370 points.
Aug 27, 2021
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