Latest news with #FCF
Yahoo
2 days ago
- Business
- Yahoo
Viatris (VTRS) Announces Positive Top-line Results from VEGA-3
Viatris Inc. (NASDAQ:VTRS) is one of the The company announced positive top-line results from VEGA-3, which is the second pivotal Phase 3 trial evaluating MR-141 (phentolamine ophthalmic solution 0.75%) in treating presbyopia. To give a brief overview, presbyopia happens to be a progressive loss of the ability to focus on close objects, which leads to blurred near vision and eye strain, mainly in dim lighting conditions. A healthcare worker in a lab coat, holding a microscope and reflecting on the diagnosis of a patient. As per Viatris Inc. (NASDAQ:VTRS)'s Chief R&D Officer, presbyopia is a very common condition that affects ~90% of adults in the US over the age of 45. Viatris Inc. (NASDAQ:VTRS) expressed optimism with the positive results from the second pivotal Phase 3 trial, which reinforce the company's confidence in MR-141 and its benefit-risk profile as a potential, non-invasive option to help millions of patients. Furthermore, Viatris Inc. (NASDAQ:VTRS)'s growing pipeline, capital discipline, operational execution, and strong global scope provide confidence to navigate the periods of volatility and uncertainty. Viatris Inc. (NASDAQ:VTRS) continues to generate strong cash flow. Its net cash provided by operating activities (US GAAP) came in at $535 million, and FCF was $493 million, which includes $43 million in transaction-related costs. While we acknowledge the potential of VTRS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
2 days ago
- Business
- Yahoo
Netflix Produces Strong Q2 FCF, But NFLX Stock Dips - Is It a Buy Here?
Netflix, Inc. (NFLX) reported yesterday that its Q2 revenue grew +15.9% and its FCF grew 14.2% Y/Y, but dipped on a Q/Q basis. NFLX stock could be a bargain, given its 20.4% FCF margin, and using a 1.65% FCF yield. Shorting out-of-the-money (OTM) put options works as well. NFLX is at $1,212.77 in midday trading, down over 4.8% today, but it could be a buying opportunity. This article will show why. More News from Barchart Insider Trading Alert: Here's Who Bought Nvidia and AMD Stock Before the U.S. Chip Deal with China AMZN Trade Idea: Capture Gains Without Chasing the Stock 3 Unusually Active Cash-Secured Puts in Quality Companies for Attractive Income Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Last quarter, after the company released its results, I projected in an April 20 Barchart article that NFLX stock could be worth $1,176 per share. Today, I am raising that target price by +14% to $1,383 per share using a similar method as before. Strong FCF Margins The table below, taken from Netflix's Q2 shareholder letter, shows that although revenue rose 15.9% Q/Q, Netflix's operating cash flow and free cash flow (FCF) dipped in Q2. Moreover, the quarterly FCF margin (i.e., FCF / revenue) fell from 25.2% to 20.4%. Don't focus on that. Over the past 12 months, its FCF margins have stayed very strong. shows the trailing 12-month (TTM) FCF margins on its cash flow analysis tab. For example, last quarter the TTM FCF margin was 18.54%, so it has risen almost 200 basis points this quarter to 20.5%. As a result, we can use that to forecast Netflix's margins going forward. After all, management raised its revenue forecast and indicated its operating margins would stay stable. Forecasting FCF Analysts now project 2025 revenue of $44.84 billion and 2026 revenue of $50.37 billion. That means the next 12-month (NTM) revenue forecast is $47.6 billion (up from $46.96 billion in my prior Barchart article estimate). So, if we assume that Netflix will continue to make a 20.4% FCF margin over the next year: $47.6b x 0.204 = $9.71 billion FCF NTM estimate We can use this to value NFLX stock over the next 12 months. How? Price Targets for NFLX Stock One way is to use its TTM FCF yield. That metric assumes that 100% of its FCF will be paid out to shareholders and the stock will have a 'yield.' shows that Netflix generated $8.5 billion in FCF over the trailing 12 months (this can also be computed from the Netflix quarterly FCF figures above). Since NFLX's market capitalization today is $515.356 billion, according to Yahoo! Finance, its TTM FCF yield is: $8.5b / $515.356 b = 0.0165 = 1.65% That is the same as a multiple of 60.6x (i.e., the reciprocal of 1.65%). Therefore, we can multiply our NTM FCF forecast by 60.5: $9.71b x 60.5 = $587.46 billion NTM market cap That result is +14% higher than today's $515.4 billion market cap. As a result, our price target is 14% higher than today's price: $1,212.77 x 1.14 = $1,382.56 p/sh price target So, assuming Netflix maintains a 20.4% FCF margin over the next year, NFLX stock could potentially be worth 14% more or $1,383 per share. This assumes the market values its FCF at over 60x, or a 1.65% FCF yield. There is no guarantee this will occur. For example, the multiple could fall (i.e., the FCF yield might rise). As a result, it makes sense to set a lower buy-in price. One way to do this, and get paid, is to sell short out-of-the-money (OTM) put options in nearby expiry periods. Shorting OTM Puts For example, look at the Aug. 22 expiry period, just over one month from now. It shows that the $1,165.00 put option strike price, which is over 4% lower than today's trading price, has an attractive premium worth shorting. The $1,165.00 put has a midpoint price of $19.68, which allows an investor who enters an order to 'Sell to Open' this put contract to make an immediate yield of 1.69% (i.e., $19.68/$1,165 = 0.0189). This also means that the potential breakeven buy-in price is $1,165.00 - $19.68, or $1,145.32 (i.e., if NFLX falls to $1,165.00 on or before Aug. 22). That is still over 5.5% lower than today's price. So, it provides good downside protection and a potential lower buy-in price. Moreover, investors willing to take on more risk can sell short the $1,170 strike price put. The account would receive $20.98 (i.e., $2,098 per put contract) on a secured collateral of $117,000 (i.e., $1,170 x 100 shares per put contract). That provides an immediate yield of 1.793% (i.e., $20.98/$1,170), and the investor has a breakeven price (if NFLX falls to $1,170) of $1,149.02, or -5.4% below today's price. Moreover, an investor in this strike price stands to potentially make an upside of +20%, if NFLX hits our target price: $1382.56/$1149.02 = 1.203 -1 = +20.3% upside In addition, even if NFLX stock doesn't fall to this breakeven price, an investor has an expected return (ER)of over 5% over 3 months. This can be done by using a mix of these two short put trades (i.e., (1.69% +1.793%)/2 = 1.7415%) over 3 months: 1.7415% x 3 = 5.22% 3 mo ER The bottom line is that investors in NFLX puts using this method can set a lower buy-in price and potentially make a good expected return. However, investors in puts should be careful to understand all the risks associated with this type of trade. One way to do this is to study Barchart's Learn Center tabs on options trading. On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Yahoo
3 days ago
- Business
- Yahoo
2 Tech Stocks to Buy Poised to Benefit From Trump's ‘One Big Beautiful Bill'
A little-noticed provision in President Donald Trump's 'One Big Beautiful Bill Act' may deliver a stealthy windfall to select software companies. According to analysts at Evercore ISI, changes in tax treatment for research and development and capital expenditures could unlock significant free cash flow for firms with heavy investment in innovation and infrastructure. With 100% bonus depreciation returning and R&D expenses now fully deductible, companies like Microsoft (MSFT) and Oracle (ORCL) stand to benefit. More News from Barchart Dear Google Stock Fans, Mark Your Calendars for July 23 Retirement Ready: 3 Dividend Stocks to Set and Forget Dear UnitedHealth Stock Fans, Mark Your Calendars for July 29 Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Here is what you need to know about these two tech giants as they stand poised to benefit. Tech Stock #1: Oracle (ORCL) Oracle (ORCL) is making a tremendous comeback, and the stock is up nearly 50% in the past six months. Wall Street used to see Oracle as a legacy business, but it became a hot topic overnight due to Trump's Project Stargate. Founder Larry Ellison went all in alongside major companies OpenAI and SoftBank (SFTBY) on $500 billion in AI-related spending through 2029. Earlier this week, Oracle committed $3 billion to invest in European AI and cloud expansion. The stock is going vertical due to the AI narrative and its related long-term growth prospects. According to Evercore analyst Kirk Materne, Oracle is one of the software companies that will receive 'a stealth FCF tailwind' due to 'favorable changes in tax treatment for R&D and capital expenditures.' He believes that Oracle's free cash flow could rise by $3.3 billion or $1.12 per share. Oracle reported $20.8 billion in operating cash flow in its most recent quarter, although it reported a $394 million free cash outflow due to its capex of $21.22 billion. Evercore has a price target of $215 on ORCL, which is lower than its current trading price. Tech Stock #2: Microsoft (MSFT) Microsoft (MSFT) is the company that kickstarted the AI rally with its multibillion-dollar investment into OpenAI. This investment has paid off in spades, though indirectly. The recent AI surge has taken MSFT stock over $500, and the company looks to spend some $80 billion in cloud and AI infrastructure this year to further boost growth. The company's productivity software suite is even more attractive due to AI integration, and white collar businesses can't get enough of it. Trump's One Big Beautiful Bill could supercharge the trajectory it is already on. According to Evercore, Microsoft is poised to receive an $11 billion increase in free cash flow, or $1.50 per share. Evercore has a price target of $515 on MSFT, implying 2% upside potential from here. On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
CNBC
4 days ago
- Business
- CNBC
Analysts are getting more bullish on these names with strong earnings growth
Stocks with durable growth and rising forecasts could outperform this earnings season, according to Wolfe Research. Financial results will be pouring in this week, with 35 stocks in the S & P 500 — or about 7% of the benchmark — on the schedule to report their latest earnings. Big banks including JPMorgan Chase , Wells Fargo , Citigroup , BlackRock , Bank of New York Mellon and State Street commenced the season on Tuesday morning. Other headliners reporting this week include PepsiCo , Netflix , United Airlines , 3M and Johnson & Johnson . In a Monday note, Wolfe Research shared a list of S & P 500 stocks with strong potential earnings growth. More specifically, the stocks had durable growth on both the top and bottom lines, as well as positive 2025 year-to-date earnings revisions. One name on the list was natural gas producer EQT , up 26% this year. Barclays echoed Wolfe's bullish sentiment on the stock. Last week, Barclays analyst Betty Jiang initiated coverage of EQT at an overweight rating. " Reintegration with [Equitrans Midstream] helps drive all-in free [cash flow] breakeven to sub-$2.00/Mcf by 2028, enabling durable FCF generation and participation in upside gas volatility. EQT is also among the best positioned to capture structural demand growth opportunities in Appalachia," she wrote. Equitrans is EQT's former pipeline unit. The company announced plans to buy it in order to improve its cost structure as natural gas prices remain at low levels. Jiang's $65 price target is approximately 12% above where shares of EQT closed on Tuesday. Lam Research , up 40% in 2025, also made the list. Goldman Sachs was similarly bullish the name, initiating the semiconductor stock at a buy rating last week. "We believe the company is on track to capture over 50% of its incremental SAM [serviceable available market] in the coming years," the bank wrote. "Despite Lam reporting revenue ~11% below prior peak levels in 3Q22, the company generated the highest gross margins realized post the Novellus merger, which we believe reflects Lam's strong operational execution." Goldman Sachs set a price target of $115, offering approximately 14% upside from the stock's current value. Goldman similarly initiated peer semiconductor stock Broadcom also at a buy rating last week. Shares have surged 21% this year. "Broadcom has a dominant franchise position across several segments of infrastructure software as a result of a long-term M & A strategy. We believe the company is likely to sustain its dominant position in enterprise networking silicon, and will continue to leverage this leadership to drive majority share in custom silicon processors for major U.S. hyperscalers — which should drive AI to comprise over 40% of the company by 2026," the bank wrote. "At the same time, Broadcom continues to generate steady, growing profitability in its core infrastructure software business." The bank's $315 price target implies upside of 12% from Broadcom's Tuesday closing price.
Economic Times
6 days ago
- Automotive
- Economic Times
Ola Electric shares surge over 9% despite posting Rs 428 crore loss in Q1. Here's why
Ola Electric's shares climbed as much as 9.5% on Monday to Rs 43.60 on the BSE, even as the company reported a wider consolidated net loss of Rs 428 crore for the quarter ended June 2025. The rally surprised many at first glance, but behind the headline loss, the company delivered a series of operational wins that signalled a possible inflection point in its journey to profitability. ADVERTISEMENT Despite the year-on-year drop in revenue, down 49.6% to Rs 828 crore from Rs 1,644 crore, Ola met its top-line guidance and reported a sequential growth of over 35% from Rs 611 crore in the March quarter. Most notably, the company's auto segment turned EBITDA positive in June, a first for the EV maker. Gross margin for the quarter stood at 25.6%, its best so far, even though key models are yet to receive government certification required to unlock PLI-linked incentives. Ola credited the improvement to reduced bill-of-materials costs and efficiencies driven by vertical integration and proprietary technology. Demand for its Gen 3 scooters, Roadster bikes, and the high-margin MoveOS+ software also contributed to the better-than-expected margin cost-cutting programme, Lakshya, helped slash auto operating expenses to Rs 105 crore per month, down from Rs 178 crore in Q3 FY25. Consolidated opex is now around Rs 150 crore monthly, and the company expects to hold this line even if volumes double by the end of FY26. ADVERTISEMENT Total expenses in Q1 fell 42.4% year-on-year to Rs 1,065 crore. As a result, while consolidated EBITDA remained in the red at Rs 237 crore, the margin improved to -28.6%, from -113.9% in the previous quarter. Auto EBITDA narrowed to -11.6%.The company reaffirmed its FY26 targets: sales of 3.25–3.75 lakh vehicles and revenue between Rs 4,200 crore and Rs 4,700 crore. Ola said it expects auto EBITDA to remain positive from Q2 onward and rise above 5% for the full year. ADVERTISEMENT Ola projected Rs 300 crore in auto capex for the remainder of FY26 and estimates that Rs 400–500 crore in additional funding will be needed to bridge to free cash flow breakeven by its battery cell business, the 5 GWh installation is on track for completion this year, with 70% of the Rs 1,000 crore investment covered by existing term loans. FCF breakeven for the cell unit is expected by end-FY27. ADVERTISEMENT The company ended June with a cash balance of Rs 3,197 crore and said it does not foresee any further funding requirements for ongoing operations. Debt refinancing talks are underway and expected to close in the next the turnaround signals are encouraging, Ola acknowledged macro uncertainties, including supply chain risks and growing competition, that could impact execution in the coming quarters. ADVERTISEMENT Still, with margins improving, cash burn narrowing, and demand holding steady, the stock's rally suggests investors are beginning to price in a credible shift toward profitability. Whether the company can sustain this momentum remains the key question. Also read | Ola Electric Q1 Results: Net loss widens 23% YoY to Rs 428 crore, revenue drops 50% (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
