While shares of car-shopping firm TrueCar Inc (NASDAQ:TRUE) are plummeting in pre-market following disappointing earnings results, shares of chip gear-maker Applied Materials, Inc. (NASDAQ:AMAT) soar as quarterly earnings beat Wall Street’s expectations. Let’s take a look and see what the analysts have to say about TRUE and AMAT.
Shareholders of TrueCar are having a rough day as the company’s stock is down by 23% in pre-market trading Friday, following fourth-quarter earnings results that came up short of expectations.
In reaction, RBC Capital analyst Mark Mahaney reiterated a Sector Perform rating on the stock, while slashing the price target to $6.00 (from $10.00), which represents a slight upside potential from current levels.
Mahaney commented: “Q4 results were lower than expected, but the bigger factor was guidance meaningfully below forecasts. New CEO Chip Perry ID’ed, we believe correctly, the pivotal issues that must be addressed to position TRUE for long-term (profitable) growth. Material changes are necessary, but investments will take time to bear fruit.”
“TRUE is an asset addressing a critical consumer need with a large addressable market, a differentiated value proposition to both car dealers and consumers and meaningful user traffic. However, execution challenges have exposed risks around its lack of negotiating leverage vs. car dealers, revenue concentration among affinity partners and customer leakage. Management is outlining a plan to address these issues, which we believe is the right course of action. But, until we see some traction we remain on the sidelines,” the analyst concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a yearly average return of 16.3% and a 56% success rate. Mahaney has a -52.8% average return when recommending TRUE, and is ranked #15 out of 3640 analysts.
Applied Materials, Inc.
Today, shareholders of Applied Materials woke up to a nice 9% pop in the value of their shares, after the company posted first quarter of fiscal 2016 financial results, ahead of the Street’s expectations. Moreover, the company provided a better-than-expected guidance for its current quarter, as it expects to post EPS in the $0.30-0.34 range, compared to the projected $0.26.
Reacting was Needham analyst Edwin Mok, which upgraded the stock from Hold to Buy, with a $22 price target, which implies an upside of 28% from current levels.
Mok commented, “We are upgrading AMAT from a Hold to a Buy as we believe the drivers are now in place to deliver profitable growth ahead. Yesterday’s F1Q16 (Jan) report was highlighted by the substantially higher guidance. We believe AMAT’s strategy and efforts to drive growth in the Silicon, Display and AGS businesses are finally starting to yield results, even with limited industry growth ahead. With improving gross margins and good cost control ahead, we now expect the model to deliver strong, double-digit-% earnings growth in 2-3 years, even though it is trading largely in line with other large-cap Semi names. We would be buyers of AMAT for the strengthened positions in multiple areas and the earnings growth that we see ahead.”
According to TipRanks.com, analyst Edwin Mok has a yearly average return of 0.4% and a 50.3% success rate. Mok has a -15.2% average return when recommending AMAT, and is ranked #1497 out of 3640 analysts.