Agilysys, Manpower, Eli Lilly and Company, Innoviva and AbbVie highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – April 7, 2020 – Zacks Equity Research Shares of Agilysys AGYS as the Bull of the Day, Manpower Group MAN asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Eli Lilly and Company LLY, Innoviva, Inc. INVA and AbbVie Inc. ABBV.

Here is a synopsis of all five stocks:

Bull of the Day:

Agilysys is the Bull of the Day after it ran an impressive 15% yesterday.  So why is it the Bull today after such a strong showing yesterday?  Well the Bull of the Day is more about explaining how the Zacks Rank can help you find better stocks... but there is more to this story.

Description

Agilysys operates as a developer and marketer of hardware and software products and services to the hospitality industry. The company offers point of sale, property management systems, payment, business intelligence, guest self-service, inventory and procurement, reservations, table management, activity scheduling, golf and spa management, document management, and online booking solutions to enhance guest experience. Agilysys, Inc. was founded in 1963 and is headquartered in Alpharetta, Georgia.

What Does This Tell You?

Well I see the stock doing fine until the COVID Crash... then the bottom fell out and there has not really been a recovery trade in this name like we have seen in so many others.

Basic logic will tell you that hotels will not cease to exist.  They will return to business as usual at some point -- and that could be sooner than Wall Street expects.

We have seen many other stocks move higher here, but until yesterday AGYS hasn't moved that much off the bottom.

The 15% move yesterday came with the broader market moving much higher but it could only be the start of things to come.

Zacks Rank #2 (Buy)

The Zacks Rank is an aglorithm that looks at the movement in all earnings estimates and then ranks them.  There are other factors such as earnings beats and misses... but for the most part, it is the earnings estimate revisions that drive the rank.

For AGYS the earnings history isn't great with three misses and one beat over the last four quarters.

Earnings Estimates

I see some good moves in estiamtes for AGYS.  This quarter moved from a loss of 9 cents to a loss of 6 cents.  Next quarter is even better as estimates moved from a loss of 9 cent so a loss of 5 cents over the same time horizon.

The Rank gives more weight to full year numbers. The 2020 fiscal number has moved from a loss of 42 cents to a loss of 36 cents.  Next year saw a nice bump of 13 cents in the right direction.

Valuation

No earnings mean no PE to lean on... but we have the other metrics to look at.  3.4x book is super reasonable for a stock that is posting topline growth of 16%.  A 2.1x prices to sales multiple is also pretty low for a software name.

Margins are headed in the right direction and as they continue to improve the flip to proftiabilty will only increase the number of eyeballs on this stock.

Bear of the Day:

Manpower Group is a Zacks Rank #5 (Strong Sell) and the stock has dropped for some obvious reasons.  Of course in a lockdown there is not a lot of demand for staffing.  The probability of many other businesses closing down after the lockdown is lifted is high, so there could be an increase in amount of people looking for work.  That will also hurt a name like MAN.  But is it a good time to look at this name as a play for the long haul?

Description

ManpowerGroup Inc. provides workforce solutions and services in the Americas, Southern Europe, Northern Europe, and the Asia Pacific Middle East region. The company offers recruitment services, including permanent, temporary, and contract recruitment of professionals, as well as administrative and industrial positions under the Manpower and Experis brands. It also offers various assessment services; training and development services; career management; and outsourcing services related to human resources functions primarily in the areas of large-scale recruiting and workforce-intensive initiatives.

In addition, the company provides workforce consulting services; contingent staffing and permanent recruitment services; professional resourcing and project-based solutions in information technology, engineering, and finance fields; solutions in the areas of organizational efficiency, individual development, and career mobility; and recruitment process outsourcing, TAPFIN managed, and talent based outsourcing services, as well as Proservia services in the areas of digital services market and IT infrastructure sector. It operates through a network of approximately 2,500 offices in 75 countries and territories. The company was founded in 1948 and is headquartered in Milwaukee, Wisconsin.

Earnings History

I see a good earnings history for MAN.  Three out of the last four quarter were beats and the lone miss was just of a penny.

Over the last four quarters MAN has posted a positive earnings surprise of 2.7%.

Earnings Estimates

The Zacks Rank really keys on the movement of earnings estimates.  For MAN, the estimates are falling.  This year moved from $7.63 down to $5.14 and next year has declined from $8.26 to $6.97.

That sort of negative revision will send a stock lower... but why would the numbers for 2021 fall so much?

I believe that the COVID 19 crisis will come to an end in the next few months... not next year.  More over, the gap of closed businesses will allow several new ones to open and existing names to close the market share gap in short order.  So will there be less demand for staffing in 2021 -- the analysts sure think so, but I think the stock recovers with the economy.

Valuation

A 10x forward earnings multiple is actually a little high for a stock that is seeing revenue contract at a 3.65% rate.  That said, the 1.2x book multiple is very low and margins are still positive.

This is certainly a stock worth taking a deeper look at as the COVID crisis will not last forever.

Additional content:

Will This Drug End Coronavirus?

Researchers at Australia’s Monash University have discovered that Ivermectin, a widely-available anti-parasitic drug, has been discovered to be an effective killer of the coronavirus. Part of a family of drugs called antihelmintics, it works by paralyzing and killing roundworms and related infections in people with impaired/weakened immune systems.

Satoshi Omura of Kitasato University, Tokyo and William C. Campbell of the Merck Institute for Therapeutic research are attributed with the discovery of the avermectin family of compounds, from which it is chemically derived.

According to a ScienceDaily report, researchers found that Ivermectin could stop the virus from growing in cell culture. "We found that even a single dose could essentially remove all viral RNA by 48 hours and that even at 24 hours there was a really significant reduction in it," said Doctor Kylie Wagstaff who led the research team.

In vitro (meaning outside a living body, like in a test tube, petri dish, etc.) testing of the drug has earlier shown it to be effective against a broad range of viruses including HIV, dengue, influenza and zika virus. And this latest test was also done in-vitro. And therein lies the problem of dosage.

While safe for its anti-parasitic problems, for which it is widely used across the world, we don’t know if the same dose could tackle the coronavirus. Nor do we know the indications for a higher dose. Nor do we know the nature of its attack on the virus, which could potentially have a different set of consequences for the human body.

Clinical study on humans is therefore the logical next step. This could take 6-8 months. Since it’s a medication rather than a vaccine, it doesn’t train the body to take on the invaders before they attack, but to cure the disease after it has already attacked.

While this is good news for therapeutics, it’s far from a done deal. The government has cautioned against people self-medicating with it to treat the coronavirus, given that self-medications of other compounds have already cost lives both in the U.S. and Iran.

Recommendations

While many pharma/biotech companies look like good options in the current environment, the ones with greater resources at their disposal are likely to weather the storm better. So recommendations for today include Eli Lilly and Company, Innoviva, Inc. and AbbVie Inc.

Innoviva’s valuation is reasonable at 8.4X forward twelve months’ earnings, which is below its median level and the S&P 500 average. Its revenue and earnings growth have been relatively steady over the past year. Its debt-cap is reasonable at 52.4% and on a declining trend. It also looks like net cash per share could go positive in the current quarter.

At 19.7X its forward 12 months’ earnings, LLY is trading well below its one-year high of 22.8X. While its revenue has moved around a bit in the last few quarters, earnings growth has been significant. One risk is its high-debt cap ratio of around 84%.

Through the acquisition of Allergan, AbbVie added higher-margin revenue, which is positive for the earnings fall-through. But an offsetting factor is the acquired debt, which also pushed up its interest levels. AbbVie’s valuation at 6.8X forward twelve months’ earnings is however well below its one-year median and the S&P 500, which makes it a buy.

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ManpowerGroup Inc. (MAN) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
Agilysys, Inc. (AGYS) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Innoviva, Inc. (INVA) : Free Stock Analysis Report
 
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