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Perion Network and West Fraser Timber have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – February 23, 2023 – Zacks Equity Research shares Perion Network PERI as the Bull of the Day and West Fraser Timber WFG as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Moderna MRNA, Bausch Health Companies BHC and Agios Pharmaceuticals AGIO.

Here is a synopsis of all five stocks:

Bull of the Day:

Perion Network, a Zacks Rank #1 (Strong Buy), has broken out to the upside this year after clearing through a powerful cup-with-handle pattern. The stock gracefully sidestepped last year's bear market, finishing strong with a positive return. PERI shares are now hitting a series of 52-week highs to kick off the New Year on increasing volume, and continue to display relative strength as buying pressure accumulates in this market leader.

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PERI sports the highest Zacks Value Growth Style Score of 'A', indicating further upside based on favorable growth metrics. The company is part of the Zacks Internet – Content industry group, which ranks in the top 39% out of more than 250 Zacks Ranked Industries. This group has widely outperformed the market to kick off the new year.

Historical research studies suggest that approximately half of a stock's price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It's no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.

Company Description

Perion Network is an international provider of digital advertising solutions to brands, agencies, and publishers. The company provides Wildfire, a content monetization platform, along with search monetization tools such as web mediation and website monetization. PERI also offers supply chain management services and an analytics platform that provides performance insights and other campaign metrics.

Perion Network boasts an artificial intelligence platform named Intelligent HUB (iHUB), which pulls in signals across various advertising channels and optimizes traffic at scale, all while yielding engagement metrics and key performance indicators (KPIs).

Earnings Trends and Future Estimates

PERI has built up an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Earlier this month, the company reported fourth-quarter earnings of $0.90/share, a 28.57% surprise over the $0.70 consensus estimate. PERI has delivered a trailing four-quarter average earnings surprise of 31.72%.

The PERI growth engine is expected to remain hot this year, as analysts covering the digital advertising company have increased their EPS estimates across the board. First-quarter estimates have been raised by +30% in the past 60 days. The Q1 Zacks Consensus EPS Estimate now stands at $0.52/share, reflecting potential growth of 57.58% relative to the same quarter in the prior year.

Let's Get Technical

PERI shares have advanced over 80% in the past eight months alone. Only stocks that are in extremely powerful uptrends were able to weather last year's bear market so gracefully. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.

Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock had been making a series of higher highs. With both strong fundamentals and technicals, PERI is poised to continue its outperformance.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Perion Network has recently witnessed positive revisions. As long as this trend remains intact (and PERI continues to deliver earnings beats), the stock will likely continue its bullish run this year. Despite the impressive performance, PERI currently trades relatively undervalued at just a 12.31 forward P/E.

Bottom Line

PERI is ranked favorably by our Style Score Categories, with an 'A' for Growth and 'B' for Momentum, paving the way for an overall 'A' VGM score. Increasing volume at recent breakout levels is another bullish sign.

Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Backed by a leading industry group and robust history of earnings beats, it's not difficult to see why this company is a compelling investment. Investors would be wise to consider PERI as a portfolio candidate if they haven't already done so.

Bear of the Day:

West Fraser Timber produces and sells lumber, panels, pulp and papers in the southern U.S. and western Canada. West Fraser Timber exports its lumber to the Far East, Asia, the Caribbean, Europe, the Middle East, and South America. Based in Vancouver, BC, WFG operates a diversified wood business including plywood, newsprint, wood chips, and other residuals.

The Zacks Rundown

WFG, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Agriculture – Products industry group, which ranks in the bottom 33% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has to start off the New Year.

Candidates in the bottom tiers of industries can often be solid potential short candidates. While individual stocks have the ability to outperform even when included in a poor-performing industry group, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.

The odds are stacked against WFG, and the stock is agreeing with this notion. WFG experienced a climax top in July of last year and has been in a price downtrend ever since. The stock has been underperforming and represents a compelling short opportunity, particularly as lumber continues its recent downward trend.

Recent Earnings Misses & Deteriorating Outlook

WFG has fallen short of estimates in two of the last four quarters. The company most recently reported a fourth-quarter loss earlier this month of -$1.13/share, missing the $1.11/share consensus EPS estimate by -201.8%. The stock has moved steadily lower since the announcement. Consistently falling short of earnings estimates is a recipe for underperformance, and WFG is no exception.

West Fraser Timber has been on the receiving end of negative earnings estimate revisions as of late. For the current year, analysts have revised their EPS estimates downward by -45.55% in just the past week. The 2023 Zacks Consensus Estimate is now $5.26/share, translating to negative growth of -74.48% versus last year. Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.

Technical Outlook

As illustrated below, WFG is in a sustained downtrend. Notice how the stock has plunged below both the 50-day and 200-day moving averages signaled by the blue and red lines, respectively. The stock is making a series of lower lows, with no respite from the selling in sight. Also note how the 200-day moving average has rolled over and is sloping down – another good sign for the bears.

While not the most accurate indicatr, WFG has also experienced what is known as a 'death cross', wherein the stock's 50-day moving average crosses below its 200-day moving average. WFG would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. The stock has fallen more than 20% in the past year alone.

Final Thoughts

A deteriorating fundamental and technical backdrop show that this stock is not set to make new highs anytime soon. The fact that WFG is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock's downtrend.

Our Zacks Style Scores depict a weakening outlook for this stock, as WFG is rated a second-worst possible 'D' in each of our Growth and Momentum categories, indicating further downside ahead. Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of WFG shares until the situation shows major signs of improvement.

Additional content:

Drug & Biotech Stocks Reporting Earnings Thursday

All the large drugmakers in the drug/biotech sector have already reported their fourth-quarter results. Overall, it has been a mixed earnings season for them, with most companies beating estimates for earnings but missing the same for sales. Most large drugmakers issued a conservative guidance for 2023.

The earnings season for the drug/biotech sector is now in its final stretch, with some smaller companies due to report their fourth-quarter results.

Per the Zacks classification, the pharma/biotech industry comes under the broader Medical sector, which comprises pharma/biotech as well as medical device companies.

As of Feb 15, per the Earnings Trends report, 75.0% of the Medical sector participants, constituting 92.7% of the sector's market capitalization, have already reported earnings. While 76.2% of the companies beat on earnings, 73.8% surpassed on revenues. Earnings decreased 6.5% year over year, while revenues rose 4.8%.

Overall, fourth-quarter earnings of the Medical sector are expected to decline 1.2%, while sales are projected to increase 3%.

Here we discuss three companies, Moderna, Bausch Health Companies and Agios Pharmaceuticals, which are set to report fourth-quarter results on Feb 23.

Moderna

This large biotech's surprise history has been mixed, with earnings beating estimates in three of the trailing four quarters while missing the same once. The average surprise is 20.04%. In the last reported quarter, the company delivered a negative earnings surprise of 16.78%.

Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Moderna has an Earnings ESP of -6.55% and a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for earnings stands at $4.66 per share.

We expect sales of Moderna's mRNA-based COVID vaccine to be significantly lower than the prior-quarter levels, with the impact of the pandemic receding. Apart from its COVID-19 vaccine, Moderna is developing more than 30 candidates in different stages of clinical studies, majorly mRNA-based products targeting different indications, including cancer.

Bausch Health Companies

This pharmaceutical company has a rather poor track record, having missed earnings in three of the past four quarters while beating in one. In the last reported quarter, it missed earnings expectations by 17.39%. It missed earnings estimates by 17.03%, on average, in the last four quarters.

Bausch Health has an Earnings ESP of 0.00% and a Zacks Rank #3. The Zacks Consensus Estimate for earnings stands at 92 cents share.

Agios Pharmaceuticals

Agios' surprise history has been mixed, with earnings beating estimates in three of the trailing four quarters while missing the same once. The four-quarter average surprise is 5.15%. In the last reported quarter, the company delivered an earnings surprise of 14.86%.

Agios Pharmaceuticals, Inc. Price and EPS Surprise

Agios has an Earnings ESP of -2.02% and holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for loss stands at $1.59 per share.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Moderna, Inc. (MRNA) : Free Stock Analysis Report

Perion Network Ltd (PERI) : Free Stock Analysis Report

Agios Pharmaceuticals, Inc. (AGIO) : Free Stock Analysis Report

Bausch Health Cos Inc. (BHC) : Free Stock Analysis Report

West Fraser Timber Co. Ltd. (WFG) : Free Stock Analysis Report

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