Tuesday, March 20, 2018 - 5:40pm
source: pexels

Euronet Worldwide, Inc. (Nasdaq: EEFT), Centene Corp (NYSE: CNC) and Equinix Inc (Nasdaq: EQIX) among best growth stocks trading at a reasonable price.

Growth Apart From Value: "Fuzzy Thinking"

In Warren Buffett's 1992 letter to Berkshire Hathaway Inc. (NYSE: BRK.B) shareholders, Buffett touches upon a subject at odds with much of the investment industry:

"Most analysts feel they must choose between two approaches customarily thought to be in opposition: ‘value' and ‘growth.' Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross-dressing.

We view that as fuzzy thinking... In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive."

Many investors tend to categorize stocks into value and growth. However, the most successful investors view growth as simply one component of a company's value as Mr. Buffett explains.

The future outlook for a company is an important aspect when you're looking at buying a stock. And while value investors would argue that it's the intrinsic value relative to the current trading price that matters the most, a more compelling investment thesis would be high growth potential at a cheap price.

Therefore, I used finbox.io's stock screener to see if I could find high growth stocks trading below their intrinsic value.

Screening For Inexpensive Growth Stocks

The following are all the filters applied in this growth at a reasonable price stock screen:

The six stocks that stood out from the screen above are presented below.

Inexpensive Growth Stocks To Buy: Oasis Petroleum Inc

Oasis Petroleum Inc. (NYSE: OAS) is an independent exploration and production company. It focuses on the acquisition and development of onshore unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin, and Permian Basin.

The company's total revenue stands at $1,248 million as of fiscal year ending December 2017. This is 81.8 percent higher than the $687 million achieved in fiscal year December 2012 and represents a five-year compounded annual growth rate (CAGR) of 12.7 percent.

The 6 Most Inexpensive Growth Stocks To Buy Now

Analysts forecast that Oasis Petroleum's total revenue will reach $3,012 million by fiscal year 2022 representing a five-year CAGR of 19.3 percent.

The 6 Most Inexpensive Growth Stocks To Buy Now Source: finbox.io

Shares of the company are down -38.8 percent over the last year while the stock last traded at $8.00 as of Tuesday, March 20th. Three separate valuation analyses imply that there is 34.7 percent upside relative to its current trading price. Wall Street's price target of $12.43 per share implies even further upside.

It's also worth noting that illustrious money manager T Boone Pickens currently owns 331,541 shares of OAS which represents 1.0 percent of his stock portfolio. T. Boone Pickens is a legend in the American energy industry and has been labeled anywhere from a ‘wildcatter' to a corporate raider. He clearly expects outsized returns from his investment in OAS.

Inexpensive Growth Stocks To Buy: Spirit Airlines Incorporated

Spirit Airlines Incorporated (NYSE: SAVE) provides low-fare airline services to approximately 60 destinations in the United States, the Caribbean, and Latin America.

The airline's total revenue stands at $2,648 million as of fiscal year ending December 2017. This is 100.8 percent higher than the $1,318 million achieved in fiscal year December 2012. In addition, Spirit's revenue growth has been fairly stable ranging from 8.4 percent to 25.5 percent over the last five years.

The 6 Most Inexpensive Growth Stocks To Buy Now

Going forward, Wall Street is forecasting that Spirit's total revenue will reach $4,508 million by fiscal year 2022 representing a five-year CAGR of 11.2 percent.

The 6 Most Inexpensive Growth Stocks To Buy Now

Source: finbox.io

Shares of Spirit Airlines are down -13.0 percent over the last year and finbox.io's fair value estimate of $62.66 per share calculated from six cash flow models imply 41.1 percent upside. The average price target from 15 Wall Street analysts of $52.47 per share similarly imply upside.

Inexpensive Growth Stocks To Buy: Euronet Worldwide

Euronet Worldwide (Nasdaq: EEFT) provides payment and transaction processing and distribution solutions to financial institutions and retailers worldwide.

The company's total revenue stands at $2,252 million as of fiscal year ending December 2017. This is 77.7 percent higher than the $1,268 million achieved in fiscal year December 2012 and represents a five-year CAGR of 12.2 percent. Euronet Worldwide's revenue growth has also steadily ranged from 6.5 percent to 17.8 percent over the last five fiscal years.

The 6 Most Inexpensive Growth Stocks To Buy Now

Analysts are estimating that Euronet Worldwide's total revenue will reach $3,869 million by fiscal year 2022 representing a five-year CAGR of 11.4 percent.

Applying these assumptions to 8 valuation models imply nice upside for shareholders.

The 6 Most Inexpensive Growth Stocks To Buy Now

Source: finbox.io

Euronet Worldwide's stock currently trades at $86.43 per share as of Tuesday, up only 2.8 percent over the last year. However, finbox.io's intrinsic value estimate suggests that shares could increase 34.1 percent going forward.

Furthermore, Joel Greenblatt is a notable investor in the company. His fund currently holds a position worth $9.0 million. Greenblatt is best known for a very specific style of value investing termed: Magic Formula Investing. The company clearly has the fundamental characteristics that make it a perfect fit within his magic formula.

Inexpensive Growth Stocks To Buy: Centene

Centene (NYSE: CNC) operates as a diversified and multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States.

The company's total revenue stands at $48.3 billion as of its latest fiscal year. This is nearly 5x higher than the $8.1 billion achieved five years prior.

The 6 Most Inexpensive Growth Stocks To Buy Now

Going forward, analysts are forecasting that Centene's total revenue will reach $87.9 billion by fiscal year 2022 representing a five-year CAGR of 12.7 percent.

The 6 Most Inexpensive Growth Stocks To Buy Now

Source: finbox.io

Shares of the company are trading 54.2 percent higher year over year. But the stock price could end up trading another 31.6 percent higher in 2018 based on Centene's future cash flow projections.

It's worth noting that highly followed portfolio manager David Tepper currently holds a position in Centene worth $76.5 million. Tepper, founder and portfolio manager at Appaloosa Management, is widely known for having inspired what's been dubbed the Tepper Rally of 2010. Through his macro view of the financial markets, Tepper was able to predict not only the stock market rally but the catalysts behind it which ultimately proved to be the Fed's stimulus. Whatever the catalyst, Tepper is likely expecting a sizable rally in Centene's stock price.

Inexpensive Growth Stocks To Buy: Equinix

Equinix (Nasdaq: EQIX) connects businesses to their customers, employees and partners via data centers.

The company's top-line reached $4,368 million as of its latest fiscal year, up 131.5 percent from fiscal year December 2012. Over that time period, Equinix's revenue growth has ranged from 11.5 percent to 32.5 percent.

The 6 Most Inexpensive Growth Stocks To Buy Now

Wall Street analysts estimate that Equinix's total revenue will continue to grow at an annual rate of 10.1 percent over the next five years.

The 6 Most Inexpensive Growth Stocks To Buy Now

Source: finbox.io

Equinix's stock currently trades at $414.48 per share as of Tuesday, up 9.4 percent over the last year. On a fundamental basis, the company's stock is trading at a 7.0% discount to finbox.io's intrinsic value estimate. However, the average price target from 22 Wall Street analysts of $507.23 implies 23.2 percent upside.

Inexpensive Growth Stocks To Buy: II-VI

II-VI, Inc. (Nasdaq: IIVI) provides engineered materials and optoelectronic components worldwide.

The company's total revenue reached $972 million as of fiscal year ending June 2017. This is 88.2 percent higher than the $516 million achieved in fiscal year June 2012. II-VI's top-line growth has ranged from 6.7 percent to 24.0 percent over the last five fiscal years.

The 6 Most Inexpensive Growth Stocks To Buy Now

Going forward, Wall Street forecasts that II-VI's total revenue will reach $1,839 million by fiscal year 2022 representing a five-year CAGR of 13.6 percent.

The 6 Most Inexpensive Growth Stocks To Buy Now

Source: finbox.io

Shares of the company are up 23.0 percent over the last year. The stock last traded at $47.25 as of March 20th and 8 separate valuation analyses imply that the stock is trading near its fair value. However, the average price target from nine Wall Street analysts implies 13.0 percent upside.

Inexpensive Growth Stocks To Buy

While investors tend to categorize stocks into value and growth, some of the most successful investors view growth as simply one component of a company's value. The companies above have positioned themselves so that double-digit growth appears to be a reasonable assumption for the foreseeable future. More importantly, this growth actually looks attractive relative to their current trading levels. As such, value and growth investors may want to take a closer look at these names.

In conclusion, the table below ranks all six stocks by their blended upside.

Inexpensive Growth Stocks To Buy
Ticker Name Upside (finbox.io) Upside (Analyst Target) Blend Upside
OAS Oasis Petroleum Inc 33.2% 57.4% 45.3%
SAVE Spirit Airlines Incorporated 41.1% 18.4% 29.8%
EEFT Euronet Worldwide 34.1% 31.6% 32.9%
CNC Centene 31.6% 19.2% 25.4%
EQIX Equinix 7.0% 23.2% 15.1%
IIVI II-VI 1.9% 13.0% 7.5%

Author: Matt Hogan

Expertise: Valuation, financial statement analysis

Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset's fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.

His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron's, Seeking Alpha and investing.com.

Matt can be reached at matt@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

image source: worth.com

The 6 Most Inexpensive Growth Stocks To Buy Now

Tuesday, March 20, 2018 - 4:52pm
Photo from Pixabay.

Altice USA Inc (NYSE: ATUS), the seventh-largest U.S. broadband provider and sixth-largest video provider, has seen its stock fall more than 40 percent since its recent highs, and investors may want to take advantage of the dip, according to Buckingham Research Group.

The Analyst

Buckingham's Matthew Harrigan initiated coverage of Altice's stock with a Buy rating and $30 price target.

The Thesis

Although Altice isn't the largest broadband provider, it does boast the most affluent consumers, as nearly 65 percent of total customers are within the New York City metro area, Harrigan said in the initiation note.

The company stands out compared to its peers in delivering $347 in 2018E EBITDA-CapEx per home passed, versus $249 for Comcast Corporation (NASDAQ: CMCSA) and just $157 for Charter Communications Inc (NASDAQ: CHTR), the analyst said. 

Altice is increasingly moving its profitability toward higher-margin broadband through the new Altice One home hub, Harrigan said. The platform integrates streaming content with "superior" Wi-Fi capabilities.

The broadband provider should be able to achieve a long-term CapEx-to-sales ratio below 10 percent, the analyst said. 

Altice is capable of generating "ample" free cash flow of nearly $7.6 billion through 2021, according to Buckingham. This should help the company achieve its target debt-to-EBITDA multiple of 4.5 to 5x and retire nearly 29 percent of all current shares over the same time period, Harrigan said. 

Buckingham's base case scenario for Altice implies a 49-percent return from current levels, and a best case scenario could yield a 70-percent return. Investors face a "favorable" risk-reward profile at current levels, according to the sell-side firm. 

Price Action

Altice shares were down 1.75 percent at $19.70 at the close Tuesday.

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Tuesday, March 20, 2018 - 4:29pm
Photo from Wikimedia.

Gap Inc (NYSE: GPS) reported a fourth-quarter earnings beat and issued strong guidance in early March, but the stock's performance has remained relatively lackluster. This represents an entry point in a stock that's underappreciated by investors, according to a new sell-side report. 

The Analyst 

Rebecca Duval at Bluefin Research Partners. The firm has no investment rating on Gap.

The Thesis

An improving product assortment at the Gap over the past year has led to improved sales trends, store traffic and conversion activity, Duval said in a Monday report. 

“In fact, the sentiment from our sources was so overwhelmingly positive about the current assortment, pipeline product, current sales trends and cost saving strategies that the retailer has in place for FY18, that we think GPS will be one of the most compelling specialty retail ideas in 2018." 

The improvement was evident in Gap's Q4 earnings beat and improved guidance, Duval said, adding that she expects more beats down the line.

“What’s really exciting to us [are] the prospects for more earnings beat and upside tweaks as FY18 progresses. We think FY17 was just the beginning of a massive operational improvement that is taking shape at the Gap.”

Making up over 46 percent on the company’s sales, Old Navy is "on fire," Duval said. 

Over the last two years, the Gap brand has enacted initiatives intended to meet consumer demands, including a data-driven test and react strategy, more "fashion-forward" features and an inventory management system, according to Bluefin. 

The retailer's cost cuts are just now beginning to pay off, Duval said. 

"Some of the cost-cutting initiatives are more obvious than others, like store closures and headcount reductions," the analyst said. Gap's "less obvious" streamlining activities are underappreciated by investors and are likely to provide further upside to earnings estimates in the second half of the year, she said. 

Price Action

Gap shares were up 0.31 percent at $32.32 at the close Tuesday.

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Tuesday, March 20, 2018 - 4:03pm
Photo from Pixabay.

Facebook Inc. (NASDAQ: FB) shares were volatile Monday after reports that Cambridge Analytica harvested unauthorized user data through the social networking site in an attempt to collect information on voters in 2016.

While the company should continue to generate long-term revenue, it's unclear how these reports could impact Facebook’s user engagement and subject the company to regulatory measures, according to Credit Suisse.

The Analyst

Stephen Ju of Credit Suisse reiterated an Outperform rating on Facebook with a $240 price target.

The Thesis

Through the use of a personality test app, Cambridge Analytica collected data not only from consenting users, but also from their friends, a violation of Facebook’s privacy policies. The information was reportedly collected in an attempt to influence the 2016 presidential election. 

While this news will expose Facebook to a great degree of headline risk in the coming weeks, the headlines are backwards-looking and have already been addressed by the company, Ju said in a Tuesday note.

“Facebook has already outlined its plans during the 3Q17 earnings call to double headcount addressing user security — so we do not anticipate material change to OpEx guidance," the analyst said. 

That said, Facebook is now exposed to longer-term risks, as the reports could negatively impact user engagement and subject the company to regulatory consequences, Ju said. 

Amid this uncertainty, Ju maintained a bullish stance on Facebook, citing its portfolio of long- and short-term revenue drivers.

“Facebook will be able to drive long term revenue growth without a material lift in ad loads, with near-term growth drivers including Instagram, Premium Video and [dynamic product ads].”

Price Action

At the time of publication, shares of Facebook were trading down 3.8 percent at $166.07.

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Tuesday, March 20, 2018 - 3:45pm
Image credit: The Rudin Group

Benzinga is proud to introduce the Benzinga Women’s Wealth Forum, a space where women can learn how to empower themselves through financial technology and be inspired by the stories of powerful women in finance.

Ahead of the March 21 event, we’re highlighting the stories of some of the leading women in the financial services industry.

In this installment we spoke with April Rudin, Founder and CEO of the global wealth marketing firm The Rudin Group, which provides visibility and consulting services to hedge funds, wealth management firms and other financial services catering to high net worth individuals.

Benzinga: Give us the elevator pitch for what you do at The Rudin Group.

Rudin: The Rudin Group is a full-service wealth marketing firm. We help financial services firms grow their AUM and market share by designing and implementing programs that enhance brand visibility on digital and mobile platforms by targeting their end clients and centers of influence.

What trends and ideas do you think will dominate the fintech discourse in 2018?

Rudin: Hybrid Robo/personal contact service. Cryptocurrencies moving to mainstream. The race to capture the millennial. Advisors will still be crucial, especially for high-net-worth investors. Advisors will not be replaced, but will instead be more focused on client engagement, which will be a differentiator. Cryptocurrencies are reshaping financial services as Amazon and Overstock.com are seeing the power of them as payment systems. We’ll see the $3 billion wealth transfer continue to usher in a new era as institutions seek ways to capture the minds — and wallets — of millennials.

What surprised you the most in the fintech and financial services industry in 2017?

Rudin: How quickly fintech startups and niche players were able to narrow the gap with traditional players and drive change in the ways financial services firms market. Smaller players have been able to tap into the needs of digitally savvy clients who require personalized and ‘on demand’ services. 

Does fintech open up new financial opportunities for women? If so, how?

Rudin: Fintech has brought about such dramatic change. With it comes new opportunities for women. Firms are changing the way they market and need fresh ideas and perspectives. Artificial intelligence and crypto currencies are fueling the launch of many new companies. And companies like Ellevest are tapping into the unique needs of women by seeking to close the gender investment gap. The attributes of women — longer lifespans, career changes, and pay issues — will continue to be a focal point for financial institutions, which will not only change the way these firms market but produce new products and services that cater to and, we hope, are marketed by women.

What about your company makes you excited to go to work?

Rudin: Digital and technological change have been game changing. So too will be changing demographics and the buying power of millennials. The opportunities to have an impact on how our clients interact with their customers has never been greater. Clients recognize that we can be a partner in addressing their brand and marketing challenges, even as they continue to evolve. Our team takes great pride in creating customer experiences that move the needle for our clients.

To hear more stories like Rudin's, be sure to grab a ticket to the Benzinga Women's Wealth Forum March 21.

Tuesday, March 20, 2018 - 3:36pm

ONEOK, Inc. (NYSE: OKE), a mid-stream service provider, has solidified its competitive position by advancing high-return expansions of its dominant Midcon natural gas liquids system, an analyst at Jefferies said.

The Analyst

Jefferies analyst Christopher Sighinolfi upgraded ONEOK from Hold to Buy and increased his price target from $56 to $67. The analyst also added the stock to his franchise picks.

The Thesis

Since June 2017, ONEOK has added $4.2 billion in Bakken/Midcon NGL expansion, while also placing more than $1.6 billion in equity capital, Sighinolfi said in a note.

"We believe OKE can achieve target build multiples (4-6x EBITDA) in 2-3 years, underpinning its dividend growth & leverage goals while mitigating M&A risks," the analyst said.

The investments, according to the analyst, fortifies the company's existing entry barriers against competition.

Sighinolfi sees upside to ONEOK forecasts, as pipeline integrity concerns may necessitate Bakken ethane recovery sooner than economics alone would suggest. The re-emergence of location pricing spreads could also present an incremental source of cash flow for ONEOK, the analyst said.

Jefferies sees possibility of an export project to address potential LPG/C2 imbalance. That said, the firm believes ONEOK could pursue exports only if long-term fee-based contracts underpin the economics.

"A recent mgmt meeting leaves us confident in its ability to hit target returns on $4.2B of current projects, providing a path to ~10% 2018-22 EPS & DPS CAGRs," Sighinolfi said.

Price Action

ONEOK shares are up about 10 percent over the past year. At last check, shares were up 2 percent to $57.65.

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Tuesday, March 20, 2018 - 3:29pm
Photo from Pixabay.

Adesto Technologies Corp (NASDAQ: IOTS) has a key competitive advantage due to its high-quality, low-energy solutions, according to B Riley FBR. 

The Analyst

Analyst Josh Nichols initiated coverage of Adesto with a Buy rating and $10 price target.

The Thesis

Adesto products are a natural fit for energy-conscious applications, where low power consumption and processor performance requirements are designed into end-unit devices, Nichols said in a Tuesday note. (See the analyst's track record here.)

The company has healthy margins due to revenue growth that's predicated on the ability to secure fixed-price design wins with OEMs and ODMs that convert into large-scale production, the analyst said.

The 90-percent CAGR in design wins since 2013 and production ramps led to nearly 30-percent year-over-year revenue growth in 2017, Nichols said.

B Riley FBR expects the growth trend to continue, given Adesto's "robust pipeline and growing end-market demand."

Adesto is able to retain customers once it secures a design win, due to the customized features and high switching costs, the analyst said.

The memory provider "crossed a major inflection point" when its pro forma EPS turned profitable in the third quarter of 2017, Nichols said. 

"As such, we believe IOTS shares offer investors an opportunity to buy a growing company with strong IP that is solving major challenges faced by the growing IoT market." 

Adesto shares trade at an unwarranted discount to the peer group median in light of the company's unique platform, recent growth trajectory and transition to profitability, according to B Riley FBR. 

The Price Action

Adesto's shares are up about 64 percent over the past year.

The stock was rising 8.7 percent at the time of publication Tuesday. 

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Tuesday, March 20, 2018 - 3:27pm
Image credit: Raysonho @ Open Grid Scheduler / Grid Engine (Own work) [CC0], via

Oracle Corporation (NYSE: ORCL) reported its fiscal third quarter results, which sent the stock lower by nearly 10 percent Tuesday. Investors appear to be concerned with the company's cloud performance and begs the question: should investors be buyers of the dip or not?

The Analysts

  • Morgan Stanley's Keith Weiss maintains an Overweight rating on Oracle's stock with an unchanged $57 price target.
  • Bank of America's Kash Rangan downgraded Oracle's stock from Buy to Neutral with a price target lowered from $62 to $57.
  • Wedbush's Steve Koenig maintains an Outperform rating on Oracle's stock with an unchanged $55 price target.

Morgan Stanley: 60% Positive Report

The bullish case for owning Oracle's stock was based on a few areas of outperformance and the company confirmed three of these cases in its earnings report, Weiss said in a note.

License revenues of $1.39 billion in the quarter fell short of consensus estimates, but Oracle CEO Mark Hurd guided for growth in the database ecosystem.

A "lackluster" performance in the SaaS business was the most disappointing aspect of the earnings report and demonstrates "something is obviously not working here."

Oracle's non-GAAP tax rate for fiscal 2019 should come in at 19.5 percent versus the analyst's prior estimate of 24.5 percent. The company has the necessary access to cash to sustain the $4 billion share repurchase activity in the reported quarter.

Bank Of America: Long Term Thesis Unchanged

Oracle's long-term thesis remains favorable for two key reasons, Rangan said in a note.

  • The company's BYOL (bring your own license) guarantees customers are more committed to Oracle's database so AWS' impact is "a rounding error."
  • A more favorable mix continues to develop among partners in terms of adoption of Oracle Fusion Apps.

At the same time, Oracle's earnings shows that the pace of transition towards a cloud company isn't fast enough to maintain a bullish stance on the stock, the analyst said. Even though partner and customer sentiment is improving it will take longer for these improvements to be reflected in Oracle's numbers.

Wedbush: Attractive Valuation

Oracle's earnings and guidance were both "underwhelming" as the "strategically important" cloud revenue fell short of expectations, Koenig said in a note. The poor earnings report could be attributed to seasonality, a "lumpiness" in vertical applications and lagging performance from SaaS offerings the company acquired.

Nevertheless, Oracle's cloud business is growing although likely at a pace that's falling short of management's own ambitions, the analyst said. There's a "reasonable chance" year-end ELA activity will generate upside in Oracle's fiscal fourth quarter report and over the longer term the company could benefit from license sales and next-generation IaaS activity.

Oracle's stock looks "reasonably attractive," coupled with a double-digit EPS growth rate that should be sustainable. As such, investors are encouraged to "use weakness to accumulate" the stock.

At time of publication, the Oracle's stock was trading down 8.8 percent at $47.35.

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Image credit: Raysonho @ Open Grid Scheduler / Grid Engine (Own work) [CC0], via WikimediaCommons

Tuesday, March 20, 2018 - 3:15pm
Photo by Jonathan McIntosh/Wikimedia.

Yum China Holdings Inc (NYSE: YUMC) reported fourth-quarter results in early February that prompted a 10-percent sell-off in the stock, which should be viewed as a buying opportunity, according to Morgan Stanley.

The Analyst

Morgan Stanley's Lillian Lou maintains an Overweight rating on Yum China's stock with an unchanged $48 price target.

The Thesis

Yum China's recent weakness can be attributed to management's commentary on challenges in the first half of 2018 from a tough year-ago comparison, Lou said in a research report. But the decline in the stock should be seen as a "short-term blip" for three key reasons, the analyst said: 

  • Only 20,000 fast food chain restaurants are spread across all of China, despite a population of around 1.4 billion, Lou said. Through 2020, the country should see an incremental 5,800 units, and 24,000 new units by 2030, according to Morgan Stanley. Yum China has the largest existing store exposure in the country among its peers and boasts a brand leadership position.
  • KFC remains in "solid shape," and cannibalization between delivery and dine-in units is "limited." The dine-in business is seeing positive traffic, and delivery contributes around 80 percent of total same store sales growth with margin accretion, Lou said. 
  • Yum China has a "solid plan" to turn around Pizza Hut, but it will take time, the analyst said. The company has identified four areas of the Pizza Hut business to fix over the next 18 to 24 months: fundamentals, digital initiatives, delivery options and experiments with new models.

Price Action

Yum China shares were up 1.7 percent at the time of publication Tuesday afternoon. 

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Photo by Jonathan McIntosh/Wikimedia. 

Tuesday, March 20, 2018 - 2:53pm
Photo from Pixabay.

Proteostasis Therapeutics Inc (NASDAQ: PTI) stock is down more than 25 percent on Tuesday after short seller Kerrisdale Capital revealed a new report and short position in the company. Kerrisdale said on Twitter the “data is terrible” for Proteostasis lead drug candidate PTI-428, calling the drug “a dud.”

Kerrisdale claims the “breakthrough status” for PTI-248 that has sent the stock soaring by about 100 percent in a matter of days was based on a Phase II clinical trial demonstrating questionable efficacy.

“The main reason that PTI-428 looks good is not that patients who received it performed unusually well but that the four placebo patients to whom they were compared performed unusually poorly,” Kerrisdale said. “Judged by a more reasonable benchmark, PTI-428 seems to do little – echoing an earlier, more obviously disappointing Phase 1 trial in which the drug yielded no statistically significant improvement in lung function.”

STAT News biotech reporter Adam Feuerstein responded to Kerrisdale’s claims, agreeing with the idea that Proteostasis data is lackluster and competitor Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) makes Proteostasis “basically irrelevant.”

Kerrisdale concluded that PTI-428 has little value and that Proteostasis has few prospects in its pipeline as a fall-back. Kerrisdale estimates Proteostasis shares have between 70 and 90 percent downside from recent highs based on the company’s current cash balance.

At time of publication, the stock was trading around $5.22, down 25.4 percent on they day. After Monday's market close, the company announced a 9-million share common stock offering.

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