For Immediate Release
Chicago, IL – May 4, 2021 – Zacks Equity Research Shares of Alphabet Inc. GOOGL as the Bull of the Day, Travelzoo TZOO as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Moderna, Inc. MRNA, Merck & Co., Inc. MRK and Milestone Pharmaceuticals Inc. MIST.
Here is a synopsis of all five stocks:
Headquartered in Mountain View, CA, Alphabet Inc. is a technology company that seemingly dabbles in everything, and over the last few years, the company has evolved from primarily being a search-engine provider to building a widely-used cloud computing platform, ad-based video and music streaming, autonomous vehicles, healthcare providers, and many other offerings.
Blowout Q1 Earnings
Last week, GOOGL reported first-quarter earnings results that shattered expectations.
Revenue for the period rose 34% year-over-year to $55.3 billion, while earnings increased by 166% to $26.29 per share.
The company saw very strong growth in all of its business segments and geographical regions. Notably, sales in its Asia-Pacific region surged 44%, while Google Cloud revenue jumped 46% over the prior-year period.
Investors also cheered Alphabet’s decision to boost its share buyback program by $50 billion after already spending $34.1 billion on buybacks over the last four quarters.
Another thing worth highlighting is the company’s incredible balance sheet. GOOGL has net cash, equivalents, and short-term investments of more than $121 billion at its disposal, while free cash flow rose to over $13.3 billion during the quarter.
GOOGL Breaks Out
Shares (specifically, the vote-enabled Class A shares) of the tech giant have been on a tear this year, up over 34% so far compared to the Nasdaq’s gain of about 8%. Earnings estimates have been rising too, and GOOGL is a Zacks Rank #1 (Strong Buy) right now.
For fiscal 2021, 14 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $69.05 to $84.97 per share, reflecting bottom-line growth of 45%. Analysts are bullish about 2022 as well, and GOOGL is expected to continue to generate strong profits next year.
Going forward, Alphabet and its management team are confident about the company’s position in the tech sector. On the Q1 earnings call, Chief Business Officer Phillip Schindler explained how the company’s omnichannel focus will be a huge benefit:
“Over the last six months, people’s shopping preferences have shifted constantly in response to changing conditions. It’s not just online, it’s not just offline, it’s a mix. And that’s our sweet spot with Search, Maps, and YouTube…omnichannel is here to stay.”
And with one of the biggest net cash positions of any business, Alphabet has plenty of ways to drive future earnings and revenue growth, as well as turn a profit on the currently unprofitable Cloud and Other Bets segments.
If you’re an investor searching for a tech stock to add to your portfolio, make sure to keep GOOGL on your shortlist.
Travelzoo is a popular online travel website that compiles deals on hotels, flights, vacations, cruises, and local and entertainment deals for its millions of members worldwide. The company operates in North America and Europe (it recently exited its Asia Pacific business), and is headquartered in New York.
Q1 Earnings Recap
Travelzoo’s first quarter results reflect the lingering impacts of the coronavirus pandemic on the travel industry.
Consolidated revenue fell 30% year-over-year to $14.3 million (but is up 14% quarter-over-quarter). The company’s North America business decreased 23%, while its Europe segment fell 48% compared to the prior-year period.
GAAP EPS was a loss of $0.14 per share, which missed the consensus estimate.
The company had 31.8 million members at the end of Q1, and membership in North America grew 7% year-over-year to 18.1 million.
TZOO is now a Zacks Rank #5 (Strong Sell).
Two analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 11 cents to $0.14 per share. But, earnings are expected to see a triple-digit increase for fiscal 2020 as the bottom line begins to recover from 2020.
Shares have been hot so far in 2021 as travel and recreational stocks have benefitted from optimism about the economic reopening. Year-to-date, TZOO is up 76.8.
Travelzoo expects to report significantly higher revenue and profitability for Q2, and management sees a revenue recovery trend going forward. However, there are still plenty of travel restrictions in place, as well as broad unknowns when it comes to Covid-19, so investors may want to stay on the sidelines for now.
What to Expect When Moderna (MRNA) Reports Q1 Earnings This Week
Moderna is scheduled to report first-quarter 2021 results on May 6, before the market open.
The company’s surprise history has been mixed so far with its earnings beating estimates in two of the trailing four quarters, while missing the same twice. The average negative surprise is 48.48%. In the last reported quarter, Moderna delivered a negative earnings surprise of 176.00%.
Moderna’s share price has surged 71.2% so far this year against the industry’s decrease of 2%.
Factors to Note
Moderna received FDA approval for emergency use of its mRNA-based coronavirus vaccine, mRNA-1273, in December last year in adults. The vaccine is the company’s first commercial product. The vaccine received similar regulatory approvals in a few other countries during the quarter, including Europe and Canada.
The company supplied more than 88 million doses of mRNA-1273 to the United States and several million doses to other countries during the first quarter. Sales of the vaccine are likely to have driven the company’s top line in the first quarter. The Zacks Consensus Estimate for total revenues stands at $1.97 billion.
The company is also developing the vaccine for pediatric and adolescents. Moreover, the company is also developing a COVID-19 variant-specific vaccine candidate, mRNA-1273.351, and a next-generation vaccine candidate against COVID-19, mRNA-1283.
Ongoing clinical studies and activities to support supply of the vaccine to different countries are likely to have driven operating expenses higher during the quarter. The company may provide clinical updates on these new vaccine candidates on its earnings call.
Meanwhile, Moderna has a funding commitment of up to $955 million from the Biomedical Advanced Research and Development Authority (“BARDA”) in place to develop its coronavirus vaccine candidate in 2021. The Zacks Consensus Estimate for grant revenues is pegged at $113 million.
Investors are likely to focus on any comments from the company related to the requirement of a third-dose to boost long-term immunity against the original COVID-19 virus and its new strains. A third-dose, if needed, will likely bring more billions of dollars in revenues going forward.
The company has provided its manufacturing plans for mRNA-1273 for 2021 and 2022. Investors may also like to know the company’s view on demand for its COVID-19 vaccines beyond 2022.
Apart from its COVID-19 vaccine candidates, Moderna is developing several other mRNA-based products targeting different indications including cancer. The company also has collaborations under which its partners like Merck use its mRNA technology for development of therapies targeting different indications.
The partners pay milestone payments to Moderna, which are likely to be reflected as collaboration revenues. These collaborations revenues can vary every quarter. The Zacks Consensus Estimate for collaboration revenues for the first quarter is pegged at $15.34 million.
Our proven model does not conclusively predict an earnings beat for Moderna this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that is not the case here as discussed below.
Earnings ESP: Moderna has an Earnings ESP of -10.29% as the Most Accurate Estimate currently stands at $1.83 per share while the Zacks Consensus Estimate is pegged at $2.04 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Moderna currently carries a Zacks Rank #3.
A Stock That Warrants a Look
Here is a biotech stock that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release.
Milestone Pharmaceuticals has an Earnings ESP of +19.21% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
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Merck & Co., Inc. (MRK): Free Stock Analysis Report
Moderna, Inc. (MRNA): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
Travelzoo (TZOO): Free Stock Analysis Report
Milestone Pharmaceuticals Inc. (MIST): Free Stock Analysis Report
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