Qualcomm Inc Gets Downgraded By UBS Analysts

The wireless giant is now being expected to have a price target of $64 from analysts at UBS

Qualcomm Inc has recently received a cut on the target share price by the analysts at UBS, who ran overresearch on the financials of the company in a note which was released in the market on Tuesday, October 20. The previous price that was expected by the company to reach was noted down at $71 whereas the new target has come around at $64. This cutting down of the target has come to the attention ofindustry analysts as it has been carried out right before the telecom company announces its earnings for the third quarter of the year.

Analyst Stephen Chin, who is the one at UBS covering the Qualcomm stock, has observed a ‘neutral’ rating for the wireless business. This particular rating which has been suggested by him is due to the a number of issues which the chip making company seems to be facing in the present times. According to the note, a decision is yet to be made by the firm which is related to some important strategic alignment which is to be carried out by the giant before the current year ends. Since the decision has not yet been made, it has erupted the feeling of uncertainty among not only the analysts but also in the investors which are not ready to suggest a bullish rating on the giant till it clears out its issue with its strategies. Apart from that issue, the company is also waiting to resolve the issue of proper and correct collection of the total sales it carried out in China when it sold out QTL and QCT in the Asian region, both which are sectors related to technology.

As per the rating given by Mr. Chin to the Qualcomm chip making company, the ratings are seen to be on the low specifically due to the increasing uncertainty and lower than expected figures coming from the OCT collection of sales that are still estimated to be on the lower side due to the amounting pressure on it. On the other hand, the analyst also discussed how the giant firm could be thinking about making a huge split between its two important subsidiaries, namely QCT and QTL, which can bring about a big change in the business it will carry out in the future. However, when the company was questioned about such changes being made, the rumor was dismissed right away by the management as this idea was indeed being considered in the past but it not being thought about anymore.

Netflix To Benefit From Narcos Hit: UBS

UBS says that response from new market launches have been strong for Netflix.

Based on Evidence Lab research, analysts at UBS pointed out that Netflix, Inc. has witnessed a weak introduction in Japan, while New Zealand and Australia reported a strong show. They highlighted Japan remains the top launch market until now, and expect that it will add 14,000 subscribers in FY15Q3.

The analysts focused that the New Zealand and Australia’s responses are still strong in the current quarter, due to Netflix app downloads. The streaming giant plans to increase its operations to more than 200 countries by the end of the following year. UBS noted that Netflix has announced it will introduce its offerings in Taiwan, Singapore, South Korea, and Hong Kong in January 2016. These countries contain advanced technologies for credit or debit card penetration and for broadband penetration, as per the firm.

UBS reiterated a rating of Buy along with a price target of $143 on Netflix stock. The Street is bullish on Netflix stock as specified by a Bloomberg poll recently, 23 analysts rated the stock as Buy, and 16 gave it a Hold, while only six suggest a Sell rating.

Analysts at UBS expect more launches next year to meet the aim of the management of global coverage by the fall of 2016. Moreover, they think that in spite of competition worries in the United States lately, the competitive atmosphere is stable. The analysts pointed out that the streaming giant enjoys various advantages like brand, technology expertise, global leadership, marketing prowess, content creation capabilities and entire emphasize on internet-based ad-free subscription videos. They also said, “Further, online video is not a zero sum game, and, while we expect Netflix to lead, it does not need to dominate to create meaningful value given the likely ultimate market size.”

The firm highlighted that Narcos – a TV series seems to be a hit for the company. It noted that Narcos was premiered on August 28 last year, and in a month, it was amongst the top most liked original shows of Netflix on Facebook. The analysts added that the reception of the show has been better in Latin America. They said, “Overall, this increases our confidence in 3Q15 subscriber growth estimates for both the U.S. and international markets. Further, we expect continued original content momentum in 4Q (Marvel's Jessica Jones vs. Marco Polo).”

Netflix stock news shows that the stock was up 4.97% to $103.24 on Wednesday, when the market closed, which is positive for the company.

Yahoo Inc. Target Price Reduced For Lower Alibaba Target

Yahoo! Inc. Price Target Trimmed For Lower Alibaba Group Holding Ltd Target

Yahoo Inc.’s valuation continues to depend on Alibaba’s and its Japan’s valuation, however the company is planning to spin off its ownership in both. Tax implications uncertainty of the spinoff remains swirling, due to which analysts are reducing their target prices for both Alibaba and Yahoo.

Eric Sheridan, an analyst at UBS AG and his team explained that they reduced their price target for Yahoo to $48 from $51 because they reduced their price target for the Chinese company to $93 from $101 per share, according to Yahoo stock news. This has been a similar theme amid several firms for couple of months. The main reason behind reducing Alibaba’s target price was revenue issues resulting in by Chinese macro environment.  They reiterated their rating of Buy on Yahoo stock.

Stock price of Yahoo has been soaring in the $30s for the past several months, and the team at UBS said the current stock price accepts no to little tax efficiency in the Yahoo and Alibaba Japan spinoff, as reproted by Yahoo stock analysis. They also added that Yahoo’s present valuation seems nearly 41% tax rate on its holding in Alibaba & Yahoo Japan.

That depends on their conjecture that the essential of Yahoo is worth 5x EV/ EBITDA on their FY16 EBITDA projection. It also expects that Yahoo’s diluted share count and cash balance count continues to be same for second quarter.

UBS Team also highlighted, however, that the Internal revenue service has not said “no” to a tax free spinoff Aabcao’s proposal, so there is still a chance for this. The IRS is going to make a final decision on that when the firm continues with the transaction. Due to this, Sheridan believes that Wall Street is ignoring Yahoo way too much.

Robert Coolbrith, an analyst at Sterne Agee also cut his target price on Yahoo stock because he cut his target for Chinese e-commerce giant, Alibaba as well. His latest target price foe Yahoo stands at $59, while $93 for Alibaba down from $110.

He thinks that IRS decision of not ruling on the Aabaco spin is discussed and is fortified that Yahoo did not get a negative ruling yet. He is of the view that the precedent rulings and tax code will not help making the spinoff taxable and that Yahoo can continue with the spinoff public lending right, rejected by IRS.

Yahoo stock closed at $31.04 on September 15 and went during pre-market session today by 0.10% to reach $31.07.

Pacific Crest Reduced Estimates On Alibaba Group Holding Ltd.'s Stock

Pacific Crest reduced its target price from $94 to $80 on Alibaba stock in light of the ongoing uncertainty in China

On Tuesday, Pacific Crest reduced its target price to $80 from $94 while reiterate an Overweight rating on stock of Alibaba Group Holding Ltd. The sell side firm provided the reason that the continuous economic slump in China has adversely affected its confidence in the company’s growth in the short term.

Analysts at Pacific Crest said that the company is affected by decreasing customer spending in the country, according to Alibaba stock analysis. They pointed out that the management has highlighted that it will witness a mid-single digit influence to gross merchandise volume from declining spending power in the country. However, the e-commerce giant believes that the macroeconomic ambiguity is caused by the negative spending gush instead of lower spending.

Keeping in mind the slowdown in the economy, the Chinese company slashed its 2016 and 2017 gross merchandise volume forecasts and doesn’t see a recovery in its estimates at least for now. Moreover, it also highlighted that currency deflation in majority of countries has caused in foreign exchange headwinds for the company’s online marketplace, AliExpress. Alibaba expects a less double digit year over year growth for the online platform in the upcoming quarter, as reported according to Alibaba stock news.

The sell side firm has also slashed its forecasts on AliExpress because of the continuing volatility in International markets and impending for more emerging currency market changes. Pacific Crest also said that though the company lowers revenues in the coming period, it upheld its fiscal year 16 gross margin guidance. The firm thinks that this step reflects some resistance around level of spending, in spite of revenue failings in Alibaba’s main e-commerce industry.

Despite of upcoming macroeconomic headwinds and volatility, Pacific Crest is still positive on e-commerce giant in the long-term. The firm’s bull case on the company stands at $102 price target while in case of bear the price target $50.

Alibaba Group Holding Ltd. stock has declined 38.8% so far this year because of increasing concerns like sell of fake and counterfeit products that took place on its online Taobao and Tmall platform. Other than that, smaller competitors like JD.Com Inc. have been ramping up their game in the industry. JD. Com revenue went up by 61% in its second quarter fiscal year 2015 earnings compared to that of Alibaba’s 29% in the previous quarter. Vipshop Holdings Ltd. reported 75% of revenue growth in its second quarter financial results. It looks like soaring competition might also impact Alibaba’s gross merchandise volume in the upcoming term.

As per the analysts covering Baba stock, 45 gave it a Buy, 5 suggest a Hold and 2 recommend a Sell. The twelve month mean price target is $95.5.

Alibaba stock was up 5.19% to $64.07 at market close on Wednesday September 10.