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Prepping For Micron and Oracle, Plus Microsoft and Broadcom
As the week draws to a close the stock market didn’t have a remarkable week, in fact, the S&P 500 was down by about 1 percent for the week. But stocks showed some strong trends on Friday which suggest next week is likely to see gains.
The S&P 500 continues, for now, to trend higher, putting in a series of higher highs, and higher lows, and as long as that trend continues then the index is likely heading back towards 2,880 over time. The index may rise towards 2,810 next week.
One would never know the market was down this week, looking at shares of Micron, the stock jumped by over 11 percent on the week, and is now resuming its uptrend as well, going into earnings next week.
The stock got another significant upgrade today this time from Baird, with the price target rising to $100 from $60, on stronger than expected trends in memory. The actual revenue and earnings estimate trends for the consensus have remained relatively flat, with revenue estimates rising by about 3 to 4 percent for 2018, 2019, and 2020, versus a stock that has climbed by 42 percent. Earnings estimates are trending higher since the start of 2018, up 7 percent for 2018, 5.5 percent for 2019, and 3.5 percent for 2020. But again the stock is up way more.
That would suggest that investors are expecting the earnings multiple to keep expanding, and it has, rising from below 5 to 6.85. How much more is the market willing to give it? We might find out next week.
Oracle also reports next week, and I found it interesting that somebody opened a position in the April $57.5 calls. The trades weren’t huge, just over 13k contracts. But with the company reporting Monday after the close, it caught my eye.
Have you notice Alphabet trending lower, it got right to resistance, at $1,175, where the gap was created post-earnings, and it has been trading lower since.
Microsoft had some exciting news, about a new division within the company that would be cloud-based gaming. The article notes Microsoft is looking for gaming to grow to 2 billion users globally, and a new cloud-based subscription service could help Microsoft reach them. In a Netflix subscriber world, the opportunity could be enormous, with only the hurdle being pricing potentially, but it sounds very cool.
I was surprised to see Broadcom trade down today, but it looked more like fill the gap-type day while retesting the downward trendline breakout. I still think shares go higher.
That it is it!
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Michael Kramer and the clients of Mott Capital own shares of NFLX GOOGL
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Tags: #sp500 #microsoft #broadcom #micron #oracle #GOOGL