Novavax stock forecast for 2021 – is $200 realistic?

Novavax, Inc.(NASDAQ: NVAX) has seen an incredible year in stock price growth, increasing 1,1711.50% YTD. The companies COVID-19 vaccine saw the market rally behind NVAX, posting a 52 week high in August of $189.40. The company announced yesterday an agreement of principle with the Commonwealth of Australia for Acquisition of 40 million doses of NVX-CoV2373. The companies share price rallied upon this new found agreement which poses further questions for investors moving into 2021. This article will breakdown analysts forecasts and our take on the Novavax stock 2021 forecast.

What are analysts forecasting for NVAX stock?

According to NASDAQ data, the 12 month price targets set by 5 analysts suggest an average price of $207.25. This suggests an upside potential of 132% over the next 12 months. The more bullish price targets suggest targets as high as $290 (225% upside potential) and more conservative targets at $105 (upside of 17%). These targets are good signs for investors as even the lowest quartile of price targets remain above the current price.To summarise what this means for investors, analysts are suggesting NVAX has room to grow over the next 12 months.

To put these targets into perspective, our article in August this year noted the average price target from analysts was $132. This is a 56% increase in average price forecasts in the space of 3 months. The bullish sentiment continues to build for Novavax as they edge closer to the results of the Phase 3 trials.

The institutions have weighed in

The more noteworthy analysts who have weighed in on the COVID-19 vaccine contender are JP Morgan Chase, Cantor Fitzgerald, Ladenburg and HC Wainwright. On the 5th of September JP Morgan had upgraded the stock status to overweight and updating their 12 month price target to $275 from $105. Interestingly, on the same day Ladenburg had downgraded the stock to a sell rating and a price target of $105. This had left investors torn between both ratings and what they meant for the stock price.

What are the revenue forecasts for Novavax stock?

Firstly, the revenue forecasts for Novavax moving into 2021 are very strong. The 2021 revenue forecasts are expected to increase 181% year on year, from $971 million in 2020 and $2.73 Billion in 2021. The lower end forecasts suggesting $1.4 Billion revenue in 2021 and higher quartile estimates closing on $4 Billion. These are impressive improvements for NVAX in comparison to its 2018-2019 results.

These positive forecasts are driven by the companies impeccable positioning to be one of the first to market a FDA approved COVID-19 vaccine to the world. However it’s worth noting these forecasts will continue to change as we move closer to 2021. As we know, the COVID-19 vaccine industry on wall street remains one of the more volatile. This is the risk investors take when entering the newly founded COVID-19 vaccine sub-market.

What are the bears saying about NVAX?

To begin with, Novavax stock forecasts from analysts definitely illuminate the long term potential the company holds for capitalisation. However, after research the COVID vaccine since inception, investors need to understand what data driven volatility means and how it effects the stock price. Firstly, data driven volatility is the market behaviour experienced when certain trial data is expected to be released. Speculation is the key driver of this and is why the COVID vaccine market is so attractive (risk reward).

Although investors see security in NanoFlu if the COVID vaccine fails to reach finalisation, the stock could take a tremendous fall upon any negative related vaccine data. The bears argue that the speculation and “perceived positioning” of the company has inflated Novavax’s stock forecasts. This is the calculated risk associated when entering a data driven volatility.

Summary

Before I begin, I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.

In conclusion, the forecasts provided from analysts maintain their bullish venom. Next year will be key for Novavax’s future, especially if they can secure success in the Phase 3 trials. Positive Phase 3 data will secure 40 million doses to be sent to Australia alone, not to mention the 60 million to the UK. This is one of my key stocks to watch as we move into 2021.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Will Hyliion stock bounce back? Here’s what analysts are saying

Hyliion (NYSE: HYLN) stock has been on a downward trend losing 54.64% in value over the past month. The sell off incurred shortly after the SPAC merger was finalised on the 28th of September. Hyliion hasn’t been the only EV listed company who has seen short selling. WKHS and even Tesla have lost 33% and 8% value respectively over the past month. With Hyliion currently staggering at $18, analysts price targets are now suggesting greater upside potential. This article will breakdown what analysts are saying about Hyliion stock.

What are analysts saying about Hyliion stock?

According to CNN and NASDAQ data, the current 12 month price targets by 2 analysts averages at $24.50. This suggests an upside potential of 31% from the current trading price. The price target coverage is from two large institutions – JP Morgan and Goldman Sachs. The JP Morgan coverage has a neutral rating with a 12 month target at $27 (44% upside potential). Whilst the Goldman Sachs coverage is more conservative with a price target of $22 (17% upside potential).

Both of these targets were set in the later half of October suggesting both analysts see potential in this recent sell off. Although these targets are limited in coverage, we can coincide that both large institutes feel neutral about their price targets above the current price.

Hyliion revenue forecasts moving into 2021

Firstly, the long term revenue guidance released by Hyliion is based upon the success of its technology as well as its ability to reach its target demand figures. Hyliion forecasts “revenue of $344 million in 2022, $1.019 billion in 2023, and $2.091 billion in 2024”. These are impressive improvements which would see Hyliion’s EBITDA improve dramatically alongside its ability to free significant Cash Flow. However, these forecasts are not reflective of the current business performance, mainly due to the company in the pre commercialisation phase.

How Hyliion stock tracking moving into 2021?

Hyliion has received 1,000 pre orders from its strategic partner Agility Logistics. Its worth noting Agility have a $39 million stake in Hyliion. Hyliion also announced on the 15 of October that they had entered a partnership with American Natural Gas which notes ANG will “pre-order up to 250 Hypertruck ERX vehicles, allowing for early availability of Hyliion’s fully electric powertrain to ANG and its fleet customers.” The partnership will also provide Hyliion customers discounted Renewable Natural Gas. The partnership also includes new ANG fueling stations built closer to Hyliion customers.

“A robust and highly scalable infrastructure is critical to the adoption of our electrified solutions. That’s why we’re working with ANG to reduce costs and enable us to offer our customers refueling stations where they are needed. Hyliion customers can continue their journeys to electrification with confidence that RNG will be available at a price that can reduce their ownership costs over the lifetime of their vehicles.”

said Thomas Healy, CEO and founder of Hyliion

What is the bear argument?

The Bears argue that the stock will continue to fall as we move into 2021. The main argument is that the companies technology is still under scrutiny. Bonitas Research published an article regarding the inefficiencies of Hyliions technology. According to Bonitas Research, the company does not reduce fuel costings by 10% as the company claims. I will leave the link to the research article here for those who are interested. It is definitely worth noting Bonitas Research publishes speculation based upon their research.

This research publication alone sparked uncertainty amongst investors, primarily for speculators and short term shareholders. We have seen this occur recently with Nikola and a short seller publication from Hindemburg Research. These allegation side effects on the share price tend to be short lived assuming SEC does not get involved.

YIG’s take on Hyliion moving into 2021 – will Hyliion stock bounce back?

In conclusion, the bears case seems to sustain similar counter arguments for all emerging EV companies in the market. I can remember clearly writing articles on Tesla over a year ago and the Bears were imminent that the stock price was overvalued at $200. I strongly believe the way of valuing EV stocks is outdated and the industry as a whole will remain over valued 5-10 years from now. In saying that, not all companies will be a Tesla equivalent. It is in my opinion the best valuing method is to understand the competition as well as what the company can bring to EV.

In regards to Hyliion, the ERX model is most certainly differentiated from the EV manufacturers. Its also worth noting the company can bring a solution for many fleet companies who cannot afford (lack the Cash Flow) to move over to EV vehicles. However, the imminent risks facing the stock including market volatility will impact the stock price moving forward (opinion not advice – see disclaimer below).

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Stake is one of the leading US trading platforms for Australian and UK investors. Click here to start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Analysts are bullish on NIO stock – here’s what investors need to know

NIO (NYSE: NIO) has continued its bullish path throughout 2020, with the stock gaining an eye watering 2008.97% YTD. NIO’s bullish investor sentiment this year has outweighed majority of its smaller competitors. The “Tesla of China” is driving significant growth in the EV industry, particularly in the Asia Pacific region which has intrigued investors in the US. This article will breakdown what analysts are saying about NIO moving into 2021.

What are Analysts saying about NIO stock?

Firstly, analyst consensus across the board is bullish on NIO stock. The 12 month price targets from 17 analysts from CNN show a median price at $155.80. This suggests an upside potential of 409% based on median pricing. The upper quartile from the pool of NIO analysts suggests a 12 month price of $269.54 whilst the lower quartile of prices NIO at $44.12. Assuming NIO can continue to excel in deliveries, analysts are confident the stock will break triple digits in 12 months.

Now based upon CNN data we can conclude these price targets are extremely bullish. To bring these targets back down to earth, we will dig deeper into what institutions are pricing the company. JP Morgan recently upgraded their price target to $40 and Credit Suisse has upgraded their target to $25 from $12.50. HSBC recently placed a hold rating at $30 a share which has left some investors confused, as the stock soared past $30 in the past week.

According to WSJ data, the consensus amongst analysts suggests the stock is overweight. An overweight rating from analysts suggests the stock is likely to grow in the future. This is promising for long term shareholders, especially with such aggressive 12 month forecasts by analyst. In recent months Morgan Stanley and JP Morgan have upgraded their their NIO rating from neutral to overweight.

Morgan Stanley analyst Tim Hsiao on NIO stock

Tim Hsiao has made his name well known amongst the NIO investor community, with his bullish views on the Chinese EV innovator. Tim Hsiao explains the margin on vehicles is likely to increase significantly in the coming years as NIO improves its scale and supply chain management through injections from its working capital.

“Stock performance, funding access and industry franchise together create self-reinforcing momentum and make NIO an even stronger player to grow its operations and investment value. Despite performing more like a trading stock nowadays with significant volatility, it’s also a growth stock with long-term value unfolding amid recent operational progress,”

Tim Hsiao on NIO stock – NASDAQ article

NIO operations and its increasing demand

Comparing this with other EV companies forecasts such as Workhorse, Hyliion, NKLA and Lordstown – it is clear analysts are favouring what NIO can bring to the EV industry. However its important to note NIO are expected to deliver 11,000 -11,500 EV vechiles this quarter. This high demand is separating them from its American EV counterparts besides Tesla.

Revenue forecasts for NIO reign supreme

Firstly, the average revenue forecast by 14 analysts suggests 2021 revenue to increase by 95% from 2.24 Billion to 4.02 Billion. This revenue growth is set on a 79% increase in sales growth year on year according to Yahoo finance data. Secondly, vehicle sales in the most recent Q2 earnings were recorded at $493.4 million which was a 146% increase from Q2 2019. Lastly, revenues are expected to be on par come the Q2 earnings call on the 17th of November with a guidance of $572.9-$596.2 million, a 10% increase quarter on quarter.

What are the bears saying about NIO stock?

However with such strong revenue performance the company still ran a $166.5 million net loss incurred from high operational costs. This is a common theme amongst EV manufacturers. The general consensus amongst bears suggest the analysts price targets are overpriced. The institutional price targets are improving, however do not share the same optimism as the targets from the CNN data.

The impact of the election outcome and the increasing COVID-19 cases in the US may effect the stock price moving into 2021. We have seen the power of institutions such as JP Morgan and Morgan Stanley impact NIO’s stock sentiment. Therefore, any negative downgrade even from overweight to neutral could see NIO sell off 5%-10% weight.

Summary

In conclusion, the analysts are definitely showing signs of bullish optimism for the next “Tesla of China”. The revenue and delivery forecasts for the upcoming Q3 earnings should provide long term investors incentive (opinion not advice). However, the economic conditions remain uncertain which may effect the investor sentiment moving into 2021. Its important the average buy in price meets your risk management strategy, and with great uncertainty pending entry points under the institutional targets will be imminent (Opinion not advice).

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your new account.

Stake is one of the leading US trading platforms for Australian and UK investors. Click here to start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Snap stock forecast 2021 – are the bulls too confident?

In a social media-driven world it should not shock you that the bulls are cheerleading a strong 2021 run for Snapchat. The contagious photography platform is expanding its customer base during the pandemic, which is pleasing to investors in terms of financial growth. While the bulls are telling a story of bodacious financial, customer, and share price growth come 2021, an investment does hold risk. Thus this article looks to provide both the bullish and bearish Snapchat (NYSE: SNAP) stock forecast.

Table of contents 

  1. Bullish Snap stock forecast 2021 
  2. Bearish counter-arguments 
  3. Summary 

Snap stock forecast – bullish

Analysts & price forecasts 

Snapchat analysts and price forecasts are relatively bullish. From the 39 analysts watching SNAP, 25(75%) are suggesting buy. Contrast that to 2 (6%) recommending to sell and 11 (33%) to hold. To say SNAP is bullish by just looking at the analyst registry would not be the smartest. The 12-month price forecasts from the above analysts are a high of $52, a low of $20, and a median of $40. Initially, a forecast of $20 is unattractive as it would provide investors with an ROI of -51.9%. However, considering only two analysts out of the 39 are championing sell, the low of $20 should be treated as more of an outlier. (opinion not advice). Moreover, analyst Michael Morris rose his price target from $36 to $52, as he remains “confident in the company’s long-term revenue and cash flow potential“. Thus, the analyst and price forecasts are largely bullish, but investors should have a mitigation plan in place before investing.

Financials 

Despite unprofitability, Snapchat’s financial muscle lies in having healthy cash flow and positive revenue and earnings projections.

Snapchat’s revenue expansion took, and continues to take, a linear path. However, the same cannot be said for SNAP’s negative earnings, which resembles that of a trench. The Facebook competition lawsuit was a major factor in sinking Snapchat’s earnings. Despite escaping the trench, Snap earnings seem to remain stagnate. However, after the impressive growth in Q3 earnings, investors could argue that the path to profitability is now in action. Analysts would agree with this conclusion as they forecast Snapchat to become profitable, and have a positive EPS in December 2022.

Moreover, SNAP holds $2.7 billion in cash and short term investments. Not only can this cover debt, but it provides the social media platform with a three-year cash runway. If we put this all together, revenue and cash are strong, and Snapchat must achieve profitability in three years. Considering analysts expect profitability in two years, it is fair to say the bulls are not ridiculously optimistic.

Inevitable growth in social media 

The explosion of social media usage during 2020 is another reason for the bullish optimism come 2021. Snapchat, like the rest of its social media siblings, is continually building on its platform to grow its customer base. For example, this year the addition of augmented reality, Snap Games, and discover was a like vacuum for more users. Snap’s 18% YoY growth in daily active users confirms this argument. Not to mention the way we consume information and connect is forever changed, especially in light of the virus. Between Snapchat, TikTok, Facebook, Instagram, and Twitter people have access to on-demand 24/7 news, businesses can advertise their products, and people can visually share their lives and feelings. The tracks are in place, and the social media train is not stopping or slowing down for a long time. Hence, long-term investors are equating a social media-driven world with higher revenue, earnings, and users for Snapchat.

Snap stock forecast – bearish

The two areas of concern are negative earnings and shareholder dilution. In the past year, SNAP diluted shareholders by 6.4%. Dilution is understandable if the business needs to raise extra cash to fund a strategic decision like acquiring a competitor or expanding. However, considering Snapchat is sitting on a hefty cash pile investors should raise eyebrows on the shareholder dilution.

Summary

Overall, Snapchat has strong upside potential with little downside risk as its cash runway can support the current unprofitable model for three years. (opinion not advice) The overarching trend of social media growth should serve to boost Snapchat’s user base, and thus revenue. However, an investment does hold risk, especially in the profitability department. SNAP’s current unprofitability should be a red flag for fundamental investors. Monitoring upcoming earnings, especially the next one on the 9th of February, are key to make sure the path to profitability is truly in action.

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your new account.

Stake is one of the leading US trading platforms for Australian and UK investors. Click here to start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Senior Manager, Patrick McLoughlin

Intel stock forecast – what does the future look like for investors?

Intel (NASDAQ: INTC) put on a show during the pandemic as they rode the technological wave. However, it seems the rapid growth might be slowing as analysts remain pessimistic for the short-term Intel stock forecast. The bulls are focusing on the bigger picture as financials look to rebound in 2024 and beyond. This article will look to breakdown the bullish and bearish argument on the Intel stock forecast.

Table of contents 

  1. Bullish argument 
  2. Bearish argument 
  3. Summary 

The bullish argument on Intel

Analysts and price forecasts

Price forecasts remain modesty bullish. Intel is currently trading at $48.20. First, Wallet Investors forecasts Intel’s share price will climb to $52.879 in a year and $72.724 in five years. If true would post a 9.7%, and 51% return respectively. Second, according to CCN business, the next 12 month forecasts from 34 analysts include a high of $100, a median of $50, and a low of $40. The median represents a modest 3.7% gain. Lastly, the current consensus price target is $57.89, which is still higher than the current price.

Financials 

The surge in demand for computers and other computing goods during the pandemic saw Intel’s financials jump to new heights. For example, revenue and earnings for Q2 2020 climbed to all-time highs of $78.955 and $23.661 billion, respectively. Consequently, Intel’s P/E ratio and EPS growth was suggesting the bulls owned the chart for 2020 and 2021. For example, INTC’s EPS grew by 15% between January and June this year. While the rapid expansion in earnings and revenue may undergo a correction heading into 2021, analysts are optimistic for the long-term future. Analysts expect EPS, revenue, and earnings to return to all-time highs in 2024, and to continue rise.

Moreover, another attractive part of Intel’s financials is its growing Return on Equity (ROE). Intel’s current ROE is 29.4%. The general rule of thumb is that ROE above 20% is solid, which Intel satisfies. Not to mention, Intel is far above the industry average of 11%. It is worth noting that Intel maintains a high ROE while debt is declining. Essentially, Intel is not using debt to artificially inflate ROE, which is positive for fundamental investors. Moreover, analysts are projecting Intel’s ROE to dip but still remain high at 22.2% in three years.

Bearish forecast

Analysts and price forecasts 

Despite, modestly bullish price forecasts analysts hold a pessimistic view for three reasons. First, the low price target of $40 would provide a downside of 17%, which outweighs the median of $50 that would only provide a 3.7% gain. Second, the consensus price targets among analysts are on a decline. For example, the price targets for 180,90,30, and 0 days ago is $64.69, $61.49, $61.49, and $57.89. Thus, the current price forecast is susceptible to further drops in the near future. To add insult to injury, the past three analysts changes rated Intel a sell and put a price target below the current price. For example, Goldman Sachs position on the 10th of October was to sell with a price target of $46.

Financials 

Despite strong historical earnings, revenue, and ROE growth Intel hold some areas of financial concern.

Intel’s disappointing Q3 financials are raising some red flags for 2021. The major area of concern for investors was that statutory EPS came in below expectations at $1.02, missing estimates by 2.4%. However, it seems negative EPS growth is not a one-off event for Intel but a trend for 2021. Especially as the analysts covering Intel are forecasting a 23% drop in statutory EPS during 2021. Ultimately, suggesting Intel will face revenue and earnings challenges come 2021, which confirms the short-term decline in earnings (opinion not advice).

Moreover, Intel’s high debt level and rising D/E ratio are concerning. Intel’s debt sits at $36 billion. Investors should be asking can Intel service its debt with cash? The answer is no. Intel holds $25.8 billion in cash ($18.3 billion from cash and short term investments and $7.5 billion from receivables). Ultimately creating a gap of $10.2 billion. To add insult to injury, Intel’s D/E ratio rose from 46.8% to 49% between Q2 and Q3. However, Intel shaved off $3 billion in debt between March to September this year. If Intel can continue to trim its debt into 2021 and beyond, then the debt contention would go from a bearish to a bullish argument. (opinion not advice)

Summary

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.

Overall, you have a company that is cooling off from its unprecedented growth in earnings and revenue. The decline makes sense as the demand-supply imbalance will take some time to correct itself. Hence, the bears look to dominate the short-term chart (opinion, not advice). However, the growth in computers and computing good sales should only continue to rise in the future. Therefore, bullish analysts are forecasting stock price growth for Intel from 2024 and beyond.

If you enjoy our articles or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your new account.

Stake is one of the leading US trading platforms for Australian and UK investors. Click here to start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Senior Manager, Patrick McLoughlin

Workhorse stock falls to $20 – is now the time to capitalise?

Workhorse (NASDAQ:WKHS) took a 15% hit last week as the EV industry including Tesla struggled to gain any traction on Wallstreet. The stock corrected from its standing equilibrium at $23-24 to $19.20 with no associated news. Workhorse has since rebounded above the $20 mark however continues to experience unusually low volumes suggesting a large bounce is unlikely this week. WKHS has not traded below $20 since early September, which poses the question is now the time to capitalise on this price? This article will breakdown all the key information you need to know about WKHS and its current price.

Workhorse stock pushed under 12 month price targets

Some investors who held Workhorse through last weeks dip took the opportunity to buy WKHS under $20, trimming down their average price. The stock price before the correction was on par or above average 12 month price targets published by analysts. However, the correction has meant WKHS is now trading well under the average 12 month price targets and translating this with more upside potential.

The 12 month price targets from 3 analysts according to NASDAQ data, show the average 12 month price target at $23.33 which is a 14% upside. In comparison, CNN data from 4 analysts suggest a median 12 month price target at $26. This represents an upside potential  of 27% from the current price. At the current price, the risk positioning based on averaged price targets has significantly improved for Workhorse investors.

What the 10% ownership in Lordstown Motors means for WKHS?

The Lordstown ticker (NASDAQ:RIDE) is to take effect on Monday 26th October after concluding its lengthy merger with its SPAC counterpart DiamondPeak Holdings. The merger is to generate Lordstown $675 million in funding to kickstart its production of the Endurance pick-up truck model. Workhorse entered a deal with Lordstown Motors which affirmed they would own 10% of the company if Lordstown is able to acquire WKHS’s intellectual property on its pick-up truck designs. See full details on the deal here

“This long-term partnership allows Workhorse to benefit by both monetizing our existing technology and participating in the upside potential of this new venture without prohibitively diluting our existing shareholders. Having an affiliated company with significant automotive production capacity also provides us with beneficial manufacturing footprint options in the future, should Workhorse win substantially larger contracts as we scale our operations”

Workhorse CEO Duane Hughes on Lordstown deal, see full report.

The terms of this deal significantly benefit Workhorse in the medium to long term. According to the terms, Workhorse is entitled to a license fee equal to 1% of the gross sales price of each Lordstown Endurance truck sold for the first 200,000 units. The deal for Workhorse will continue to improve Cash Flow within the business. Hence allowing for expansion in operations and a healthier balance sheet.

Workhorse stock forecasts for 2021 and beyond

Firstly, the current revenue forecasts published by analysts for 2021 are Bullish. The 2021 revenue forecast is expected to hit $143 million annually. This is a realised increase in revenue of 570% Year on Year respectively. Furthermore, the Earnings Per Share (EPS) is expected to reach a positive figure by 2022. This upward trend is forecasted to continue moving into the next 5 years. The positive revenue targets are a product of the guidance provided by WKHS as they plan to uptick production and sales moving into 2021.

Steve Schrader Talks Workhorse on TD Ameritrade

USPS deal is on investors minds

The main bull factor surrounding this stock is the potential USPS contract which Workhorse have positioned themselves as promising contenders. Out of the final three contenders, Workhorse is the only manufacturer offering USPS a completely Electric solution. This award contract would allow for 180,000 vechiles to be manufactured for USPS use. If Workhorse are successful in landing the entire contract, the stock will soar to new heights well above its current 52 week highs (opinion not advice). However, there is a possibility Workhorse do not land the contract or only land a small portion of this award. In this instance, the stock will likely react inversely at a similar magnitude.

Interestingly, the Moving Forward act passed by Congress will require USPS to replace 75% of their existing vehicles with EV or zero carbon alternatives. The bill will also prohibit USPS in purchasing the current delivery vehicle models (Grumman Long Life Vehicle) by 2040. This external pressure from the Government will force USPS to re-evaluate their current plans in revamping their delivery vehicles. As the only fully Electric Vehicle model applying for the award, investors have connected the dots on this opportunity arising.

Summary

In conclusion, the current stock price has been driven underneath analysts 12 month price targets which is a good sign for investors looking for entry. The company is currently positioned well for the USPS deal, however we can only speculate the outcome. In saying this, the company does not need the USPS deal to succeed in the Electric Truck industry.

Disclaimer: The author of this article is currently holding a mid-long term position in Workhorse (NASDAQ:WKHS). Please read our disclaimer and disclosure below for more information.

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Stake is one of the leading US trading platforms for Australian and UK investors. See instructions on how to get started here. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Tyger Fitzpatrick, Founder of YIG.

How to invest in the US stock market from Australia?

The US stock market is host to the best performing market indices across the globe. The US market is made up of two large exchanges, of which buyers and sellers can trade shares in US listed companies. The NASDAQ and NYSE are host to some of the largest corporations in the world, of which own 40% of market capitalisation across the world. This article will discuss why more and more Australian investors are moving to the US market and how you can invest in US stocks from Australia.

Why Invest in US stocks from Australia?

Before we get into how to invest in US stocks from Australia, its important to know why more and more Australian investors are moving to Wallstreet. Compared to the ASX 200, the US market has an vast abundance of companies operating in next generation industries. For example, the US market has a vast eco system of Electric Vechile and Hydrogen powered companies. Companies such as Tesla, Workhorse, Hyliion, Plug Power and NIO have made eye watering returns on Wallstreet. The US market also holds value for value investors looking for Goliath blue chips which have continued to perform over the past 10-15 years.

When compared to the Australian stock market, the difference in opportunity and growth is monumental. The industry diversification in the US stock market is unparalleled. With many niche and evolving industries available on the market, this allows for investors to bolster a strong investment strategy that can cover a vast range of industries. The ASX 200 lacks diversification at this level and therefore investors can find it hard to divise a smart investment strategy that can be hedged.

How to Invest in US stocks from Australia?

For many Australians, accessing the US market was a difficult task. Because of the long paperwork, high costs with commissions, and headache inducing process behind finding a viable broker. However, the eruption of technology, more specifically niche brokers, is allowing Australian investors to easily access the US market at a fraction of the cost. 

It takes four steps for Australians to enter the US market. These include: 

  1. Selecting your broker 
  2. Creating your account 
  3. Funding your account 
  4. Picking your level of competence 

Selecting your broker  

Australian investors have quite a few US brokers to select. Some brokers include Stake, IG, CMC Markets, Saxo, Etoro, and the international accounts with the Big Four except ANZ.  Finding the right US broker based on fees, securities they offer, and investing tools is crucial. From the US brokers above YIG views Stake as an attractive choice for three reasons. YIG does have a commission driven partnership with Stake. First, the platform is incredibly simple and easy to use. Users segway between their investments (dashboard), potential investments (watchlists) and the overall market activity (Wall St). The lack of excessive stimulation allows beginners to get their feet wet in the US market. Second, Stake charges zero commission. Lastly, Stake only offers shares and ETFs. In turn, users are not encouraged to trade with leverage or highly-risky securities. Instead, users can build a strong foundation in the basic US securities, shares and ETFs. 

Creating and funding your account 

Once you are set on a US broker, creating and funding your account is the next step. If you are looking to join Stake, follow this link and use our referral code YIG at registration to receive a free stock. If you want to read our partnership disclosure, then click here

Picking your level of competence 

However, investors must understand that ease of access to the US market does not guarantee financial gain. Investors should remember they are entering a new market. One that has a different economy, greater economic connections to the world, and different market drivers. For example, understanding the impact of presidential comments, Twitter posts, and Robinhood investors on the market is crucial. Knowing the ins and outs of the US market is only half the battle. The US market is enormous. Trading in an industry you feel competent in is a smart strategy. Attempting to trade the entire market could see you burn out and lose money. 

Summary

Overall, Australians have never had more access to the US markets than now. The zero commission policy, simple registration process, and user-friendly interface makes the barriers to enter extremely low. The sheer size of the market, volatility, and investment opportunities make investing in the US market a no brainer. However, investors must understand that trading securities in the US market holds risk and access never guarantees capital gains. 

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Stake is one of the leading US trading platforms for Australian and UK investors. Click hereto start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

PayPal stock forecast 2021 – how high can PYPL go?

To say PayPal (NASDAQ: PYPL) is on a rocket would be an understatement. The recent introduction of cryptocurrency and buy now pay later positions PayPal at the forefront of the payment revolution. Not to mention, the rise in online business is sending PayPal merchant fee revenue through the roof. However, the bears are shaking their heads at the PayPal bulls. This article looks to explain the PayPal stock forecast from the bullish and bearish perspective.

Table of contents 

  1. Introduction 
  2. The bullish argument 
  3. The bearish argument 
  4. Summary 

PayPal stock forecast – the bullish argument

Analysts and price forecasts 

Analysts and their price targets are, to a large extent, bullish on PayPal going forward. Among the 44 analysts, the consensus is bullish as 34 analysts hold a buy rating while only 1 suggests selling. Also, of the 44 analysts, 39 offer a 12 price forecast of $290 (high), $220 (median), and $200 (low). Considering the current price is $213.07, a one-year investment would at worst produce a 6.1% loss, and at best provide a 36% return. The attractive upside with little downside adds to the bullish argument (opinion not advice). Moreover, Wallet Investors’ one-year forecast for PayPal is $274. If true would translate to a 28.6% return on investment (ROI).

Catalysts 

PayPal’s future catalysts will likely revolve around new currencies and business models joining the economy. The decision to allow users to buy, hold, and sell cryptocurrency today will not fade as a catalyst. The initial adoption of cryptocurrency includes Bitcoin, Etherium, Bitcoin Cash, and Litecoin. The insurgence of new cryptocurrencies will see PayPal’s digital wallet offering expand. Thus, today’s announcement lays the groundwork for future cryptocurrency-PayPal catalysts.

Moreover, PayPal’s recent decision to join the buy now pay later movement with Pay-in-4 will see more retail, and e-commerce stores partner with PayPal. Consequently, future revenues should spike, which will create strong earnings catalysts for PayPal investors.

Financials

At large PayPal is showing financial strength in the areas of earnings growth, widening profit margins, and growing revenues.

The explosion of e-commerce during the pandemic saw PayPal’s merchant fees grow exponentially. Hence revenues sit at an all-time high of $19.218 billion. Analysts see the rush to e-commerce as an ever-growing trend, which explains the 35% growth forecast in PayPal’s 2021 revenue. Not to mention the recent news around PayPal accepting cryptocurrency should add to the revenue rocket.

PayPal did take a hit in earnings during 2020, but their June financials indicate profits are back, and better than pre-2020. The growth in earnings is an extended benefit of extreme merchant fee growth. However, it seems strong profitability should be a thing of the future for PayPal (opinion not advice). Especially as analysts project earnings and EPS to grow to$3.720 billion, $2.470 in 2021. If PayPal meets these estimates they would post an impressive 20% and 12% growth in earnings and EPS, respectively.

PayPal stock forecast – the bearish argument

Financials 

Despite the positive financials above, PayPal does hold some areas of concern. Especially in regards to debt levels. PayPal’s current debt totals $8.394 billion (June 2020), which is 235% higher from last year. Moreover, PayPal’s D/E ratio is 0.5:1. At face value the D/E is good. However, when comparing it to the 2019 D/E ratio of 0.15:1, investors can see that ratio is worsening. Rising debt levels and an unpleasing D/E is never a good sign. However, the real question is, can PayPal sustain its leverage with cash? PayPal holds $13 billion in cash and short term investments and $3.6 billion in receivables. Consequently, the $16.6 billion in cash means PayPal can cover its debt of $8.9 billion for now. While the debt is manageable fundamental investors should not ignore the growing debt.

Summary of the PayPal stock forecast

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.

Overall, PayPal is in a strong position for a bullish 2021. The introduction of PayPal buy now pay later, and cryptocurrency should create more catalysts in the future and encourage strong revenue and earnings growth. PayPal does hold concern in the area of debt. However, adequate cash levels allow PayPal to sustain its current leverage structure. Also, PayPal is now immune to the virus, at least from a financial standpoint. Thus, the forecasts for 2021 is largely bullish.

If you enjoy our articles or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your new account.

Stake is one of the leading US trading platforms for Australian and UK investors. Click hereto start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Senior Manager, Patrick McLoughlin

Senmiao Technology (AIHS) forecast for 2021 and beyond

Senmiao Technology Ltd (NASDAQ:AIHS) is currently flying under Wallstreets radar. The stock has surged 213% over the past month, with investors continuing to rally behind the Chinese Fintech. With a current market capitalisation of $60.1 million, the micro-cap stock has captured speculators attention. Analysts are yet to place the first 12 month price target on the stock publicly, making it much more difficult to gauge a forecast moving into 2021 and beyond. However, by using the information provided to investors alongside tracking investor trends, we can decipher everything you need to know about AIHS as an investment.

AIHS’s Strategic Co-operation Agreement with Sichuan Hongyu Enterprise

Announced in early August, the 3 year strategic co-operation agreement aims to facilitate the purchase of EV’s for potential use in the ride-hailing market. The agreement also aims to promote both companies “with a goal to further expand its automobile transaction and related services business.” Investor interest in EV companies has surged over the past few years. Hence, industry related companies have seen incredible stock growth. With AIHS surging on no related news, we can assume investors have peaked their interest on the EV potential moving forward.

“Finally, we believe that our cooperation with Hongyu Auto will enable us to give our ride-hailing drivers more cost-effective access to electric vehicles which aligns with our social responsibility to lower overall carbon footprint.  We are excited about this next step and look forward to finding more innovative ways to drive long-term sustainable growth for our shareholders.”

Mr. Xi Wen, Chief Executive Officer of Senmiao – Public announcement here.

 

AIHS capturing market share in Chinese Ride-hailing

Ride-hailing is mentioned frequently throughout AIHS’s recent public announcements. Ride-hailing simply means the process of hiring a driver to take you to a specific destination. Just like an Uber or a Taxi, ride-hailing has a lot of room for growth in China’s growing cities. AIHS integrated service aims to target second and third tier cities of Mainland China, which are currently growing at a rapid rate. The greatest threat to AIHS ride-hailing ambitions will be the extended economic impact of the COVID-19 virus. A second wave of COVID-19 in Mainland China would subdue any progression made in the ride hailing industry, which of course would be a threat to their wishful ambitions.

“We continue to believe in the huge long-term market opportunity resulting from the rapid development of the online ride-hailing service industry in China… To summarize, we believe we are executing on our goal in becoming an outstanding and leading provider of automobile transaction and related services to the growing online ride-hailing eco-system in China.”

Xi Wen, Chairman, Chief Executive Officer and President of Senmiao

Looking forward into 2021 and beyond for AIHS

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.
It is important realise why there is little to no analyst commentary on this stock. After looking through quarterly financial statements and NASDAQ data, there is no long term guidance on revenue. The risk associated with the long term outlook is relatively high. With a relatively small market cap analysts are yet to provide any in-depth research to the public.
The EV revolution has blown a gust of wind into the industry and hence AIHS has tailored their business model to incorporate the EV hype. This trend should see AIHS continue to thrive if they are able to expand into the EV sphere. At $1.41 the stock is reaching the upper quartile of its 52 year high. This would suggest a better average price is attainable for longer term investors (opinion not advice).
Smaller cap companies provide a much higher risk to investors. While the large returns may be attractive, micro-caps do not have the best track record for sustainability. This is definitely a stock to watch as we move into 2021. Especially if AIHS can successfully implement a strong EV strategy and endorse it into the ride-hailing market.

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Stake is one of the leading US trading platforms for Australian and UK investors. Click hereto start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Fisker stock forecast 2021 – are the bulls outrageously optimistic?

Fisker is dividing wall street. On the one hand, the merger confirmation and promising prospects are making investors bullish. Contrast that to the bearish argument where investors see Fisker replicating Nikola’s downfall as opposed to Tesla’s meteoric rise. This article looks to breakdown the Fisker stock forecasts from both the bullish and bearish sides.

Table of contents 

  1. Introduction
  2. Bullish argument
  3. Bearish argument
  4. Summary

Fisker stock forecast – bulls

The attractive low-cost business model 

Unlike other EV companies, Fisker is not vertically integrated and nor are they building dealerships. The unorthodox approach allows Fisker to reduce overhead costs significantly. Fisker is not manufacturing EV cars, unlike Tesla, which had to go through production hell. Hence, Fisker’s argument that they will enter profitability in a shorter time frame than it took Tesla.

Injection of IPO funds 

The reverse merger will see Fisker receive a billion dollars in funds. Considering Fisker is still in infancy the SPAQ funds would significantly aid their progression from the establishment to the growth stage. For example, the capital is intending to go to the design of the Ocean, building the digital billing app, and the experience centres. Essentially the funds would see Fisker go from having a skateboard structure to potentially having a viable EV.

Product pipeline – unique value proposition 

The bulls are championing Fisker’s product for three reasons. These include the claim that it is the world’s most sustainable vehicle, the use of digital billing, and the build through partnerships approach. According to Henry Fisker, the Volkswagen contract will allow Fisker to make electric vehicles in the millions from 2022 and beyond. In which case, the customers pay a lower price tag and Fisker can use the money to improve the interior and exterior design of the Ocean.

Not to mention Fisker’s experience at BMW, Tesla, and Aston Martin should see the Ocean live up to its hype. Consequently, eyeballs should be on the Fisker Ocean in the lead to its release in the fourth quarter of 2022. However, the dark side of Fisker’s automotive history is discussed in the bearish section.

Furthermore, Fisker will allow customers to lease their electric vehicles online and return after any given time period. The expectation is for the leasing price to be the most competitive in the EV market. Essentially, Fisker’s pricing model is targeting future consumers who prefer accessibility and use over ownership.

Fisker stock forecast – do the bears have strong rebuttals?

Fisker’s poor track record 

The bears use Henry Fisker’s dark past as their main counterargument to the bulls. It all started when Fisker automotive began delivering the world’s first luxury plug-in hybrid car in 2011. However, in 2012 Fisker automotive’s battery supplier entered bankruptcy. Not to mention the company recalled hundreds of vehicles for battery fire, which management knew about. Consequently, the company put chains on production and ended up selling the company to a Chinese auto part conglomerate. To add insult to injury, Tesla and Aston Martin sued Fisker automotive for allegedly using its technology.

Despite the first business fallout Henry Fisker set up shop again under the name Fisker Inc. It seems the new business brought over the red herrings, as Fisker was sued for misleading investors in 2013. The lawsuit arose because Fisker kept the government’s $529 million loan rejection quiet for a year. Overall, the dark past of Fisker is showing more commonalities with Trevor Milton and the Nikola demise than that of Elon Musk and Tesla. Henry’s retort is that the past failures provide him and now Fisker Incorporated invaluable experience.

Fisker’s financials

The major financial flaw is that Fisker’s revenue is zero and it plans to stay that way until 2022 (Ocean SUV release). Fisker has no revenue because they do not have any EV products ready for the market, which is ringing Nikola motor alarm bells.

Fisker’s unsecured value proposition 

Fisker is entering the EV space, not as a manufacturing company. Instead, they are an EV orchestrator who is using strategic partnerships to build their electric vehicles. While the plan sounds appealing investors must not write off the potential shortcomings. For example, if Fisker fails to secure said partnerships, with Volkswagen for example, then the Ocean dream would be delayed or at worst denied. Thus, the bears argue Fisker’s VP is built on promises versus concrete signatures. Much like a straw house versus a brick house.

 

CNCB interview with Fisker CEO Henrik Fisker

Summary

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.

Overall, you have an EV company that is surging over industry hype, and its recent SPAQ confirmation. The stock price could continue to rise into and in 2021, in which the bulls have relatively sound arguments. However, the lack of fundamentals, such as products on the market and revenue, should be a red flag for most investors. If we were to create a Fisker, Tesla, and Nikola venn diagram, the company is strikingly similar to Nikola, which we all know how it ended up. Hence the bears have more weight for the long-term future for now (opinion not advice). However, if Fisker landed their intended partnerships, allocated SPAQ funds wisely, and the Ocean lived up to its potential, then the EV company would be worth watching.

If you enjoy our articles or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your new account.

Stake is one of the leading US trading platforms for Australian and UK investors. Click hereto start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Will INO stock bounce back? Here’s what you need to know

Inovio Pharmaceuticals Inc (NASDAQ:INO) has been on a recent downward trend, with the stock losing 56% of its value over the past three months. Currently priced at $11.85, INO rose to polularity amongst retail investors due to its sheer returns it produced between February and August of this year. The recent announcement on the 28th of September confirmed the FDA have put INO-4800 Phase 2/3 trials on hold. The trials remain on hold until further questions about the up coming trials are satisfied with the FDA. INO confirmed they plan to respond to the FDA in October. Inturn, the FDA will have 30 days to determine whether Phase 2/3 trials are to go ahead. This article will breakdown everything you need to know as we move into this critical period for INO.

Key summary on up-coming FDA decision

The COVID-19 vaccine industry has been on edge recently as AstraZeneca and Johnson & Johnson have placed their trials on hold. Following the announcement from the FDA, the INO stock price took a substantial hit. The main concern for INO investors was that the stock price had initially priced-in for the expectation that Phase 2 trials would begin by the end of September. The stock gained momentum mid-way through September as CEO & President Dr. Joseph Kim announced at the H.C Wainwright 22nd Annual Investment Conference that Phase 2 trials were on track to begin by the end of September.

What does the FDA’s decision mean for INO investors?

Investors became confident in the success of the Phase 1 trial data and the hinted potential of Government funding to initiate their Phase 2/3 trials. This confidence has since dispersed with the decision from the FDA ultimately holding INO’s fate in the balance. Without a COVID-19 vaccine in the pipeline, the stock is ultimately worth what it was trading in January this year. However, if the FDA are satisfied with INO’s response the stock will likely surge above the price it was trading mid-way through September (opinion not advice).

“The U.S. Food and Drug Administration (FDA) has notified the company it has additional questions about the company’s planned Phase 2/3 trial of its COVID-19 vaccine candidate INO-4800, including its CELLECTRA® 2000 delivery device to be used in the trial. Until the FDA’s questions have been satisfactorily addressed, INOVIO’s Investigational New Drug Application (IND) for the Phase 2/3 trial is on partial clinical hold. The company is actively working to address the FDA’s questions and plans to respond in October, after which the FDA will have up to 30 days to notify INOVIO of its decision as to whether the trial may proceed.”

What are the positives for INO Bulls?

With a lot of speculation surrounding the future of INO-4800, there are some bullish signs moving forward. These positive signs could send the stock back up to new heights assuming trials can commence in due course.

Phase 1 trials show positive signs

From data released in recent conferences, the Phase 1 human trials showed immunological responses in 100% of the 38 patients. In addition, the Phase 1 non-human primate trials showed strong neuturalising T body immune responses in primates. We can conclude the data once published as a Journal, should reflect the CEO Dr Kim’s confidence in how the drug had performed. Furthermore, the company has confirmed it is not on hold due to any adverse effects. As discussed in the statement, INO continues to prepare for initiation of Phase 2/3 trials.

INOVIO and its partners are continuing to prepare for a planned Phase 2/3 trial of INO-4800. Following resolution of the FDA’s partial clinical hold and subject to the receipt of external funding to conduct the trial.

Inovio Pharmaceuticals announcement September 28, 2020

Thermo Fisher partnership

The Thermo Fisher partnership allows Inovio to manufacture 100 million doses of INO-4800 in 2021. Furthermore, this estimate is expected to multiply in 2022-2023. The partnership will allow for Inovio to scale up their operations once FDA approval is given. The large scale production Thermo Fisher will bring should enable INO to get the doses shipped across the world effectively and timely.

“Thermo Fisher provides an end-to-end solution for manufacturing, labeling, packaging and distribution that we believe will help us to provide hundreds of millions of doses of INO-4800 to the US and the rest of the world.”

Robert J. Juba Jr., INOVIO’s Vice President of Biological Manufacturing and Clinical Supply Management

Analysts suggest upside potential for INO stock

The 12 month price targets from analysts according to NASDAQ data suggest a mean price target of $13.71 with a high end target at $25 and low end target at $8. These forecasts are heavily weighted upon the success or failure of INO-4800. Although the Phase 2/3 trials are on hold, analysts are still suggesting a BUY rating as per the NASDAQ data. The 12 month price targets will shift significantly upon the arrival of the FDA’s decision.

Summary

In conclusion, the decision by the FDA will determine how the INO share price will close out for 2020. The clear risk is that the FDA will not approve of INO’s response to their questions/concerns surrounding INO-4800. This would be detrimental to the speculated stock. However, we know as per the priced-in 12 month forecasts from analysts, an FDA approval for Phase 2/3 trials would see INO reach new heights (opinion not advice).

If you enjoy our articles or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your new account.

Stake is one of the leading US trading platforms for Australian and UK investors. Click hereto start trading US stocks with $0 commission on trades and a streamline trading experience. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Tyger Fitzpatrick, Founder.

Bank of America stock forecast 2021 – bullish or bearish?

Bank of America (NYSE: BAC), like most Banks, is laying the groundwork for a 2021 recovery. Buffett still stands firm by the company, but hedge funds are beginning to exit. Who is right? The future looks bleak for the coming months, but the long-term future is bright. (opinion not advice) This article looks to breakdown what the smart money, options chain, and financials are saying about the Bank of America stock forecast for 2021.

Table of contents 

  1. What does the smart money say? 
  2. Are BAC options for 2021 bullish or bearish? 
  3. Is BAC financially healthy? 
  4. Summary – YIG Takeaway 

Bank of America stock forecast – smart money?

To a certain extent, the smart money is saying suggesting a short-term bearish correction. Analysts and price targets remain optimistic, which might make it difficult to see what’s happening under the surface. For example, 14 out of the 22 Wall Street analysts covering BAC have a buy rating. Also, the price target consensus is $29.50 (15/10/2020), which would translate to a share price appreciation of 24.89%. Despite the analyst optimism hedge funds are exiting BAC. For example, the number of hedge funds in BAC between Q1 and Q2 dropped from 94 to 91. To add insult to injury, 91 is the lowest number of total hedge funds in BAC over the past five years. It is crucial to note hedge fund positions change quarterly through SEC filings. Contrast that to short-term changes in analyst ratings and price targets.

Bank of America stock forecast – Options chain

The options chain is suggesting a bearish to stagnate 2020 but a bullish 2021. For example, the volume for October 20 calls, in particular, strikes of 24, 24, and 26 is 10,995, 4,512, and 37616, respectively. Contrast that to the put volume of 10,415, 9018, and 5978 for 24, 23, and 22 strikes. In turn, you get an image where the bears are slightly winning the 2020 tug of war. However, the further into 2021 you go the volume favours the call options. Especially for the March 2021 options chain.

Bank of America stock forecast – financials

Positive financials

Bank of America is showing financial strength in three areas. These include forecasted earnings growth, long-term EPS growth, and its price to earnings ratio (P/E ratio or earnings multiple). Usually, investors want a low P/E ratio because there is more chance the stock is in the undervalued territory. However, low P/E multiples also indicate that future earnings are slowing. In BAC’s case, its earnings multiple is 11.2x. When comparing it to the industry average of 9.8x investors can interpret BAC’s P/E ratio as bullish for 2021. Because it is expected to grow earnings at a better rate than peers. Analysts are forecasting EPS to surpass its pandemic level by 2022, which supports the bullish P/E argument.

Furthermore, earnings understandably took a hit for BAC. However, analysts are projecting earnings to follow an upward trend from here on out. More specifically, BAC’s earnings are expected to grow by 47% between December 2021 to 2022, totalling $21.834 billion. The bullish earnings forecasts should thus see revenue return to a positive linear progression. However, analysts are only expecting a modest 4.4% increase in revenue over the same time period.

Negative financials

Despite the weight to the bullish argument, BAC still does have areas of financial concern. These include a 2021 EPS dip, low ROE, a low P/E to market comparison, and debt. While Bank of America’s P/E multiple is higher than its peers, it fails to beat the market multiple of 18.9x. Consequently, Bank of America’s earnings, and possibly share price are likely to grow at a slower rate in comparison to the market. (opinion not advice) BAC has a D/E ratio of 192% with a total of $510 billion in debt. At face value, the D/E ratio and historically high debt levels are distressing. However, BAC holds $909.4 and $55.4 billion in cash and receivables, respectively. Consequently, BAC can cover all of its debt with cash. Thus, for now, debt is palatable, but investors should watch Bank of America’s cash debt relationship in 2021.

Q3 earnings show mixed signals 

Bank of America’s Q3 earnings yesterday indicated the bank’s financials are on the recovery track but still need some work. Revenue came in at $20.3 billion, which was 2.4% lower than analyst estimates of $US 20.8 billion. Not to mention, revenue was down 11% Year on Year (YoY). Also, despite net income beating estimates by 14%, they are still down 16% YoY. Therefore, BAC is improving quarterly but still has to catch up to its 2019 performance.

Summary – YIG Takeaway

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.

Overall, Bank of America is likely to pull back as we enter 2021. The fleeting hedge funds and slightly bearish options activity supports this notion. Despite the short-term pessimism, BAC should reach an inflection point for EPS and begin regaining strong earnings momentum at the end of 2021. (opinion not advice). In which case, the share price should continue its upward ascent. Considering the world expects a vaccine by April and the digital world will continue to grow the banking customer base, a BAC pullback followed by a long-term slingshot sounds relatively realistic (opinion not advice).

If you enjoy our articles or are wanting to learn more, you can subscribe to us by turning on notifications to get updates when we post a new article. From all of us at YIG, thank you for the support.

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your account in 24hrs.

Stake is one of the leading US trading platforms for Australian and UK investors. See instructions on how to get started here. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

DiamondPeak and Lordstown close in on merger – Here’s what you need to know

DiamondPeak Holdings Corp (NASDAQ: DPHC) is one of the hottest Special Purpose Acquisition Companies (SPAC) listed on the market right now. The company initially announced its reverse merger with Lordstown Motors on the 3rd of August. DPHC has since climbed an impressive 125%, rewarding investors who had snapped up the chance to buy early. The hype surrounding the sheer potential Lordstown Motors can bring to the EV industry is exponential. This article will breakdown the key information you need to know as we edge closer to the DiamondPeak Lordstown merger.

Key points

  • Shareholder meeting scheduled for the 22nd of October, where shareholders will vote on the SPAC’s decision to merge with the EV innovator, Lordstown Motors.
  • If successful, the vote is one of the final steps to complete the merger
  • Once the merger is completed, Lordstown Motors Corp. will trade publicly on the NASDAQ under the new ticker symbol “NASDAQ:RIDE.”
  • SHLL and Hyliions merger success is driving immense investor confidence in other listed SPAC’s. Especially SPAC’s who are focusing on merging with new generation  EV innovators.
  • Approx. $675 million gross capital raised from the transaction will be used to fund Lordstown’s production of the Endurance. Endurance model manufacturing is expected to begin mid-2021.
  • Trump excited about the Lordstown pick-up truck technology and the jobs Lordstown will provide in Ohio as they expand their operations.

Trump discusses the Lordstown EV Endurance truck, White House 

When will the DiamondPeak Lordstown merger be completed?

As per the SEC filings the merger is to be completed in the 4th quarter of this year, however we now have a better estimate for timing. The shareholder vote is to be held on the 22nd of October. This suggests the DiamondPeak Lordstown merger should be completed before the beginning of November. Interestingly, the special meeting where shareholders will vote on the outcome is essentially the last step before beginning the merging process. This Harvard Law article has some quality information on the SPAC process.

“The SPAC will undertake a mandatory shareholder vote or tender offer process, in either case offering the public investors the right to return their public shares to the SPAC in exchange for an amount of cash roughly equal to the IPO price paid. If the business combination is approved by the shareholders (if required) and the financing and other conditions specified in the acquisition agreement are satisfied, the business combination will be consummated (referred to as the “De-SPAC transaction”), and the SPAC and the target business will combine into a publicly traded operating company.”

Harvard Law article “Special Purpose Acquisition Companies: An Introduction”

Assuming all conditions are met with the majority of voting shareholders, the company is likely to merge within days following a shareholder approval. For example, SHLL and Hyliion had merged within one week of their special meeting (merger vote). This was a rapid turnover considering one of their proposals had not been agreed upon in the initial vote.

What investors need to know about the DiamondPeak Lordstown merger?

Firstly, Special Purpose Acquisition Companies (SPAC) main objective is to find private companies who are looking for funding. However, these private companies don’t want the hassle of organising an IPO independently. We have seen SPAC’s popularity soar this year as EV manufacturers have found the “backdoor to Wallstreet”. EV companies such as Nikola and Hyliion have gained incredible exposure and funding via the corporate shell SPAC’s provide.

Endurance model set for production in 2021

Secondly, Lordstown Motors as a company will receive a huge influx of funding to jump-start the large scale production of the Endurance pick up truck. Lordstown will be the first publicly listed company who is solely focused on the development of EV pick-up trucks. The endurance 2021 model has the worlds first in-wheel motor which will improve productivity and efficiency of the vehicle. This gives Lordstown an advantage over its fierce competition of combustable engines.

“Our all- electric full-size pickup truck delivers the equivalent of 75 miles per gallon and has been systematically engineered and competitively priced specifically for the large commercial fleet market, which includes companies in manufacturing, contracting, utilities, transportation and delivery, and agriculture, among others. Since its unveiling just over a month ago, the Endurance has been met with enthusiastic support, and to date, we have secured $1.4 billion of pre-orders.”

Steve Burns, Founder and Chief Executive Officer of Lordstown

Post Merger pricing for Lordstown (NASDAQ:RIDE)

Lastly, the post merger should allow for a nice entry point as investors begin to sell-off their shares under the new ticker (opinion not advice). From what we have seen after the completion of the Hyliion + SHLL merger, HYLN has since lost half its value. However, this has allowed for investors interested in the long term projections of the company to enter at a better price.

Summary on the DiamondPeak Lordstown merger

In conclusion, the DPHC Lordstown merger will allow for the EV manufacturer to fund the upscale in production of the evolutionary Endurance 2021 series. It is important to follow the stocks price closely after the merger. Speculators may look to sell off their positions. This is where the longs will get the most competitive prices respectively (opinion not advice).

We’ve partnered with Stake. Use our code “YIG” to receive a free stock when funding your account in 24hrs.

Stake is one of the leading US trading platforms for Australian and UK investors. See instructions on how to get started here. For more information on our referral program click here.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.