Author Archives: Scalper1

Dating Site Match Group Plunges On Mixed Earnings

Dating conglomerate Match Group ( MTCH ) stock tumbled intraday Thursday after mixed Q4 results Wednesday afternoon. The company missed revenue expectations but beat what Wall Street estimated for earnings. The company reported revenue of $268 million, up 12% from the year-earlier quarter but below the $277 million that analysts had predicted. The company’s earnings per share ex items came in at 24 cents, above the 20 cents that analysts polled by Thomson Reuters had estimated and down 25% from a year earlier. Match Group stock plummeted 11% to about 9.50 in the stock market today , dipping as low as 8.75 in the morning. The company has an IBD Composite Rating of 55, where 99 is the highest. These results represent the first time that Match Group has reported since the  InterActiveCorp ( IAC ) unit’s November IPO . UBS analyst Eric Sheridan wrote in a research note Thursday that “noise in the initial EPS report should confuse” from the firm’s long-term growth and value proposition for investors. He called Match Group executives “disciplined” in their investment approach and growth in the long run. In terms of the stock price, Sheridan said, “We think investors are already pricing in single-digit revenue growth,” adding that investors believe margins won’t improve in the future. But, Sheridan says, since the stock sits 20% above his worst-case scenario, with 70% upside to his price target of 18, the stock currently offers a compelling risk vs. reward scenario for investors. In prepared remarks on the company’s earnings call with analysts, Match Group executives said that the company expects dating revenue growth of between 5% and 7% in each quarter of 2016. Executives expect non-dating revenue to grow by “high single digits” in Q1, compared with the year-earlier quarter, and in the mid-double digits for the full year. Guidance implies 2016 dating revenue of $1.12 billion, up 22%, according to a Thursday research note from Cowen analyst John Blackledge.  

Take-Two Interactive Software’s Games Show Staying Power; Q3 Beats

Video game publisher Take-Two Interactive Software ( TTWO ) late Wednesday trounced Wall Street’s targets for the December quarter, despite not having launched any big new games during the holiday shopping season. The New York-based company earned 89 cents a share excluding items on sales of $486.8 million in its fiscal third quarter, ended Dec. 31 . Analysts polled by Thomson Reuters had expected Take-Two to earn 50 cents a share ex items on sales of $452.8 million. On a year-over-year basis, earnings per share fell 67%, and sales fell 31%. Take-Two credited the sustained popularity of such games as “Grand Theft Auto 5,” “Grand Theft Auto Online,” “NBA 2K16,” “WWE 2K16” and the “Borderlands” series for its fiscal Q3 upside. Take-Two stock was up more than 4%, near 34, in afternoon trading on the stock market today . The stock hit an all-time high of 37 on Nov. 6. Take-Two has “limited near-term product momentum” because its next big game, “Battleborn,” isn’t scheduled for release until May 3, which falls in the company’s fiscal 2017 first quarter, says Baird analyst Colin Sebastian. He rates Take-Two stock as neutral, with a price target of 38. One big disappointment is the lack of a new game on the horizon from Take-Two’s Rockstar Games, Pacific Crest Securities analyst Evan Wilson said in a research note Thursday. Rockstar is the studio behind the “Grand Theft Auto” and “Red Dead” franchises. “The Street had previously been hopeful for a big Rockstar release this year (Red Dead), but that is not happening, and we still have not heard any news for next year,” Wilson said. “It has now been two years since discussion about an imminent Red Dead announcement began.” Wilson rates Take-Two stock as sector weight, with a fair value in the mid-30s. Take-Two continues to benefit from two powerful tailwinds: faster-than-expected sales of current-generation consoles and the transition to digital revenue streams, which is driving improved profitability, Jefferies analyst Brian Fitzgerald said in a note Wednesday. He rates Take-Two a buy, and he raised his price target to 48 from 44. RELATED: Everybody Into The Pool! Take-Two Joins Esports Trend .

Level 3 Free Cash Growth: Fodder For Buybacks Or Acquisitions?

Level 3 Communications ’ ( LVLT ) stock jumped on stronger-than-expected free-cash-flow guidance after the telecom service provider early Thursday reported Q4 EPS that was a penny above Wall Street views, excluding a tax benefit. Revenue, though, just missed expectations. Some observers have speculated that Level 3 could announce a share repurchase program in 2016. Level 3’s guidance “suggests LVLT will be in a strong position to pursue strategic opportunities or buybacks,” said UBS analyst John Hodulik in a research report. Level 3 stock was up 6.5% in afternoon trading in the stock market today , near 50, but shares of the business service provider are still down 7% in 2016. Broomfield, Colo.-based Level 3 closed its $5.3 billion acquisition of TW Telecom in late October 2014. Thursday, Level 3 said it earned 53 cents in the December quarter, swinging from a 24-cent loss in the year-earlier period. Revenue rose 7% to $2.053 billion. Analysts polled by Thomson Reuters expected per-share profit of 52 cents and revenue of $2.06 billion. Level 3 said it expects 2016 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to rise 9% to 12%. It forecast 2016 free cash flow — net cash from operating activities minus capital expenditures — of $1 billion to  $1.1 billion. “EBITDA and FCF guidance easily outpaced expectations, and likely reflects the accelerated pace of (merger) synergy realization,” said Jefferies analyst Scott Goldman in a research report. Prior to TW Telecom, Level 3 bought Global Crossing for $1.9 billion in late 2011. At a UBS conference in January, Level 3 executives said they were studying  possible shareholder returns as well as possible acquisitions. Level 3 might pursue privately held XO Communications, Cowen & Co. analyst Colby Synesael said in a research note. Synesael says Level 3 could be a takeover candidate itself, with cable TV firm Comcast ( CMCSA ) the buyer. “2016 guidance including color around expected revenue growth acceleration and better than expected FCF are a positive,” Synesael wrote. In the content delivery network market, Level 3 competes with Akamai Technologies ( AKAM ). Image provided by Shutterstock .