Author Archives: Scalper1

A Few Reasons Why Investors Need Advisors: Financial Advisors’ Daily Digest

Wealthfront, one of the big three robo-advisors, says low fees aren’t everything – an excellent arrow for human advisors’ quivers as well. Evan Powers exemplifies the benefit of having an advisor (and listening to him), as he recounts the sorry tale of Prince’s recent passing without a will. Michelle Waymire provides the bottom line for FAs’ social media usage, and Lance Roberts recounts the experiences of clients on their first day of retirement. Today’s Seeking Alpha Financial Advisors’ Daily Digest provides an embarrassment of riches for advisors, so I’ll try to keep this brief before getting to the links. First, I was struck by Wealthfront’s latest post. Of course, the robo-advisor par excellence is supposed to be advisors’ chief nemesis, and indeed the article is not shy about extolling its offerings as an investor’s ultimate solution. Yet, in arguing that ” investment fees matter, but taxes matter even more,” I believe the robo-advisor is perhaps unintentionally offering a pretty juicy bone to human advisors by saying, in essence, don’t sweat the small stuff like fees. And as if to prove that point, comes along one of SA’s newer contributors, Evan Powers, with an article about how Prince’s untimely intestate passing will cost his heirs hundreds of millions of dollars in avoidable fees and taxes. Powers is an investment advisor, not an estate attorney, and yet his highly intelligent and informed framing of the issue is a clear reminder of the value of having an advisor’s counsel. And speaking of intelligent and well-informed new contributors, Michelle M. Waymire offers a highly readable and clear description of what advisors need to know about using social media. I admit I’ve seen a fair amount of kitschy stuff on that topic, but Michelle has done the homework of going through the rulebooks and provides a bottom line in a simple and pleasant way. Before moving on to today’s links, it is my strong recommendation that you follow Evan’s and Michelle’s feeds straightaway to avoid the risk of missing their next articles. And as I mentioned, we’ve got some really great advisor content today: Your comments, as always, are welcome below.

Fitbit Fails Q1 Physical, Stock Collapses On Q2 Guidance

Fitbit ( FIT ) stock tumbled Thursday after the maker of wearable fitness trackers said increased spending on marketing and R&D will cut into earnings near term. Fitbit shares were down 14%, near 14.50, in morning trading on the stock market today . The stock sliced through its 50-day moving average, a key support level, in touching a six-week low. Late Wednesday, Fitbit smashed Wall Street’s targets for the first quarter , but the company delivered mixed guidance for the current quarter. It earned 10 cents a share excluding items on sales of $505.4 million. Analysts polled by Thomson Reuters expected 3 cents EPS and $444.3 million in sales. On a year-over-year basis, Q1 sales rose 50%, but earnings dropped 63%. For the current quarter, Fitbit is projecting earnings per share of 8 to 11 cents excluding items on sales of $575 million at the midpoint of guidance. Wall Street had been modeling Fitbit to earn 26 cents a share on sales of $531.3 million. Fitbit competes in the health and fitness wearables market with Apple ( AAPL ), Garmin ( GRMN ) and others. Battle Of Fitbit Bulls And Bears Oppenheimer analyst Andrew Uerkwitz reiterated his outperform rating on Fitbit stock with a 12- to 18-month price target of 25. The digital health market is showing strong demand, but Fitbit management “is struggling with the pushes and pulls of operating a rapidly growing business,” he said in a research report. Volatility in operating expenses is pressuring the stock, he says. Fitbit bulls say the company is “striking while the iron is hot” and ramping up marketing and R&D spending to capitalize on the growing market. But bears argue that if Fitbit “takes its foot off the gas, the ride will stop,” Uerkwitz said. FBN Securities analyst Shebly Seyrafi maintained his outperform rating on Fitbit stock but trimmed his price target to 22 from 25. S&P Global analyst Angelo Zino kept his hold rating on Fitbit stock with a price target of 20. “Fitbit is seeing good penetration for its newest devices, Blaze and Alta,” Zino said in a report. “But we are cautious about elevated second-half expectations and intense competitive pressures.” Edison Investment Research analyst Richard Windsor said Fitbit’s higher sales and marketing spending has placed “unrealistic expectations of profitability” in the second half of the year. “This is particularly worrying as there are clear signs that commoditization is forcing the company to increase spending, hitting profits,” he said in a report. To meet its EPS guidance, Fitbit will need to generate 83% of its net profit in the last six months of the year, he said. “Given the environment, this looks to be a very tall order and there is likely a heavy cut to full-year EPS guidance coming either in June or October,” Windsor said. Piper Jaffray analyst Erinn Murphy reiterated her neutral rating on Fitbit, with a price target of 16. “While we are pleased with the traction of new products, we are wary of the Q4-weighted guide and opt to remain on sidelines,” she said in a report. Fitbit Dominates Fitness Device Market On the company’s earnings conference call with analysts, Fitbit CEO James Park expressed confidence in the company’s ability to continue to lead the nascent digital health market. “Fitbit has had an incredible and consistent track record of creating and launching innovative devices and software that people love,” he said. “Over nine years of creating and leading this category, we’ve gained a deep and proprietary understanding of the market and our customers.” San Francisco-based Fitbit is putting a lot of “marketing muscle” worldwide behind its Blaze fitness watch and Alta activity tracker, which were both launched in March, Park said. Retail sales tracker NPD Group on Thursday reported that Fitbit remained the king of connected digital fitness devices in the first quarter. It said Fitbit accounted for 81% of the dollars spent in the category in the U.S. in Q1. Fitbit does most of its business in the U.S. In Q1, 70% of Fitbit’s revenue came from the U.S. Europe, Middle East and Africa contributed 15% of sales, followed by Asia-Pacific with 11%.

CyberArk Slated For ‘Solid’ Q1; FireEye Sales ‘Remain Suppressed’

CyberArk Software ‘s ( CYBR ) first-quarter improvement on health care and higher education sales wasn’t reflected at FireEye ( FEYE ), where product sales “remain suppressed” amid the transition to subscription offerings, an analyst said Thursday. Both are set to report first-quarter earnings late Thursday. Mid-morning on the stock market today , FireEye and CyberArk stocks were each down a fraction, and Dougherty analyst Catharine Trebnick expects solid and in-line reports, respectively, from the duo. Analysts polled by Thomson Reuters project CyberArk to report $43.4 million in sales and 16 cents a share in adjusted earnings, up 32% and flat, respectively, vs. the year-earlier quarter. Demand for CyberArk’s bread and butter, its privileged account management, remains robust, Trebnick wrote in a research report. Trebnick rates CyberArk stock a buy and has a 50 price target on the shares. Several health care bake-offs put CyberArk at the top of vendors’ lists. In one deployment alone, CyberArk’s enterprise vault solutions are being used in 20,000 servers. Higher education, too, is paying dividends, Trebnick wrote. “A number of chief information security officers in this area have selected CyberArk’s solutions, as high turnover in their IT departments (due to staff members often being graduating seniors) drives the need for credential management,” she wrote. For FireEye, however, the first quarter represents another stalled period, as the company transitions to subscriptions — FireEye-as-a-Service and Mandiant incident response — from product sales. FireEye’s network and endpoint product sales have’t improved, Trebnick wrote. “With the HX (endpoint), we did not pick up significant traction, despite recent changes to include exploit detection,” she wrote. “According to one source, the installed base looks to be slow (in) adopting the next generation of code, and many are still running old versions.” But FireEye’s channel is driving increased combination sales, pairing FaaS and Mandiant. The consensus of 35 analysts models $171.8 million in sales, up 37% year over year, and a 50-cent per-share loss minus items widening from a 48-cent loss in the year-earlier quarter. FireEye previously guided to $163 million-$183 million in Q1 billings, which would be up 14% at the midpoint of guidance. Trebnick has a neutral rating on FireEye stock.