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Vivint Solar Burned On Widening Q4, 2015 Losses In SunEdison’s Wake

Vivint Solar ( VSLR ) stock combusted Tuesday after the No. 3 residential installer reported mixed Q4 earnings results, underperforming an equally blended Q4 for Chinese solar panel-maker JA Solar ( JASO ). Vivint Solar’s late Monday report comes a week after the company scrapped its sale to   SunEdison ( SUNE ), which, according to a Vivint 8K filing, likely couldn’t afford to close the deal as it faces an ongoing liquidity investigation. In midday trading on the stock market today , Vivint Solar stock was down 12%, near 3.50 and touching an all-time low for the fourth straight trading day. JA Solar stock, meanwhile, was down 4%, near 8.75. JA Solar reported before the open Tuesday. SunEdison stock also fell, sitting down nearly 3% midday Tuesday. Collectively, IBD’s 21-company Energy-Solar industry group was down 1.5%. The group ranks No. 48 out of 197 groups tracked. Vivint Reports Widening Losses For Q4, Vivint Solar reported a 132% year-over-year sales jump to $16 million. But losses per share ex items deepened to 50 cents vs. 36 cents in the year-earlier quarter. Two analysts polled by Thomson Reuters expected a 71-cent loss per share and $19.3 million in sales. Vivint Solar booked 80 megawatts and installed 59 MW during Q4, up a respective 56% and 17% vs. the year-earlier quarter. Cumulative installations reached 68,527, including a 23% year-over-year bump to 8,411 during the quarter. For the year, Vivint Solar’s $64.2 million in sales and a $2.39 per-share loss ex items missed the consensus expectations for $68.2 million and a loss of $1.83, respectively. Sales grew 154%, but losses deepened from $1.99. The company didn’t provide current-quarter guidance. Analysts are expecting $16.3 million and a 66-cent per-share loss ex items. Sales would grow 71%, but losses would widen from 57 cents in the year-earlier quarter. JA Solar Guides Shipments Up Before the open Tuesday, JA Solar reported $709.3 million (RMB 4.6 billion) in sales and 49 cents (RMB 3.14) earnings per American Depositary Share ex items, up 28.5% and 81.5%, respectively, on a year-over-year basis. Sales topped the consensus of the two analysts for $683.3 million (RMB 4.5 billion) and JA Solar’s earlier views for $680 million to $710 million (RMB 4.4 billion to RMB 4.6 billion). But EPS missed Wall Street’s expectation for 68 cents. JA Solar topped its earlier guide to 1.32 gigawatts to 1.35 GW shipped, with 1.366 GW shipped during Q4. For the year, JA Solar shipped 4 GW, up 29% and topping guidance for 3.92 GW to 3.95 GW. JA Solar guided to 1 GW to 1.1 GW in current-quarter shipments, which would be up 54% at the midpoint. For the year, JA Solar sees 5.2 GW to 5.5 GW in shipments, up 30%-37.5% vs. 2015. The company doesn’t provide financial guidance. The consensus expects $421.7 million (RMB 2.75 billion) in sales and 20 cents (RMB 1.30) earnings per ADS ex items for the current quarter, up 9% and 53%, respectively. For the year, analysts model $1.65 (RMB 10.74) earnings per ADS minus items on $2.26 billion (RMB 14.68) in sales, both up 8%.

Valeant Stock Plummets As Guidance Slashed After Q4 Earnings Miss

Shares of Valeant Pharmaceuticals International ( VRX ) plunged to a four-year low Tuesday after the specialty drugmaker’s Q4 earnings and guidance missed analysts’ expectations. Valeant reported adjusted earnings of $2.50 a share, 11 cents short of the consensus estimate of analysts polled by Thomson Reuters. Revenue of $2.79 billion beat consensus by about $40 million. The results were preliminary and unaudited because of an ongoing review of the company’s current and past financial reporting after a scandal broke out last fall, delaying the filing of the 10-K annual report. Valeant didn’t provide year-over-year comparisons because 2014 financials are still under review, but it previously reported Q4 2014 earnings of $2.58 a share on revenue of $2.28 billion, so on that basis EPS fell 3% and sales rose 22%. Valeant slashed its guidance for the current quarter. It now expects revenue of $2.3 billion to $2.4 billion, more than $500 million below its previous guidance, with EPS guidance down about $1 to a range of $1.30 to $1.55. For the year, Valeant hacked more than $1 billion off its sales guidance, now $11 billion to $11.2 billion, with the EPS range down more than $3 at $9.50 to $10.50. Valeant stock plunged 44.5% to 38.34 in late morning trade on the stock market today , its lowest point since November 2011. There were multiple reasons for the shortfall, many to do with the messy transition of the company’s business model in the wake of the scandal. Valeant had severed its relationship with now-defunct specialty pharmacy Philidor after a number of allegations were lodged against it. In December, Valeant announced a new partnership with Walgreens Boots Alliance ( WBA ) to distribute the dermatology and ophthalmology drugs previously channeled mostly through Philidor, but Valeant CEO J. Michael Pearson admitted on the company’s earnings conference call with analysts that the deal hadn’t been well received, and Valeant has made unspecified changes after complaints from distributors. Pearson said Valeant has also been negotiating with payers over the pricing and rebating of drugs, which also contributed to the reduced guidance. Valeant has been the target of criticism all the way up to the U.S. Congress over its historic price increases, but the Walgreens deal brought with it a 10% price cut across the board. Pearson said that, overall, Valeant’s price increases this year are among the lowest in the industry, as it’s tried to accommodate payers. Pearson said that the impact of most of this is being felt in Q1, and that “we in essence lost a quarter.” For that reason, Valeant gave guidance for the 12 months starting April 1, which it says is more representative of its business going forward. Valeant expects EPS of $10.75 to $11.25 for the period, which is still below the Street’s average estimate of $15.02. It forecast revenue of $11.6 billion to $11.8 billion, which has no point of comparison, since there isn’t a consensus revenue number for Q1 2017.

Oracle Earnings: Can Rising Cloud Make Up For Legacy Fall?

Analysts expect Oracle ( ORCL ) to show a fourth consecutive quarter of year-over-year earnings and sales declines in its Q3 fiscal 2016 report after the close Tuesday. The business software giant rose 2.4% to 38.95 Friday, hitting a 3-month high and rising back above its 200-day moving average. Oracle stock fell 0.6% to 38.70 in the stock market today , holding above the 200-day. Oracle stock remains 14% off a more than one-year high set June 17, and nearly even with its 38.91 close on Dec. 16, right before its fiscal Q2 earnings release showed shrinking earnings and sales. That report sent the stock sliding to a 25-month low of 33.13 on Jan. 20. “The stock is down 1.1% since (fiscal 2016’s second-quarter) earnings, outperforming the S&P 500, down 4.0%, given the general rotation out of growth stocks into more value names like Oracle,” wrote Nomura analyst Frederick Grieb in a research note Thursday. “While metrics for cloud revenue growth have been solid, investors remain concerned by what the potential cost will be to the legacy business, as well as the potential impact to margins during the transition.” Meanwhile, Pacific Crest Securities says more business users expect to increase spending on software-as-a-service (SaaS) from Microsoft ( MSFT ) than any other vendor, followed by spending increases for Oracle, then rivals SAP ( SAP ),  Salesforce.com ( CRM ) and others. Microsoft stock closed up 2% to 53.07 Friday, then advanced 0.2% on Monday. SAP gained 2.3% to 78.65 on Friday, tacking on 0.1% on Monday. Salesforce rose 1.3% to 71.63 on Friday, then climbed 0.8% on Monday, finding resistance at the 200-day line. Analysts expect Oracle’s legacy-software license sales to continue falling faster than increasing cloud-subscription sales will rise, at least in the short term. Those polled by Thomson Reuters now model total Q3 revenue down 2% from a year earlier to $9.13 billion, revised down from $9.28 billion, estimated when Q2 earnings were released. They see adjusted EPS of 62 cents, down 9% from a year earlier and down from the 65 cents they estimated three months ago for Q3. In a conference call with analysts after the Q2 release, CEO Safra Catz guided Q3 revenue to a $9.08 billion midpoint and earnings to a range of 60 to 63 cents per share minus items. Anticipating more acceleration of cloud revenue in the second half of the fiscal year for Oracle, Nomura’s Grieb said: “It will be important to make sure that the company is not losing share to the competition. Strong cloud growth rates supported the business until the steep license revenue declines in the last few quarters suggested that the company may not be successfully converting on-premise customers to the cloud. “Investors are concerned that Oracle is not only cannibalizing the on-premise license business, but also offering aggressive incentives to sign cloud customers.” Nomura maintains a buy rating with a 44 price target on Oracle. Aggressive discounting of subscription sales might be why Pacific Crest Securities analyst Brendan Barnicle found feedback from Oracle customers better than expected. “Even though cloud is lagging with existing customers, it is doing better with new customers and cloud revenue recognition on existing deals is likely to drive upside to cloud expectations,” Barnicle wrote in a research note Thursday. “Among SaaS vendors, Oracle showed well in the recent Pacific Crest CFO survey.” He added that feedback about on-premises “applications was surprisingly positive,” particularly in the installed base. “We had little feedback on the database and infrastructure businesses. As a result, we see upside to the Cloud SaaS and PaaS  (platform-as-a-service) revenue expectation of $554 million and overall revenue expectation of $9.127 billion,” Barnicle wrote. “We are less confident on EPS upside. EPS consensus of 62 cents seems a bit high, so we expect in-line EPS.” Pacific Crest carries Oracle with a sector weight rating, akin to a hold rating. In his recent survey of CFOs, Barnicle said that 46% plan to increase SaaS spending in 2016 with Microsoft, followed by 26% with Oracle, 25% with SAP, 16% with Salesforce.com, and about 12% each with HubSpot ( HUBS ) and Paylocity ( PCTY ). Image provided by Shutterstock .