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Amazon.com, Uber Threaten GrubHub In Food Delivery, Analyst Says

Analysts are cautious about food-delivery firm GrubHub ( GRUB ) and its outlook in 2016, saying the sector has become intensely competitive as startups and publicly traded companies vie for diner dollars. Despite strong Q4 earnings  posted early Thursday, GrubHub was downgraded by  Oppenheimer analyst Jason Helfstein to perform from outperform due to concerns over growing competition. In a research note Friday, he specifically cited e-commerce juggernaut Amazon.com ( AMZN ) and ride-booking app Uber. Helfstein says that both firms will cut into GrubHub’s revenue and profitability in the next 12 to 18 months. “As Amazon and Uber aggressively pursue food delivery, we believe GrubHub will see margin compression on reduced order rates, more expensive customer-acquisition costs and lower commission rates,” he wrote. He noted that the number of Amazon shoppers dwarfs GrubHub’s customer base of about 6.7 million active diners — Amazon’s customer loyalty program Amazon Prime alone has more than 50 million members, according to estimates. Meanwhile, Uber is growing rapidly, Helfstein noted, and now is valued at over $60 billion. Online review website Yelp ( YELP ) also entered the food delivery market last year with its acquisition of Eat24 for about $134 million. And payments processor Square ( SQ ), which recently had its IPO , owns food delivery app Caviar. GrubHub stock was down 2% in late-afternoon trading in the stock market today , near 21.  The company has an IBD Composite rating of 68, where 99 is the highest. GrubHub stock rose 13% Thursday after its Q4 beat. It held its IPO in April 2014, pricing shares at 26 and raising $192 million. RBC Capital Markets analyst Rohit Kulkarni, in a research note Friday, called GrubHub’s Q4 “solid” and said its 2016 guidance was better than expected. But Kulkarni wrote that he’d “prefer to remain on the sidelines” because of unfavorable trends. The analyst lowered his price target on GrubHub stock to 26 from 27, saying he sees no clear route to acquiring more diners and finds a lack of evidence of “stable delivery economics.” “We don’t believe GrubHub shares can fundamentally outperform,” Kulkarni wrote.

Apple Chipmakers Skyworks, NXP, Avago Plunge On Qorvo Sales Outlook

Qorvo ( QRVO ) drew fellow  Apple ( AAPL ) suppliers Skyworks Solutions ( SWKS ), NXP Semiconductors ( NXPI ), Cirrus Logic ( CRUS ) and Avago Technologies ( AVGO ) into a hole Friday, after the company late Thursday guided current-quarter sales below Wall Street’s consensus by $20 million. IBD’s 41-company Electronic-Semiconductor Manufacturing industry group fell by as much as 3.7% Friday and was down more than 2% in afternoon trading on the stock market today . Qorvo was down nearly 4%. Avago and Cirrus Logic stocks were down 5.5% and 4%, respectively. Shares of Skyworks and NXP were both down about 6% Friday afternoon. Apple stock was down nearly 2.5%. For its fiscal Q3 ended Jan. 2, Qorvo reported $620.7 million in sales and $1.03 earnings per share ex items, down 16% and 20%, respectively, vs. the year-earlier quarter. Both measures topped the consensus of 21 analysts polled by Thomson Reuters for $620.34 million and 94 cents. Qorvo also topped its Jan. 7 sales pre-announcement of $620 million, but missed its earlier, unchanged guide for $1.25-$1.30 EPS ex items. For the current quarter, Qorvo guided to $600 million in sales minus items and 90-95 cents EPS ex items. The consensus saw $620.1 million and 92 cents. At least four analysts cut their price targets Friday on Qorvo stock. Citigroup downgraded shares. DA Davidson analyst Thomas Diffely blamed Apple iPhone weakness as a “key contributor” to Qorvo’s 15% sequential decline in mobile sales. During Q3, Apple sales comprised 42% of Qorvo’s total revenue, he estimated in a research report. The March quarter will largely depend on Samsung’s Galaxy S7 ramp-up, MKM analyst Ian Ing wrote in a report. Qorvo is approaching the quarter cautiously. “We perceived an abundance of caution and potential volatility to both the current quarter as well as the calendar year,” he wrote. “That said, Qorvo feels ‘very good’ on designs for marquee phones with a September quarter, December quarter ramp.” Qorvo expects dollar-content growth in “the most highly-anticipated marquee smartphones this year at our three largest mobile customers,” CEO Robert Bruggeworth told investors on the company’s earnings conference call late Thursday. Infrastructure/defense sales grew sequentially, analyst Diffely noted. “We expect growth (in infrastructure and defense products) to continue for several more quarters buoyed by a combination of stable markets and a number of new product introductions,” he wrote. Ing and Diffely slashed their price targets on Qorvo stock to 65 from 66, and to 65 from 70, respectively. Both rate Qorvo stock a buy.

Twitter User Numbers Expected Stagnant In Q4, Will Ad Revenue Grow?

Twitter ( TWTR ) stock continued to free fall on Friday. It again tumbled close to a record low after getting a price target cut from Wedbush, which predicts that the social media company won’t show meaningful user growth when it reports Q4 earnings next week because the service remains harder for the average user to figure out than its peers in the social space. “We believe positive ad pricing trends drove Q4 revenue towards the high end of guidance, but user growth likely was stagnant,” wrote Wedbush analyst Michael Pachter in an industry note on Friday. Monthly active users of the service (excluding SMS Fast Followers, who can get tweets on their phones without being registered users) rose by just 5 million to 307 million from Q1 to Q3, he said. Wedbush cut its price target on Twitter stock to 20 from 30. Wedbush maintains a neutral rating on Twitter stock. Social media leader Facebook ( FB ) last week reported that mobile strength boosted its average price per ad by 21% year over year in Q4. Judging by that, Twitter likely also saw an ad pricing uptick with “increased engagement, up 165% year over year in Q3,” Pachter said. The rise likely offset lower cost per engagement to the consumer (down 39%) due to the shift to auto-play from click-to-play video ads, he said. But some new efforts aren’t working. “We do not think that Moments drove a meaningful increase in users, as much of the content remains outdated or irrelevant,” said Pachter, referring to Twitter’s Moments service, launched last fall, which showcases the hottest news stories. Also, he said, “Twitter remains difficult to use relative to its peers, and a solution does not appear to be imminent.” Twitter stock was down more nearly 6% in early-afternoon trading in the stock market today , near 16 and not far above its record low of 15.48 brushed in late January. Twitter is down 78% from its all-time high of 74.73, touched in late December 2013. It’s been below its IPO price of 26 since mid-November. With its stock so low, buyout talk has emerged, with rumored acquirers including Alphabet ( GOOGL )-owned search giant Google, along with traditional media companies Comcast ( CMCSA ), Walt Disney ( DIS ) and News Corp. ( NWS ). News Corp. discounted the rumors, according to Reuters . Twitter’s efforts to expand its user base aren’t gaining traction. It has launched programs to reel in “logged out” users who visit Twitter’s site but don’t have accounts of their own, making them less coveted by advertisers. Twitter posted Q3 earnings and revenue that beat Wall Street views, but its user growth slowed and its Q4 sales guidance missed analyst estimates. For Q4, Twitter guided revenue of $695 million to $710 million, up 46% at the midpoint but below the $739.7 million that analysts polled by Thomson Reuters had originally modeled; they now expect $709.94 million. Analysts polled by Thomson Reuters originally expected Q4 EPS ex items of 14 cents, up 17%. But they have revised their EPS ex items estimate to 12 cents. Twitter reports earnings on Feb. 10 after the stock market close.