Category Archives: stocks

ServiceNow Growth Roadmap On Collision Course With Salesforce.com?

ServiceNow ( NOW ), at its analyst day Monday, touted its plan to reach $4 billion in revenue by 2020 by expanding into management software for human resources, customer service and security. The company posted sales of $1 billion last year. The push into customer service software likely means more competition with Salesforce.com ( CRM ), analysts say. Cloud software leader Salesforce.com is scheduled to  report earnings after the market close Wednesday. At its analysts day, ServiceNow forecast expanding profit margins. “New this year, management now assumes FCF (free cash flow) margins of 30%-32% by 2020, which is a nice positive in our opinion. Overall we believe ServiceNow has the opportunity to become a multi-product platform, with 30%-plus revenue growth and expanding margins through 2020,” Matthew Hedberg, an RBC Capital analyst, said in a research report Tuesday. The cloud-based software provider’s core business has been information technology service management (ITSM). ServiceNow’s 2015 revenue jumped 47% to reach the $1 billion mark. Its Q1 2016 revenue rose 44% to $306 million. “Management reiterated its goal to reach $4 billion in revenue in 2020, with free cash flow of at least $1.2 billion as FCF margin expands 1% to 3% annually,” Rob Owens, an analyst at Pacific Crest Securities, said in a report. “While not giving specific free cash flow guidance for 2017, the company did release a guideline for understanding how the growth and profitability trade-off could play out. ITSM was 70% of bookings in 2015, and management believes it should decrease further toward 50% as we head toward 2020 and new solutions ramp.” ServiceNow stock is down 20% in 2016 despite rising more than 4% on Monday, but shares soared 14% on April 21 after its Q1 earnings and revenue beat expectations . Shares are forming a cup-with-handle base with a buy point of 76.94. Shares fell 1.2% Tuesday, to 69.50. ServiceNow has an IBD Composite Rating of 85 out of a possible 99, putting it among the top 15% of all stocks in key metrics such as sales and earnings growth. “Management reiterated 2020 revenue goal of $4 billion, with ITOM (IT operations management) software driving 15% of revenue and solid contributions from security, customer service, HR, facilities and other non-IT apps,” wrote Citigroup analyst Walter Pritchard in a research report. ServiceNow will continue investing in building up its salesforce, he said. Pritchard estimates ServiceNow will generates near $1 billion in FCF in 2016.

Apple Supplier NXP Follows Tesla-Rivaling Smart Car With Smart City

Apple ( AAPL ) supplier NXP Semiconductors ( NXPI ) Tuesday unveiled a slew of smart-city ventures — adding to its autonomous car platform, announced Monday, that rivals efforts by  Tesla Motors ( TSLA ), Alphabet ( GOOGL )-owned Google and Ford ( F ). NXP’s smart-city technology will be used by the U.S. Department of Transportation to streamline traffic and toll payments via automatic vehicle identification as part of its Smart Cities Challenge. Smart card ICs (intelligence chips) will simplify eGovernment services, NXP said. The Smart Cities Challenge features seven finalists vying for $40 million to become a truly “smart city”: Austin, Texas; Columbus, Ohio; Denver; Kansas City, Mo.; Pittsburgh; Portland, Ore.; and San Francisco face a May 24 deadline for proposals. On Monday, U.S. Transportation Secretary Anthony Foxx set out to visit the seven finalists. The winner will get $40 million “to fully integrate innovative technologies — self-driving cars, connected vehicles and smart sensors — into their transportation network.” NXP wants to be a part of that. To that end, on Monday  NXP announced its BlueBox engine to help “drivers ‘see’ around corners and through traffic obstacles, thereby calming traffic and helping reduce accidents.” Canaccord analyst Matthew Ramsay expects NXP to outgrow the macroeconomically strangled chip market through 2019 on 10% long-term growth in its automotive segment. On the stock market today , NXP stock fell a fraction, to 84.75. NXP says it has a 14.5% share of the automotive chip market, following its December acquisition of Freescale Semiconductor. NXP CEO Rick Clemmer estimates 40% of the company’s sales stem from the automotive segment. In 2016, NXP is targeting high-single-digit to 10% automotive growth, despite views for 3% growth in vehicle unit sales, Ramsay wrote in a research report. NXP sees sales into in-car networking, infotainment, security, powertrain and safety offsetting the small unit growth. Ramsay sees NXP hitting its target of $9 earnings per share minus items in 2019, at a 15% compound annual growth rate. It posted $5.60 EPS ex items last year. The company also has a path toward $4 billion earnings before interest, taxes, depreciation and amortization (EBITDA) in the same time frame. Ramsay kept his buy rating and 120 price target on NXP stock. Cree Joins NXP With Smart City Goals Also Tuesday, LED light-maker Cree ( CREE ) reported the results of a two-year study in Somerville, Tenn., where it says its XSP series luminaires had cut citywide lighting costs by a whopping 75% since their installation in August 2014. “We originally budgeted more than $100,000 a year for our lights, and now we budget $25,000,” Somerville Mayor Bob Turner said in Cree’s press release. “That’s $75,000 (in) tax dollars saved in the general fund.” Cree stock rose nearly 1% Tuesday.

Apple Has Reportedly Started Production On iPhone 7

Apple ( AAPL ) may have started production of its next-generation smartphone, according to media reports. The 10th-generation handset, due out in September, is expected to come in three variants: the 4.7-inch iPhone 7, the 5.5-inch iPhone 7 Plus and the iPhone 7 Plus Premium (also called the iPhone 7 Pro), gadget news website MobiPicker reported Monday . The first two versions will be similar to the current iPhone 6S and 6S Plus, but the new premium model will have a dual-lens rear camera, tech news website BGR said Monday . As usual, contract manufacturers Foxconn and Pegatron are building the devices, BGR said. The iPhone 7 is rumored to be thinner than its predecessors and have an upgraded antenna design, speedier processor and no audio jack for plugging in headphones. Apple wants users to move to Bluetooth wireless headsets or wired headsets that use its multifunction Lightning port. Apple stock fell a fraction, to 93.49, on the stock market today . Consumers Delaying iPhone Purchases Consumers are postponing iPhone purchases ahead of the iPhone 7 launch, Canaccord Genuity analyst Michael Walkley said in a research report Monday. “While we anticipate a decreasing replacement rate through September as consumers delay upgrading their iPhones ahead of the anticipated iPhone 7 launch, we do anticipate recovering sales with the iPhone 7,” Walkley said. Walkley reiterated his buy rating on Apple stock, with a price target of 130. “Consistent with late-stage cycles of iPhones ahead of a new number launch, we also anticipate weaker iPhone average selling prices during the June and September quarters,” he said. The lower-cost iPhone SE, which launched on March 31, also is likely to pressure average selling prices, he said. RELATED: As Growth Investors Flee Apple, Warren Buffett Sees Value Soros, Greenlight Join Berkshire With Apple Buys; Facebook Slashed .