Today’s News: Earnings reports from Delek US Holdings (DK), Supernus Pharmaceuticals (SUPN) and TiVo (TIVO).
Delek US Holdings (DK – yield 1.8%) reported second-quarter adjusted EPS of $1.22 vs. the consensus estimate of $1.17. As is common when there are a variety of adjustments to earnings, many news reports got the numbers wrong, some giving the impression that the company had a poor quarter. Revenue of $2.6 billion surpassed the estimate of $2.4 billion.
Delek is an energy refining and marketing company with a large Permian exposure. Economic synergies associated with the 2017 acquisition of Alon USA Energy continue to surprise investors on the upside. In addition, the company made progress with non-core asset divestitures. Delek repurchased $20 million of stock during the quarter, with $160 million remaining in the repurchase authorization.
The stock reacted well to the earnings report, and is rising toward its recent high of 60. Buy DK now. Strong Buy.
Supernus Pharmaceuticals (SUPN) reported a strong second quarter this week. Earnings per share of $0.57 far exceeded the consensus estimate of $0.43. Record quarterly revenue of $99.5 million came in on target. The company gave full-year EPS guidance that was a penny above Street estimates.
Sales of Supernus’ epilepsy drug Trokendi rose 36.4%, yet one analyst expressed disappointment that the figure was not higher, although management did raise its total 2018 revenue expectation for the drug. In addition, news emerged that one equity investment firm sold most of its stake in SUPN during the quarter.
In reaction to the earnings report, Jefferies raised their price target from 55 to 58. The share price fell in what seems to be an extreme overreaction to a great earnings report. I expect a near-term rebound to the mid-50s. My recommendation is that traders and growth stock investors take advantage of the current price and buy SUPN now. Strong Buy.
TiVo (TIVO – yield 5.6%) is an entertainment technology company. TiVo creates products and licensable technology that enable the world’s leading media and entertainment providers to nurture more meaningful relationships with their audiences.
First, regarding yesterday afternoon’s earnings report, the press release and the conference call were very informative, both in terms of TiVo’s ongoing product successes and new business wins, and also regarding the company’s goal of selling the company at a significantly higher price than where the stock is currently trading. (Read on for more on that topic.) But I also want to point out that TiVo does not offer 2018 earnings guidance (and therefore analysts’ estimates are not terribly relevant) and TiVo does not report non-GAAP earnings per share. As a result, whenever TiVo releases quarterly results, the bots that write the news stories invariably screw up the reporting. So unless you’re reading a research report from an analyst at a major Wall Street firm, take all of the numbers that you might read with a grain of salt. I noticed last night that articles written by bots once again got the numbers all wrong.
TiVo’s management believes that their stock’s share price is inappropriately low. As a result, company management is in strategic discussions with entities that are considering buying TiVo’s product and/or IP licensing divisions, because a buyout would bring shareholders a much higher share price than the stock currently offers. As of early August 2018, management has conveyed that the negotiating process is well under way. In fact, management put their CEO search on hold, since the company will likely be under new management by a potential buyer. Investors should not be surprised if a final buyout offer is announced any time between now and year end.
TIVO is an undervalued growth stock with a very attractive dividend yield. With valuable patents, constant innovation in entertainment technology, and a tiny $1.7 billion market cap, TiVo is an easy and obvious takeover target for any number of media conglomerates that want to “own instead of rent” the technology that’s essential to their products and services. The stock rose 7% this morning in a reaction to the good earnings report and the pending buyout. Strong Buy.