NVIDIA and Neurocrine Biosciences highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – February 28, 2022 – Zacks Equity Research Shares NVIDIA NVDA as the Bull of the Day, Neurocrine Biosciences NBIX asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Halliburton HAL, Occidental Petroleum OXY and Marathon Oil MRO.

Here is a synopsis of all five stocks:

Bull of the Day:

Since NVIDIA reported its Q4 earnings on February 16, with the beat-and-raise pattern we've come to know and love, analysts have raised their revenue and profit estimates enough to once again make the stock a Zacks #1 Rank.

NVIDIA delivered record quarterly revenue of $7.64 billion, up 53 percent from a year earlier, which propelled record fiscal-year revenue of $26.91 billion, up 61 percent.

Gaming, Data Center and Professional Visualization market platforms each achieved record revenue for the quarter and year. And company guidance was full of positive surprises, with Q1 revenue of $8.1 billion expected, vs. the then-current consensus projection of just $7.3 billion.

And just so we're clear: NVIDIA is not a "gaming" company. They make the high-powered GPU chipsets that not only make advanced gaming graphics possible but also feed the R&D of AI. I'll let the boss explain...

"We are seeing exceptional demand for NVIDIA computing platforms," said Jensen Huang, founder and CEO of NVIDIA. "NVIDIA is propelling advances in AI, digital biology, climate sciences, gaming, creative design, autonomous vehicles and robotics – some of today's most impactful fields.

"We are entering the new year with strong momentum across our businesses and excellent traction with our new software business models with NVIDIA AI, NVIDIA Omniverse and NVIDIA DRIVE. GTC is coming. We will announce many new products, applications and partners for NVIDIA computing," he said.

Unstoppable Demand for the King of AI

Based on this broad demand for one-of-a-kind computing and AI solutions, analysts raised this year's consensus revenue projection to $34.50 billion, representing 28% growth.

At the same time, the EPS consensus for this year rose 9% to $5.56, for a 25% projected profit advance.

While the stock will look expensive to value investors, as it trades at 43 times earnings and 17X sales, the role of NVIDIA as the "king of AI" hardware and software applications is undisputed and will fuel growth for many more years.

I've written dozens of articles about NVIDIA since I became aware of its GPU-driven "massively parallel architectures" in 2016. If you don't know what that means, check out this tutorial I did in 2017...

Get Your MPA in Deep Learning

So I won't belabor any further my love for the company and Jensen Huang's ability to surround himself with the best engineering talent in the world.

Instead, I'll just put your attention on the future and the upcoming GPU Tech Conference from March 21-24. This is the semi-annual event where Jensen gets to show off their latest innovations and solutions for customers like Deloitte, Epic Games, Mercedes-Benz, Microsoft, Pfizer, Sony, Visa, Walt Disney, and Zoom.

They have to do this twice a year just to keep up with all the technology envelope-pushing they do. After Jensen's news-filled keynote there will be more than 900 sessions from 1,400 speakers, including some of the world’s top researchers and industry leaders in AI, high performance computing and graphics.

Registration is free and open now at www.nvidia.com/gtc. Huang's keynote will be live-streamed on Tuesday, March 22, at 8 a.m. Pacific time and available on demand afterward. Registration is not required to view the keynote. Watching the Wizard of AI present his latest wares is always a treat so don't miss it!

What's key about these conferences is that Jensen & Co. aren't just talking to C-suite suits. Their primary audience are the developers who use the CUDA (Compute Unified Device Architecture) hardware+software stack to create AI applications for every conceivable industry and task.

Here's a taste of what you will experience at GTC...

“As one of the world’s leading AI conferences, GTC provides a singular opportunity to help solve huge challenges and redefine the future for developers, researchers and decision-makers across industries, academia, business and government,” said Greg Estes, vice president of Developer Programs at NVIDIA. “There’s a mother lode of content and opportunities for attendees of all levels to deepen their knowledge and make new connections.”

This GTC will focus on accelerated computing, deep learning, data science, digital twins, networking, quantum computing and computing in the data center, cloud and edge. There will be more than 20 dedicated sessions on how AI can help visualize and further climate science.

Wall Street Analyst Reaction

Here were two analyst views that stood out after their recent quarterly update...

Piper Sandler analyst Harsh Kumar wrote that NVDA reported "flawless execution, nicely beat January quarter expectations, and provided strong April quarter guidance." The analyst says that outside of data center and gaming, there are "multiple, large, disruptive catalysts in the company's arsenal that can ignite growth and gross margins in the future." He believes software will provide the next leg of revenue growth and gross margin expansion. Kumar reiterates an Overweight rating on the shares with a $350 price target.

Rosenblatt analyst Hans Mosesmann reiterates his Buy rating and 12-month price target of $400 on Nvidia after the company beat expectations with its Q4 results, "as expected," and gave guidance that supports sustained accelerated broad-based demand. Nvidia "continues to destroy the notion of an end of the semiconductor cycle and sets the stage for a secular dynamic that we see as never seen in the history of semiconductors," said Mosesmann, who still views Nvidia as "the best-in-class AI play with several growth vectors."

I like what the Piper analyst says because the CUDA software stack is the driving force expanding into new industries and use applications, even as Datacenter overtakes Gaming as the primary revenue bucket.

And I like what the Rosenblatt analyst says about "a secular dynamic never seen in the history of semiconductors." That was the primary thesis of my 2017 vlog...

The Technology Super Cycle

You can bet against chips on supply chain worries and the Russian invasion of Ukraine. But don't bet against NVDA. At least not until you attend the GTC so you know what you're betting against.

Disclosure: I own shares of NVDA for the Zacks TAZR Trader portfolio.

Bear of the Day:

Neurocrine Biosciencesis an $8.5 billion neuroscience-based company focused on the discovery and development of novel therapeutics for neuropsychiatric, neuroinflammatory and neurodegenerative diseases and disorders.

The company's neuroscience, endocrine and immunology disciplines provide a unique biological understanding of the molecular interaction between central nervous, immune and endocrine systems for the development of therapeutic interventions for anxiety, depression, insomnia, stroke, malignant brain tumors, multiple sclerosis, obesity and diabetes.

It's lead drug on the market, Ingrezza, is a medication used to treat tardive dyskinesia (TD), a condition which manifests as uncontrolled body movements. Here's how the company describes the condition on the Ingrezza website...

TD is a distinct condition and different from other movement disorders like Parkinson's disease, dystonia, or essential tremor disorder, which can also present as involuntary movements. TD can result from taking certain mental health medicines (antipsychotics) for a while.

Investing in Success is Hitting EPS

Neurocrine reported Q4 results on February 11 with a quarterly loss of $0.08 per share versus the Zacks Consensus Estimate of $0.61. This compares to earnings of $3.58 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -113.11%. A quarter ago, it was expected that this biopharmaceutical company would post earnings of $0.51 per share when it actually produced earnings of $0.23, delivering a surprise of -54.90%.

The company delivered Q4 revenue of $312 million vs. the consensus of $317.5 million. We'll look at the downward revisions in EPS estimates that made NBIX a Zacks #5 Rank in a moment, but it's worth noting that sales for Ingrezza are strong and growing as analysts project the company topping $1.35 billion this year, representing 19% growth while next year is pegged to cross $1.6 billion for a 20% advance.

"As we exited last year with restored growth for INGREZZA, investments we are making this year will further accelerate our ability to help many more patients with tardive dyskinesia who remain undiagnosed and untreated. Additionally, we now have 12 clinical programs in mid-to-late-stage studies, many which will generate important data readouts over the next two years," said CEO Kevin Gorman. "With a blockbuster product in INGREZZA, a novel and diverse pipeline, and a strong balance sheet, Neurocrine Biosciences is uniquely positioned to be a leading neuroscience-focused company."

Estimates Were Headed Down Before Earnings

Neurocrine profits are expected to soar the next two years -- +110% in 2022 and +80% in 2023 -- and so healthcare investors should keep the stock on their watchlists.

But in the last two months, analysts have scaled back their upside projections as the company reveals new pipeline R&D and investment plans with their cashflow.

60 days ago, the Zacks EPS consensus for this year called for $2.86. That was lowered to $2.59 before earnings and now has been dropped to $1.93 afterwards.

Likewise two months ago, the EPS consensus for next year sat at $4.53 and got knocked down to $4.13 before the company report. Now analysts have taken it down to $3.47.

So the strong growth for Ingrezza is still there, but the recent tapping of the brakes by analysts is what moved NBIX into the cellar of the Zacks Rank.

Analyst Reactions

Mizuho analyst Vamil Divan lowered the firm's price target on Neurocrine Biosciences to $95 from $103 and kept a Neutral rating on the shares after Q4 results. Management commentary suggests reasonable conservatism is baked into the guidance because of the pandemic, leaving room for potential upside, but the analyst awaits more pipeline progress before getting more positive on the shares.

Goldman Sachs analyst Chris Shibutani upgraded Neurocrine to Buy from Neutral with an unchanged $115 price target. The analyst is positive on the stock based on its "underappreciated but strengthening catalyst path over the coming 12-18 months." Shibutani also cites Neurocrine's solid balance sheet and a genuine strategic optionality of being well-positioned to build their asset base through strategic business development activities.

Bottom line on NBIX:Trading under 6X sales with growing expertise in neurological treatments, NBIX should stay on your radar after the estimates stop going down. The Zacks Rank will let you know.

Additional content:

Oil Surpasses $100 a Barrel 1st Time in 7 Years

The price of oil briefly rose above $100 a barrel on Thursday for the first time since 2014 amid Russia’s launch of military operations in Ukraine. Both Brent and the U.S. WTI crude futures headed into triple-digit territories after taping intraday highs of $105.79 and $100.54 a barrel, respectively.

The spike reflected concerns about oil supplies from Russia, which is one of the world's largest producers of the commodity. Yesterday, President Vladimir Putin declared the start of a “special military operation” in Ukraine, aimed at "demilitarization and denazification” of the country. The Ukrainian and Western governments have condemned the strike as a sham and a violation of international law. On its part, Kremlin has vowed to retaliate against any interference.

Traders are worried that the turmoil in Ukraine might lead to interruptions of Russian energy exports to Europe as punitive sanctions target the country’s banks and leading companies. With the United States, United Kingdom, the 27-nation European Union, and Australia, among others, threatening harsher measures, markets are primarily reacting on the potential that the situation could worsen.

But with the formally announced sanctions mostly avoiding any hurdles to Russian energy exports, oil prices eased somewhat in later trading yesterday, with the Brent settling at $99.08 and WTI at $92.81.

While the immediate impetus for the price rise appeared to come from the uncertainty imposed by Kremlin’s aggression, crude has been flirting with the $100 mark for months because of a demand spike owing to the reopening of economies and a rebound in activity.

As a matter of fact, the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — has risen 20.9% year to date against an 11.2% loss for the broader S&P 500 benchmark.

Consequently, the top three gainers of the S&P 500 this year are all energy-related names: Halliburton, Occidental Petroleum and Marathon Oil.

Halliburton:Halliburton, carrying a Zacks Rank of #3 (Hold), is the top-performing S&P 500 stock in 2022 with a gain of 37.6%. The company beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 9%.

Halliburton is valued at around $28.5 billion. The Zacks Consensus Estimate for HAL’s 2022 earnings has been revised 6.5% upward over the past 60 days.

Occidental Petroleum:This Zacks Rank #1 (Strong Buy) stock has jumped 34.2% year to date. Occidental Petroleum’s expected EPS growth rate for three to five years is currently 36.7%, which compares favorably with the industry's growth rate of 22.1%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

OXY has a projected earnings growth rate of 81.3% for this year. The Zacks Consensus Estimate for Occidental Petroleum’s 2022 earnings has been revised 26.6% upward over the past 60 days.

Marathon Oil:This Zacks Rank #1 stock was the third-best performer in the S&P 500 Index, with shares appreciating 30.5% so far in 2022. Marathon Oil has a projected earnings growth rate of 83.4% for this year.

The Zacks Consensus Estimate for MRO’s 2022 earnings has been revised 26.9% upward over the past 60 days. Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%.

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