Investing

Earnings Previews: 2 Cathie Wood Picks and More

As usual, there are no interesting earnings reports coming out after markets close Friday afternoon and, a bit less usual, none again before the markets open on Monday.

The pace picks up a bit after markets close Monday with reports from a technology firm that supplies the cannabis industry, and one of two stocks that are among the holdings in two exchange-traded funds managed by Cathie Wood’s Ark Invest. The second Ark company reports results Tuesday morning.

Raven Industries

Raven Industries Inc. (NASDAQ: RAVN) reports fourth-quarter 2021 results after markets close Monday. Cathie Wood’s ARK Autonomous Technology and Robotics ETF (NYSEARCA: ARKQ) owned approximately 1.18 million shares (about 3.3% of shares outstanding) as of March 18. The company supplies a variety of specialty software and services to agricultural and aerospace markets. Over the past 12 months, the stock has risen by about 134%.

The stock is lightly covered by analysts (just two), who expect Raven to post earnings per share of $0.11 for the quarter and have forecast full-year EPS at $0.62. Revenue for the quarter is expected to rise about 3.4% to $88.7 million and full-year revenue is expected to reach about $357 million, a decline of 6.7%.

Three analyst firms covering the stock all have Buy ratings on Raven with a mean target of $36.50 and a high target of $41.00. At a recent price of around $38.25, the stock trades with a potential upside of 7.2% to the high target. Raven trades at around 57 times expected 2021 earnings, 41 times estimated 2022 earnings and 33 times estimated 2023 earnings.

The stock’s 52-week trading range is $17.56 to $45.11. More than 80% of Raven’s shares are held by institutional investors.

Akerna

Akerna Corp. (NASDAQ: KERN) is set to report fiscal-second quarter results after markets close Monday. The company provides an enterprise resource planning system for the cannabis industry and a tracking system designed to help the companies prepare government reports, along with other specialized software products. 2020 saw the company’s shares drop more than 60% of their value, but as of Thursday’s close, shares had gained nearly 70% for the year to date and have posted a 12-month price gain of 38%.

The company is expected to post a loss per share of $0.21, about half as large as the prior-year loss, on sales of $4.02 million, an increase of nearly 27%. Estimates for the 2021 fiscal year call for a loss per share of $0.88, a year-over-year improvement of about 37%.

The lone analyst tracking Akerna has a Buy rating on the shares with a price target of $10.50. At a current price of around $5.50, the potential upside on the stock is about 91%. The company is not expected to post a profit in either 2021 or 2022.

The stock’s 52-week range is $2.17 to $11.49. Average daily share trading volume is around 3.5 million, and less than 10% of the stock is held by institutional investors.

Huya

Before markets open Tuesday, Huya Inc. (NASDAQ: HUYA) will report fourth-quarter and full-year 2020 results. The Guangzhou, China-based firm operates live streaming game platforms in China, Southeast Asia and Latin America. The Ark Innovation ETF (NYSEARCA: ARKK) owns about 6.4 million American depositary receipts (ADRs) of Huya, and the Ark Next Generation Internet ETF (NYSEARCA: ARKW) owns nearly 4 million. The stock peaked last September, with a year-to-date gain of nearly 65%, but the ADRs ended 2020 with a gain of about 11%. So far in 2021, the ADRs have traded up about 24%.

Analysts estimate fourth-quarter EPS at $0.19 on sales of $469.3 million. For the 2020 fiscal year, the consensus estimates call for EPS of $0.82 on sales of $1.69 billion. Full-year EPS is expected to increase by 78%, while sales should post a gain of 41%.

The two most recent ratings on the stock were both downgrades and analysts are mixed on their ratings with eight of 13 giving Huya a Buy (six) or Strong Buy (two) rating. The mean price target is $29.50, and the high target is near $37. With ADRs trading at around $24.75, the potential upside at the mean target is around 19% while the potential upside at the high target is nearly 50%.

The ADRs trade at about five times expected 2021 EPS, four times estimated 2021 EPS and just three times estimated 2023 EPS. The 52-week trading range is $12.41 to $36.33. Average daily trading volume is around 3.3 million ADRs.