Investing

Earnings Previews: Palo Alto Networks, Range Resources, Teladoc, Virgin Galactic

Paul Ausick

Published: February 22, 2022 7:35 am

Markets were closed Monday in observance of President’s Day. Even so, a couple of intrepid energy companies chose to report results when no one was around to hear them. Go figure.

Oil and gas producer APA (formerly Apache) reported adjusted earnings that missed expectations by 11.6% and revenue estimates by nearly 35%. The company also doubled its dividend to $0.125 per quarter and committed to a 60% capital return plan for investors. APA’s stock traded up 4.4% in Tuesday’s premarket. Pipeline operator Williams reported beats on both the top and bottom lines and guided 2022 dividends to $1.70 annually, up from $1.64 in 2021. Shares traded up by about 2% in the premarket session Tuesday.

Before markets open Tuesday, these three companies will report quarterly results: Home Depot, Macy’s and Medtronic.

After markets close, we shall hear from the following four companies, along with dozens of others.

Palo Alto Networks

Palo Alto Networks Inc. (NYSE: PANW) supplies cybersecurity platforms, including both hardware and software, along with subscription and other professional services. Over the past 12 months. Since a mid-August low, shares have added about 35% after posting a gain of more than 55% the four-month period to late December.

Analysts are strongly bullish on the stock, with 35 of 38 brokerages giving the shares a Buy or Strong Buy rating. At a recent price of around $482.20 a share, the stock’s upside potential based on a median price target of $610 is 26.5%. At the high price target of $840, the upside potential is 74.2%.

For its second quarter of fiscal 2022, Palo Alto Networks is expected to report revenue of $1.28 billion, which would be up 2.7% sequentially and 25.5% year over year. Adjusted earnings per share (EPS) are forecast at $1.65, up 0.5% sequentially and about 6.5% higher year over year. For the full fiscal year ending in July, analysts are looking for EPS of $7.24, up 17.8%, and revenue of $5.39 billion, up 26.6%.

Palo Alto Networks stock trades at 66.6 times expected 2022 EPS, 54.0 times estimated 2023 earnings of $8.92 and 43.4 times estimated 2024 earnings of $11.10 per share. The stock’s 52-week range is $311.56 to $572.67, and Palo Alto Networks does not pay a dividend. Total shareholder return for the past 12 months was 25.5%.

Range Resources

Independent oil and gas producer Range Resources Corp. (NYSE: RRC) has posted a 12-month share price increase of around 78%. No secrets here: the company has ridden the crude price hikes that began in late September of last year. In May of last year, a barrel of crude was fetching barely $20 a barrel, compared with a current price of around $90.

Analysts are cautious on the stock, with just nine of 27 brokerages giving the shares a Buy or Strong Buy rating. At a share price of around $20.40, the stock’s upside potential based on a median price target of $25 is 22.5%. At the high price target of $36, the upside potential is 76.5%.

For its fourth quarter of 20212, Range Resources is expected to report revenue of $879.34 million, up nearly 191% sequentially and 46.8% year over year. Adjusted EPS are forecast at $0.99, or 90.5% higher sequentially and up from just $0.02 year over year. For the full fiscal year, analysts are looking for EPS of $2.03, up from a per-share loss of $0.09 in 2020, and revenue of $2.4 billion, up almost 22%.

Range Resources stock trades at 10.0 times expected 2021 EPS, 5.8 times estimated 2022 earnings of $3.51 and 6.4 times estimated 2024 earnings of $3.17 per share. The stock’s 52-week range is $8.47 to $26.48, and the company does not pay a dividend. Total shareholder return for the past 12 months was almost 97%.

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Over the past 12 months, shares of Teladoc Health Inc. (NYSE: TDOC) have dropped by about 77%. However, if we start counting in January of 2020, the shares are down by about 21%. In mid-February of last year, the stock was up more than 240% compared to its level in January 2020. The pandemic and subsequent lockdowns drove Teladoc’s share price gains, and the recovery has now taken hold and pushed the stock price back down. The company needs to prove it has a key to the future.

Sentiment among analysts remains mostly bullish, with ratings of Buy or Strong Buy from 17 of 29 and the remaining dozen all with Hold ratings. At a share price of $65.00, the upside potential based on a median price target of $121 is 86.2%. At the high price target of $215, the upside potential is 231%.

Analysts expect Teladoc to post fourth-quarter revenue of $546.3 million, up 4.7% sequentially and 42.5% year over year. Teladoc is expected to report a loss per share of $0.54, worse than the $0.50 loss per share reported in the third quarter, but much better than the $3.07 loss per share in the year-ago quarter. For the full year, Teladoc is projected to lose $2.95 per share, down from $5.36 in 2020, on revenue of $2.03 billion, up 85.2%.

Teladoc is not expected to post a profit in 2021, 2022,or 2023. Shares currently trade at a sales to enterprise value multiple of 5.4 times $2.03 billion for 2021, 4.2 times $2.57 billion in 2022 and 3.4 times $3.18 billion for 2023. The stock’s 52-week range is $65.23 to $294.94. Teladoc does not pay a dividend. Total shareholder return for the past year was negative 77%.

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Virgin Galactic

For the past 12 months, shares of Virgin Galactic Holdings Inc. (NYSE: SPCE) have tumbled by 83%. The loss includes two spikes last year, one in mid-February that shot the price up by 150% and another in mid-May that added more than 260% to the share price. Alas, the price has been sinking pretty much steadily since then. Delays in space tourism flights until late this year have been costly for investors.

Chamath Palihapitiya, the board chair, stepped down last Friday to “focus on other existing and upcoming public board responsibilities.” The stock is a favorite of retail investors and trades an average of more than 35 million shares daily.

Analysts are mixed on the stock. Of 11 brokerages covering the shares, four have a Buy rating, four more give it a Hold rating and the others have a Sell or Strong Sell rating. At a share price of around $8.40, the upside potential based on a median price target of $20 is about 139%. At the high target of $36, the upside potential is around $330%.

Virgin Galactic is expected to report revenue of $440,000 for the fourth quarter, down about 83% sequentially. Analysts also expect a loss per share of $0.36, worse than the prior quarter loss of $0.19. For the full year, the company is expected to post a loss per share of $1.49, compared to last year’s loss of $1.25 per share, on sales of $3.39 million, up more than 1,300% year over year.

The company is not expected to post a profit in 2021, 2022 or 2023. For those three years, the stock’s enterprise value-to-sales multiple is 316.8 based on sales of $5.7 million in 2021, $7.82 million in 2022 and $41.13 million in 2023. The stock’s 52-week range is $7.58 to $57.51. Virgin Galactic does not pay a dividend. Total shareholder return for the past 12 months was negative 83%.