Ticker Reports for November 4th
Intel: Is Now the Time to Be Brave?
Intel Corp (NASDAQ: INTC) has endured a tough year, with its stock losing as much as nearly 65% due to red-hot competition and declining earnings. However, in recent weeks, the stock has been consolidating and has even started to show signs of rally potential.
Santa Clara-based Intel, a semiconductor giant valued at around $100 billion, has struggled against rivals like NVIDIA Corp (NASDAQ: NVDA) and Advanced Micro Devices, Inc. (NASDAQ: AMD), who have staked out strong claims to much of the market. However, since hitting lows in September, Intel shares have climbed 25%, and there are several reasons for investors to be excited. Let’s jump in and take a look.
Intel's Fundamental Performance
Starting with fundamentals, Intel’s Q3 results came as a welcome surprise. Despite the company posting a bigger-than-expected loss of $0.46 per share, revenue came in higher than expected. It also helped that Intel’s forward guidance was on the high side, a forward-looking factor that will almost always help make up for any shortfall in a past quarter.
Intel’s leadership also struck a decidedly upbeat tone, with CEO Pat Gelsinger emphasizing the company’s $10 billion cost-reduction plan. In his call with analysts, he said “our Q3 results underscore the solid progress we are making against the plan we outlined last quarter to reduce costs, simplify our portfolio, and improve organizational efficiency. We delivered revenue above the midpoint of our guidance, and are acting with urgency to position the business for sustainable value creation moving forward.”
The stock popped nearly 10% after the report’s release, and while it traded a little softly into the weekend, there were signs that the bulls might be starting to take control.
Analyst Updates for Intel Stock
Backing up this view is the fact that the team over at Northland Securities upgraded Intel to an Outperform rating at the end of last week. This was on the basis that much of the worst case scenario is now priced into the stock, and the risk/reward profile is almost too attractive to miss.
Northland’s refreshed price target of $28 is targeting a 20% upside from current levels, and would have the stock trading at its highest level since August’s drop. It’s worth noting that the analysts at Truist Financial and Robert Baird, while neutral, also have price targets above the $23 that Intel shares closed at on Friday, suggesting the stock is seriously undervalued right now.
Potential Concerns Around Investing in Intel
For all the cautious optimism, though, Intel obviously has a long road ahead of it, along with its fair share of skeptics. Jefferies’ Blayne Curtis highlighted that Intel’s Q4 growth relies heavily on the PC client segment, which is facing cooling demand.
Morgan Stanley’s Joseph Moore also cautioned that Intel’s Foundry ambitions face risks, including challenges in its upcoming processes. Intel’s prospects in the near-medium term will depend heavily on how the broader market behaves. For the more risk-averse investor, it could be worth waiting to make any move until mid-November, as market direction could become clearer after several key tech earnings reports, not to mention tomorrow’s U.S. election.
Getting Involved With Intel
For those of us on the sidelines with an appetite for risk, however, this could be a golden entry opportunity. Having weathered a tough year, the company’s fundamentals are showing signs of life, and the stock has been trending cautiously upward.
The technical setup here adds to the bullish outlook. Intel’s Relative Strength Index (RSI), a momentum indicator that gauges overbought or oversold conditions, sits at 55, suggesting there’s a ton of room for further gains before anyone could call the stock overbought. For Intel’s long-suffering investors, that would be a nice problem to have but one that they soon might have to face.
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Carnival or Royal Caribbean—Which Cruise Stock Has More Upside?
The cruise operators were unfortunately locked into an epicenter industry in the consumer discretionary sector during the COVID-19 pandemic. The spread of the disease onboard cruise ships spurred fears that no one would ever want to take a cruise again and risk catching a fatal infection. Fast forward four years later, and the industry is booming as the pent-up demand spawned a travel boom after the reopening that has lasted years.
The best-run operators like Royal Caribbean Cruises Ltd. (NYSE: RCL) have enjoyed a robust recovery, with shares surging to all-time highs at $214.12 in October 2024. Lagging the recovery but finally catching its stride is Carnival Co. & plc (NYSE: CCL), whose shares are still trading nearly 70% off its all-time high of $72.70 set in January of 2018.
Investors may wonder which stock has more upside, the leader or the laggard. Let's take a look.
Royal Caribbean: The Premium Experience at Premium Prices
With a focus on premium brands and experiences, Royal Caribbean is firing on all pistons. Its premium brands include Celebrity Cruises and Royal Caribbean International, which targets families. Silversea Cruises is an ultra-luxury expedition brand. Royal Caribbean also has seven of the world's largest cruise ships, including the largest, 1200-foot ship, Icon of the Seas, which accommodates 5,610 guests and 2,350 crew members.
Its higher-spending customer base continued to help drive record quarterly revenue of $4.89 billion, up 17.4% YoY. Its third quarter of 2024 EPS was $5.20, beating consensus estimates by 17 cents. Its gross cruise costs per available passenger cruise days (APCD) rose 1.3% YoY.
The load factor was 111%, indicating strong demand and solid capacity utilization, which is impacting profitability to the upside. Gross margins yield increased 13.4%. Due to higher pricing across key products, better onboard revenue and strength in Alaskan and European itineraries.
Accelerated Demand and Pricing Outpacing 2023
The demand and pricing environment accelerated since last quarter and exceeded 2023 levels. Closer in-demand 2024 sailings led to higher load factors at higher prices and higher onboard revenue exceeding expectations. Onboard consumer spending and pre-cruise purchases significantly exceed 2023 levels, fueled by greater participation at higher prices. Demand for 2025 is strong, with booked load factors in line at higher rates, which allow for further pricing and yield growth as bookings continue to accelerate. The company closed Q3 with $3.9 billion in cash and cash equivalents.
Full-Year Guidance Is In-Line, But 2025 Expected to Start With $14 EPS
Royal Caribbean expects full year 2024 EPS of $11.57 to $11.62 versus $11.58 consensus estimates. This was raised from its previous EPS guidance of $11.35 to $11.35. Net yields are expected to increase from 10.8% to 11.3%. Demand for 2025 is strong, and booked load factors align with last year's but at higher rates. Elevated demand patterns are expected to drive EPS to start 2025 with a $14 handle.
Carnival Corp: The Affordable Budget Friendly Option Breaking Records
Catering to the budget-conscious customer base, Carnival Cruises offers more affordable cruises with a more party-going atmosphere featuring family-friendly and adults-only areas.
It does sport some premium brands like Princess Cruises, Seabourn, Cunard, and Holland America. Carnival also experienced a demand surge in Q3 2024, which came after an impressive Q2 2024 EPS beat and raise.
Carnival Breaks All Kinds of Records in Q3
The company hit record revenue of $7.9 billion with record yields and record net per diems in constant currency, which exceed 2023 levels. Gross margin yields rose by 19% YoY. Operating income reached a record $2.2 billion, which exceeded 2023 levels by $554 million.
Carnival achieved record adjusted EBITDA of $2.8 billion, up 25% YoY and outperforming June guidance by $160 million. Customer deposits hit a new record of $6.8 billion.
Upbeat CEO Comments Suggest Carnival Has the Upside
Carnival CEO Josh Weinstein was overwhelmingly and convincingly upbeat with his comments. He stated that high-margin, same-ship yield growth drove a 26% YoY unit operating income improvement, hitting the highest level in 15 years. If CEO enthusiasm is the measure of upside, Carnival runs away with the lead over Royal Caribbean.
Weinstein summed it up, "With nearly half of 2025 booked and less inventory remaining for sale than the prior year. We are leveraging strong demand to achieve record ticket pricing (in constant currency). Our brands continue to deliver robust booking momentum, with all our brands ahead on price for 2025 sailings, based on the success of their demand generation efforts, along with the exciting offerings and unparalleled experiences we consistently provide our guests. Likewise, 2026 is off to an unprecedented start, achieving record booking volumes in the last three months."
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Summit Therapeutics: Is Their Lung Cancer Drug a Game Changer?
Summit Therapeutics Inc. (NASDAQ: SMMT) is a development-stage biotech company specializing in novel therapies for oncology and infectious diseases. Their leading drug candidate is Ivonescimab, an immunotherapy treatment being tested on non-small cell lung cancer (NSCLC). The stock is trading up 627% year-to-date (YTD) on the belief that it could be a game-changer in the fight against advanced lung cancer. Its stunning Phase 3 clinical trial results shocked the medical sector. Analysts believe it has the potential to be more effective than Merck & Co.’s (NYSE: MRK) blockbuster drug Keytruda (pembrolizumab) against NSCLC.
Keytruda is the blockbuster drug that’s considered the most effective solid tumor therapy currently on the market, generating over $25 billion in sales in 2023.
Phase 3 Clinical Trials Were Performed in China
It's important to note that Chinese drug developer Akeso actually developed the drug, which is also known as AK104. Summit Therapeutics obtained the license to commercialize Ivonescimab in the United States for various cancers. Akeso conducted the HARMONi-2 Phase 3 trials testing Ivonescimab directly against Keytruda using 398 patients in China. Patients were randomly given intravenous Ivonescimab or Keytruda shots over two years.
HARMONi-2 Study Results in Crush Keytruda, a Game Changer
Ivonescimab met its primary endpoint of progression-free survival (PFS) as a first-line therapy. Secondary endpoints included overall survival (OS), duration of response (DOR), and objective response rate (ORR). Ivonescimab is a bispecific antibody that binds simultaneously to two different targets, the PD-1 receptor to boost the immune response and vascular endothelial growth factor (VEGF) to inhibit blood vessel growth in the tumor.
The resulting PFS reduced the risk of disease progression or death by 49% in first-line PD-L1 positive advanced NSCLC compared to Keytruda. Ivonescimab patients achieved a PFS of 11.4 months compared to 5.82 months for Keytruda. It also outperformed in ORR and DCR. It was the first drug to improve over the incumbent Keytruda materially. The news sent shares rocketing up from $12.93 to $33.89 in five days upon gapping on Sept. 9, 2024.
FDA Grants Fast Track Designation
On Oct. 4, 2024, the FDA granted a Fast Track designation for Ivonescimab for the treatment of advanced lung cancer in combination with platinum-based chemotherapy. However, the FDA doesn't give much credit to data from Chinese clinical trials. Summit Therapeutics will likely have to perform Phase 3 clinical trials in the United States. Additional Phase 3 studies could also include HARMONi-7, which would be used to treat first-line PD-L1 high advanced NSCLC patients. From there, it could be expanded to target other types of cancer, including liver, breast, head, and neck.
Each Phase 3 clinical trial positive result could build up more momentum for the stock. Summit Therapeutics is looking at another two to three years of clinical trials. Meanwhile, the company has $325.8 million in cash with a quarterly burn rate of around $45.6 million, which gives it a runway until the end of 2025, when it will need to raise more capital before then. Summit Therapeutics is undergoing two multi-regional Phase 3 studies, which are HARMONi and HARMONi-3 and HARMONi-7, to start in early 2025. HARMONi top-line results are expected in mid-2025.
SMMT Stock Forming a Symmetrical Triangle Breakdown
A symmetrical triangle is comprised of a descending upper trendline resistance converging with an ascending lower trendline support at the apex point. A breakdown occurs if the stock collapses below the lower trendline support.
SMMT peaked at the $33.89 swing high to commence the descending upper trendline resistance, meeting the ascending lower trendline support at the apex point. SMMT stock fell under the lower trendline and below the daily anchored VWAP at $19.77. The daily RSI is flat at the 45-band. Fibonacci (Fib) pullback support levels are at $15.95, $12.93, $11.75, and $9.95.
SMMT’s average consensus price target is $35.57, implying an 87.8% upside and its highest analyst price target is $44.00. It has two analysts' Buy ratings and one Hold rating. The stock has a 2.1% short interest.
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