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Ford Motor and IRobot have been highlighted as Zacks Bull and Bear of the Day

·15-min read

For Immediate Release

Chicago, IL – January 7, 2022 – Zacks Equity Research shares Ford Motor Company F as the Bull of the Day, and IRobot IRBT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Option Care Health OPCH, Globus Medical, Inc. GMED and Omnicell, Inc. OMCL.

Here is a synopsis of all five stocks:

Bull of the Day:

The Ford Motor Company certainty didn’t kick start the modern electric vehicle revolution, as it did with the original automobile wave. Luckily for Ford and investors, EVs are still in their infancy and the historic automaker’s big electric push is already turning heads.

All In on EVs

Ford dove headfirst into EVs under new CEO Jim Farley, who officially took over in October of 2020. Since then, Ford has focused almost entirely on bringing the historic automaker into the future. These efforts include EVs and the accompanying digital services for the tech-filled vehicles.

On top of that, Ford aims to boost its electric appeal and relationships with its array of commercial customers, from contractors and construction companies to police departments and other government fleets. Its commercial business is set to bring in more recurring revenue as companies pay to monitor their connected fleets. This segment should also help it stand out against Tesla.

Ford is currently the nation’s No. 2 automaker by sales and it was the best-selling automaker in the fourth quarter. The company’s F-Series was the best-selling truck for the 45th year running and the best-selling vehicle for the 40th straight year. Plus, Ford’s early EV efforts are already paying off in a big way.

Ford rolled out an all-electric version of its famous Mustang in late 2020. The Mach-E is far more of a crossover and aims to compete closely against Tesla’s small SUVs. Despite some early skeptics, Ford’s Mustang Mach-E was named the “Electric Vehicle of the Year” by Car and Driver in 2021.

More importantly, Ford was the No. 2 overall electric vehicle seller in 2021, behind only Tesla. Ford’s EVs grew 36% faster than the segment as a whole last year. Ford also posted impressive sales to end the year in December. And the company’s EV age is just starting.

Trucking Ahead

Ford turned heads when it showed off the all-electric version of its hugely popular F-150 back in May of 2021. The F-150 Lightning quickly pulled in well over 100,000 reservations. The upside growth is massive since over 75% of those early reservations came from customers new to Ford.

Better still, Ford said on Tuesday that nearly 200,000 reservations have now been placed for the F-150 Lightning. The company also announced plans to nearly double its goal for manufacturing the Lightning, targeting over 150,000 a year. Deliveries of the F-150 Lightning pickups will begin this spring at a starting MSRP of $39,974, before any available tax incentives.

Along with the early demand and increased production for the Lightning, Ford plans to triple Mach-E production and expects to reach 200,000-plus units per year by 2023. Looking ahead, Ford is set to launch an EV line of its best-selling commercial vans, dubbed E-Transit, which are projected to go on sale this year. Ford has also teased plans to sell EV versions of the Explorer and the Lincoln Aviator down the road.

All in, Ford is investing over $30 billion in EVs through 2025 and it plans to cement its place as the No. 2 EV maker in North America and “then challenge the No. 1 spot” (Tesla). These efforts crucially include major investments in battery tech and manufacturing. The company said it will have the global capacity to produce 600,000 battery EVs annually within the next two years.

Other Fundamentals

Wall Street has bought into Ford’s EV future, with the stock up 170% in the past year to leave its industry and the benchmark S&P 500 index in the dust. The showing includes a 62% climb in the last three months. And the stock surged over 10% on Tuesday to 52-week highs, following its EV updates.

Ford shares popped again through mid-day trading Thursday to hover at $24.42 a share. The stock might be a bit overheated at the moment and could face some near-term selling pressure. Still, it has miles of road left before it returns to the $30 a share it traded at in the late 1990s.

On the valuation front, Ford trades at 12.6X forward 12-month earnings. This represents some value compared to its year-long highs and a huge discount to the S&P 500’s 21.1X and the Autos-Tires-Trucks Market’s 31.1X.

Along with its solid valuation and great run, investors should be pleased to know that Ford reinstated its dividend after a pandemic pause, having made its first post-stoppage payment on Dec. 1. Ford’s current dividend yield sits at roughly 1.7% to match the recently-rising 10-year U.S. Treasury.

Near-Term Outlook

Ford was able to successfully manage the semiconductor shortage in the latter stages of last year and its outlook is strong. Zacks estimates call for Ford’s adjusted FY21 earnings to soar 360% from $0.41 to $1.88 a share on nearly 13% higher revenue.

Ford is then projected to post another EPS gain in FY22 despite the tough-to-compete against period. And its 2022 revenue is expected to jump 13% higher to $147.31 billion to inch within striking distance of its pre-pandemic total.

Bottom Line

Ford, perhaps ambitiously, said it expects fully electric vehicles to generate 40% of global sales by 2030. The company is investing more money into the tech side, which is vital since EVs rely heavily on interconnected tech and remote software updates. Ford in September even poached a former Tesla executive from Apple to help with these efforts. Ford is also crucially planning to manufacture its own batteries.

Ford’s EPS outlook has improved since its Q3 release to help it land a Zacks Rank #1 (Strong Buy) right now. It’s also crushed our bottom-line estimates by an average of 355% in the trailing four periods. And even with all of the excitement, EVs made up roughly 3% of all vehicle sales in 2021, which means there’s still time to get in near the starting line.

Bear of the Day:

IRobot makes robotic vacuums and more. The company has also entered into a totally different and potentially important market. Still, IRBT shares have been on a wild up and down ride over the last five years and things have been just as crazy during the past 12 months.

The Short Story

Bedford, Massachusetts-based iRobot makes and sells small household robot cleaners that glide around the floor to help tidy up. The Roomba robotic vacuum drove sales for years. Today, iRobot’s Roomba portfolio includes multiple vacuum models that range in price from around $275 to over $1,000.

The company also sells various Braava robot mops and it entered the handheld vacuum space. Outside of cleaning, iRobot now sells educational robots designed to help children learn how to code. Its Root coding robots start at $129.99 and could turn into hits as parents look to help their kids get a leg up in the future.

IRobot’s revenue growth has been strong over the past decade. But Wall Street has never really been convinced of its long-term business model, with IRBT stock up only 18% in the last five years. This lags way behind the S&P 500’s 120% run and the tech sector’s 163%.

Bottom Line

IRBT stock is also heavily shorted (26% of shares outstanding). This contributes to its wild swings and helped it get caught up in the meme-stock mania of early 2021. IRobot shares are down 20% in the last year and 30% since early November. And IRBT shares are currently hovering far below both their 50-day and 200-day moving averages.

Zacks estimates call for iRobot’s adjusted FY21 earnings to sink 65% from the last year on 10% higher sales. It is projected to post solid growth next year. However, its earnings estimates have tumbled since its Q3 report amid global supply chain setbacks, rising costs, and other headwinds.

IRobot’s FY22 consensus EPS figure is down 30% compared to where it was 30 days ago. IRBT’s overall earnings revisions activity helps it land a Zacks Rank #5 (Strong Sell) right now. The stock also lands an overall “F” VGM score and iRobot is part of an industry that sits in the bottom 6% of over 250 Zacks industries right now.

Additional content:

Omicron Hits Elective MedTechs: 3 Subsectors Likely to Thrive

The elective subsectors of MedTech had started seeing recovery after a rollercoaster ride through 2020 and the initial months of 2021. Although there were disruptions in the form of the emergence of new and more infectious variants of COVID-19, the overall trend of improvement from the previous year was sustained, courtesy of the gradual opening up of the economy following large-scale vaccination.

In the last reported third quarter, the collective business of the MedTech companies showed a sequential decline in terms of the legacy base business. However, thanks to the fiscal and monetary stimulus and mass vaccination drive in the nation and outside, the process of economic reopening never stopped.

Unfortunately, fourth-quarter (ending Dec 31, 2021) earnings (reporting cycle to start from the third week of January) are already apprehended to have been grossly disrupted by the surging Omicron wave. This highly-infectious variant of coronavirus has been seen to potentially infect hospital staff widely and at a much faster rate than the earlier variants.

In view of this, here we discuss three major subsectors of MedTech and three constituent stocks, Option Care Health, Globus Medical, Inc. and Omnicell, Inc., for which the present changing scenario has opened up enormous growth prospects.

The Current Doldrums and Changing Demand

The hospital staffing crisis has taken a severe turn over the past one and a half months following the emergence of Omicron. The COVID-led massive hospitalization has once again stalled elective MedTech procedures.

Going by a MEDTECHDIVE report of Jan 5, hospital administrators expect the surging Omicron wave to affect elective surgeries for up to four weeks, potentially resulting in a 7% revenue hit for “exposed” MedTech companies. By ”exposed” MedTech companies, we mean the medical device subsectors whose procedures can be easily deferred. The report quoted MedTech analysts from BTIG who stated that, “the areas that are being hardest hit are the usual suspects, orthopedics and elective general surgery, while cardiac surgery and non-elective general surgery appear to be least impacted."

Added to this, while specialized medical caregiving is suffering big time as a result of the declining non-COVID hospital admissions, demand for long-term care (LTC) services and home health care reached an all-time high during this period due to increased health concerns among the elderly and the vulnerable population.

3 Sectors to Bet On

Looking at the current COVID wave worldwide, we once again expect an abrupt change in the consumer behavior pattern. The resultant uncertainty will put overall MedTech stock investment in a tight spot. Here we discuss three MedTech subsectors, which are expected to sail through this tough time with flying colors based on the nature of their business.

The first sector that we ask investors to focus on is the prospering home health and hospice. Thanks to COVID-19, this industry has become the new generation’s preferred choice of healthcare now. The pandemic has raised the demand for home-based care beds exponentially over the past few months. Apart from this, the need for remote monitoring and assistance has increased the adoption of remote care settings significantly.

Going by a Market Data Forecast report, the global home healthcare market is set to witness a CAGR of 9.5% by 2026.

Option Care Health, a home and alternate site infusion services provider with a Zacks Rank #2 (Buy) is our first pick. Option Care is currently benefiting from momentum in-patient referrals across both acute and chronic therapy portfolios driven by collaborations with health systems.

Also, improved supply chain dynamics for certain therapies and collaborations with manufacturers as a channel partner of choice on newer therapies are adding to the growth of OPCH. Over the past year, Option Care stock has surged 56.2%

The next sector on our list is the surgical robotics space. Among all the orthopedic device sub wings, robotic surgery has been gaining popularity faster. A major advantage of robotic surgery is the lesser utilization of hospital resources along with minimal patient contact and exposure to the virus. This type of surgery not only enhances patient outcomes and minimizes costs but also reduces postoperative recovery time, immediate post-surgical pain, and infection rates as well as lowers complications.

Investors can consider buying the shares of musculoskeletal solutions provider, Globus Medical, Inc., currently carrying a Zacks Rank #2. You can see the complete list of Zacks #1 Rank stocks here.

Following the initial pandemic-led downturn of the Globus Medical business, there has been a visible rebound in the company’s revenue trend. According to the company, its ExcelsiusGPS Robotic Navigation system’s clinical superiority in the operating room continues to be the underlying growth driver. Adoption and utilization remained strong even in the COVID-19-dampened third quarter and prospective surgeon customers routinely acknowledged that ExcelsiusGPS is the best fine robot on the market.

In August 2021, Globus Medical’s Excelsius3D, an intelligent intraoperative 3-in-1 imaging system, was granted 510(k) clearance by the FDA. Over the past year, Globas Medical has gained 9.8%

The next sector on our list is telehealth services driven by its growing prosperity through the pandemic months on demand for contactless services. Consistently robust uptake, consumer preference, and significant strategic investment have been the main contributing factors behind this continued growth. Per a July 2021 Mckinsey & Company report, telehealth use has increased 38 times from the pre-COVID-19 baseline. The report also stated that investment in virtual care and digital health has skyrocketed, fueling further innovation.

Investors can consider betting on Zacks Rank #2 company, Omnicell, a provider of end-to-end automation solutions for the medication-use process. Omnicell’s strong performance in the pandemic months reflects the robust demand for its medication management and adherence automation solutions.

Omnicell recently acquired FDS Amplicare in an effort to strengthen its Advanced Services portfolio, which continues to gain momentum in the market. This is a strategic addition to the company’s Enliven Health solution. FDS has a suite of comprehensive and complementary SaaS technology solutions and a national network of more than 15,000 independent retail pharmacies. Over the past year, Omnicell has rallied 40.4%.

Zacks Top 10 Stocks for 2022

In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?

From inception in 2012 through November, theZacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.

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Ford Motor Company (F) : Free Stock Analysis Report
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