Uncovering insights on Apple, Under Armour and Netflix

You are probably familiar with top line and bottom line consensus estimates from the sell side, but Visible Alpha takes a different approach.

Through relationships with more than 60 sell-side firms, Visible Alpha receives full analyst models and applies machine learning to them to create unique consensus data and analytics across every line item within the model.

This allows our clients to streamline their data aggregation process and uncover new insights on the companies important to them in record speed.

“Go Beyond Consensus: Uncovering insights from sell-side consensus data in 3 case studies” was the first in a webinar series hosted by Visible Alpha. The webinar takes a look at three companies – Apple, Under Armour and Netflix – using Visible Alpha Insights, an investment research technology platform that provides instant access to deep forecast data and unique analytics on thousands of companies. For each company, we present the current story, the questions investors are asking and a summary of the insights our platform can provide.

Note: The data used in this presentation was from February 7, 2018.

Apple

The Story: iPhone Super Cycle

The iPhone super cycle refers to the expectation that a strong iPhone X feature set and higher price point could provide a significant boost to Apple’s revenue in 2018. After the company reported F1Q18 results, expectations have shifted dramatically.

The Question: Will iPhone units and average selling prices grow in 2018?

The Insights: Analysts have revised down their estimates for both units and ASPs after 1Q18, but continue to expect both unit and ASP growth for the full year.

The Question: What do investors expect from the iPhone X going forward?

The Insights: After Apple’s F1Q18 earnings report, expectations are now lower for the remainder of the year. iPhone X estimates were revised downward and total iPhone ASPs estimates also shifted down.

Under Armour

The Story: Competitive Pressures

Under Armour is seeing pressure on both sales and margins. The pressure is coming from two sources: 1) Heightened competition from Nike, Adidas and other athleisure companies, and 2) a shift in consumer preferences in athleisure, moving from a technical focus to more of a lifestyle focus. This is important because Under Armour is overexposed on the technical side, but underexposed on the lifestyle side.

The Question: Where are investor expectations for the wholesale segment?

The Insights: Wholesale sales estimates have been revised down significantly over the last few months. However, wholesale is still expected to grow in 2018, which is surprising given the pressure this segment has endured.

The Question: Gross margins have been experiencing a decline over the past several years. Is that trend expected to continue in 2018?

The Insights: Interestingly, consensus estimates show that analysts are expecting growth in gross margin in 2018.

Netflix

The Story: The Bull Case and the Bear Case

Netflix has seen explosive growth, but they are now in a race to acquire, license, and create content. Bulls focus on the growth, while bears focus on the costs.

The Question: What’s the bull case for Netflix?

The Insights: This case is premised on global expansion (with Netflix now available in 50 countries) and pricing power generating strong revenue momentum. There’s been a dramatic shift in the consensus for estimates in international subscribers and average revenue per user through 2022.

The Question: What’s the bear case for Netflix?

The Insights: Netflix has spent a lot of money in the race for differentiated content, and the result of this is increasing content obligation liabilities and negative free cash flow. Compared to six months ago, analysts have revised content obligations up for the next five years, which is resulting in free cash flow turning even more negative in 2018. However, even with these projections, the consensus among analysts is that free cash flow turns positive by 2021.

Drill into these case studies in more depth by viewing the full webinar >