Here's the Latest on 4 of Our Most Dynamic Positions Following May CPI Report
A handful of our portfolio holdings, from Apple to Nvidia, have seen major updates in the last few days.
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*Elevance reiterated its 2024 guidance ahead of its investor conference presentation on Wednesday
*Here’s how we see the Qualcomm and Arm drama playing out
*Bank of America sees a iPhone shipment forecast as too conservative
*A few more post-split price target changes for Nvidia
Now that we’ve digested the May CPI report and have a better grasp as to what the Fed is likely to say this afternoon, let’s catch up on some portfolio headlines and news.
1. Elevance
After a federal court ruled that the Centers for Medicare and Medicaid Services must recalculate Anthem Blue Cross and Blue Shield of Georgia's Medicare Advantage star ratings, Elevance Health ELV reaffirmed its 2024 EPS guidance for more than $37.20. That compares to the $33.14 delivered in 2023 and the market consensus of $37.28. We’ll be reviewing Elevance’s comments from today’s presentation at Goldman Sachs' 45th Annual Global Healthcare conference and will adjust our ELV price target as needed.
2. Qualcomm
While the market continues to focus on AI and the forthcoming AI-on-device upgrade cycle, contract disputes between Arm Holdings ARM and Qualcomm QCOM are catching some headlines. This explains the recent pressure on QCOM shares.
While ARM and Qualcomm have worked together in the past, Arm is arguing the use of Qualcomm’s chips in PCs should be housed under a different royalty agreement. Qualcomm has said that its broad license for Arm technology already covers its PC chips and a Qualcomm spokesperson said its position has not changed since Arm filed the suit in 2022. With nearly two dozen AI PC models ranging from Microsoft MSFT, Dell DELL and Samsung expected to start shipping next week, we are likely to see a meeting of the minds occur.
This could lead to some modest revisions to 2024 and 2025 EPS expectations, but when we look at the overall ramp in those figures compared to 2023, we still see reasons to be bullish with the AI-on-device upgrade cycle.
3. Apple
Sticking with AI but shifting to Apple AAPL, Bank of America (BofA) echoes our thinking about the iPhone install base and the volume of folks who did not update their devices in the last few years. Based on a proprietary survey BofA finds 77% of iPhone users in the U.S. own either the iPhone 11, 12 or 13 models. Granted, the sample size was on the smaller side at less than 8,000 respondents, but this does reinforce our thoughts about the coming upgrade cycle that will benefit not only Apple but Qualcomm and Universal Display OLED. In BofA’s view, it sees calendar years 2025 and 2026 iPhone unit shipment forecasts of 241 million units and 238 million units as too low. For context, Apple shipped 231.8 million iPhones in 2023.
4. Nvidia
We are seeing some stragglers when it comes to Nvidia NVDA price target adjustments following the recent 10-for-1 stock split:
Evercore ISI raised the firm's price target on Nvidia to $145 from $131 and keeps an outperform rating on the shares.
Argus raised its price target on Nvidia to $150 from $110 and kept a buy rating on the shares.
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At the time of publication, TheStreet Pro Portfolio was long AAPL, ELV, QCOM, MSFT, OLED and NVDA.
