Stocks’ Details
 

Amazon.Com, Inc.

 
AMZN’s Necessary Measures Amid COVID-19-led Crisis:  Amazon.Com, Inc. (NASDAQ: AMZN) is one of the top e-commerce providers, which offers numerous cloud-based products like AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, Alexa, to name few. On 13 April 2020, the company announced its latest plans to hire 75,000 more workers, in order to strengthen its workforce in a bid to enhance performance during the COVID-19 crisis. In order to hike worker wages, the company is expected to spend ~$500 million, as compared to the prior figure of $350 million. In another update, the company stated that it has started prioritizing orders in a bid to manage the flood of orders in this current lockdown situation. In doing so the company has kept new grocery orders on hold, thereby prioritizing to address the existing customer orders first.
 
AMZN also remains on track to address the safety and health of its workers and employees amid COVID-19 tensions. In doing so, the company is building an in-house COVID-19 testing lab. In another update, the company stated that it will temporarily hold service for non-Amazon package and suspends its own delivery service, Amazon Shipping, starting June. The company also announced that it is taking initiatives to donate 8,200 laptops to students in Seattle Public Schools during the COVID-19 pandemic.
 
AMZN Collaborates with Conduent: Recently, the company stated that it has collaborated with Conduent, to make the latter’s Maven available on AWS in order to combat the coronavirus crisis.  
 
FY19 Business Highlights for the Period ended 31st December 2019: AMZN declared its full year results, wherein the company reported revenue of $280.5 billion, an increase of 20% on pcp, owing to strong revenue growth from the North America segment. Net income stood at $11.6 billion, as compared to 10.1 billion in the previous financial year.
 
 
 

Revenue Highlights (Source: Company Reports)
 
Outlook: As per the Q1FY20 guidance, the company expects net sales within the range of $69.0 billion to $73.0 billion, depicting a growth of 16% to 22% on Q1FY19. 
 
Stock Recommendation: The stock of AMZN closed at $2283.32 with a market capitalization of $1136.7 billion. The stock made a 52-week low and high of $1,626.03 and $2,292 and is currently trading at the upper band of the range. The stock has given positive returns of 22.14% and 23.89% in the last three months and one year, respectively.The company’s investment in artificial intelligence for health is a part of its’ broader focus on modernizing the healthcare system by utilizing emerging technologies to fight the outbreak. Notably, AMZN’s strong healthcare competencies aid the company to take advantage from the ongoing digital overhaul, caused by the coronavirus crisis. Considering the aforesaid facts, current trading levels and business prospects amid COVID-19 crisis, we give a ‘Hold’ recommendation on the stock at the closing price of $2283.32, up5.28% as on 14 April 2020.
 
 

Microsoft Corporation

 
MSFT Initiative to Curb COVID-19 Impact: The Microsoft Corporation (NYSE: MSFT) is a tech behemoth and an information technology company which offers a broad range of cloud-based services to individuals and businesses. On April 13, 2020, the company announced that it is dedicating $20 million to the advancement of AI for Health initiative in a bid to combat the coronavirus pandemic. In another update, the company stated that its Teams Communication platform has witnessed a new daily record of 2.7 billion meeting minutes, owing to the coronavirus-induced demand.
 
MSFT Forms Strategic Alliance with Blackrock: Recently, the company stated it has entered into a strategic partnership with Blackrock to host the latter’s Aladdin infrastructure on Azure cloud. In another update, MSFT expanded its strategic alliance with Adaptive Biotechnologies to support public health officials and researchers to trace information relating to COVID-19 patient immune reactions.
 
Other Recent Updates: Recently, the company appointed Apple’s former executive, Ruben Caballero, for its hardware Design & Technology division. In another update, the company partnered with Walk Me, to assist companies in boosting the utilization of Dynamics 365 and drive digital renovation. Further, the company also announced an agreement to buy Affirmed Networks with an objective to gain advanced software and 5G edge computing capabilities.
 
Key Highlights for Q2FY20: During the quarter, the company reported revenues of $36,906 million, up 14% year over year, aided by 27% y-o-y growth from Office 365 Commercial and higher revenue per user.
 

Q2FY20 Financial Highlights (Source: Company Reports)
 
Outlook: Due to COVID-19 outbreak, the business anticipates that it would fail to meet its More Personal Computing revenue guidance of $10.75 and $11.15 billion.
 
Valuation Methodology: Price to Earnings Based Valuation

Price to Earnings Based Valuation (Source: Thomson Reuters)
 
Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation: The stock of MSFT closed at $173.7 with a market capitalization of ~$1.32 trillion. The stock made a 52-week low and high of $119.01 and $190.70 and is currently trading above the average of the range. The stock has given positive returns of7.14% and 43.61% in the last three months and one year, respectively. Considering the aforesaid facts, current trading levels and business prospects, we have valued the stock using price to earnings based illustrative relative valuation method. For the purpose, we have considered peers like Salesforce.Com Inc (NYSE: CRM), Adobe Inc (NYSE: ADBE), and Oracle Corp (NYSE: ORCL), and arrived at a target price with high single-digit upside (in % terms). Hence, we give a ‘Hold’ recommendation on the stock at the closing price of $173.7, up 4.95% as on 14 April 2020.
 
 

Apple Inc.

 
AAPL Partners Google to Fight the Novel Coronavirus: Apple Inc. (NASDAQ: AAPL) is a top manufacturer of mobile phones, personal computer, laptops, and other electronic gadgets. The company also provides software platforms like iOS, macOS, watchOS and tvOS to its clients. On April 14, 2020, the company stated that it has issued a mobility data trends tool from Apple Maps to help curb the spread of COVID-19. In another update, the company partnered with Alphabet’s Google to divulge a new set of tools that will permit mobile devices to gather data via Bluetooth connections to notify people when they are in close vicinity with someone who has tested positive for COVID-19.
 
COVID-19 Updates: Recently, Apple along with Goldman Sachs is permitting customers to postpone their Apple Card payment for the month of April with no additional interest charges or a penalty due to the coronavirus outbreak. In another update, the company announced that it will probably keep its U.S. retail stores closed until early May due to the constant spread of the coronavirus pandemic.
 
Q1FY20 Operating Highlights for the Period ended 28 December 2019: During the period, the company reported net sales of $91,819 million, up from $84,310 million reported in the year-ago period. Total gross margin stood at $35,217 million, as compared to $32,031 million in Q1FY19, driven by a favorable service mix and higher leverage, which was partially offset by higher service expenses. 


Q1FY20 Key Income Statement Highlights (Source: Company Reports)
 
Valuation Methodology:Price to Cash Flow Based Valuation

Price to Cash Flow Based Valuation (Source: Thomson Reuters)
 
Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation: The stock of AAPL closed at $287.05 with a market capitalization of $1.26 trillion. The stock made a 52-week low and high of $170.27 and $327.85 and is currently trading at the upper band of its 52-week trading range. The stock has delivered positive returns of 3.27% and 44.34% in the last one month and one year, respectively. Considering the aforesaid facts, current trading levels and business prospects, we have valued the stock using Price to Cash Flow based illustrative relative valuation method and arrived at a target price with single-digit upside (in % terms). For the purpose, we have considered peers like Cisco Systems Inc (NASDAQ: CSCO), International Business Machines Corp (NYSE: IBM), and Microsoft Corp (NYSE: MSFT), Hence, we give a ‘Hold’ recommendation on the stock at the closing price of $287.05, up 5.05% as on 14 April 2020.
 

JP Morgan Chase & Co.

 
JPM Q1FY20 Earnings Down Y/Y on Coronavirus Credit Costs: JP Morgan Chase & Co. (NYSE: JPM) is one of the biggest financial institutions in the United States, with assets worth $2.6 trillion and employees more than 250,000. Recently, the company donated $50 million worldwide to focus on the public safety and health, owing to the long-term economic challenges due to rising COVID-19 pandemic.
 
Q1FY20 Operating Highlights: During the period, JPM reported earnings of 78 cents per share, down from $2.65 per share reported in the year-ago period, owing to a considerable rise in provisions due to coronavirus-related fears. The tepid results were primarily due to provision builds owing to decline in the macro-economic backdrop, losses associated to funding spread widening on derivatives and bridge book markdowns. The company reported net revenues of $28.3 billion, down 3% year over year. Among the positives, credit card sales volume increased 4% and merchant processing volume rose 5% on pcp. Notably, Commercial Banking loan balances went up 14%, while the company witnessed 16% increase in Asset & Wealth Management loan balances. Overall quarterly performance of JPMorgan’s business segments, in terms of net income generation, was unsatisfactory. Net income fell 69% year over year to $2.9 billion.
 

Key Highlights (Source: Company Reports)
 
Credit Quality Deteriorates: During the period, provision for credit losses was $8.3 billion, up from $6.8 billion in 1QFY19, due to reserve build amid worsening operating environment owing to coronavirus and continued pressure on oil prices.
 
Stock Recommendation: The stock of JPM closed at $95.5 with a market capitalization of $290.9 billion. The stock made a 52-week low and high of $76.91 and $141.1 and is currently trading at the upper band of its 52-week trading range. The stock has corrected 8.09% and 14.13% in the last one month and one year, respectively. On TTM basis, stock is trading at a price to book value multiple of 1.11x as compared to the industry median of 0.8x. Considering the aforesaid facts, current trading levels and tepid 1QFY20 results due to COVID-19 crisis, we give a "hold" rating on the stock at the closing price of $95.50, down 2.74% as on 14 April 2020. 
 
 
Comparative Price Chart (Source: Thomson Reuters)

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