News and analysis

EOS (EOS) has seen a 2.3% increase this week, rising to $0.5040 and slightly outperforming the broader market. The most significant development is that EOS has climbed above a key resistance level at $0.5000. This is encouraging news, especially after the token broke through the descending channel’s resistance from March 7. If EOS can maintain its momentum above $0.5000, it could open the path to the next resistance level at $0.7000.

The project is undergoing continuous development, having recently introduced a new tokenomics model and a new staking program. These positive advancements suggest that the token could see a substantial 40% jump, provided the broader crypto market continues its recovery.

In early July, I shared my thoughts about wise use of buying patterns to join fresh bullish opportunities in shares of McDonald's, following its recent retracement from almost $300 to below $250. It has been fifty days now and the stock freshly touched an intraday high above $290 to take a step back to $285 before the Wall Street close this Tuesday. A 14% of profit in such a short time correlates with a more than 100% in yearly income, which is an incredible achievement for a rather conservative investment within the consumer staples segment. Besides, my own statistical observations and personal trading experience tell me that crowd investors in McDonald's may need at least a small pause for further price consolidation before deciding on going ahead to retest or even break the stock's all-time peaks above $300 per share. Therefore, I prefer to take the greater part of my accumulated profit from the trade. The "back student" went to the blackboard to write down the proof he actually had learned the lesson. I am quite satisfied with his B grade, and I am not sure this student would be qualified for the higher A grade right now. Despite having good fundamentals, he may need to do a bit of work on those matters before wiping out a more ambitious project. Yet, we have a full right on using our honestly earned money if we want it.

Applied Materials is on the brink of delivering another buy signal to extend its recent bounce from its unusual dips below $175. Taking profit after hitting mid-term targets above $250 per share has gone too far at some moment, mostly in sync with other tech stocks' slump. However, the manufacturer of semiconductor components for Huawei, Samsung and Apple forecasted its next quarter's revenue above Wall Street expert consensus, citing a supposed increase in AI-related demand for global chip production. The news came before the weekend, keeping concerns about the wafer fabrication equipment market limited the immediate price response because the previous buy-on-expectation phase of the new rally in AMAT already led it to as high as $211.83 just several hours before the quarterly release which came late in the night on August 15. As a result, AMAT's market value lost nearly 1.75% in after-hours trading. Further development just showed the stock attracted new groups of purchasers each time when the price was trying to touch the underground area below $205. The current formation of an almost symmetrical triangle is ending, which may quickly turn any possible next move even an inch above $211 per share into an immediate technical breakthrough with price targets of $220 at least. Yet, stronger-than-expected fundamentals would easily transform it into a more solid pattern to resume the accelerated stage of a longer-term rally in AMAT.

Coming back to the fundamentals, AMAT just reported its earnings of $2.05 per share for the 3 months ended July 28, vs $1.85 in a similar period of 2023. Its sales number reached $6.78 bln compared to $6.43 bln. Both bottom and top numbers are better than Wall Street pool projections for EPS of $2.02 on revenue of $6.54 bln. Demand for dynamic random access memory (DRAM) used in data storages is growing to account for 24% of total revenue vs 17% only one year ago. Sales of Applied Materials in China contributed nearly a third of all growth, improving from $1.73 bln to $2.15 bln YoY, despite US export restrictions. For the next quarter, AMAT forecasts its EPS within the range of $2.00 to $2.36 on revenue of $6.93 bln, plus or minus $400 million vs recent average estimates for EPS of $2.14 on revenue of $6.92 bln. For the calendar year of 2025, AMAT expects EPS of $10.15 vs the consensus number at $9.81, with "a possible path to $11 or more". Even most pessimistic investment houses now provide AMAT it with Overweight ratings, holding 12-month price targets at $250 or above. AMAT is trading with a 20% discount to this target, a nice story for bulls' attraction.

Palo Alto Networks completely recovered losses of the last thirty days and is so close to heal all of its wounds got in February, when disappointing forward guidance surprisingly derailed the epic climb from below $150 in early 2023 to an all-time high above $380. Slowly and steadily, a terrible technical retracement to $260 was fully recovered. And now the company's share price exceeded $350 after adding more than 5% for less than two days as another radically changed forecast suggested 2024 full-year results to shift previous mentally boundaries above consensus estimates, citing robust cybersecurity features demand against a surge in digital scams, while the July 19 global security outage, linked to CrowdStrike's software update, showed the risks of relying on single-vendor solutions.

Digital threat landscape evolves, Palo Alto CEOs said while now posting its annual sales projections between $9.10 and $9.15 billion, vs Wall St analyst pool's recent estimate of $9.11 billion, with its annual adjusted profit per share in the range of as much as $6.18 to $6.31, compared with previous suggestions of $6.19 per share on the average. Several financial services and investment houses like Stifel rushed to raise their price target for Palo Alto to $385 or even $400 per share on the news. Most of those chameleons quickly dressed up, or one may call it dressed down, by lowering their ratings for the company to Sell during the winter and springtime. Now most of them became optimists again to uphold their Buy ratings on Palo Alto.

Its management is focusing on platformization, which clearly pays off. Its next-generation security products like Cortex (surpassing $900 million in annual recurring revenue), PrismaCloud (collecting more than $700 million) and AI offerings (approaching $200 million) are best sellers. Meanwhile, only forecasts underwent major challenges while Palo Alto's actual financial results were brilliant, perfectly happy growing almost every quarter. Its EPS evolved from slightly above $1 per share in Q1 and Q2 2023 to the sequence of $1.44, $1.38, $1.46, $1.32 in the next four reporting periods, to reach $1.51 in the last quarter.

In each of these cases, corresponding numbers of EPS exceeded consensus estimates. The same mathematical principle applies to the whole set of revenue numbers. This means that all recent imaginary weaknesses of Palo Alto were mostly located inside investors' wavering minds, which were rather coordinated with forecasts' rhetoric than with actual fundamentals. It is unlikely that the market will get into the same vicious circle once again with the same Palo Alto in the course of the same year.