Shares in Cheesecake Factory (CAKE) surged 8% in Tuesday’s after-hours trading after the company provided a positive business update given the ongoing Covid-19 pandemic.CAKE began to reopen dining rooms in the second week of May. Currently approximately 25% of the company’s restaurants, including 34 Cheesecake Factory restaurants, have reopened dining rooms with limited capacity.Most encouragingly, the reopened Cheesecake Factory restaurants have recaptured, on average, approximately 75% of prior year sales levels, which CAKE says “reflect[s] continued strength in off-premise sales and building dine-in business.”For restaurants that are continuing to only operate off-premise, current weekly off-premise sales would equate to nearly $4 million per unit on an annualized basis, on average, the company said.Overall, fiscal second quarter to-date comparable sales at Cheesecake restaurants are down 63%, including the impact of 87 full or partial closures due to recent demonstrations across the United States.Looking forward, the company expects to have approximately 65% of dining rooms that closed due to Covid-19 reopened with limited capacity by mid-June, including an anticipated 124 Cheesecake Factory restaurants.However this is subject to any closures due to further demonstrations and other factors related to the ongoing Covid-19 pandemic, CAKE added.Shares in Cheesecake Factory are currently trading down 46% on a year-to-date basis, and analysts have a cautious Hold consensus on the stock. The average analyst price target stands at $22 (3% upside potential). (See CAKE stock analysis on TipRanks.)“We believe management’s efforts to reduce costs will position the company to survive and take share when things normalize but also expect a slower sales recovery this year given its mall dependency and reduced earnings power longer-term from the expensive financing the company secured last month,” BTIG analyst Peter Saleh explained, as he recently reiterated his Hold rating without a price target.Related News: Starbucks Is Said To Further Cut Worker Hours Due To Sales Demand Lyft Rises 5% After-Hours On Strong May Performance More recent articles from Smarter Analyst: * Alibaba Rolls Out Online Business Services As Covid-19 Boosts Digitalization Need * Glu Mobile Sinks On $100M Public Offering Announcement * Zoom Lifts Full-Year Sales Guidance As Quarterly Revenue Balloons 169% * Microchip Gains 7% After-Hours On Boosted Guidance; Top Analyst Ups PT

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Popular video-conferencing company Zoom Video Communications (ZM) far outpaced sales expectations in the first quarter as millions of users flocked to use its technology to host business and social meetings during the coronavirus pandemic.First-quarter revenue surged 169% to $328.2 million year-on-year, beating analysts’ estimates of $202.7 million. Zoom now has about 265,400 customers with more than 10 employees, up about 354% from the same quarter last fiscal year.“The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom,” said Zoom founder and CEO Eric S. Yuan. “Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives. We also supported an unprecedented number of free participants, including over 100,000 K-12 schools.”Commenting on the earnings, five-star analyst Ittai Kidron at Oppenheimer, said that while Zoom reported “exceptional” results, “its gross margin significantly contracted (-1,480bps QoQ and -1,149bps YoY) due to high levels of free meeting minutes (K-12 schools) and increased public cloud hosting costs”. Indeed, cost of revenue in the first quarter skyrocketed 330% to $103.7 million year-on-year.Shares rose 1.9% to close at $208.08 ahead of the earnings release on Tuesday and dropped 1.7% in after-market trading.Looking ahead, the company raised its full-year revenue forecast to a range of $1.78 billion to $1.80 billion from $905 million to $915 million. This compares with analysts’ average estimates of $935.2 million for the fiscal year ending January 2021.Shares have more than tripled this year as Zoom has gone from an average of 10 million daily users to about 300 million this year. The analyst community will now wait to see if the user boom is sustainable as some countries are starting to relax their lockdown restrictions and employees are beginning to go back to their work place.Oppenheimer’s Kidron, who maintained a Hold rating on the stock due to valuation, says that Zoom has seen strong adoption, which calls into question how this develops as businesses reopen.“Zoom reported robust net expansion and user growth,” Kidron wrote in a note to investors. “Going forward, exposure to multiple growth levers (new customer growth and use cases, upselling, cross-selling Rooms/ Phones, int'l expansion, etc.) leaves us feeling positive. However, we admit we likely missed an entry point earlier this year and remain Perform-rated on valuation.”The rest of the Street is cautiously optimistic on the stock. The Moderate Buy consensus showcases 14 Hold and 2 Sell ratings versus 8 Buy ratings. Following this year’s sharp rally the $131.18 average analyst price target, now implies shares may decline 37% from current levels. (See Zoom stock analysis on TipRanks).Related News: Lyft Rises 5% After-Hours On Strong May Performance Beleaguered Hertz Sinks 36% In After-Market On Bankruptcy Protection Filing Carl Icahn Initiates Position in Delek US Holdings, Boosts Occidental Petroleum More recent articles from Smarter Analyst: * Alibaba Rolls Out Online Business Services As Covid-19 Boosts Digitalization Need * Glu Mobile Sinks On $100M Public Offering Announcement * Microchip Gains 7% After-Hours On Boosted Guidance; Top Analyst Ups PT * Cheesecake Factory Spikes After-Hours As 75% Sales Recaptured

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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each […]

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