(Bloomberg) — It’s the rise of the robots: Japan’s second-largest company is now a maker of industrial automation systems, highlighting the rising importance of a less visible sector to a nation long associated with consumer-facing brands.Keyence Corp., a maker of machine vision systems and sensors for factories, has jumped 19% this year to become Japan’s second-largest company by market value. At a valuation of over 11 trillion yen ($100 billion), it has overtaken telecommunications giants SoftBank Group Corp., and NTT Docomo Inc., which have jostled for the honor to sit behind Toyota Motor Corp. over most of the past decade.Keyence is famed for its dizzying profitability with an operating profit margin of more than 50%, among the country’s highest. That’s enabled by its “fabless” output model, according to analysts, with production of its array of pressure sensors, barcode readers and laser scanners outsourced to avoid high capital costs.Its industry-leading sales system creates bespoke solutions for clients, and its frequently listed as the highest-paying company in Japan. The surge in its shares has also benefited founder Takemitsu Takizaki, who has overtaken SoftBank’s Masayoshi Son by a good margin to become Japan’s second-richest man.“It’s got everything — high growth, high dividends and a high operating margin,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “It’s the type of long-term stock you want to leave to your kids or your grandkids.”Keyence has more than tripled in market value since early 2016. “We feel the sense of expectation from our shareholders,” said Keyence director Keiichi Kimura when asked to comment on the milestone. “We’ll do our best to live up to those expectations.”The rise has also underscored how important the country’s parts and robot makers have become to the stock market, shown in the weighting of companies that make up the the country’s benchmark Topix index. Japan stocks were once dominated by banks and automakers — but years of zero rates which now dip into negative have hurt the profitability of the former, while the importance of the latter was declining even before the coronavirus sent the industry into reverse gear.The weighting of the Topix’s Electrical Appliance sector, also home to the likes of Sony Corp., Murata Manufacturing Co., and Fanuc Corp., has increased to almost 15%, the highest in about a decade, as the importance of the Banks and Transportation Equipment sectors have declined. The Information and Communication sector, headed by the five listed companies that dominate Japan’s mobile carriers, is the second-most heavily weighted segment.The growing presence of IT shares has also been a feature in the U.S. stock market, with the sector making up the highest proportion of the S&P 500 Index since the dot-com bubble burst. The coronavirus pandemic has amplified a trend for investors to prefer companies that eliminate humans from the process — a trend Keyence benefits from both with its fabless production model, and by enabling companies to automate their own production.“It’s a business model that grows the more factory automation throughout the world progresses,” said Mitsubishi UFJ Morgan Stanley Securities’ Fujito.Founder Takizaki holds about 23% of Keyence’s shares, Bloomberg-compiled data show. For the Topix, which takes the free float of the shares into account in its weightings, those holdings mean Keyence is less heavily weighted than Sony, whose market value trails by comparison. Toyota the biggest company on the index, and even forecasting an 80% drop in profit this year, the automaker remains Japan’s largest business with a market value double that of Keyence.“We like Keyence as it outsources production instead of owning factories, allowing it to focus on R&D,” HSBC analysts including Helen Fang wrote in a May 26 report that initiated coverage of the company with a buy rating. “It also uses a direct-sales model that keeps it close to clients. This strategy means it can better capture market share in a widening array of industries and can focus on high-value client solutions.”While the coronavirus pandemic will depress profits this year, Nomura sees a recovery “to record-high profit levels” the following year and sees a record profit the next, analyst Masayasu Noguchi wrote in a report May 28 raising its target price on the stock.“It’s unclear how long the coronavirus pandemic will continue,” Keyence’s Kimura said. “The global uncertainty is likely to continue and in the midst of that we’ll continue to do what we can.”Factory Automation in Asia May Be First to Recover From PandemicThe notoriously tight-lipped Osaka-based company does not provide earnings guidance in its sparse quarterly disclosure. It’s an outlier in a country where companies are being encouraged to boost their transparency and communication with the market.“They are an efficiency-above-any-other kind of company, so doing extra that doesn’t result in revenue addition is probably less of a priority,” said Bloomberg Intelligence analyst Takeshi Kitaura. “They think generally those following the company are happy when they manage solid earnings and growth.”Yoshiharu Izumi, an analyst at SBI Securities Co., says that Keyence holds talks with shareholders and that reassures investors, and doesn’t view the paucity of disclosure as a problem. “Keyence has overtaken Sony, which is extremely proactive in responding to shareholders,” he said. “When Keyence starts putting energy into disclosure, that might be the time to sell.”(Updates with quotes from Keyence from sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Shares in Lyft (LYFT) rose 5% in Tuesday’s after-hours trading, after the company provided an encouraging update on May business trends and on its Adjusted EBITDA outlook for the second quarter.Rides on Lyft’s rideshare platform in May 2020 increased 26% versus April 2020, although they were still down 70% year-over-year.Rideshare rides have increased week-over-week for 7 consecutive weeks since the week ended April 12, 2020, Lyft also revealed. In the week ended May 31, 2020 rideshare rides were down approximately 66% versus the year ago period and increased 5.5% versus the prior week.Recent monthly rideshare ride growth has been stronger in specific cities where restrictions on social activities and visiting business venues have been eased, says Lyft. For example, rideshare rides increased 73% in Austin, 41% in Denver, 54% in Las Vegas, and 59% in Miami, in May versus April. In addition, bike rides on the Lyft platform increased 118% in May 2020 versus April 2020.Given the stronger performance in May 2020 versus April 2020, Lyft now expects that its Adjusted EBITDA loss for the second quarter will not exceed $325 million if average daily rideshare ride volume in June is unchanged from May- a roughly 10% improvement relative to the company’s prior expectation of a loss not exceeding $360 million.Lyft also pointed out that it has taken further steps to improve its financial position. In May, Lyft completed a convertible debt offering, along with corresponding capped call transactions. On a pro forma basis for these transactions, Lyft held approximately $3.3 billion of unrestricted cash, cash equivalents and short-term investments as of March 31, 2020.Overall the Street has a cautiously optimistic take on LYFT with a Moderate Buy consensus and $43 average analyst price target (35% upside potential).(See Lyft stock analysis on TipRanks) Shares have plunged 26% year-to-date, but RBC Capital analyst Mark Mahaney argues that Lyft “should be a very good Rebound Stock.”“As SIP restrictions are lifted, we expect Rides demand to recover to full growth by H1:21” he says, adding “In the meantime, we believe LYFT’s scale to profitability is improving. Thanks to $300MM in additional fixed expenses, LYFT believes that it can now achieve EBITDA profitability with 15%-20% lower Ride volume than it previously modeled.” Mahaney has a buy rating on the stock and $51 price target (61% upside potential).Related News: Carl Icahn Initiates Position in Delek US Holdings, Boosts Occidental Petroleum Uber In Partnership With MoneyGram For Driver Discount During Pandemic More recent articles from Smarter Analyst: * Google In $5 Billion U.S. Lawsuit For Collecting Users’ ‘Private’ Internet Data    * 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%

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China’s oil demand has recovered to more than 90% of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns. While China – the world’s second-largest oil consumer – is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020, industry executives said. “The brisk resumption of Chinese oil demand, 90% of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy,” said Jim Burkhard, vice president and head of oil markets at IHS Markit.

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China’s oil demand has recovered to more than 90% of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns. While China – the world’s second-largest oil consumer – is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020, industry executives said. “The brisk resumption of Chinese oil demand, 90% of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy,” said Jim Burkhard, vice president and head of oil markets at IHS Markit.

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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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Shares in Microchip Technology (MCHP) surged 7.4% after-hours on Tuesday, after the company boosted its guidance for net sales and earnings for the 2021 fiscal first quarter as Covid-19 disruptions ease.Microchip now expects consolidated net sales for the June quarter to be $1.247 billion – $1.326 billion, or between flat and down 6% sequentially. That’s versus prior guidance of $1.194 billion – $1.3 billion (down between 2% and 10%).GAAP earnings per share is now expected to be between $0.25 and $0.39 and non-GAAP earnings per share is expected to be between $1.35 and $1.53. The original guidance for GAAP earnings per share was $0.13 to $0.31 with non-GAAP at $1.25 to $1.45.“With two months of the quarter behind us, our business is performing better than we expected during our May 7, 2020 earnings conference call. COVID-19 related supply chain disruptions which were primarily in Malaysia and Philippines have eased. We have begun to make up for lost production and expect to continue to gain ground through the end of this quarter,” cheered Steve Sanghi, Microchip’s CEO.“Our customers’ factories in China are fully back to work. Some of our other customers’ factories in Europe and North America have also started to reopen, including automotive factories where we saw the largest demand destruction,” he added.Shares in Microchip are currently trading down 7% year-to-date. However the stock boasts a bullish Strong Buy analyst consensus, with both Mizuho Securities and Rosenblatt reiterating their buy ratings on June 2. (See MCHP stock analysis on TipRanks.)Mizuho’s Vijay Rakesh also ramped up his MCHP price target from $92 to $105 (8% upside potential), citing improving auto-industrial and 5G base station trends after a challenging few months.“We continue to believe MCHP can leverage costs and achieve its target 63% GMs over time, and its broad customer base and product mix are competitive advantages as a potential 2H re-opening positions well from depressed levels” he wrote.Related News: AMD Can Keep the Rally Alive, Says Top Analyst Lyft Rises 5% After-Hours On Strong May Performance MongoDB Earnings Preview: Analysts Looking For Beat, Raise Quarter More recent articles from Smarter Analyst: * Glu Mobile Sinks On $100M Public Offering Announcement * Zoom Lifts Full-Year Sales Guidance As Quarterly Revenue Balloons 169% * Cheesecake Factory Spikes After-Hours As 75% Sales Recaptured * Lyft Rises 5% After-Hours On Strong May Performance

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