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Clearfield and Upstart have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – November 28, 2022 – Zacks Equity Research shares Clearfield (CLFD) as the Bull of the Day and Upstart (UPST) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on DCP Midstream LP (DCP), The Williams Companies Inc (WMB) and MPLX LP (MPLX).

Here is a synopsis of all five stocks:

Bull of the Day:

Clearfield is a Zacks Rank #1 (Strong Buy) that manufactures, markets, and sells standard and custom passive connectivity products to the fiber-to-the-premises, enterprises, and original equipment manufacturers markets in the United States and internationally.

In a market that has been unkind to most stocks, Clearfield has been a clear outperformer. The stock is up 65% in 2022 and after a recent earnings report has taken out all-time highs.

Clearfield is doing something right, but in a market that is so negative, can the stock continue this momentum into 2023?

About the Company

Clearfield was founded in 1979 and is headquartered in Minneapolis, MN. It employs 250 people and has a market cap of $1.7 Billion.

Clearfield provides fiber protection, fiber management and fiber delivery solutions that enable rapid and cost-effective fiber-fed deployment throughout the broadband service provider space. The company has a strong competitive position as 5G and NG-PON2 technologies are rolled out to meet rapidly growing demand.

CLFD has a Zacks Style Score of "B" in Growth and "A" in Momentum. The stock has a Forward PE of 26 and has a Zacks Style Score of "D" in Value.

Q4 Earnings Beat

Clearfield recently reported a 52% EPS beat for Q4. The company saw Q4 revenues more than double year over year and raised its 2023 revenue outlook. FY23 revenues were taken to a range of $380-393M v the $290M expected.

This quarter followed up on a monster Q3 and shows that the company's earnings momentum is very strong.

Gross profit margin was down year over year, but their quarter over quarter backlog was up 148% y/y to $165M.

Clearfield is looking to build capacity to reduce their backlog, but is concerned that finding labor is an uncertainty.

Investors loved the quarter and the stock surged after the earnings report. It took just four trading days to take the stock up over 30 points to all-time highs.

Analyst Estimates

Because of the big quarter, analysts are taking earnings estimates higher.

Over the last 7 days, estimates have spiked across all-time frames. For the current quarter, we have seen a move from $0.85 to $1.02, or 20%. Next year, estimates have gone from $0.85 to $1.09, or 28%.

Looking down the road, analysts are very excited for next year. Estimates have gone from $3.60 to $4.95, or 37%, over the last 7 days.

Along with estimates, analysts are lifting price targets. Northland Capital lifted its target from $110 to $120 and Needham has gone from $115 to $135.

The Technicals

The stock is trading at all-time highs, so the question now is how much meat is left on the bone. To find a price target we can use the 161.8% Fibonacci extension, which can be found drawing the November highs to lows. This level is at $155, which is about 20% above current trading levels.

For those that want to avoid chasing the momentum, waiting for a pullback could be an option. The 21-day moving average is at $107, the 50-day MA is at $102.50. The 200-day MA is all the way down at $80.50 and not likely to print anytime soon.

Bottom Line

Clearfield continues to post strong earnings momentum. With that, the stock has shown relative strength in a year that most stocks have been trading lower.

Look for CLFD to close out 2022 on a strong note. If the company can continue to outperform on earnings, next year could be a breakout year for the company and the stock.

Bear of the Day:

Upstart is a Zacks Rank #5 (Strong Sell) that is an AI lending platform connecting consumers to bank partners.

The stock took off last year shortly after their IPO and was one of the hottest names in 2021. After some solid earnings reports, the stock ran from $30 to $400, topping out in October of 2021.

Since the tops, earnings have slowed and the stock has collapsed, falling back below the IPO price. While some investors might see the price as a bargain, there is clearly an issue after the company posted its worst quarter since going public.

About the Company

Upstart is headquartered in San Mateo, CA. The company was founded in 2012 and employs about 1,500 people.

Upstart is valued at $1.5 billion and has a Forward PE of 190. The company holds a Zacks Style Score of "B" in Growth, but "D" in Momentum and "C" in Value.

Q3 Earnings

Since their IPO, Upstart has beaten earnings every quarter. But in early November the company reported their first miss, with a whopping 242% surprise to the downside.

Q3 came in at -$0.24 v the $0.07 expected and revenues came in at $157M v the $172M expected. The company guided Q4 adjusted net income at -$40M and revenue is now seen at a range of $125-145M v the $181M expected.

Bank partner originated loans were down 48% y/y and conversion on rate requests were 10% v 23% y/y.

Higher interest rates were an obvious culprit to the disappointing quarter and analysts do not see this improving.

Analyst Estimates

Over the last month, numbers have been taken down across all time frames.

For the current quarter, estimates have dropped into the negative, going from $0.09 to -$0.47. For the current year, estimates have fallen from $0.73 to $0.10, a drop of 86%.

Analysts don't see things improving anytime soon. Numbers for next year have dropped from $1.42 to $0.49 over the last 30 days. This is a drop of 65% and is a red flag for investors to stay away until there is a turn around.

Along with estimates, price targets are headed lower. Goldman Sachs reiterated its Sell and dropped their price target to $11 from $14. Mizuho also reiterated their underperform and dropped their price target to $12 from $17.

Technical Take

The UPST chart is one that will be referenced for years when talking about the 2021 bubble. The stock went from $30 to $400 and is now under $20. It has been a death spiral lower that has given no opportunity to anyone buying a dip.

The 200-day moving average is up at $52.20 and way out of reach. The stock has been trading along the 50-day moving average since August, with that area being a selling point.

The low is $14.02 and the 61.8% retracement drawn from that low to November highs is $17.50. This spot is holding for now, but if the stock were to break that support area, the lows will likely come and a move under $10 is possible.

In Summary

Upstart will have many hurdles with interest rates staying elevated. The stock will likely continue grinding lower or trade sideways until the business can show growth like it did in years past.

Additional content:

3 Midstream Stocks to Gain in a Volatile Energy Market

Broad inflationary pressures and rising coronavirus infections overseas are making the broader market extremely volatile. Many investors believe that uncertainty will prevail as inflation is not going away anytime soon. Being inherently volatile in nature, the global uncertain business scenario has further induced choppiness in overall energy operations, which is getting reflected in the oil price chart.

Companies belonging to the energy sector have been witnessing a choppy business environment since the onset of the coronavirus pandemic. The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity's price plunged to a negative $36.98 per barrel on Apr 20, 2020. However, with the rapid developments of vaccines, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration.

Considering the backdrop, it would be wise for investors to bet on midstream stocks like DCP Midstream LP and The Williams Companies Inc, while keeping an eye on MPLX LP.

Midstream Energy Players to the Rescue

Although the fate of energy players is highly dependent on oil and gas prices, stocks belonging to midstream space have lower exposure to volatility in commodity prices. This is because midstream players generate stable fee-based revenues since the transportation and storage assets are being booked by shippers for the long term. Thus, their business model is relatively low-risk, signifying considerably less exposure to both oil and gas price and volume risks.

We have employed our Stock Screener to zero in on three stocks belonging to the midstream energy space. One stock sports a Zacks Rank #1 (Strong Buy), one carries a Zacks Rank #2 (Buy) and one has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.

3 Stocks in the Spotlight

DCP Midstream LP: DCP Midstream is a leading provider of midstream services, having a fully integrated and resilient business model. With 12 billion cubic feet of natural gas storage assets, the master limited partnership has 2.8 billion cubic feet of daily natural gas pipeline capacity. DCP Midstream, with a Zacks Rank of 1, strongly focuses on strengthening its balance sheet with the foremost priority of reducing debt load.

MPLX LP: MPLX has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflows. With a strong focus on returning capital to unit holders, the #2 Ranked MPLX announced that as of third-quarter 2022-end, it had roughly $1 billion available under its unit repurchase authorizations.

The Williams Companies Inc: The Williams Companies is well-poised to capitalize on the mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.

With its pipeline networks spread across more than 30,000 miles, The Williams Companies connects premium basins in the United States to the key market. With a Zacks Rank of 3 at present, WMB's assets can meet 30% of the nation's consumption of natural gas, which is utilized for heating purposes and clean-energy generation.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

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Williams Companies, Inc. The (WMB) : Free Stock Analysis Report

MPLX LP (MPLX) : Free Stock Analysis Report

Clearfield, Inc. (CLFD) : Free Stock Analysis Report

DCP Midstream Partners, LP (DCP) : Free Stock Analysis Report

Upstart Holdings, Inc. (UPST) : Free Stock Analysis Report

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