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When you think drones, what do you think of? Death from above? Packages from Amazon (AMZN)? A way to spy on your neighbors? The possibilities are endless. BofA Merrill Lynch thinks what while the commercial market for drones is going to take off in 2016, the agricultural industry will make up 80% of the business. In their latest Global Research report, Merrill says that robots could dominate the farming industry. Here we were all worried about Skynet coming to kill all of us. Turns out they just wanna hook us up with delicious fruits and vegetables.
Merrill suggests that the agricultural robot market will grow to $16.3 billion by 2020 compared to the $817 million market it was in 2013. A big part of that market is going to be drones. There are already drones to spray pesticides and drop water balloons on strangers outside of beauty salons, but their potential uses expand well beyond that. Thermal imaging camera maker Flir Systems (FLIR) recently launched a product that can show farmers which crops are healthy and which crops are distressed. By using this data, farmers can adapt their water and pesticide use on these plants. If they can make that, how come they can’t make a camera to tell me which women are really single are which ones are just lying. Now there’s an idea.
Don’t get too excited about Flir yet. Currently the company is a Zacks Rank #4 (Sell). A big reason for the sell is five analysts have dropped their earnings estimates for the current year and next year. The bearish sentiment has dropped our Zacks Consensus Estimate for the current year from 1.67 to 1.58 and slashed next year’s number from $1.91 to $1.76.
GoPro (GPRO) is launching its own drone, the Quadcopter, but that stocks got all sorts of problems anyway. Their last miss, coming in at 14 cents last quarter versus consensus estimates for 22 cents was the latest in a string of bad news for the company. Analysts have already dramatically dropped current quarter estimates from 80 cents all the way down to 30. No wonder the stock is floundering as a Zacks Rank #5 (Strong Sell). Maybe instead of GoPro we should call it GoPoor.
Did you know that Intel (INTC) has already invested money in three different drone companies? While it’s not a direct drone play, it is a way to gain exposure to the industry without rolling the dice on a couple of stocks that are not in the good graces of our Zacks Rank. Intel is a Zacks Rank #2 (Buy) with a Growth Style Score of “B” and a Value Style Score of “A.” It may be a good idea to wait in a stock like that until something like Ambarella (AMBA) turns to a Zacks Rank Buy.
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