Wednesday, June 28, 2006

Calls of Note Part 1

- UBS is modestly trimming their intermediate growth assumptions for Broadcom (NASDAQ:BRCM) owing to concerns surrounding our belief that MRVL will be able to increase the competitive profile of INTC's mobile XScale business. Firm's more conservative growth assumptions takes BRCM Price Target to $55 from $60.

Firm believes the acquisition gives MRVL greater wireless sales leverage for its increasingly sophisticated offerings in the CE, Wi-Fi, handset, and ARM core product spaces. XScale is used in the MOT Q, PALM Treo, and RIMM BB8700 among other platforms, and offers a natural bridge for incorporating MRVL WiFi solutions in converged 3G and eventual 4G platforms.

Notablecalls: Not actionable but good to know category. UBS should have issued the note yesterday morning!

- Wachovia's Peter J. Bye notes Alcon (NYSE:ACL) stock has been repeatedly battered over the past several months on growing concern that management may have to lower 2006 revenue guidance for ReSTOR. While the firm acquiesced on this point when they resumed coverage with below guidance estimates for this product and expect management will (should) lower 2006 guidance for this product on the Q2 conference call, they still believe that there lies an upward bias to current 2006 company-wide revenue and EPS projections.

They believe the market is being a bit myopic with the singular focus on ReSTOR (a product that in the best case scenario would represent ~5% of revenue in 2010). Alcon has multiple drivers for revenue growth in its IOL franchise including continued conversion to blu blocker, Toric and IQ and long-term drivers in pharma (Japan, Patanase). Thinks current Street estimates for ACL's lens care franchise underestimate the upside from the recall of competitor's MoistureLoc brand as feedback on ACL's OptiFREE Replinish is strong and we believe share gains are sticky. Maintains Outperform and $125-$130 valuation range.

Notablecalls: Peter, I like your call! But I feel you should have waited a bit longer before issuing it. ACL may still warn.

- JP Morgan comments on Satellite Radio noting that in order to gain an anecdotal view of retail sales trends for the crucial June Father's day period (with June driving 40% to 50% of Q2 gross retail unit sales), they called 40+ retailers the week of June 19 in the Circuit City, Best Buy, RadioShack, Wal-Mart, and Target chains. The calls suggest: 1) June sales were slightly disappointing, but in-line with their downwardly revised XM and Sirius estimates and 2) Sirius' retail edge continues to ease. Retains Neutral ratings on both.

Most stores said that XM and Sirius were selling near parity, with Sirius' Howard Stern-driven retail share edge fading, and XM's Major League Baseball content exclusive providing a seasonal lift, along with its new combo satrad/MP3 devices.

Notablecalls: Not actionable but good to know category.

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