Monday, June 19, 2006

Calls of Note Part 3

- Bear Stearns notes the Internet visitor traffic to the website peaked about a week ago at significantly higher than average levels, likely suggesting a spurt in interest in XM prior to Father's Day. Sirius' traffic was within the usual range, as expected, as the Dads-'n-Grads demand is generally skewed towards XM.

The firm recently completed a second round of channel checks at various Best Buy and Circuit City stores. Despite the stoppage in receiver shipments, they did not find any radio in short supply likely due to significantly muted demand. They recently reduced net adds estimate to 395k from 450k (and from 650k originally) based on channel checks.

Given the increase in traffic (which they had anticipated) and the fact that XM Satellite Radio (NASDAQ:XMSR) has restarted radio shipments, the firm thinks the company likely should be able to meet the expectations. Maintains Underperform.

Notablecalls: I highlighted Bear's net adds cut couple of weeks ago. The shares haven't done much since then and with the firm now sounding a bit positive, plus competitor Sirius (SIRI) getting a positive mention from NY Post this morning I'd not be surprised to see some upside.

- Bear Stearns is reducing their FY06 ReSTOR sales projection to $112M from $128M; they are also increasing 06 Lens Care sales expectations by $43M to $386M to reflect the potential benefit from the BOL ReNu related issues. The impact of the ReSTOR adjustment on 06 EPS projection is -$0.03 but this is offset by the roughly +$0.03 to +$0.04 benefit from the increase in Lens Care sales.

Firm received 17 responses from the 130 surveys they sent out to Alcon surgeons. The feedback suggests that over the next 12 months, surgeons will increase utilization of AMO's ReZoom and decrease use of ACL's ReSTOR - this is consistent with the feedback from the last 20 surgeons they spoke to.

They continue to believe ACL shares will remain range bound until there is positive news on Vigamox and Travatan Japan approvals. Maintains Peer Perform.

Notablecalls: ReSTOR is ACL's most critical growth driver but the performance of the IOL has been lagging expectations for a while. At present, the call belongs to the Not Actionable but good know category. But that may change soon.

- First Albany reiterate Strong Buy rating on Hythiam (NASDAQ:HYTM) shares ahead of two important industry conferences scheduled this week. Together, these conferences, they believe, represent an attractive platform for Hythiam to continue to advance awareness of its unique Prometa addiction treatment protocols to both commercial and government payers.

Valuation: Firm forecasts that the company will generate diluted, fully taxed earnings of $1.00
per share in 2010. Applying a 30x multiple to this yields a share price of $30 at that time. Discounting back four years using a 25% risk factor yields a price objective of approximately $12.50 in 2006. $12.50 price objective represents significant share price appreciation from current levels near $7, resulting in Strong Buy rating. However, HYTM shares should be considered speculative, and the firm therefore recommends the shares only for longer-term investors with above-average risk tolerance.

Notablecalls: Not actionable but good to know category.

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