Friday, July 07, 2006

Calls of Note Part 2

- Bear Stearns is positive on Sandisk (NASDAQ:SNDK) noting their recent checks with companies in the NAND flash supply chain support their expectation that the NAND market should become undersupplied as they progress through 2H06. Factors that should contribute to better supply-demand include continued penetration of NAND in handsets and into emerging areas such as PCs and PMPs, in addition to seasonality and elasticity.

In the very near-term, there remains some excess inventory that needs to be worked through. However, they believe we are close to a supply-demand balance. Though flash inventory remains slightly above normal in the overall supply chain, inventory levels are down compared to the end of 1Q06.

They believe the recent pullback in SNDK presents a great buying opportunity. Despite the near-term ripples, firm's 2H06 thesis remains intact. 2H06 EPS estimate remains above consensus, at $1.57 vs. consensus of $1.41, and implies earnings growth of 80% HoH from 1H06, as they expect solid margin expansion.

Notablecalls: Not actionable but good to know category.

- Goldman Sachs has added American Tower (NYSE:AMT) to their Americas Conviction Buy List. Firm believes investors should take advantage of share price weakness to add onto their positions. In their opinion, the SEC's informal inquiry into the company's option practices has introduced an overhang to the stock such that it now trades at a 20% discount to peers Crown Castle and SBA on P/FCF multiples (based on 2007 estimates).

While they are not sure as to the outcome and timing of the conclusion of the SEC inquiry, they believe the option backdating issue has little bearing operationally. Accordingly, the firm believes this is a stock that investors should plan on holding for a 12-month period to realize the upside to $41 target price as option backdating related issues clear and industry fundamentals once again become the primary driver of value.

Notablecalls: What the h*ck is an Americas Conviction Buy List? Must say I have no idea. I just happen to fancy AMT for its chart.

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