- Merill Lynch is very positive on LSI Logic Corp (NYSE:LSI) saying that following a series of conversations with management, they continue to believe that LSI has better prospects than the street realizes, especially in the storage end market.
Merrill's estimates are significantly above the street - on the pro-forma basis that First Call is using to calculate consensus, they're looking for $0.60 in earnings this year and $1.00 for 2007 (Consensus stands at $0.44 for 06 and 0.60 for 07).
According to the firm LSI is looking more and more like a storage company now that RapidChip development has been terminated and the DSP business is being sold. They think the pressure is on LSI's consumer business to show material improvement or face some type of material action from top management, and regard that as a good thing.
Investors tend to focus on gross margin, which is fine, but in LSI's case they think the real potential is further down the P&L. LSI was inefficiently run under previous management, and as the current team redeploys assets and people they think that it will be possible to generate revenue growth with very little additional operating cost. Translating that to the numbers, the firm thinks that GAAP operating margin can hit 15% in 2007, up from only 5% for Q106.
Reiterates Buy recommendation and $15 price target.
Notablecalls: I do like this call. Merill has enough following to push the stock higher. Looks actionable.
- Piper Jaffray recommends purchase of shares of Illumina (NASDAQ:ILMN) ahead of strong 2Q:06 results driven by BIG genotyping contract wins. Firm expects Illumina will meet or even potentially beat 2Q:06 revenues of $33 million and GAAP EPS of $0.02, increasing firm's comfort for full year numbers.
Notablecalls: Chart looks strong. May have some upside in it.
Merrill's estimates are significantly above the street - on the pro-forma basis that First Call is using to calculate consensus, they're looking for $0.60 in earnings this year and $1.00 for 2007 (Consensus stands at $0.44 for 06 and 0.60 for 07).
According to the firm LSI is looking more and more like a storage company now that RapidChip development has been terminated and the DSP business is being sold. They think the pressure is on LSI's consumer business to show material improvement or face some type of material action from top management, and regard that as a good thing.
Investors tend to focus on gross margin, which is fine, but in LSI's case they think the real potential is further down the P&L. LSI was inefficiently run under previous management, and as the current team redeploys assets and people they think that it will be possible to generate revenue growth with very little additional operating cost. Translating that to the numbers, the firm thinks that GAAP operating margin can hit 15% in 2007, up from only 5% for Q106.
Reiterates Buy recommendation and $15 price target.
Notablecalls: I do like this call. Merill has enough following to push the stock higher. Looks actionable.
- Piper Jaffray recommends purchase of shares of Illumina (NASDAQ:ILMN) ahead of strong 2Q:06 results driven by BIG genotyping contract wins. Firm expects Illumina will meet or even potentially beat 2Q:06 revenues of $33 million and GAAP EPS of $0.02, increasing firm's comfort for full year numbers.
Notablecalls: Chart looks strong. May have some upside in it.
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