Monday, July 10, 2006

Calls of Note Part 5

- Jefferies says they are aggressive buyers of Iridex (NASAQ:IRIX) at current levels. Firm believes the stock should trade higher on numerous catalysts, including: 1) Friday's Markman rulings; 2) strong 2006 results; 3) the closure of at least one of several potential business development initiatives; and 4) increasing institutional exposure and new product launches.

Friday, the Markman hearing overwhelmingly favored IRIX, where the judge ruled in favor of IRIX on 13 out of 14 counts on their patents. This is a significant positive for IRIX as this should lead to a settlement, whereby SURG would pay significant damages to IRIX.
Reits Buy and $17 tgt.

Notablecalls: Expect IRIX to see some interest.

- Cowen notes that one of Energy Conversion Devices (ENER)'s significant solar PV customers, Solar Integrated Technologies, is currently experiencing working capital challenges. However, the firm does not believe this poses a risk to projected revenues for ENER, because demand from other customers should continue to significantly exceed capacity, even after the second 25MW line ramps up this fall.

SIT accounted for 11% of ENER's F05 (June) revenues. While figures for F06 are not yet available, SIT delivered 3.8MW of PV systems to its customers in CY2005, which equates to about 18% of ENER's CY05 MW shipments. SIT's 2005 annual report was published June 30th. The company cited gross margin and working capital challenges, and the auditors' report includes a "going concern" paragraph. Management also noted that it expects to be in non-compliance with certain covenants under its credit facility for the June quarter. SIT is currently evaluating financing alternatives.

Notablecalls: While Cowen is defending the stock I do think there will be some pressure.

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