Wednesday, April 30, 2008

Formfactor (NASDAQ:FORM): Colour on quarter

Several firms out with comments on Formfactor (NASDAQ:FORM) after the co issued weaker than expected results & guidance last night:

- Cowen is clearly the most negative here calling the results a mess saying that in the wake of this poor outlook, FORM will likely retest lows in the morning. As they asserted last quarter, there seems to be little reason to downgrade the stock here, at the bottom. For reference, assuming the stock price goes back to previous lows ($17) the stock would be trading at 1.1x TBV and 1.3x revised forward revs.

FORM is caught in an extremely tough DRAM downturn that should take time to correct. FORM's customers are losing huge $$ and are unable to cover manufacturing costs so it is no surprise to Cowen that they are in cash preservation mode themselves.

In short, while the stock will likely find a bottom and might bounce a bit off these levels in the ST, there is nothing here to get excited about except that the stock is cheap and investors get a call option a LT recovery in FORM. Still if another DRAM recovery is coming there are other leveraged ways to play. Except for longer-term value investors there seems little reason to step into the name in the ST. Maintains Outperform.

- Piper Jaffray is somewhat more neutral noting FORM missed their expectations for Q1 and its guidance missed Q2 consensus. While the company shipped ~2x Harmony cards q/q and regained some prior share losses we believe that weakness in the DRAM industry will continue to weigh on the company's profitability over the next several quarters. Consequently, they do not expect the company to return to profitability until 2H09. However, the firm notes the company has a strong book value of ~$15.36/shr including cash of ~$11.40/shr and as such, they expect the shares to trade at close to 1x BV/shr until visibility improves and the company returns to profitability. Maintain Neutral rating. Tgt goes to $17 from $18.

- Morgan Stanley is the most bullish of the three saying its too early to rule out a 2H08 recovery. Though March quarter results were expected, June guidance was weaker than expected and management’s 2H08-recovery push out comments could be disconcerting for some investors, in their view. However, they think it is too early to rule out 2H08 recovery for three reasons a) poor visibility in FORM ‘s high (~60%) turns business, b) positive 2H08 DRAM supply-demand and pricing outlook by our global memory team, and c) recent sub 70nm transitions highlighted by DRAM makers to reduce costs. We also point out that FORM’s DRAM revenues doubled in ~ 3 quarters off the trough in the previous 2003-DRAM cycle lending credibility to firm's model that a similar rebound is quite possible in the current cycle. Consequently, their longer-term thesis on FORM’s secular growth driven by improving test efficiency and technology in the probe card market is unchanged.

With stock almost cut in half since its peak in September last year, they think the risk-reward
profile is not compelling for a downgrade at the current levels. Maintains Overweight while lowering tgt to $27.50 from $30.

Notablecalls: I think FORM will be a solid bounce candidate in the $16 range. That's around the book value.

Tuesday, April 29, 2008

Time Warner (NYSE:TWX): Major call from Citigroup

Citigroup is out with a major call on Time Warner (NYSE:TWX) saying they expect the co to reach an agreement with Time Warner Cable (NYSE:TWC).

Specifically, they expect a 3-step transaction: 1) TWX sells NY Group for a larger public stake in TWC, 2) TWC to pay a 1-time special dividend of about $6 per share, 3) TWX to distribute its stake in TWC to existing TWX equity holders.

Firm sees two potential benefits of the proposed transaction for TWX:

1) Split from TWC will highlight the “core” TWX valuation at just 10.3x ’08 EPS;

2) Special dividend should generate $1.35 per TWX share in cash, or 9% of current TWX value and 17% of the “core” equity value. They do not expect TWX to use dividend proceeds to repurchase shares.

Citigroup expects Time Warner and Time Warner Cable to make a joint announcement regarding Time Warner’s majority stake in the cable company some time over the next few months. Indeed, such an announcement could occur as soon as Wednesday, when both companies report Q108 earnings.

They think TWX’s equity is particularly attractive at these levels, given that the “core” is trading well below peer P/E multiples, coupled with a handful of potential catalysts.

As such, the firm continues to rate Time Warner a Buy. Maintains Buy rating at $25 price target.

Notablecalls: This is a major positive call from Citi's Jason Bazinet. I expect to see a significant upside move ($0.5-$0.75 is significant in TWX) in the stock today as there's a possiblity the deal will be announced as soon as tomorrow.

Monday, April 28, 2008

Obagi Medical (NASDAQ:OMPI): Actionable Trading Call!

Obagi Medical (NASDAQ:OMPI) is getting mega-comments from two firm this morning ahead of their Q1 report scheduled for May 5.

- Baird & Co reaffirms their Outperform rating and recommends purchase ahead of the Q1 report. They conducted a survey in 12 US cities to assess demand for physician-dispensed products. Firm's survey results indicate that demand for these products is roughly comparable to six months ago. Firm believes the market has priced in too much pessimism; buy ahead of quarter.

Baird's 2008 sales estimate of $122.0 million calls for revenue growth of 18.9% over 2007 levels, but they note that OMPI's sales in Q4 amounted to a $109 million run rate.

In addition, OMPI is continuing to launch both its CLENZIderm and ELASTIderm product lines, and most recently introduced the ELASTIderm Decolletage line extension.

The stock has halved in value since OMPI issued its Q4 report, but their survey data indicates that this pullback is unwarranted.

Reits Outperform and $30 tgt.

- Oppenheimer notes expect Obagi's 1Q08 earnings call on 05/05 to be a key catalyst for the shares. They expect management to provide qualitative and quantitative information on the macro environment and to clarify the growth outlook. With OMPI shares trading at 7.0X tempered '09 EPS estimate of $1.04, concerns on guidance risk (due to the reduction in discretionary aesthetic spending) seem overdone. Firm would buy on the weakness in the stock and expect strong secular growth, new product launches, and geographical expansion to support growth returning to 20%s in '09.

Firm believes that OMPI valuation has likely hit a trough, with shares declining more than 50% since the 4Q07 earnings call. With Obagi enterprise value trading at merely 1.3X '09 sales estimate of $140.9 million, the current valuation seems to reflect the Street's the most bearish view on the story, which essentially assumes no growth at all.

Reits Outperform & $15 tgt.

Notablecalls: Have I ever called a preview Actionable? Don't think I have. First time for everything. OMPI will report a week from now and I suspect the stock will at least 10%-20% higher by then.

Most of the asthetics space has been crushed but given that OMPI's products cost around $100 (& less) it's somewhat more immune to the weakening consumer than for example Mentor (NYSE:MNT) that makes breast implants ($10K a pop).

I think there will be a wave of acquisitions in the space (JNJ for MNT makes sense here, surely - been rumored for quiet a while) which will help the valuations.

Anyway, OMPI is a buy here. Actionable too.

Momenta Pharma (NASDAQ:MNTA): Upgraded to Overweight from Underweight at Morgan Stanley

Morgan Stanley is upgrading Momenta Pharma (NASDAQ:MNTA) to Overweight-V and increasing their target to $22. Firm believes the stars could be finally aligning for the FDA approval of MNTA/NVS’s M-Enox in 2008-09 as the only genericversion of SNY’s Lovenox (blood thinner), potentially leading to: 1) 40-50% share of the $1.5+ billion U.S. Lovenox market, 2) peak potential earnings of $3/sh and 3) a share price of $40+. The downside risk of a long delay or non-approval is that the stock returns to $6.

Why are they upgrading now? Firm believes that the heparin (a complex sugar) contamination crisis may have given MNTA the unique opportunity to prove to the FDA its proprietary technology for characterizing complex sugars. Last week’s Nature publication shows that MNTA worked with the FDA to identify the heparin contaminant. They view this work as a game changer, underestimated by the Street. In our opinion, the FDA is now more likely to view MNTA’s technology as sufficient to show that M-Enox is the same as Lovenox (also a complex sugar) — a key regulatory hurdle and one they feel competitors Teva and Amphastar cannot achieve.

Notablecalls: This is a game-changing upgrade for this stock. Morgan Stanley has been neg on MNTA for quite some time (UW rating) and now they are saying the stock could do $35+ under bullish scenario.

I expect to see a 10%-15% upside move in MNTA today.

Friday, April 25, 2008

Bucyrus (NASDAQ:BUCY): We may be materially underestimating Bucyrus's profitability potential - Baird

Baird is out with some good comments on Bucyrus (NASDAQ:BUCY) following Q1 results announced yesterday.

According to the firm Impressive margin performance drove 1Q08 EPS $0.28 (29%) above consensus and both new machine and aftermarket orders were exceptional. While 1Q revenue was only in line with their estimate (and below consensus), strong order intake creates greater visibility of sustained growth potential, and the substantial upside to their 1Q margin estimates suggests they may be materially underestimating Bucyrus's profitability potential.

Order growth surges. 1Q08 orders increased 58% sequentially (following a 108% sequential increase last quarter) to $1,093 million, well above the $565 million of orders incorporated in Baird's model. 1Q08 consolidated N12M backlog stood at $2.07 billion, up 40% sequentially.

While Baird currently maintains their Outperform rating and $130 tgt they expect their EPS estimates, price target to move higher after management's conference call (8:00 a.m. CDT).

Notablecalls: I suspect Baird's target on BUCY goes to around $140+ following conf call. This will make the stock look cheap again & will provide another push over the $120 level. It's all about orders and orders sure were up strong. The slight miss on rev side doesn't mean much. It's ALL about orders. Buying BUCY around $115 (offered pre-mkt) will likely lead to profits.

Ariba (NASDAQ:ARBA): See meaningful appreciation in the next six months -Deutsche Bank

Deutsche Bank has some interesting comments on Ariba (NASDAQ:ARBA) following better than expected results posted last night.

Ariba reported strong 2Q revenues and EPS of $83m and $0.09 (above DB's and consensus estimates of $82m and $0.08) with subscriptions of $31m (up over 50% y/y organically) and bookings up over 70% organically. Firm believes 2Q could represent a turning point for the stock and see meaningful appreciation in the next six months on execution to guidance alone. Reiterates Buy and $16 price target.

Firm sees execution to management's reiterated guidance of $0.45 in EPS for Sept. improving investor sentiment in the short-term and see several dynamics helping longer-term growth: 1) full-featured SaaS release GA, 2) sales capacity up 26% y/y and productivity is improving, and 3) an improved competitive environment with SAP's delayed SRM initiative and Procuri. They expect these factors alongside a growing ASN opportunity being showcased at the May 5th Analyst day and User Conference and would recommend building positions before that event.

Notablecalls: I see ARBA just broke the $10 level this AM. More upside may be in the cards.

Potash (NYSE:POT): JP Morgan raises 2009 EPS est way high - expect a positive reaction

JP Morgan is out with a major earnings change on Potash (NYSE:POT) this morning raising their 2009 EPS est to $18.50 from $11.75 a share (vs. consensus $12.70).

Firm's 2008 earnings estimate goes to $10.50 from $8.95 a share.

Notablecalls: Wow, this is probably one the largest EPS est raises I've seen in a long time. POT has gotten whacked over the past two days on apparent "sell-the-news" reaction to their fantastic results.

I suspect POT will be re-testing the $200 level today following JPM's call.

PS: Currently, RBC Capital has the Street high $300 tgt on POT. This tgt is based on their 2009 EPS of $15.02, which is over $3 lower than JPM's new EPS est. Fwiw.

Wednesday, April 23, 2008

Vmware (NYSE:VMW): Shorts on the run

I kinda like Vmware (NYSE:VMW) this morning. Think the shorts are on the run and the stock could hit $70 in a jiffy.

- Jeffco ups tgt to $70 from $55. Maintains Buy.

- Bear reits Outperform. Tgt goes to $95 (was higher).

- Merrill Lynch ups tgt to $74. Buy rated.


Tuesday, April 22, 2008

Syntax-Brillian (NASDAQ:BRLC): Upgraded to Outperform at Baird - should jump big

Baird is upgrading Syntax-Brillian (NASDAQ:BRLC) to Outperform from Neutral based on recently announced strategic initiatives and what they view as an attractive valuation. New price target is $3.

Syntax-Brillian is ramping TV manufacturing at Compal, moving away from Kolin. Firm believes the move eliminates most of the counterparty risk seen with the Kolin relationship. Syntax-Brillian also announced it will implement headcount reduction, cutting its overhead costs by approximately 20%.

In firm's opinion, the company's decision to focus on strategic customers is positive and will result in better service to its U.S. big-box retailers. Should the company be successful securing
guaranteed orders from some of its big-box customers, working capital issues would be virtually

They believe Syntax-Brillian's chances of bankruptcy are very slim and that the company will be
able to refinance its debt, significantly lowering its interest expense. Recent streamlining of
business model should help cash flows as well.

Current weakness in U.S. TV demand is leading Syntax-Brillian to gain market share as tier-two/three TV brands are currently ongoing consolidation, in Baird's view. Excess panel capacity should help Syntax-Brillian's gross margin going forward. * Risks to the stock remain significant, including a potential delisting due to filing delays, potential financial restatements, as well as possible additional cash issues.

However, these risks are already built into the current valuation. The stock is currently trading at about 0.3x last reported tangible book and 0.2x our new C08 revenue estimate.

Notablecalls: Wow. This will help the stock lift today as Baird is reportedly one of the most influential ratings mover. BRLC has been left for the dead recently given Sony's much-speculated entry into lower-cost LCD TV market.

I have really nothing to add here. I think the stock goes to $1.35-$1.40. Today.

Monday, April 21, 2008

Wells Fargo (NYSE:WFC): Downgraded to Underperform at Oppenheimer

Oppenheimer's Meredith Whitney put her death spell on Wells Fargo (NYSE:WFC) downgrading the stock to Underperform from Perform, as they believe the company is under-reserved by at least $4.5 billion and will need to take a reserve "true-up" in 2008 and potentially more in 2009. Wells has been a long-time favorite holding of investors due to its consistency and continuity of results; thus, the firm believes there is significant room for multiple contraction in the event of anything unexpected, and in this case an unexpected reserve build. Note, given their now dramatically below consensus estimates, they believe few if any are anticipating what they believe to be the inevitable consequence of Wells' current reserve position.

Oppenheimer is cutting their EPS estimate for FY2008 to $1.20 from $2.15 vs. consensus of $2.33. FY2009E goes to $2.00 from $2.15 vs. consensus of $2.65.

They make the following forward assumptions: credit will continue to deteriorate and WFC will need to build its reserve coverage back in line with historical standards. Accordingly, they believe WFC will be forced to make reserve "true-ups" in excess of $4.5 billion throughout 2008. Note, our peak 2008 loss estimate for home equity is 4%, 1.1% for first mortgages, 7.5% for credit cards, and 1% for commercial loans. These loss assumptions are in line with industry expectations, but if losses continue to accelerate past the 2Q, Opco's well below Street estimates will prove too optimistic.

Notablecalls: Meredith Whitney has been dead right on many of the major financials lately. I fully expect WFC to trade below $30 level today.

Apple (NASDAQ:AAPL): Citigroup ups EPS est to a new Street high

Citigroup is raising their ests on Apple (NASDAQ:AAPL) to a new Street high. Firm now expects $7.0B rev(prev $6.9B, consensus $6.95B), 36.5% GM (35.2%, ~33.5%), and EPS of $1.23 ( prev $1.14, consensus $1.06). New 1CQ08 rev and EPS ests reflect solid PC sales and, more importantly, sharp ~40% declines in DRAM/flash pricing.

Citi now expects PC unit shipments of 2.1M (+38% yoy) versus our prior estimate of 2.0M and consensus of 2.06M, with upside coming from Mac Pro desktops and MacBook Air notebooks. They now expect iPod unit shipments of 9.5M versus prior estimate of 10.0M and consensus of 10.5M; iPod should struggle until the line is refreshed in 3CQ.

They continue to expect iPhone unit shipments of 1.5M despite the impending 3G iPhone launch.
Citi expects Apple to guide 2CQ revenue flattish sequentially, gross margin down sequentially, and EPS down sequentially, none of which should shock the Street.

Reits Buy and $212 tgt. AAPL remains their Top Pick.

Notablecalls: Note that Citi's $1.23 EPS est is the new Street high. That's a pretty bold move by Mr. Gardner. Should drive at least $2-3 pts of upside in the stock early on.

Friday, April 18, 2008

Citigroup (NYSE:C): Short?

Talking to a smart trader (former heavy hitter at a major firm) who says he's looking to short Citigroup (NYSE:C) on today's gap-up. According to him the write downs are more real than people suspect, nothing to be recaptured. Lots of headline risk and a definite recap has to get done, they're going out the well again very late, will affect pricing.

Morgan Stanley is also out on Citi this morning saying their forward view is more challenging
in light of credit deterioration. Citi’s miss vs. consensus today had more to do with rising credit costs and reserve build than the market related losses. While Citi was $3B higher than their estimate, the Street was building in significantly higher write-downs. This is a negative for
the stock as credit deterioration will be longer tailed than market losses. EPS estimates likely to come down.

Notablecalls: It prolly makes some sense to scale into a short position in C this AM. I've already started with a small position around $26.25.

Google (NASDAQ:GOOG): Congrats, Gene!

Piper Jaffray's Gene Munster must feel like a champ following Google (NASDAQ:GOOG) results out last night. Munster retained his positive stance & Street high tgts on the stock even after most other firms took down their numbers and ratings following comScore data that (falsely) indicated a slowdown in co's search business. Here's what the analyst has to say this AM:

Last night's results are a reminder to stay focused on the big picture, vs. month to month performance data. As for the big picture, we continue to believe Google will begin to see measurable contribution from Doubleclick, YouTube, and general improvement in consumer search during the second half of 2008. Additionally, Google's major competitors (Microsoft, Yahoo, AOL, and Fox Interactive) continue to seek leverage in Yahoo takeover/merger talks, which we believe may prevent them from executing any near term strategies to compete with Google. Meanwhile, recent Wall Street Journal reports suggest Google is getting closer to signing a deal with Yahoo to outsource search.

What About Paid Clicks? The street was bracing for Google to report a miss in paid clicks given recent third party data. In defense of the third party data, it did accurately predict the direction of paid click growth and Google reports paid clicks on a worldwide basis. Therefore, paid clicks in the U.S. conceivably could be closer to what comScore suggested. Google's paid clicks were up 20%y/y, vs up 30% in December, and up 45% in March. The key take away: Paid clicks are difficult to predict and dismiss an important factor: revenue per click. Google appears to have a strong handle on balancing the relationship between paid clicks and revenue per click.

The $842 Million Question. Google spent $842m in CAPEX (on land and data centers) for Q1 vs $678m in Q4 last year, a 24% increase. To put this in perspective, this is more than Amazon, eBay, or Yahoo ($224m, $454m, $602m) spent individually for all of last year. Microsoft is spending similar numbers per quarter to Google, but their spending is spread across various business lines while Google's spending is purely on internet offerings. The bottom line is that we believe it will be difficult for any Google competitors to compete against the sheer scale of Google's technology empire.

Munster ups his tgt on GOOG stock to $819 from $790 (both Street high) and maintains Buy rating.

Notablecalls: So GOOG managed to come in-line w/ consensus. Great! Guess it desevres to trade around $520+. Think short covering played an important role in last night's upside move.

No edge here. Just fyi.

Wednesday, April 16, 2008

Is it just me...

..or is this market really tough (& getting tougher by the day) ?


PS: Thinking of taking a break. Some of my smartest contacts on NCN (Notable Calls Network) are already enjoying the Keys.

Sigma Designs (NASDAQ:SIGM): Sell-off unwarranted - Deutsche Bank

Deutsche Bank's Nagesh Sukhi is out with some very good comments on Sigma Designs (NASDAQ:SIGM) following yesterday fall-off caused by Baird & Co saying Broadcom had won a design at Motorola for its next generation IPTV set-top box.

- According to the firm have they have always maintained the view that Broadcom would likely garner some share of IPTV set-top boxes in 2009 and so this is not new or surprising. They also note that winning a design does not necessarily mean that Broadcom's chip will be used in higher volume boxes from the STB OEMs. They have said all along that Sigma's market share in both the IPTV and Blu-ray DVD markets is likely to decrease starting in 2009 due to new entrants, which is normal in any fast growing end markets.

Back in March based on existing inventory levels of set-top boxes at Motorola/AT&T, the firm determined that the company's FY2009 revenue guidance of $300-350m (mid point of which would indicate +47% y/y growth) was likely unrealistic. Based on their assumptions for market share this year and next they believe that the company can realistically achieve +25-35% growth in FY2009 (already reflected in DB numbers). They believe the rest of the sell-side is now realizing this as well and as a result they expect the Street numbers to come down to DB ests.

Deutsche continues to like Sigma due to its leadership position in the IPTV and Blu-ray DVD markets. They believe SIGM will likely to outgrow all its peers this year and again likely next year.

Maintains Buy and $43 tgt on the stock.

Notablecalls: I didn't think Baird's call would do THAT much damage to SIGM stock. While very good it was still mostly based on speculation. I expected to stock to see 10% downside at best with some stops being hit creating some additional 5% follow-through over the next couple of days.

Yet, the stock got taken to the back and SHOT. Execution style. Boom.

The shorts and scared sellers overdid it here. It needs to bounce. My gut tells me $18+ level is fair enough today. I almost want to call it Actionable here.

Oh and btw, this is what has to say about SIGM:

'..But Sigma isn't convinced that Motorola has made any decisions on its next generation of boxes, considering Broadcom's relatively recent entry into the market. "Decisions like that are not usually made in that way," says Ken Lowe, Sigma vice president of business development.

Even if Motorola has decided it likes Broadcom, Sigma probably wouldn't lose all its business there. "The type of position somebody like Motorola would take is that they want to offer as many options as they can," Lowe says. "As far as I'm concerned, we're in very good position with our next-generation product...'

Tuesday, April 15, 2008

Sigma Designs (NASDAQ:SIGM): Losing customers - Baird

- Baird is out with a negative call on Sigma Designs (NASDAQ:SIGM) saying their checks indicate Broadcom has won Motorola's second-generation high-end IPTV set-topboxes (Microsoft's Mediaroom platform), for launch in 2009. As a result, they expect Sigma Designsto lose IPTV share at large telcos including AT&T, British Telecom, and KDDI starting next year. They also believe Sigma will lose market share at Samsung for Blu-ray players this second-half, due to pricing. Firm believes Broadcom-based Motorola IPTV set-top boxes are already prototyping, and are scheduled for launch in calendar 1H09.

Checks also indicate Sigma Designs could lose significant market share at Samsung Blu-ray players this second-half, due to pricing. Baird believes Broadcom has design wins in Blu-ray ramping this year. Both Broadcom and Mediatek plan on launching an integrated back-end/front-end SOC next year. Panasonic is currently selling a 45nm-based Blu-ray back-end SOC.

Reducing estimates, as well as price target to $26 from $30 on SIGM shares. Neutral rating.

Notablecalls: Motorola generated 23% of Sigma Designs' revenues in fiscal 2008, making it their largest customer. SIGM will be a $17-$18 stock soon. Nice call by Baird's Tristan Gerra.

Monday, April 14, 2008

USEC (NYSE:USU): Actionable Trading Call Alert

Two firms are positive on USEC (NYSE:USU) this morning:

- Jefferies notes the DoE has submitted its loan guarantee implementation plan to Congress for a 45 day review. The DoE aims to issue solicitations in late May or June for $2bn in "front-end" nuclear facilities, $18.5bn for nuclear power facilities, and $10bn for renewable energy and energy efficiency & transmission projects.

Given the advanced stage of the American Centrifuge Project, the firm expects USEC to pass the DoE's technical review easily, particularly if the review focuses on "new or significantly improved technologies" that can help reduce greenhouse gases. Firm expects the Street to have more concern over the financial review, which focuses on the project's creditworthiness, construction costs and timeline, and legal/regulatory risk--particularly given the ongoing uncertainty over the ACP costs and USEC's ability to secure SWU prices that generate returns above its cost of capital.

Rising uranium and SWU prices and elevated energy prices provide an attractive backdrop for operational improvements at USEC, particularly given conservative Street expectations on competitor behavior and project execution.

Reits Buy and $11 tgt om USU.

- Goldman Sachs notes they are encouraged that under the plan, the first solicitations for loan guarantees would include $2 bn for advanced nuclear facilities for the "front end" of the nuclear fuel cycle. This directly applies to USEC's American Centrifuge Project (ACP) and they see few if any other candidates. Separately, the GAO concluded that the DOE's stockpile of depleted uranium could be worth as much as $7.6 billion and recommended a sales strategy be completed "as soon as possible." Firm believes this could potentially lead to an enrichment contract with USEC, enabling USEC to capture some of the economics.

While American Centrifuge Project (ACP) execution and risk remains their primary focus, GSCO sees two potential catalysts that provide valuation support at current levels.

- First, the path to a DOE loan guarantee is becoming increasingly clear. They believe USEC could be awarded a loan guarantee by the end of 2008 or early 2009.

- Second, re-stripping of DOE high assay tails could be a meaningful opportunity for USEC. They believe USEC is well suited to bid on any re-stripping contract which could create $1 billion of total value over four years.

Notablecalls: Guys, I have good feel about this one. Why? Well, for several reasons:

- First this uranium play has been trashed over the past year or so. No catalysts, no nothing. And suddenly, kaboom - Dept. of Energy offers us one with GSCO calling USU pretty much the only beneficiary of the loan plan.

- Secondly, takeover rumors have started to circle around the uranium plays. We had two last week - CCJ & USU. Both worked very well, telling me the path of least resistance is UP.

I believe this one may have 10-20% s-t upside. I calling these two calls Actionable Trading Calls.

eBay (NASDAQ:EBAY): believe eBay is beginning to turn the corner - Piper Jaffray

Piper Jaffray is increasing their estimates for eBay (NASDAQ:EBAY) primarily due to better performance of the core eBay Marketplace in Q1. They arealso increasing estimates for PayPal and Skype.

For Q1, they move from$2,058M and $0.40 to $2,164M and $0.42. Firm note consensus is $2,064M and $0.39 and guidance is $2-2.05M and $0.37-0.39. For 2008, they move from $8.6B and $1.67 P EPS to $9.1B and $1.75. For 2009, they move from $9.6B and $1.88 to $10.5B and $2.00.

They believe solid Q1 upside, increased guidance, and improving metrics (listings and GMV acceleration) should serve as catalyst for shares. While 2008 is still a transition year for eBay as it undertakes a number of initiatives to reaccelerate core eBay growth, they believe eBay is beginning to turn the corner and they believe shares offer an attractive entry point at 18x/16x
2008/2009 PF EPS vs. 15-20% est LT EPS growth.

Piper is also increasing their PT from $34 (18x '09 PF EPS) to $40 (20x '09 PF EPS) due to higher estimates and a slightly higher multiple due to the improved fundamental outlook.

Notablecalls: This is a pretty meaningful call by PJ's Aaron Kessler on many counts.

- First, they are upping their Market Place ests which is somewhat of a surprise (stronger listing + FX)

- Secondly, Payments rev estimates are upped by quite a bit. This is mostly due to increased Market Place revs.

- Third, Skype ests are upped nice. I continue to view Skype as an interesting call option as there have been rumors of Google being interested in buying Skype. Chatter indicates Google is willing to pay up to $6B for Skype, which is twice as much as eBay paid for the co just 2 yrs ago.

eBay has found zilch ways to integrate Skype into their biz model and selling the darn thing for a $3b profit would be awesome.

- Lastly, PJ is upping their tgt to $40 saying they believe eBay is beginning to turn the corner. Bold statement.

Anyway, I think eBay is a buy here given the upside potential & possible catalysts.

Friday, April 11, 2008

Trina Solar (NYSE:TSL): Cowen ups ests way above consensus

Cowen is out positive on Trina Solar (NYSE:TSL) this morning raising their Street high 2008 estimates to to reflect the new GCL supply deal, which boosts secured silicon to 95% of targeted production. We believe Street consensus is too low on operating margin, and too high on interest expense (poly plant interest should be capitalized). Silicon coverage for 2009 also looks good, with perhaps 15% still to come from new sources.

Raising 2008E E/ADS To $4.05 Vs. Prior $3.64, Street $2.90. They raised revenue to $750MM (vs. prior $710MM, St. $709MM), based on shipments of 195MW (in line with 95% coverage of 200-210MW target). Since 15% of poly is covered by the new contract, they boosted GM by 50 b.p., to 23.8% (vs. St. 23.1%).

Sees 50%+ upside vs. the market in 12 months and reiterates Outperform.

Notablecalls: Cowen's one of the best firms covering the Solar space. I suspect TSL will trade up today. I see a possible squeeze developing.

General Electric (NYSE: GE): Bounce around $34

GE is getting trashed following weaker than expected results. You have to understand that most of this is coming from the fin. side.

GE's a buy here at $34.

PS: Some perspective from a very smart hedgie:

"..I changed my whole perspective the day... UBS reported a staggering 19Bln charge... WAY more than expectations... and closed the day up$4.."


Thursday, April 10, 2008

Lehman Bros (NYSE:LEH): Smelling a squeeze

Lehman Bros (NYSE:LEH) is trading down this morning in reaction to:

1) News of 3 funds closing (non-event)

2) Deutsche Bank's Mike Mayo saying while LEH's liquidity seems okay, he continues to expect more write-downs to equity (est. $2 bln in 2Q08) and tougher revenues this year. As a result, their estimates for the quarter and the year remain below consensus ($0.43 vs. $1.07 for 2Q08 and $3.95 vs. $4.69 FY2008) and still have a negative bias. Given an adjusted BV of estimate of $47 that is est. one-fifth above the stock price, and a new ROE range close to the avg. since the IPO (15%) but a price-to-book ratio that is one-third below, the firm maintains their Buy rating.

Notablecalls: While hilights DB's call this AM I know for a fact that Mayo was out with the call yesterday just before close. (You see the 1pt sell-off?). That makes LEH a bounce play around $39.50. He's not even negative on LEH.

I smell a squeeze.

Focus Media (NASDAQ:FMCN) lowers guidance

* Announces revised guidance for mobile advertising business
* Sees FY 2008 revenue $860 million to $890 million
* Reuters Estimates FY 2008 revenue view $909.40 million
* Says expects FY revenue for wireless business will be significantly lower
than previously announced guidance of $54.0 million to $55.8 million
* Sees revenue from mobile handset business in 2008 to be between $14.0 million
to $15.8 million

- Via Reuters

Notablecalls: While Trader is calling for recent lows ($29.25), I respectfully disagree. Piper Jaffray was out neg on FMCN yesterday saying CHL had stopped co's wireless services (6% of revs). The stock was down close to 7%.

So, today's warning is pretty much priced in already. Saw some conviction buyers around $30.50. Should represent the floor. Fwiw.

Not sure you can get fills around there, though.

Wednesday, April 09, 2008

Novellus Systems (NASDAQ:NVLS): Upgraded to Buy at Amtech

AmTech: Novellus Systems (NASDAQ:NVLS): upgrade to Buy. We think much of yesterday's neg pre-ann was based on 1-time events including CMP rev recognition change, inventory write-down, & higher tax rate. Based on checks we think a restructuring of NVLS's biz is currently underway and CMP and dry strip will be discontinued (unprofitable), along w/layoffs. This will improve NVLS's profitability & make it more attractive as a take-over candidate. Stock is currently trading near trough valn levels at 1.6x book. PT $27.50.

Notablecalls: I like this call as the timing is just perfect. The stock got killed yesterday following the pre-announcement & looks to be ready for a bounce.

Amag Pharma (NASDAQ:AMAG): Bounce to $39+

I just wanted to say I think AMAG has a fair chance to bouncing today, given the additonal colour. I see the stock around $39+ today.


Amag Pharma (NASDAQ:AMAG): Strongly believe Ferumoxytol will recieve first pass approval- Jefferies

Jefferies out on the box saying to buy AMAG agressively here. Analyst says there will be NO delay.

Notablecalls: I do agree - at $38 the stock is a buy.

Deets: Jefferies notes on Friday they held a conference call for clients featuring AMAG CEO Dr. Brian Pereira. The firm says AMAG bears have argued that the ferumoxytol development program does not include a sufficient number of patient exposures to meet I.C.H safety guidelines (N=1,500). To set the record straight the firm notes, AMAG's CEO went on record (again) to confirm that, in total, over 1,700 patients and healthy volunteers were treated with ferumoxytol in the co's eleven clinical studies. The firm also says the fact that AMAG has the resources to execute additional clinical trials in C.K.D, but has chosen not to do so, suggests that AMAG strongly believes the filing is complete in its current form, per FDA guidance.

Amag Pharma (NASDAQ:AMAG): Downgraded to Sell at Merrill Lynch

Merrill saying it's worth $21 to $29. They now see potential for a delayed launch til 2011.

This thing could be down 10%+ today.


PS: One NCN member has some interesting comments on the AMAG downgrade.

It's the third time hes downgraded it in 10 weeks - first Jan 30 then Feb 28 and now. Nothing new in the report. Also the analyst was hired by Merrill only last year and I think the guy's trying to make a name for himself.

Jan 30 he went from a $100 target to $78 the stock fell 6 points. Than Feb 28 he went to Neutral and stock fell $4 I think.

I'm just saying the whole street knows he has it out for AMAG.

Notablecalls: Excellent colour.

Tuesday, April 08, 2008

Antigenics Inc (NASDAQ:AGEN): Wow!

The tiny biotechnology company Antigenics Inc (NASDAQ:AGEN) said on Tuesday it has won approval to market its kidney cancer vaccine, Oncophage, in Russia, making it the only cancer vaccine available in the world.

The product was approved despite failing to win approval in the United States. It is the first time the Russian government has approved a foreign drug that was not first cleared in its country of origin, Antigenics said. Antigenics is also planning to file for approval of the vaccine in Europe by the end of the year.

- Via Reuters

Notablecalls: Phew! This is unbelievable! World's 1st cancer vaccine is approved. This is historic. I expect to see some buy interest in other cancer vaccine names, mainly Dendreon (NASDAQ:DNDN).

Apple (NASDAQ:AAPL): Apple should be 10+ pts lower here

Morgan Keegan, one of the best research houses on the Street is downgrading Apple (NASDAQ:AAPL) to Underperform from Mkt Perform.

Notablecalls: About time! I was all over AAPL when the stock was 35 pts lower. I now feel it has gone too far too fast. Needs to be at least 10 pts lower. The problems with iPhone in Europe should be weighing on the stock. Read what uber-analyst Tero Kuittinen had to say about European iPhone demand over at Realmoney.

PS: Deets (the wording is very strong):

We are downgrading our rating on AAPL shares from Market Perform to Underperform based on mounting evidence of broad-based weakness in consumer technology spending in the U.S. and Europe.

We also expect that Apple's education vertical will be more challenged this year given state and local budget issues, which combined with what appears to be a more stable component pricing environment, we believe will lead to a deceleration in growth over the next 2-3

We are maintaining our March estimates for Apple, but slightly lowering June, Sept., and Dec. quarter expectations for both iPods and Macs based on a difficult economic environment. We are now projecting Y/Y EPS growth to slow substantially over the next few quarters. We believe the upside potential in the shares if the Mac biz continues to outperform is outweighed by the downside risk if growth begins to slow, and are therefore downgrading to Underperform.

Monday, April 07, 2008

Steel Dynamics (NASDAQ:STLD): Top Pick at Morgan Stanley

Morgan Stanley is initiating coverage of Steel Dynamics (NASDAQ:STLD) with an Overweight rating; STLD is firm's new top pick. US steel supply has been constrained by declining imports. The industry has sufficient capacity to meet only about 80% of domestic demand, which has sparked a wave of rising prices. They believe Steel Dynamics is well positioned to benefit from the import void as a result of growing its production capacity faster than at any other major North American steel producer. Expects secular growth resulting from the company’s increased production base, combined with improving industry fundamentals, to drive earnings growth 8–29% above current consensus estimates over the next three years. Firm believes consensus is missing STLD’s growth potential.

MSCO thinks the market is underestimating the double impact of improving industry fundamentals and strong shipments growth to Steel Dynamic’s bottom line. Consensus EPS estimates are flat from 2008 to 2009, which is inconsistent with the 15% production growth planned for 2009, assuming relatively stable metal margins, which they expect. Firm forecasts EPS of $3.07 in 2008e, $3.54 in 2009e, and $3.85 in 2010e, well above consensus of $2.88, $2.89, and $2.98, respectivel.

Near-term catalyst (April 21). Firm believes the next major earnings revision will occur when the company reports 1Q08 results. They expect management to provide 2Q earnings guidance, and possibly update full-year guidance. Firm recommends that investors build positions in STLD ahead of the earnings release.

Notablecalls: This is a bold move by Morgan Stanley that will not go unnoticed. Expect to see buy interest in STLD today. Also in US Steel (NYSE:X) (upped to Overweight)

I must say I'm somewhat more cautious on the steel names after MSCO's call. The STLD call is actually part of a larger positive Steel call. We may have put in a s-t top in the Steels after today.

Friday, April 04, 2008

JPMorgan (NYSE:JPM) buying Bear (NYSE:BSC) stock on the open market - Reuters

JPMorgan Chase & Co said it bought 11.5mm shares of Bear Stearns on the open mkt. With the purchase, JPMorgan owns about 12.98mm Bear shares, or about 8.9%. JPMorgan said it expects to buy more shares, potentially until it owns as much as 49.5% of Bear Stearns' outstanding shares.

- Reuters

Notablecalls: What the heck is JPM doing buying BSC stock above their own $10 bid? Is it because they know (or suspect) something..?

Riverbed Technology (NASDAQ:RVBD): Increased risk for CSCO, JNPR - Cowen

Cowen & Co notes that last night Riverbed Technology (NASDAQ:RVBD), a leading provider of WAN optimization solutions, pre-announced that its Q1 revenue would be roughly $72.0-$73.0mm, well below its original guidance range of $79.0-$82.0mm. Riverbed's main competitors include both Cisco and Juniper.

On the call management noted that the shortfall was mainly the result of delayed purchases with respect to its larger deals. Furthermore, it noted that while some larger deals got pushed others were downsized.

Given Riverbed's weaker then expected results and given that it participates in one of the fastest growing market segments within enterprise networking; they believe that this increases the risk associated with all enterprise facing vendors operating results including Cisco, Foundry, Juniper, NETGEAR, and Polycom.

Notablecalls: RVBD represents the sexiest part of networking. With these guys failing to come at least in-line w/ guidance people should be worried about the current state of business at CSCO & JNPR.

Thursday, April 03, 2008

BioMimetic Therapeutics (NASDAQ:BMTI): Deutsche Bank reits Buy and $22 tgt - Actionable Call Alert

Deutsche Bank out positive on BioMimetic Therapeutics (NASDAQ:BMTI) saying they conducted a due diligence call with Dr. Jeffrey Wieman, the Lead Investigator for the Regranex pivotal study and involved with the product since its preclinical days, to discuss recent concerns over potential Regranex cancer deaths. Based on all his work with Regranex, Dr. Weiman does not believe there is a causal relationship between Regranex (or PDGF) and carcinogenesis/cancer deaths. Also, he is actually a cancer expert and CEO of St. Luke's Cancer Institute (Univ. of Missouri) and understands the nuances of cancer mechanism/science.

Firm continues to believe FDA's Regranex safety review will not materially impact BMTI's GEM OS1 clinical/regulatory outlook given the poor clinical/scientific link between recombinant PDGF and cancer.

Reiterates Buy and $22 tgt.

Notablecalls: You gotta buy BMTI here. Based on DB's call the stock deserves to trade around $11-$12 here. Going to call it Actionable Trading Call. (NASDAQ:AMZN): Lowering 1Q/2008 Estimates based on Consumer - Piper Jaffray

Piper Jaffray is lowering their revenue and EPS estimates for Amazon due to 1) PJ's 1Q08 eCommerce survey which suggests sluggish online spending for U.S. consumers in 2008 2) 3rd party online spending data which suggests a meaningful deterioration in eCommerce spending in Q1 and 3) low levels of consumer confidence and retail sales data. They are also lowering interest income to account for the lower interest rate environment. For 1Q, they are lowering revenue and PF EPS from $4.13B and $0.43 to $4.0B and $0.39. 1Q revenue guidance is for $3.95-4.15B. For CY08, the firm is moving from $19.4B and $2.03 to $19.1B and $1.91. Approximately $0.06 of lower PF EPS is from the lower revenues and the other $0.06 is from lower interest income.

PJ notes that they are lowering 2008 North America revenue estimate by 3.2% vs. previous estimates. They have left International revenue estimates unchanged given the strength in the Euro (up 3% q/q in Q1 and up 5% q/q in Q2) which they expect to largely offset a slowing International consumer.

Overall, PJ's survey indicated low levels of consumer confidence. 36% of respondents indicated that they are worse off financially today vs. a year ago, 23% indicated they are better off, and 41% indicated their financial condition was the same. Looking forward, 21% of respondents indicated that they expect their financial condition to worsen over the next year, 38% expect their financial situation to improve, and 42% expect their financial condition to remain the same.

Notablecalls: I'm surprised yet again. This pretty much goes against what we heard when the stock was 20% lower. PJ's call is going to hurt AMZN today. Go short early & aggressively but don't overstay your welcome.

This is not the end yet.

The race is not for the swift, nor the battle for the strong, But time and chance happens to them all. Fate's hand falls suddenly, who can say when it falls?

MEMC Elec (NYSE:WFR): Bounce

I like WFR down here. Sure, it deserves to be down 2-3 pts but not more. The issues are very s-t in nature.


PS: We're almost certain to get defenses from several tier-1 firms. UBS analyst is probably already calling his best clients & telling them to buy all the WFR they can sub-$72.

Wednesday, April 02, 2008

Proprietary Intelligence: Promising ITC Bill May See Senate Action This Week - Cowen

Cowen notes their sources in D.C. tell them that Senators Cantwell and Ensign are drafting an energy tax (ITC/PTC) bill--WITHOUT pay-fors, which could see Senate action Friday. Firm remains bullish on the prospects for such a bill, given the dropped pay-fors construction. they believe that it will be passed in both chambers, and that it should be signed into law during/before May. Final term extensions are hard to handicap. Cowen thinks the Senate bill will have L-T extensions, but that these could shorten (to 1-2 years) in conference. They understand that passing the ITC/PTC is a high priority for Majority Leader Reid. One of the key developments was the consultation between parties, and with the White House. A positive ITC development should positively impact the stocks with greatest U.S. exposure, including Outperform-rated SPWR, ESLR, ENER, and STP.

Notablecalls: Great news. Too bad it's a week too late. Goes in the good to know but not actionable category.

Tuesday, April 01, 2008

Schering-Plough (NYSE:SGP): Reit positive stance

I very much like Schering-Plough (NYSE:SGP) here.


I may have been a bit premature in the stock yesterday as I didn't realize no fund wanted to show to their clients that they owned it. Remember, yesterday was quarter end. This is the time when performance sheets are sent to clients. Nobody wanted to look stupid.

Now this restriction is off. One may end looking pretty smart owning the stock here. I've been a buyer here.


Btw, NCN Ugg said he loooooves the trade.

Lehman (NYSE:LEH): Shorts may feel a slight sting...

Couple of good comments on Lehman (NYSE:LEH) following yesterday's capital raise:

- Citigroup estimates that the capital raise will reduce gross leverage by 3 to 4 times and net leverage by almost 2 times (down to as low as 13.5x), resulting in the lowest net leverage ratio among peers. Using a conservative 8% return on the capital raised, they estimate that EPS dilution will be less than 3%.

Lehman's capital raise is efficient, as it has a conversion price in the $50 range (30-35% above current share price). Furthermore, compared to the 4 other capital raises in our coverage universe, Lehman's raise-up is unique in that it was not driven by the need to replenish capital as a result of large writedowns. Therefore, Lehman can be more opportunistic in putting its new capital to work in the near term.

They continue to see up to 70% upside in LEH shares and any potential concern around the
capital and liquidity position of the franchise should be put to rest.

- Deutsche Bank the new $3B of capital, mostly fom a few large U.S. investors, will likely be raised (in firm's view) within several hours, showing market support for LEH. They expect a conversion price premium of around 30%-35% to the stock (around $50). Firm notes they don't like the idea of earnings dilution by 1/10th forever, but the stock, their our opinion, has been trading in the past week on fears related to liquidity/capital more than EPS and this new issue should help alleviate these concerns. Reits Buy.

Notablecalls: I suspect the shorts in LEH will feel some heat in the n-t. Around a week ago I called Meredith Whitney's (OpCo) downgrade Actionable. The stock was trading close to the $50 level then. Now, at $37 I think the stock's a buy as I feel it has $2-$3 pts of upside in the n-t. Liquidity are put to bed, for now. Shorts will need to come up with more creative stuff.