tag:blogger.com,1999:blog-292975692024-03-17T23:03:09.519-04:00Notable Callsnotablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.comBlogger2952125tag:blogger.com,1999:blog-29297569.post-56145236006454454902021-01-04T07:44:00.000-05:002021-01-04T07:44:18.114-05:00Notable Calls Network (NCN) - Welcoming new members<p></p><div class="separator" style="clear: both; margin-left: 40px; text-align: right;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgatRSFGpg3lrg4DQNcTEySvG3luGHMAzFs3rAEARY0ya6zd_AUeVRqqLviahbzM01SRbBg6nfWrPbLGHTNy9vdn4pdXErJMPMddRpTrsQ6sJb1hdjCpE8qCAZht3yFyWEhYjCl/s400/new-members-clip-art.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="300" data-original-width="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgatRSFGpg3lrg4DQNcTEySvG3luGHMAzFs3rAEARY0ya6zd_AUeVRqqLviahbzM01SRbBg6nfWrPbLGHTNy9vdn4pdXErJMPMddRpTrsQ6sJb1hdjCpE8qCAZht3yFyWEhYjCl/s320/new-members-clip-art.jpg" width="320" /></a></div>It's been a while since we have opened the books to newcomers but that time is here. <br /><br /><br /><b>Notable Calls Network (NCN) </b>is open to new members. We're timely, insightful and in the know.<br /><br />Sharing the flow. We catch them every day.<br /><br /><span style="color: red;"><b>Want to be part of NCN?</b></span><br /><br />It's easy. Just shoot me a brief email that includes a short description of yourself.<br /><br />Please do note that contacts via IM are limited to people with:<br /><br />- 5+ years of trading experience<br /><br />- Access to quality research/analyst commentary<br /><br />- Ability to generate and share (intraday) trading calls<br /><b><br />NCN will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 5 years of experience in the field. </b><br /><p></p>notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com16tag:blogger.com,1999:blog-29297569.post-40000203372175036292018-07-18T11:13:00.002-04:002018-07-18T11:16:20.696-04:00Notable Calls Network (NCN) - Books are open<b>Notable Calls Network (NCN) </b>is alive and well. Today we're opening the books to newcomers.<br />
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Just to show what we are about, here are some examples of intraday trading opportunities we have caught over the past couple of days:<br />
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- Around 10:00 ET yesterday a senior member of NCN pinged me with the following:<br />
<b><br />Facebook considering moving cloud storage away from Dropbox to Google, The Information reporting<br /><br />https://www.theinformation.com/articles/in-reversal-facebook-mulls-switch-to-google-apps</b><br />
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To those familiar with Dropbox (DBX), this read as an outright negative that had the potential to impact the stock price. So I quickly distributed the link to other fellow Notable Calls Network (NCN) members. <br />
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Here's what happened:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK12aQz1usg4yBAjcDXpQanADfEnw8-Z3pSMExerp1K_IsrVJXy1vUzwudgpEXdCq3RuGln01u6Xpi5HH6P6FNvrjZOvhmA5qUJzncB2H5dHfYIvjrrnT3_Teqm7_3DqA1SrlP/s1600/DBX+Notable+Calls.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="708" data-original-width="964" height="293" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK12aQz1usg4yBAjcDXpQanADfEnw8-Z3pSMExerp1K_IsrVJXy1vUzwudgpEXdCq3RuGln01u6Xpi5HH6P6FNvrjZOvhmA5qUJzncB2H5dHfYIvjrrnT3_Teqm7_3DqA1SrlP/s400/DBX+Notable+Calls.jpg" width="400" /></a></div>
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Over the next 20 minutes the stock price of Dropbox Inc (DBX) took almost a -2pt (-7%) hit as the link made rounds and sellers piled on.<br />
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- Last week on July 12, we had another beautiful situation in Shutterfly Inc (SFLY):<br />
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Around 10:25 a fellow NCN member pinged me with the following:<br />
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<b>Apple discontinues its own photo printing service, recommends third-party Photos Projects apps instead<br /><br />https://9to5mac.com/2018/07/12/photo-print-products-discontinued/</b><br />
For those who have been in the game long enough, the SFLY/Apple situation surely brought back some memories of Apple entering the space and destroying SFLY stock in the process. So this was to be perceived as a positive for SFLY.<br />
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Here's how it went down:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSFSsHJ42HpotDf4mGC2QDMvgZ_fpUlvsksL9GUyLhHQwU2UbPhziKjxos68mJ9AGidygRGP2N3iF3I8zLIH-P3KMIogwXpzsS5Rq7TPDdSH47D2Uq11M9qqHp6Cm6ph6b55Hd/s1600/SFLY+Notable+Calls.jpg" style="margin-left: 1em; margin-right: 1em;"> <img border="0" data-original-height="826" data-original-width="1321" height="250" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSFSsHJ42HpotDf4mGC2QDMvgZ_fpUlvsksL9GUyLhHQwU2UbPhziKjxos68mJ9AGidygRGP2N3iF3I8zLIH-P3KMIogwXpzsS5Rq7TPDdSH47D2Uq11M9qqHp6Cm6ph6b55Hd/s400/SFLY+Notable+Calls.jpg" width="400" /></a><br />
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Over the next 15 minutes the stock spiked +2.5pts as the news made rounds around trading desks and buyers moved in.<br />
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<b><br />This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.</b><br />
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<span style="color: red;"><b>Want to be part of NCN?</b></span><br />
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It's easy. Just shoot me a brief email that includes a short description of yourself.<br />
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Please do note that contacts via IM are limited to people with:<br />
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- 3+ years of trading experience<br />
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- Access to quality research/analyst commentary<br />
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- Ability to generate and share (intraday) trading calls<br />
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<b>I will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 3 years of experience in the field</b>.notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com30tag:blogger.com,1999:blog-29297569.post-27793303914269313262013-02-19T07:11:00.004-05:002013-02-19T07:13:23.155-05:00 Cliffs Natural Resources (NYSE:CLF): Actionable Call Alert!<div class="separator" style="clear: both; text-align: justify;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhr0Ru8u3tCMSWTqajmLyBgCnSK5EANnWi8oUUJggC2saOpytZ0RtTgX46v-TWg99He7xvyR3vBwP0hwq_vfF4RpsdIMJsgs1RFNcduGdcRFmX21P-e7eq73E5MmjcQExDhsEDq/s1600/Cliffs+North+Shore+mine+2_Cropped.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhr0Ru8u3tCMSWTqajmLyBgCnSK5EANnWi8oUUJggC2saOpytZ0RtTgX46v-TWg99He7xvyR3vBwP0hwq_vfF4RpsdIMJsgs1RFNcduGdcRFmX21P-e7eq73E5MmjcQExDhsEDq/s320/Cliffs+North+Shore+mine+2_Cropped.jpg" width="320" /></a></div>
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J.P. Morgan Metals king Michael Gambardella is making a major call in<b> Cliffs Natural Resources (NYSE:CLF) </b>this morning upgrading the iron ore miner to Overweight from Neutral with a $40 price target (prev. $35).<br />
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- Since mid-September 2012, Cliffs’ peer group is up 17% on average while CLF is down 37% despite a 53% rise in seaborne spot iron ore prices – the current discount between Cliffs’ stock price and iron ore prices is now at the widest spread on record.<br />
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Gambardella attributes this substantial relative underperformance to persistent disappointments at Bloom Lake presented to the market piecemeal over the last two years, ultimately culminating in a 20% writedown on the initial $5B purchase price, a threefold increase in Phase II capex, and a 76% dividend cut. Additionally, the recent capital raise diluted shareholders by 15-17% but reinforced Cliffs’ balance sheet to endure future commodity volatility and possibly fund future growth projects. <br />
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In his view, Cliffs’ shares reflect this series of negative events and are only pricing in $110/tonne iron ore in 2015, 29% lower than current spot prices, based on the stock’s average EV/EBITDA multiple of 5.6x. Gambardella believes the stock’s reduced sensitivity to rising iron ore prices post 3Q12 earnings and the historically wide gap versus spot seaborne indices should dampen any potential downside if the recent run loses momentum following the end of the Chinese New Year.<u> In his opinion, management has reset Bloom Lake’s expectations to an achievable level and given sentiment appears apathetic at best (9% buys after three recent cuts to neutral/hold) he believes merely meeting guidance at the key project will be enough for Cliffs to begin climbing over a large wall of worry. As this process unfolds Gambardella sees the market re-rating CLF’s valuation higher for its renewed leverage to iron ore prices, which he believes have a positively skewed risk profile in the medium term.</u><br />
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<b>In his opinion, 2015 seaborne iron ore prices have more potential upside price risk in the medium term than reflected in forecasts by J.P. Morgan’s commodity team or consensus estimates.<br /></b><br />
Some of the more interesting details from the call:<br />
<b><br />- Execution on Bloom Lake key to stock appreciation... </b>We believe the stock’s muted correlation with robust iron ore fundamentals and record discount to current prices suggest this former prime driver will take a back seat to results delivered by management relative to the new Bloom Lake plan. In our view, Cliffs has likely reset the bar to an achievable level in 2013 after the recent streak of poor performance and a 20% write-down of the initial purchase price perpetually disappointed investors. Given this poor track record, merely meeting the new guidance could be enough to boost sentiment and the share price; we would note the first phase at Bloom Lake exited the year on track with its stand-alone 2013 target.<br />
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<b>- … and re-establishing leverage to seaborne prices.</b> We expect Cliffs’ leverage to seaborne prices will gradually increase over the next three years with the addition of Bloom Lake Phase II and long term USIO contracts rolling over into shorter, spot centric agreements. Assuming management delivers Phase II on time and budget, CLF’s valuation should re-link to iron ore prices, which we believe could ultimately remain higher for longer than consensus and our internal commodity team expect.<br />
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<b>- Potential value outside of Bloom Lake.</b> Although Cliffs declared the project is the future of the company, we believe management is also in the process of unlocking value in several other areas. We estimate Cliffs could net EBITDA improvements of 10% and 11% versus our 2013 and 2014 forecasts if Wabush operations break-even ahead of our current 2015 timeline. Separately, we believe management could conservatively monetize the estimated $500mm spent on purchasing the chromite properties and bringing the project to feasibility by taking on a partner or selling the stake outright. Additionally, we expect the company will take steps to mitigate material contract expirations at USIO by developing and marketing DRI pellets while potentially expanding its optionality to export more than its estimated current limit of 2mm tonnes of pellets annually.<br />
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<b>- </b>We would note holding the current $155.10/tonne iron ore price in 2015 yields a $75 price target utilizing the stock’s long term average EV/EBITDA multiple of 5.6x, 160% above the current stock price.<b><br /></b><span style="color: red;"><b><br />Notablecalls: </b></span><b>Actionable Call Alert!</b><br />
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- Gambo is the Axe in the space. He downgraded CLF back in Sept '12 - 15 pts higher. One of the few analysts that can actually time the market.<br />
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- Gambo notes management has reset Bloom Lake’s expectations to an achievable level. Remember this guy has a very good management bullshit detector. Molycorp anyone? So if he says Bloom Lake is good, it's likely good. At it's mostly about Bloom Lake right now.<br />
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- It's an out-of-consensus call as Gambo himself notes. There are very few Buy-rated analysts out there. Shorting CLF has been the hip trade. Chart looks awful and I suspect everyone and their mother has been expecting a downside break. Short intrest stands around 20%. They could be in for a nasty surprise if Gambo is right.<br />
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- Note Gambo is going against JPM commodities team and Consensus on iron ore pricing. He thinks there's more upside.<br />
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- If he is right on iron ore pricing, CLF is a $75/share stock vs. ~$30/share today.<br />
<b><br />All in all, this call has potential to propel the stock back above the $30 mark and likely closer to $31 today. I say +7%.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com90tag:blogger.com,1999:blog-29297569.post-87964169412836129842013-02-04T08:02:00.000-05:002013-02-04T08:06:15.657-05:00Blackberry (NASDAQ:BBRY): Getting Ready for a Grand Blackberry 10 Debut; Upgrade to Outperform, Target Price $22 - Bernstein<div class="separator" style="clear: both; text-align: justify;">
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Bernstein's Pierre Ferragu is upgrading <b>Blackberry (NASDAQ:BBRY)</b> to Outperform from Market Perform with a $22/share price target.<br />
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<b>- They believe Blackberry should trade in the $20-25 range once a decent launch for Blackberry 10 and a stabilised trajectory for FY2014 are priced in.</b><br />
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Bernstein upgrades Blackberry to outperform today as they believe BB10 is set for a strong launch. Even if the long term prospects for the platform are very uncertain, the firm believes all is in place for Blackberry 10 to enjoy a great debut. They see four reasons to model a launch well above current expectations.<br />
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<b>1 -</b> Blackberry has drained channel inventories over the last 12 months and is in a very strong position to start shipping its new devices. Channel inventories came down by over 10m units over the last 12 months, which means most distributors and operators will take on significant initial orders (Exhibit 1)<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_gW_HMxwZuQMAFJVdP_Vc7lW9XvhBaneaSLOz2nfPyDrPqvGIm2lWTxsBL1FSBFv1tqtlUSzFfsMO-18TYwpd4fTbmU-RSzprwjGg_LkahKu5FXrm179rvApz8l-CEHGN4Tgo/s1600/RIMM_Sell_in_thru_Scbern.gif" style="margin-left: 1em; margin-right: 1em;"> <img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_gW_HMxwZuQMAFJVdP_Vc7lW9XvhBaneaSLOz2nfPyDrPqvGIm2lWTxsBL1FSBFv1tqtlUSzFfsMO-18TYwpd4fTbmU-RSzprwjGg_LkahKu5FXrm179rvApz8l-CEHGN4Tgo/s1600/RIMM_Sell_in_thru_Scbern.gif" height="215" width="400" /></a><br />
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<b>2 –</b> Blackberry 10 will propel up device gross margins. Bernstein believes the company currently sells high end devices at negative gross margins. As these devices are replaced by positive margin Blackberry 10 ones, Blackberry’s P&L should swing back into the black in 1QF14. They are at this stage convinced initial Blackberry 10 shipments will carry gross margins in the region of 30%. <br />
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<b>3 - </b>The Blackberry 10 launch is supported by most operators. In their recent discussions with operators the firm noted a very broad support, with operators willing to give the platform a good push.<br />
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<b>4 –</b> Initial Corporate demand will be strong. Bernstein recognises rapid share losses for blackberry in corporate, as "Bring Your Own Device" becomes the norm, but the brand still benefits from a significant user base equipped with ageing smartphones. They have anecdotal evidence that a number of corporate clients have been waiting for Blackberry 10 to refresh their installed base, which will support shipments meaningfully in the first months of the launch. If only 10% of Blackberry’s 30m corporate users refresh their phone within the first 6 months of the launch, this would represent ~3m units alone.<br />
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<b>The strength of this launch is overlooked by investors, creating strong opportunity to buy Blackberry.</b><br />
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- Bernstein conservatively expects shipment of 1m units for January and February, in the current quarter, and thereafter 1m units per month in March to May, generating 3m units of BB10 sales in the first fiscal quarter of 2014. As a reference, the current sell through run rate of Blackberry is close to 3m units a month.<br />
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- They assume ~$550 ASP and 30% gross margins for BB10 devices, which is in line with communicated selling prices and their channel checks. This would drive gross profits 24% above current expectations for 4QF13, 32% above expectations for 1QF14. <br />
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<u><b>There is no bear case related to the evolution of Service revenues.</b></u><br />
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- For the last two years, Blackberry's service revenues have remained stable, in the region of $1bn a quarter, driven by a stabilising user base and resilient ARPU.<br />
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- It is well understood that the migration to Blackberry 10 will create some pressure on Service revenues, most likely for some consumer segments. Bernstein models an average service revenue per BB10 user 50% below the current average.<u><b> On that basis they see two potential scenarios, and the stock working well for both!</b></u><br />
<b><br />- Either Blackberry 10 is a slow launch, driving limited upside.</b> In that case, older contracts will continue to form the vast majority of Blackberry’s user base. Blackberry will continue to benefit from the service revenue cushion. In that scenario, Blackberry’s business model is much more resilient than consensus expectations imply.<br />
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<b>- Or Blackberry 10 is a success, and in that case, there is a risk that service revenues come under meaningful pressure.</b> The irony is that if Blackberry 10 is a success, some pressure on Service revenues would be the least of Bernstein's concerns and more than compensated by a recovery in the device business. <br />
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<span style="color: red;">Notablecalls: </span>Ferragu has been a major bear in Blackberry since '10 with a couple of stints on the Market Perform side along the way. Now he is making a rather significant call saying the stock should trade ~100% higher. This will not go unnoticed.<br />
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His views regarding the Services side potentially ending in a win-win situation are also quite interesting and should work to calm investor fears. <br />
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<b>With the stock down 5 pts from the $18+ highs I suspect a strong case for a long trade can be made here. Potential 10%+ move in the cards.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com13tag:blogger.com,1999:blog-29297569.post-78099547865534886602013-01-22T09:56:00.000-05:002013-01-22T09:56:19.608-05:00Finisar (NASDAQ:FNSR): Overblown Fears on “Silicon Photonics” Misconstrue Technical Merits and Market Segmentation—Reiterating Buy<div style="text-align: justify;">
Following the scathing downgrade from Jefferies on Friday <b>Finisar (NASDAQ:FNSR)</b> is getting some supportive comments from Needham's Networking team.<br /><br />- Overreaction to “Silicon Photonics” fears—they think hype and innuendo drive fears more than technical merits do.<br /><b><br />It appears that Silicon Photonics advances from Intel are being used to imply co’s CPAK is a threat to Finisar. Needham strongly disagrees. </b>They do not see CPAK as superior to Finisar’s current or future technology. Firm points out that Intel’s technology is applicable to very short PCI Bus architectures and has tightly constrained distance limitations. The physical limitations of silicon, lasers and composite chips limit Intel’s design to very short distances for connectivity within a single rack where optics are not used. It is replacing copper in a rack, and is not replacing any Finisar offerings.<br /><br /><b>Cisco’s CPAK CMOS technology cannot scale down—</b>as monolithic designs are shipped they believe Finisar can deliver lower power, tighter density and lower costs than CPAK. First generation CPF LR4 100G devices are not yet monolithic. As the more integrated versions ship, Needham expects them to easily surpass Cisco’s CPAK CMOS Silicon Photonics offerings even before they ship. This is simply not a threat to Finisar, in firm's opinion.<br /><br /><b>Reiterate Buy—Silicon Photonics not a threat.</b> FUD (fear, uncertainty, doubt) is a problem and the technology is difficult to explain, but it won’t impact revenues and profits, Needham says. Reiterates their Buy rating and $18 price target.<br /><br /><span style="color: red;">Notablecalls:</span> Just a FYI. Now pick your side.</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com6tag:blogger.com,1999:blog-29297569.post-82140857738950259062013-01-18T08:40:00.000-05:002013-01-18T08:40:10.350-05:00Finisar (NASDAQ:FNSR): Actionable Call Alert!<div class="separator" style="clear: both; text-align: justify;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7xILJ0PQIv12PPByvYM2g5hApfiBoj04TAT6PqACTZ-41Tg_AptWaG4UIBpUe3DQVq_Wi9PrSs2J9Blyt4csh0mA5DJmWrfNj5IMvdMgDicZOmPm22XOvFJ-CDqeQ-It0IsYt/s1600/finisar.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="191" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7xILJ0PQIv12PPByvYM2g5hApfiBoj04TAT6PqACTZ-41Tg_AptWaG4UIBpUe3DQVq_Wi9PrSs2J9Blyt4csh0mA5DJmWrfNj5IMvdMgDicZOmPm22XOvFJ-CDqeQ-It0IsYt/s200/finisar.jpg" width="200" /></a></div>
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Jefferies & Co analyst James Kisner is making a major negative call on <b>Finisar (NASDAQ:FNSR) </b>downgrading the optical module maker to Underperform from Hold with a Street low $7.50 price target (prev. $14.00).<br /><br /><b>- Checks with Intel suggest the they can now build 100G transceivers at “high volume” and with a “good yield”. Bad news for Finisar.</b><br /><br /><b>Investor Summary: </b>Jeffco's checks and a recent public announcement from Intel suggest that the ultimate commercialization of highly deflationary silicon photonics technology in data centers is likely no longer in doubt – bad news for manufacturers of “traditional” MSA-based, manually assembled optical transceivers for the data center such as Finisar. They believe current Street expectations for Finisar in FY14 and FY15 are likely too high as they likely do not contemplate the impact of silicon photonics-based products on the 100G CFP market, of which Finisar may have as much as an 80% share. The business currently trades at 18x firm's new CY14 EPS estimate of $0.95, a premium to industry peer JDSU (which trades at ~14x CY14). Firm arrives at their new $7.50 target price (down from $14.00 previously) by applying an 8x P/E multiple to our CY14 EPS estimate – reasonable in their opinion given Finisar’s relatively lower medium-term growth profile. (They now expect revenue growth in the low to mid-single digits over the medium- to long-term.)<br /><br /><b>* Cisco and Others Are More Significant Near-Term Threat.</b> While Jeffco suspects it will be a while before we see optical transceivers from Intel, their checks suggest a number of players, including Cisco, are likely to launch silicon photonics-based transceivers for 100G applications in the data center in 2013 and 2014.<br /><br /><b>* Finisar may now have as much as an 80% share of the 100G CFP market, and Jeffco estimates that 100G CFPs represent around 10% of Finisar’s business today.</b> However, they would note that: 1) CFPs are currently among the highest margin, fastest growing products in Finisar’s Datacom Portfolio; 2) Conversations with industry contacts suggest that silicon photonics technology can scale to higher speeds (400Gbps and beyond) relatively easily – thus the broad adoption of silicon photonics technology puts the long-term growth prospects of Finisar’s datacom business in jeopardy.<br /><br /><b>* Acknowledge a Lot of Unknowns</b><br />Kisner acknowledges there remains significant uncertainty around timing, pricing, and breadth of customer adoption of silicon photonics technology. He also admits there may be lack visibility into various ways Finisar might participate in the deployment of this technology (including potential acquisitions). Nonetheless, on balance, he believes that the threat of silicon photonics is now tangible and skews the risk/reward offered by Finisar shares to the downside.<br /><br /><b><span style="color: red;">Notablecalls:</span> </b>This is a big fundamental call that will serve as a overhang for the foreseeable future. Having Intel and Cisco as competitors (with better tech!) simply can't be good. A structural problem that's not going to go away.<br /><br />Kisner's no stranger to making big negative calls in the space. He downgraded Finisar back in Feb after Cisco announced the $300 mln Lightwire deal sending the stock down ~50% over the next 4-5 months. <br /><br />With Kisner saying competition is now on the doorstep and slashing his estimates and target way below Consensus, this is going to generate ample fear and selling interest. Don't get me wrong - every FNSR watcher out there has been aware of the looming competition for quite a while but Kisner says it's coming earlier than many expected.<br /><br /><b>All in all, I suspect FNSR will be down 10%+ today and trade toward recent lows in the coming months.</b> Don't chase it too low, let it come to you.<br /><br /><span style="color: red;"><b>Actionable Call Alert!</b></span><br /></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com4tag:blogger.com,1999:blog-29297569.post-68994419341140018322013-01-11T07:57:00.000-05:002013-01-11T07:57:05.941-05:00 Dendreon (NASDAQ:DNDN): Provenge Doesn't Seem to Be Fading; Could DNDN Be One of 2013's Best Performers? - Porges<div class="separator" style="clear: both; text-align: justify;">
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Bernstein's uber analyst Geoffrey Porges is making a big biotech call upgrading<b> Dendreon (NASDAQ:DNDN)</b> to Outperform from Market Perform with a $10 target (prev. $7).<br /><br /><b>- Porges now convinced Provenge is not dead; Raises his estimates significantly; Sees $1+ EPS power by 2016 yielding significant upside for the stock.</b><br /><br />The basis for his upgrade is the feedback he and his firm received from urologists in recent months as part of Bernstein's ongoing monitoring of the adoption of Medivation's Xtandi and its positioning against JNJ's Zytiga. That feedback, particularly from community urologists, convinces them that Provenge is not going to disappear, and in fact is more likely to return to modest but steady growth once the turbulence in the market (and the company) stabilizes. When the market (and industry observers) realizes that this is occurring, Porges expects the stock to offer significant upside given current low expectations.<br /><br />Dendreon has been one of the worst performing stocks in biotech for the past two years, languishing between $4 and $5.50 since mid 2012 compared to prior highs of $40 to $45 in 2011. The last 18 months have seen the progressive disaster of poor forecasting, reimbursement challenges, slowing revenue growth, insider selling, excessive cash burn, shareholder class action suits, changes in management and board membership and finally restructuring. Most traditional healthcare and biotech investors have abandoned the company, and the stock now reflects a significant probability of extinction, in Bernstein's view. Investors have endorsed the dogma that the firm outlined in their coverage initiation a year and a half ago, which suggested that new prostate cancer drugs such as Zytiga and Xtandi will crowd out Provenge and gradually reduce its revenue opportunity, such that Dendreon fails to ever achieve sustained profitability.<br /><br />- To explore the impact of these competing drugs, and how perceptions of Provenge are evolving, Bernstein recently conducted a series of one-on-one detailed phone interviews with urologists who are current users of Provenge – their thesis was that if Provenge is going to disappear, current users should be reducing their patient numbers now, or expecting to in the future.<br /><br /><u>When they contacted urologists with significant experience with Provenge, the firm found the opposite of these bleak expectations. The busiest urologist Provenge prescribers have been increasing their use, and recruiting colleagues and peers to use the product as well.</u> These high volume users acknowledge some hiccoughs, but are adamant that they will recommend the drug to a significant and growing minority of advanced PC patients. Not only do they not expect any reduction in the frequency of use, but instead expect a 10-20% increase in the frequency of use in 2013, compared to 2012, and a further increase in 2014. These findings differ from Bernstein's prior research and other opinions about Provenge because they come from current users of Provenge; however, they are consistent with Dendreon's own comments and information (+15-25% sequential growth in urologists' use) from the last three quarterly conference calls.<br /><br />- Based on these findings they are increasing their revenue forecast for Provenge; <b>They now forecast peak revenue for Dendreon of $799mm by 2017, compared to $580mm previously with a significant contribution from ex US markets. </b><br /><br />- They expect the company's cash expenses to now match revenue by mid 2013, and for the company to report full year positive earnings in 2014. <b>Firm's adjusted EPS estimates are now for pro forma earnings of $0.17 in 2014, then $0.54 in 2015 and $1.14 in 2016. </b>These are all significantly higher than recent consensus;<br /><br />This call is consistent with Bernstein's more cautious stance about the higher quality mid cap biotech stocks toward the end of 2012. Porges believes there may be more opportunity in the disliked "out of favor" names (of which Dendreon is the poster child) than in chasing new highs for the recent sector leaders.<br /><br /><b>Given the cost and complexity of Provenge, Porges thinks Dendreon is unlikely to be a free standing company long term</b>.<br /><br /><span style="color: red;">Notablecalls: </span>There are several reasons why this is a big call and likely to have significant positive impact on the stock:<br /><br />1) Porges is the probably the most respected analyst in the space; He is the Axe.<br /><br />2) Dendreon has been left for dead by almost everyone except some die hard cult followers; Short interest stands at 30%.<br /><br />3) Porges is now saying outright Provenge is going to survive and even thrive; His estimates are now way above Consensus.<br /><br />4) EPS power of $1+ in '16 will yield in a $20-25/share stock = huge upside.<br /><br />5) Porges is making a very sensible bet saying out-of-fav names are going to be the place to be in 2013. DNDN is the prime candidate.<br /><br />6) This call is a huge surprise. I bet there are analysts out there today telling their associates to get on the effin phone and start talking to docs. If the feedback they are going to get is anything similar to what Porges recieved there are going to be more upgrades.<br /><b><br /><br />All in all, this call is likely to take the stock above $6/share today and toward $7 in a few weeks.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com5tag:blogger.com,1999:blog-29297569.post-59738728981068900612013-01-08T09:28:00.000-05:002013-01-08T09:28:07.361-05:00 Fusion-io, Inc (NYSE:FIO): Jason Ader downgrades..<div class="separator" style="clear: both; text-align: justify;">
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William Blair's uber analyst Jason Ader is downgrading<b> Fusion-io, Inc (NYSE:FIO)</b> to Market Perform from Outperform this morning.<br /><br />- Checks reveal weaker than expected performance and increasing competitive threat from Intel.<br /><br />Ader is downgrading the shares of FIO from Outperform to Market Perform, based on his belief that Street consensus estimates for the second half of fiscal 2013 (March and June quarters) calling for year‐over‐year growth of 46% are aggressive. <b>His checks point to slower‐than‐expected bookings</b>, specifically on the enterprise side of the business (both for PCIe cards and standalone software), leading him to believe that the company will struggle to meet expectations for the full fiscal year. <br /><br />Ader notes they continue to strongly believe that enterprise flash is at an inflection point, but demand for server‐attached PCIe cards appears to be developing more slowly than he expected, though he is still expecting FIO to grow its enterprise sales by 53% (down from his previous estimate of 66%) in fiscal 2013 (June).<u> The analyst notes he is struggling to point his finger at why demand has slowed in recent months, but it is evident that macro pressures affecting the larger storage market are impacting the PCIe segment, resulting in less low‐hanging fruit being available. </u>In addition, his checks suggest that Fusion’s software offerings (ioTurbine and ION) and recent OEM partnerships (with Cisco [CSCO $20.29; Market Perform] and NetApp [NTAP $33.24; Market Perform]), both of which he has viewed as key growth catalysts in fiscal 2013, are developing more slowly than he initially anticipated. Lastly, Ader believes that new emerging architectures such as all‐flash arrays may be causing customers to pause as they evaluate alternative approaches to flash and educate themselves on newer offerings.<br /><br />From a competitive standpoint, while William Blair has not picked a material change in the PCIe flash landscape, firm's checks indicate that Intel (INTC $21.25) is gaining steam with its recently introduced Ramsdale 910 series PCIe card. <b>The 910 is substantially less expensive (30‐40% cheaper by some accounts) than Fusion’s ioDrive 2 product line, and according to their sources performs better than Fusion in write‐intensive environments.</b> They believe Fusion may soon introduce a lower‐priced PCIe card that will be more competitive with the Intel card, but their fear is that this new card could cannibalize ioDrive sales.<br /><br /><span style="color: red;">Notablecalls: </span>This is a big call from Ader. He is pretty much calling Fusion-io the next Mellanox (MLNX) with the exception Intel is already here with a competing product. What's even worse Intel's Ramsdale 910 series PCIe card is 30-40% cheaper while performing better than Fusion-io's comparable offering. That's going to weigh on margins sooner or later.<br /><br />We had the perma bulls from Credit Suisse out yesterday touting FIO's ioTurbine software as the main competitive edge. Here's what Ader has to say: <br /><br /><i>'ioTurbine failing to meet growth expectations. Our checks indicate that FIO’s ioTurbine software designed to accelerate virtualized workloads is ramping more slowly than expected'</i><br /><br />Ader is the Axe in the networking and storage space with his calls moving smaller names such as FIO by as much as 6-10%. He is lowering his '13 and '14 estimates below Street. FIO trades 40x '14 EPS.<br /><br /><b>Below $20 today and toward recent $17.50 lows in a few weeks?</b> <b> I would expect to see continued selling pressure in the name throughout the day.</b><br /><br />(Note Ader is also downgrading EMC (NYSE:EMC) this morning)</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com17tag:blogger.com,1999:blog-29297569.post-70399695695959573802013-01-07T09:28:00.000-05:002013-01-07T09:28:30.245-05:00Cree Inc. (NASDAQ:CREE): Business model shifting; downgrade to Hold - Canccord<div class="separator" style="clear: both; text-align: justify;">
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Canaccord's Jonathan Dorsheimer is making a very interesting call this morning downgrading <b>Cree Inc. (NASDAQ:CREE)</b> to Hold from Buy with a $32 price target (prev. $38)<br /><br />- Dorsheimer believes that their thesis of GM expansion from the transition of legacy components to SC3 has largely played out and is reflected in the stock. He thinks Cree’s next phase of growth will be driven by its lighting systems business, not components, which may limit further GM expansion.<br /><br />Canaccord is downgrading CREE shares on expectations of a slowing rate of GM expansion and lowering their estimates to reflect a more lighting systems-centric business model, which they do not feel is reflected in treet expectations.<br /><br />With roughly 50% of components comprising SC3 technology, the firm believes the low-hanging fruit of the GM expansion story has been achieved.<br /><br />They view the CREE story evolving to lighting from components, as evidenced by CREE’s 8-K on December 4, 2012, regarding CEO Chuck Swoboda’s compensation, which is now weighted more toward performance of the lighting segment.<br /><br /><b>Canaccord sees CREE entering a period of “investment” in order to stimulate the market and capture share, a strategy they agree with over the medium to long term</b>. However, in the near term they feel this may lead to investor frustration, and with a softer demand environment it creates risk to the December and March quarters.<br /><br /><u>If this was just a seasonality call and a miss on the quarter they would not downgrade the stock, Canaccord notes. However, they see the business model shifting and would prefer a more attractive entry point before recommending the shares during this transition.</u><br /><br /><b>Valuation</b><br />Canccord is lowering their price target to $32 from $38 previously, based off of a 15x multiple to their newly introduced C2014 EPS estimate plus cash per share. They have lowered their estimates to reflect lower component growth offset slightly by higher lighting systems growth. Within the segments the firm has tempered their expectations for GM expansion in components, but increased slightly GM assumptions for the lighting systems business.<br /><br /><span style="color: red;">Notablecalls: </span>Dorsheimer seems to be making a solid out-of-consensus call here. Period of "investment" is probably not what the current holders want to see right now. Lighting systems carry a 30% GM vs. 40% for components. <br /><br />He is the kind of analyst that is not afraid to make big negative calls and this qualifies as one. <a href="http://notablecalls.blogspot.com/2012/09/gt-advanced-tech-nasdaqgtat-sapphire.html" target="_blank">He whacked GT Advanced Tech (GTAT) back in Sept.</a><br /><br />Dorsheimer is lowering his '13 estimates below consensus and price target below current market price to prove his point.<br /><br />All in all, this looks like a call that could turn even some long-term holders into sellers. Especially after the stocks' recent strong performance. <br /><b><br />I'm guessing below $33/share today and toward $30 level in the coming weeks. </b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com7tag:blogger.com,1999:blog-29297569.post-57809678111811916462013-01-04T07:40:00.000-05:002013-01-04T07:40:32.675-05:00Lululemon Athletica (NASDAQ:LULU): Slowing comps and discounts; Downgrade to Neutral - Credit Suisse<div class="separator" style="clear: both; text-align: justify;">
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Credit Suisse is downgrading <b>Lululemon Athletica (NASDAQ:LULU)</b> to Neutral from Outperform this morning while lowering their target price to $80 (prev. $86).<br /><b><br />- With slowing comp momentum likely and further merchandise margin pressure a distinct risk, they believe the shares are range bound.</b><br /><br /><b>Signs of Slowing Momentum in Mature Markets Gives Pause.</b> LULU’s mature store (59% of stores) comp momentum has slowed in Canada over the past several quarters. Credit Suisse believes 3Q12’s low-single-digit comp highlights LULU’s challenges in driving incremental sales in these highly productive mature stores (Canada stores doing ~$3,000/sq ft vs. U.S’s ~$2,000.) With this recent deceleration, their prior thesis for sustained doubledigit comps is at risk, as it was predicated on mature stores comping high single digits.<br /><br /><b>Elevated Discounting In Stores and On Line, Re-Pricing High Ticket Items</b><br />CSFB's analysis of over 2,500 lululemon SKUs offered on the company’s eCommerce site highlights a significant increase in discounted apparel at the end of December. As of December 28, close to 20% of apparel was on sale, compared to 8% in mid- December and average of 10% since the beginning of June. Additionally, the average markdown on sale apparel increased to 38% at the end of December, up from an average of 30% since June. This coincides with what the firm sees in stores, with additional racks of sale merchandise brought onto floors. According to CSFB, this indicates that new and winter product lines have stretched outside of the company’s comfort zone, resulting in re-pricing actions, broader discounting, and higher markdown levels than they have historically seen.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-nB6VkUpYwI-KIqdu040HlC58uizYPjZNovJGNDIHZaA38oN8_ATOcyu1YrkQZ4wQPDskqTRXWuOr1yPCdOJ6Gp_M1Ew_U17hJaGKcnwe7KcCli_Z2WKHQqkLf-ghUVolJLTt/s1600/LULU_discounts_CSFB.gif" style="margin-left: 1em; margin-right: 1em;"> <img border="0" height="140" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-nB6VkUpYwI-KIqdu040HlC58uizYPjZNovJGNDIHZaA38oN8_ATOcyu1YrkQZ4wQPDskqTRXWuOr1yPCdOJ6Gp_M1Ew_U17hJaGKcnwe7KcCli_Z2WKHQqkLf-ghUVolJLTt/s400/LULU_discounts_CSFB.gif" width="400" /></a><br /> <br /><b>With Additional Focus on Activewear, Increased Long-Term Risk to LULU’s Competitive Positioning and Pricing Power.</b> Credit Suisse believes LULU brand and product positioning has fended off competition due to 1) casual luxury positioning; 2) cross-sports appeal; and 3) brand authenticity. However, CSFB sees long-term risks to its competitive positioning and pricing power as activewear gains shelf space across retail channels (particularly premium department stores) and competitive vendors adjust offerings to compete with lululemon at lower price points.<br /><br /><b>Adjusting Estimates and Lowering Target Price.</b> Reflecting their more conservative model for mature store sales, firm's 2013 comps, sales, and EPS estimates are 9.7%, $1.73B, and $2.29 from 12.5%, $1.76B, and $2.40. CSFB's new target price of $80 (from $86 previously) is an equal-weighted average of: 1) comparable multiples ($80); 2) a DCF analysis ($84); and 3) long-term growth scenario ($75).<br /><br /><span style="color: red;"><span style="background-color: white;">Notablecalls:</span> </span>Higher than usual discounts is the biggest takeaway from this CSFB call in the short term. It could imply at least two things:<br /><br />- Consumers unwilling to pay the 25-5<span style="background-color: white;"><span></span></span>0% premium for LULU stuff as the hype is starting to subside. <br /><br />- GPS' Athleta brand with its significantly lower price points starting to take its toll on LULU.<br /><br />People have been wondering about the discounts over the past week or so and the CSFB comments seem to confirm their worries. Selling 90%+ of their product at full price is still very good but what if it's just the beginning of a trend?<br /><br />With the stock trading around 30x EPS, this is probably not what investors want to see. <br /><b><br />I'm guessing there will be ample selling pressure in the n-t. Thinking $72/share or lower today and possibly below $70 in couple of weeks. </b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com5tag:blogger.com,1999:blog-29297569.post-8497652478933648122012-12-12T12:22:00.000-05:002012-12-12T12:22:08.205-05:00Take-Two Interactive (NASDAQ:TTWO): Positive Holiday Themes Emerge & GTA Visibility Improves; Upgrade to OW - Piper<div class="separator" style="clear: both; text-align: justify;">
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Piper Jaffray upgraded <b>Take-Two Interactive (NASDAQ:TTWO)</b> to Overweight from Neutral with a $18 price target (prev. $12) this morning.<br /><br />According to the firm three factors lead to a more positive bias:<br /><br /><b>1) Strong 2012 Holiday Trends and Quality Theme Bode Well for Big Budget Titles in 2013.</b> Three key industry themes have emerged this holiday. 1) Holiday is tracking better than expected. Concerns around social competition and/or console fatigue have proven overly conservative. 2) The top 5 holiday games as a group are growing. Long-tail titles are, in contrast, selling exponentially worse as game quality issues are magnified by negative reviews and social media. 3) The Xbox 360 and PS3 consoles continue to be relevant in 100 million households globally. This represents the largest active console installed base in video game history.<br /><br /><b>2) Powerful Portfolio of Titles.</b> 2011's Modern Warfare 3 (ATVI) holds the record for biggest 5-day entertainment launch grossing $775 million globally. Piper notes they are confident that GTA V can approach and possibly break this record as their visibility around the title's technical scope and launch timing have improved. Despite being Street high, Piper's June qrtr non-GAAP revenue est. of $1b appears reasonable (Street’s $821m). TTWO's portfolio outside of GTA is the strongest it has ever been. Firm notes, NBA 2K & Borderlands 2 are exceeding estimates this holiday. They are, however, cautious around the 3/26/13 launch of Bioshock Infinite given timing and quality concerns.<br /><b><br />3) TTWO shares have outperformed the market leading up to prior GTA launches.</b> Assuming a Jun-13 quarter launch, we are approximately 6 months away from GTA V shipment. Although past performance is not necessarily indicative of future performance, Piper notes that in the past 3 GTA launches, TTWO shares have materially outperformed the market in the 6 months prior to shipment. Specifically, TTWO shares appreciated, on average 32% in the 6 months prior to launch in the last 3 versions, while the NASDAQ was, on average, down - 14% during the same time periods. Outperformance for TTWO vs. the market was material and consistent in each of these 3 periods (see table below) and the least amount of relative outperformance was 32 percentage points.<br /></div>
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<br /><b>Raising PT to $18 Based on 12x FY13/FY14 Avg EPS.</b> Piper notes they had previously assigned TTWO a multiple that was discounted (8x) vs. their target multiple of 12x for EA & ATVI. Based on factors discussed in this note, they believe TTWO shares deserve a multiple that is in-line with comps in the space. Firm notes better performance of top 5 titles bodes well for the sell-through prospects of GTA V. They also note an improving portfolio of titles outside of GTA are helping to "smooth" the model.<br /><span style="color: red;"><br />Notablecalls: </span>This looks like a solid call that could work over the next several months. The last similar Gaming sector call we had was this:<br /><br /><a href="http://notablecalls.blogspot.com/2012/09/gamestop-nysegme-tactical-opportunity.html" target="_blank">Gamestop (NYSE:GME): Tactical opportunity as title and hardware drought breaks; up to Buy - Goldman Sachs </a><br /><br />Worked out just fine.<br /><br />It's been a while since I've seen a positive Game publisher call. Street high target and estimates too.</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com2tag:blogger.com,1999:blog-29297569.post-80535386974592379132012-12-04T09:30:00.000-05:002012-12-04T09:30:30.870-05:00Francesca's Holdings Corp (NASDAQ:FRAN): FRAN's Looking Good Again for the Holidays; Upgrade to Buy, PT to $38 - Konik<div class="separator" style="clear: both; text-align: justify;">
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Jefferies & Co star retail analyst Randal Konik is upgrading <b>Francesca's Holdings Corp (NASDAQ:FRAN) </b>to Buy from Hold this morning with a $38 price tag (prev. $35).<br /><br /><b>Konik notes that a quarter ago he downgraded FRAN as valuation was high and he was surprised by the recent management change. However, since then valuation has become much more attractive, his confidence in the long term has not waned and he now feels comfortable with new leadership taking the baton</b>.<br /><br /><b>Why Upgrade In Front Of The Quarter?</b> Based on performance of the retail sector and their view that FRAN's momentum continued into 3Q, Jefferies feels good about 3Q results and think guidance was likely conservative when given on 9/4. The set up is also favorable given very negative sentiment. While it is not their intention to make a direct call on the quarter, as rather they view this as a nice entry point on a LT growth name, they do expect a solid 3Q.<br /><br /><b>Confidence In New Management.</b> Following the September ’12 announcement of CEO/co-founder John DeMeritt’s departure, they believe the company has transitioned smoothly to the new CEO, Neill Davis. Mr. Davis is currently President and director since 2007, and clearly is very familiar with the company’s operations. Additionally, Jefferies notes they know him from his previous CFO role at Men’s Wearhouse and believe he is a capable and experienced leader. Meanwhile, they also like that Theresa Backes (COO and recently appointed President), a key member of the management team, has been a constant throughout this transition.<br /><br /><b>Solid Fundamentals.</b> FRAN continues to have some of the strongest fundamentals in retail. The company’s unique real estate strategy and high 4-wall margins yield strong new store economics, with over 150% ROI within the first year. Operating margins are also significantly above industry average, with firm\s model forecasting ~25% operating margins this year. Also, the company's older stores continue to perform very well with SSS up 15-20% in the 1H of calendar 2012.<br /><br /><b>Valuation Is Again Compelling.</b> FRAN currently trades at 21x EPS and 11x EBITDA, roughly in line with peer growth companies. However, Jefferies believes FRAN warrants a premium valuation given: 1) its early stage of growth vs. peers; 2) superior operating margins; 3) highly visible earnings trajectory of 25-30% annual growth; and 4) strong ROI.<br /><br />...<br /><br />And now for the most important chart:<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3xF1LYzWdEQS_216yNBEIUGPj4-0WJtm9KT36quu_KU2e2Wr0XaMsoTitwNiMFiwrwYiG7YoCbhjhgXMzIL9m-cRvQowYMQEM4nlKQJk1MFW4X9PwU6eB09RmvMAnncDsmXWG/s1600/FRAN_Jeff_short_int.gif" style="margin-left: 1em; margin-right: 1em;"> <img border="0" height="255" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3xF1LYzWdEQS_216yNBEIUGPj4-0WJtm9KT36quu_KU2e2Wr0XaMsoTitwNiMFiwrwYiG7YoCbhjhgXMzIL9m-cRvQowYMQEM4nlKQJk1MFW4X9PwU6eB09RmvMAnncDsmXWG/s400/FRAN_Jeff_short_int.gif" width="400" /></a><br /><br /><b><br />Sentiment Now Too Negative.</b> FRAN’s short interest has risen sharply within recent months, from 14% before 2Q results to 28% at present. <u>Additionally, FRAN has the third highest short interest rate within Jefferies' coverage universe of 25 companies.</u> They believe sentiment is now overly negative at these levels especially given the strong fundamentals and growth story at FRAN.<br /><br /><span style="color: red;">Notablecalls: </span>Several reasons to like this call:<br /><br />- FRAN took a 8 pt (-25%) hit last quarter not because of weak results but because of the resignation of CEO/co-founder DeMeritt. Now there's a new CEO in place and has Jeffco's blessing.<br /><br />- The co is scheduled to report tomorrow. Short interest has been on the raise into the quarter, rivaling only Deckers (NASDAQ:DECK). Jeffco is confident enough to make a positive call on the quarter. That's not something one sees very often. Will create buy interest.<br /><br />- Konik has the hottest hand in retail right now. He called the bottom in <b>Deckers (NASDAQ:DECK) and Abercrombie (NASDAQ:ANF).</b><br /><br />Francesca's (NASDAQ:FRAN) could be next. Has all the characteristics.<br /><b><br />I'm thinking +7-10% today, putting $27.50+ level in play.</b><br /><br /><b><br />PS: </b>Posting this around open. Scale into position if possible. Avoid overpaying at around open.</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com0tag:blogger.com,1999:blog-29297569.post-42527464049438691692012-11-29T06:56:00.001-05:002012-11-29T06:56:40.469-05:00Research in Motion (NASDAQ:RIMM): Upgrading to Buy on positive risk/reward into BlackBerry10 launch - Goldman<div class="separator" style="clear: both; text-align: justify;">
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Goldman Sachs is joining the <b>Research in Motion (NASDAQ:RIMM)</b> bulls this morning with an upgrade to Buy from Neutral with a $16 price target (prev. $9)<br /><br /><b>- Their Bull case is $31/share based non FY14 EPS of $3.0</b>8<br /><br /><b>Some context on the recent run – </b>RIMM is up 76% from its September low of $6.31, but still down 23% on the year and down 92% from its 2008 high. The recent run has been driven by better–than-expected August quarter earnings, followed by the announcement that BB10 would launch on January 30 and is in the labs of 50 carriers for final testing, as well as a steady drumbeat of emerging bits of information around the new smartphones’ specs and features (which have been generally impressive). Given that short interest in the stock is at an all-time high at 20% of shares outstanding, Goldman believes short covering has contributed to the sharp bounce off the lows.<br /><br />Goldman notes they are upgrading the stock as they see a positive risk/reward heading into its BlackBerry 10 (BB10) launch on January 30.<b> For the first time in 3 years, they think out-year Street estimates are too low</b>, as they don’t capture: 1) the ASP lift from BB10; 2) the associated margin improvement; and 3) the channel inventory fill for BB10. They now assess a 30% chance of success for BB10 given positive early reviews, broad-based carrier support, attractive features, and interest by carriers and consumers in broadening the field beyond Android/iOS;<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGwlYuleTwxgdSliFKUVYvOmKeqE1jDt9Qja7XNgLzE2s8xsIiWStLFcbSIG4ESfx9r11Ieajcoshia3MX4WFyj0bsNdaI-zizFhxZnYXvQIV9T-vRlQLpYOhiEtgzsQETzZSC/s1600/RIMM_Goldman_Base_Bull.gif" style="margin-left: 1em; margin-right: 1em;"> <img border="0" height="157" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGwlYuleTwxgdSliFKUVYvOmKeqE1jDt9Qja7XNgLzE2s8xsIiWStLFcbSIG4ESfx9r11Ieajcoshia3MX4WFyj0bsNdaI-zizFhxZnYXvQIV9T-vRlQLpYOhiEtgzsQETzZSC/s400/RIMM_Goldman_Base_Bull.gif" width="400" /></a><br /><br /><b>Catalyst</b><br />Goldman expects RIM’s results will exceed Street estimates over the next 4 quarters, with their revenue estimates 8% and their quarterly EPS $0.14 above consensus on average. In fact, the firm now estimates that RIM will turn profitable in FY14 (Feb) vs. the consensus view of continued losses. The primary source of upside is their FY14 smartphone ASP estimate of $270, up 21% yoy vs. the consensus view of roughly flat, as they expect BB10 devices priced at over $400 will drive more than a third of the total volume, offsetting sharp declines in emerging markets where ASPs are much lower. Goldman is raising their FY13/14/15 EPS estimates to ($0.99)/$0.20/($0.62) from ($1.07)/($0.52)/($1.61) on higher ASPs and margins as a result of the BB10 ramp, partially offset by much lower units in emerging markets.<br /><br /><b>A trade or an investment? Time will tell – </b>Even if BB10 is ultimately not successful (which is Goldman\s current base case scenario, at 70% probability) they expect RIMM to outperform over the next 2-4 quarters, as they see upside to Street estimates from higher ASPs and margins as well as channel inventory fill over the next 4 quarters around the BB10 launch. If RIMM does succeed in establishing BB10 as a viable niche ecosystem and sees follow-through demand post the launch (which is Goldman bull case scenario, at 30% probability), then it could further strengthen the long-term investment case.<br /><br /><span style="color: red;">Notablecalls:</span> The stock took a slight breather following the 2 upgrades (Jeffco and CIBC) that took it from $9.50 to $12 recently. <br /><b><br />Now it can proceed higher. I'm thinking $12.50+ today.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com2tag:blogger.com,1999:blog-29297569.post-85178628802727207452012-11-20T07:14:00.000-05:002012-11-20T07:14:18.909-05:00Research in Motion (NASDAQ:RIMM): Carriers surprisingly positive on BB10; Upgrade to Hold - Jefferies<div class="separator" style="clear: both; text-align: justify;">
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Jeffco's well regarded Telco analyst Peter Misek is backing off of his uber-bearish stance on <b>Research in Motion (NASDAQ:RIMM)</b> this AM and upgrading the name to a Hold from Underperform. <br /><br /><b>- According to Misek RIMM could be a ~$43 stock in 12 months, if things go well.</b><br /><br />Preliminary results from Jeffco quarterly handset survey indicate developed market carriers have a much more positive view of BB10 than Misek expected. With greater carrier shelf space and marketing support, he now believes BB10 has a 20%-30% probability of success. While the likelihood is low and Jeffco remains well below St for the Nov Q and Feb Q, the potential reward is high.<br /><br /><b>Preliminary Survey Results Indicate Carriers Will Support BB10</b><br /><br />Checks in the fall of 2010 pointed to a high level of carrier excitement around BB10 (then called QNX). Carriers wanted a third ecosystem to reduce their reliance on Android and iOS.<br /><br />But two years later, after integration challenges with RIM’s BIS/BES infrastructure and continued execution issues, RIM has still yet to launch BB10 handsets.<br /><br />This summer the firm trialed the BB10 developer alpha handset. They saw significant potential for it, and it certainly is a vast improvement over BB7 devices; however, they believe it is highly unlikely that BB10 will be an improvement over iOS 6 and that it will be about equal to Android Jelly Bean 4.2.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4EY2o4DK_1d3qWmUI9__GcacFt-6COVV-Efj9DKuwbVMDsGHwhJiSb1usr4cn_jrazpvuQDUtuaXHSbC9t98TdwcALIWFZ0cY7Y7r-6LSKo3eHlSvpAp95h2O_W7GweC7atkk/s1600/Smartphone+OS+Market+Shares+Jefferies+2012.gif" style="margin-left: 1em; margin-right: 1em;"> <img border="0" height="233" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4EY2o4DK_1d3qWmUI9__GcacFt-6COVV-Efj9DKuwbVMDsGHwhJiSb1usr4cn_jrazpvuQDUtuaXHSbC9t98TdwcALIWFZ0cY7Y7r-6LSKo3eHlSvpAp95h2O_W7GweC7atkk/s400/Smartphone+OS+Market+Shares+Jefferies+2012.gif" width="400" /></a><br /><br />The delay caused RIM’s new OS to fall from cutting edge to middle of the pack, and Jeffco's own checks indicate that developer support has steeply declined. A large factor was the market share losses (falling from >20% to 5%), which limited the monetization opportunities for developers<br /><b><br />Preliminary survey results indicate carriers will support BB10.</b> Jeffco notes they have been surprised by the strongly positive initial feedback on BB10 from carriers (who admittedly have every incentive to be bullish). They are a bit puzzled as they expected a more muted response given BB10 is two years late and RIM's market share has plunged from 20% to 5%. Firm's theory is that carriers see BB10 as one of their last chances to avoid being locked into a long-term smartphone OS duopoly.<br /><br />Additionally they believe RIM will be swinging for the fences with BB10 and will have significant presence at MWC and potentially even at CES.<br /><br /><b>Risk/reward more balanced. </b>Scenario #1 (20%): Despite better prospects Jeffco still sees only a 20%-30% of BB10 success as consumer demand will be the ultimate determinate; however, they see BB10 success (which would also increase the potential for licensing) leading to a ~$43 stock in 12 months. Scenario 2 (20%): RIM could be sold if BB10 fails; however, this will likely be a takeunder at $5-$7. Scenario 3 (60%): BB10 fails, no acquisition, and continued cash burn leads the stock toward $0. The weighted probability of these scenarios equals firm's new $10 target.<br /><br /><span style="color: red;">Notablecalls:</span> Misek is the Axe in RIMM. His comments tend to move the name even if there is no rating change involved. This time there is.<br /><br />His findings are certainly of interest - who knew the carriers would still be THAT interested in BB10? I certainly didn't. Investors had left this one for dead. Even the turmoil surrounding Nokia (NYSE:NOK) was getting more attention from investors than RIM.<br /><br />It's all about carrier support these days. And the carriers want to break away from the Android/iOS duopoly. BB10 suddenly has a fighting chance.<br /><br />Also, more BB10 hype could be in store at MWC and CES, which bodes well for the stock.<br /><br />Last time Misek upgraded RIM to Hold was back in Dec '11. The stock produced a 10%+ move on the day, 20% move over the next 5 days and a staggering 40% move over the next 30. <br /><br />There's a 20% short interest in the name. Will they stick around to see if Misek is right and the stock goes up 300% from here? Or will they cover? 4:1 risk reward situation.<br /><br /><b>I'm thinking $10.50+ levels today.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com1tag:blogger.com,1999:blog-29297569.post-29319541343221717442012-11-19T09:32:00.000-05:002012-11-19T09:32:39.879-05:00 Computer Sciences (NYSE:CSC): Upgrading to Buy; Turnaround Happening Faster Than Anticipated - Deutsche<div class="separator" style="clear: both; text-align: justify;">
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Deutsche Bank's Computer Services & IT Consulting analyst Bryan Keane is putting his weight behind<b> Computer Sciences (NYSE:CSC)</b> this AM upgrading the stock to Buy from Hold with a $46 price target.<br /><b><br />- This is one of the most strongly worded calls of late.</b><br /><br /><u>In 10+ years covering the IT Services industry, they have seen many blow ups and recoveries, and this recovery/plan is setting up as one of the best, Keane tells his clients</u>. He notes they wanted to track a few quarters of the recovery to be sure the correct management team and plan was in place, and<b> they are now convinced that CSC will make a full recovery and come out an even better company after the turnaround is complete. </b>Currently, the stock’s valuation reflects depressed profit levels, which does not take into account the company’s true normalized earnings power, in their view. Although Street sentiment remains overly negative, they believe better-than-expected results (faster-than-anticipated turnaround) will begin to turn the tide more positive.<br /><br />After faltering significantly in FY12 on lax contract oversight, faulty financial controls, resource mismanagement, and a long-running failure to recognize major shifts in the IT services industry, CSC has arguably turned into a viable turnaround story after instilling new management, redressing its cost structure, and altering its strategic focus. New CEO Mike Lawrie and CFO Paul Saleh have begun to create a culture centered around contract profitability and streamlined operations, changing CSC from a fragmented holding company to a disciplined operating company and rewarding shareholders with higher operating margins and EPS growth as a result. <b>Deutsche believes the turnaround is happening faster and normalized EPS of $5.00+ will be reached earlier than expected (current valuation does not reflect future normalized earnings), warranting multiple expansion to 14x CY13 EPS (shares currently trade at 10x).</b> If they see the full amount of cost saves realized by FY14, Deutsche believes there could be material upside to their EPS expectations. Long term, CSC believes it can achieve and sustain 3-5% top-line growth and 15% EPS growth.<br /><br />Deutsche sees Accenture, IBM, and CGI Group as CSC’s true comparables in light of their similar business models and margin profiles. As investors generally focus on top-line growth, operating margin expansion, and earnings growth to value multinational IT services companies, the firm believes their target multiples are fair as CSC returns to industrylevel top-line growth while expanding its operating margins to grow EPS. <b>They believe CSC’s multiple could catch up to its peer group average should it achieve industry topline growth and operating margins levels on par with peers earlier than expected.</b><br /><br /></div>
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<br />CSC currently trades at a significant discount to peers even at depressed EBITDA levels (trades at only 3.5x CY13 EV/EBITDA versus peer group of 8.4x). Deutsche is raising their FY14 EPS est $0.29 to $3.51 (above Street) and issuing FY15 EPS of $4.00, believing these figures could prove conservative.<br /><br /><span style="color: red;">Notablecalls:</span> It's certainly lovely to see an analyst have such conviction in a name. Byrne has done a resonably good job covering the name (he went from Sell to Hold in Oct '11) and is now really pounding away the table.<br /><br />The stock shot as high as $38/share 10 days ago when they reported better than expected numbers which means the trend is up. If they were willing to buy it there, they will be more than happy to buy it several points lower on this upgrade.<br /><br />Note how Keane sets a $46 price target while hinting that if the stars really align for the co, this will be a $70+ stock as valuation catches up to sector. Should create ample buy interest.<br /><b><br />I'm thinking this one will trade to $36+ in the near-term. Use scale-in approach if possible.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com0tag:blogger.com,1999:blog-29297569.post-43408668304228065862012-11-14T15:50:00.002-05:002012-11-14T15:50:12.558-05:00Notable Calls Network: Teavana Holdings (NYSE:TEA)<div style="text-align: justify;">
<b>Notable Calls Network (NCN) </b>caught a big one today.<br /><br />- Around 2:00 PM ET members started pinging me re: <b>Teavana Holdings (NYSE:TEA).</b> The stock was spiking on moderate volume and noone knew why. Something was clearly going on..<br /><br /><b>- Around 2:09 PM ET a senior NCN member sent me the following:</b><br /><br />TEA? <a href="http://www.bizjournals.com/atlanta/news/2012/11/14/source-starbucks-to-acquire-teavana.html">http://www.bizjournals.com/atlanta/news/2012/11/14/source-starbucks-to-acquire-teavana.html</a><br /><br />There it was. Atlanta Business Chronicle's Urvaksh Karkaria was out with a piece saying Starbucks was about to acquire Teavana, according to his sources. The piece had been sitting there since 1:48 PM ET.<br /><br />I quickly blasted the the link to our 300+ Notable Calls Network (NCN) members..<br /> </div>
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<br /><br />- As you can see from the chart above the stock started spiking as the link circulated trading desks. Several hundreds of thousands of shares were bought.<br /><br />- At 2:20 PM ET Teavana (NYSE:TEA) was halted from trading. <br /><b><br />- At 2:49 CNBC 'broke' the news followed by Starbucks' PR at 2:51 announcing takeover of Teavana for $15.50/share in cash.</b><br /><br />Assuming the 500,000 shares were bought by <b>Notable Calls Network (NCN)</b> members at an average price of $12.50/share we made a cool $1,400,000 on this call. A stretch I know but this how I like to think about it. <br /><br />We broke this one first. It's tough out there. Calls like this help.<br /><br /><br /><b>This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.</b><br /><br />Not all calls are this good (we get many wrong as well) but NCN is for the pros. You decide which calls to take and which one's to leave.<br /><br /><span style="color: red;"><b>Want to be part of NCN?</b></span><br /><br />It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.<br /><br />Please do note that contacts via IM are limited to people with:<br /><br />- 3+ years of trading experience<br /><br />- Access to quality research/analyst commentary<br /><br />- Ability to generate and share (intraday) trading calls<br /><b><br />I will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 3 years of experience in the field.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com1tag:blogger.com,1999:blog-29297569.post-89181009732616029462012-11-08T13:47:00.000-05:002012-11-08T13:47:27.820-05:00Concur Technologies (NASDAQ:CNQR): Downgraded to Underweight at Piper Jaffray<div class="separator" style="clear: both; text-align: center;">
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<br /><span style="color: red;">Notablecalls:</span> Down doggy! Down!notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com0tag:blogger.com,1999:blog-29297569.post-39430155804696141002012-11-08T07:51:00.003-05:002012-11-08T07:58:29.615-05:00Apple (NASDAQ:AAPL): Gross Margin Deep Dive 2.0: GM Headwinds Not Secular; Raising CQ4 GM Estimate; Buy - Jefferies<div class="separator" style="clear: both; text-align: justify;">
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Peter Misek a well plugged in analyst from Jefferies & Co is out with markedly positive comments on <b>Apple (NASDAQ:AAPL)</b> this morning reiterating his Buy rating and $900 price target.<br />
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- Apple's gross margin issues will be resolved by Q4, Misek says.<br />
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<b>Jefferies sees three sources of CQ4 GM upside:</b> 1) Their analysis of every Apple SKU and component yield issue indicates 168bp of improvement during CQ4; 2) Jeffco's CQ4 53M iPhone est is 5-7M above St, which could boost GM by 80bp; 3) GM guidance historically ~300bp below actual. Their analysis points to another 200bp GM improvement in CQ1. <u>Firm raises their CQ4 GM est from 39.0% to 40.0% (guidance 36%, St 38.6%) and EPS from $15.50 to $16.00 (St $13.52).</u><br />
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<b>GM Deep Dive 2.0 and an analysis of component yield issues indicate 168bp of improvement during CQ4.</b> Jefferies analyzed all the Apple product SKUs' ASP, BOM, and GM. They also analyzed the nine components that their checks indicate are seeing yield issues when trying to meet the high level of demand. Firm's conclusion is that these yield issues are a ~376bp headwind at the beginning of CQ4 but should improve by ~168bp this quarter.<br />
<b><br />Notably, they think the key bottleneck for the iPhone is currently assembly at Hon Hai.</b> In CQ3 they believe Hon Hai had ~50K idled employees due to component bottlenecks limiting the iPhone 5 ramp. After display and 28nm bottlenecks were alleviated, they believe the situation has flipped and that Hon Hai is trying to hire more people to meet demand. Jeffco believes Apple is paying Hon Hai higher amounts to make up for the idled reserved CQ3 capacity as well as to foster increased CQ4 hiring. Recently Hon Hai’s chairman noted to reporters, <i>“It's not easy to make the iPhones. We are falling short of meeting the huge demand.”</i><br />
<b><br />Also, the firm sees Qualcomm’s CQ4 MSM shipment guidance of 168-178M (St 172M) vs. CQ3’s 141M as implying ~60M CQ4 iPhones and supportive of Jeffco's 53M estimate.</b> Qualcomm’s major customers are HTC and Samsung. HTC guided CQ4 revenues -14% Q//Q and Samsung guided its high-end handsets flattish Q/Q. Assuming Qualcomm’s non-Apple business grows slightly Q/Q would imply a 33M increase in iPhone shipments or ~60M total for CQ4.<br />
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<b>Jefferies' CQ4 53M iPhone est is 5-7M above St, which could boost GM by 80bp.</b> They continue to believe that the display bottleneck has been worked through, that the current bottleneck is now assembly, and that Apple recently raised its CQ4 iPhone build plan from 55-60M to 60-65M (JEF shipment est 53M). Firm believes St is too low at 46-48M. Firm believes iPhones will have a blended GM of ~48% in FQ1, below the low 50%s GM in prior Qs.<br />
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<b>GM guidance historically ~300bp below actual. </b>The last two years Apple has beaten its GM guidance by an average of 291bp and the last two CQ4s Apple has beaten it by 360bp.<br />
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<b>Raise CQ4 GM estimate from 39.0% to 40.0%.</b> Firm notes they originally modeled 300bp above Apple's 36% guidance to account for Apple's typical conservatism; however, their analysis leads us to believe that Apple included no yield improvement for units or COGS in its guidance. They see iPhone upside and continual BOM yield improvements throughout the quarter adding 100bp to their prior GM estimate.<br />
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<b>Analysis points to another 200bp GM improvement in CQ1</b>. Jefferies thinks the yield issues will be largely worked through so that the 376bp headwind will have mostly dissipated. This implies a 200bp Q/Q GM uplift to 42.0% (St 41.0%). Additionally, they believe Apple is able to pressure its component suppliers and get price concessions of ~2-5% per Q.<br />
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Reiterates Buy and $900 target.<br />
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<span style="color: red;">Notablecalls:</span> Margin issues are mostly to blame for the stock's 150pt slide. Now we have a well respected analyst out saying the issues will likely be resolved faster than the Street thinks. That makes the stock a buy. Simple as that.<br />
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<b>I would not be surprised to see the stock above $570/share level as soon as today.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com38tag:blogger.com,1999:blog-29297569.post-13264557655975847832012-11-06T07:27:00.000-05:002012-11-06T07:27:33.113-05:00Zillow (NYSE:Z): Sometimes It’s Important to Remember These Guys are “Empire Builders”… - PAA Research<div class="separator" style="clear: both; text-align: justify;">
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Shares of<b> Zillow (NYSE:Z)</b> the online real estate database have been under pressure since late September when Citron Research issued a hit piece on the name calling the business model dysfunctional and advised investors to short the stock. The stock saw another wave of selling last night after the co presented their Q3 results and issued Q4 guidance. To many, below-consensus Q4 numbers appeared to confirm Citron's negative views. Z ended down -20% in after market trading.<br /><br /><b>Much to my surprise, PAA Research a boutique firm known for their hard hitting negative views is out defending Zillow (NYSE:Z) this morning. </b><br /><br />Here's what they have to say:<br /><br />If you told us heading into the earnings print that Zillow would have added more than 4,000 premier agent subscribers in the third quarter, we almost certainly would have expected Zillow shares to trade higher. Obviously that has not happened and the stock traded off sharply after hours, largely in response to weakness in display ad revenues and disappointing 4Q12 guidance. As long time followers of PAA Research know, we’re not the type of firm that simply espouses the usual “buy the dip” mantra. We view any meaningful reaction in a stock as cause for serious reevaluation of our investment thesis. In our view the circumstances that facilitated the sharp sell-off after hours are as follows:<br /><br /><b>Zillow completed a secondary offering in early September, including the issuance of roughly 4.0MM primary shares.</b> Growth companies are expected to significantly exceed consensus forecasts following the issuance of stock. Zillow beat numbers handily, but guided lower for 4Q12.<br /><br /><b>Insiders have continued to sell shares.</b> To be noted, insiders still own more than 30% of the company and the percentage of shares sold has been small, but no one likes looking at form 4 filings every week.<br /><br /><b>Citron Research issued a “short report” on the company.</b> As a firm that prides itself on short idea generation, we do not take these types of reports lightly. In general we found the report lacking on a number of fronts. For now it appears they’ve been fortunate to be at the “right church and in the wrong pew” as far as their short thesis is concerned. Zillow crushed our estimates for premier agent growth and witnessed solid improvements in ARPU, both of which contradict the principal elements of Citron’s short thesis from what we can see.<br /><br /><b>Guidance was disappointing and management did a poor job of communicating some of the factors that contributed to the perplexing outlook.</b> Two factors largely contributed to the relatively soft topline guidance: slowing in display ad revenue growth as a result of change in Zillow’s advertising relationship with foreclosure.com and increased transaction and integration costs as a result of two small acquisitions Zillow will complete this quarter. We estimate those two items will reduce Zillow’s EBITDA by more than $2.0 million in 4Q12. Management should have explained these two issues up front rather than having analysts try to “ferret out” their impact.<br /><br /><b>The question remains: What elements of our thesis have changed here?</b> In the case of Zillow, we continue to be encouraged by robust consumer engagement and increased traction with residential real estate agents. Display revenues were soft in the quarter and are expected to be down sequentially in 4Q12, but that’s not really a principal part of investment thesis on Zillow. The company continues to add tools for residential real estate agents, mortgage brokers/underwriters, and property managers that will increase engagement and customer lifetime value. At the same time, the vibrancy of Zillow’s property database increases with each passing month, which continues to drive higher consumer traffic and engagement. Zillow has established clear mobile leadership and all signs point to the company becoming a preferred marketing partner for agents, mortgage issuers, and other participants in the real estate value chain while establishing itself as the defacto residential real estate search engine for consumers. Zillow management appears focused on building the company for the long haul, which will come at the expense of near term earnings in some cases. They are in short, attempting to build an empire.<br /><br />In the context of our estimates and the enormous total addressable markets in which the company operates, we think Zillow shares are attractively valued. We anticipate the stock could trade to 35-40x our FY14 EPS estimate within the next 12-months as investors gain greater understanding of the transformational role Zillow can play in the residential real estate market.<u> On a much longer term basis, we anticipate Zillow could generate $1 billion in revenues with EBITDA margins in excess of 40%, which suggests upside in the stock could be far greater than our $50 near term objective.</u><br /><br /><span style="color: red;"><span style="background-color: white;">Notablecalls:</span></span> The PAA Research piece goes into much more detail (8 pages worth) explaining why the -20% decline in Zillow stock in after hours trading was way overdone. Certainly worth a read, especially if one is short the name. <br /><br />The co added 4,000 subs which is almost 2x the consensus expectation. Also, the Q4 EBITDA guide miss can be explained by seasonality and the loss of foreclosure.com ad revenues as Zillow launched their own competing service.<br /><br />Another thing to consider this morning is the fact there are no analyst downgrades in the name. Targets and estimates get lowered but that's about it. Canaccord lowers their target to $45/share (down from $50) noting core business continues to be very strong and is improving etc.<br /><br />One more thing, you may want to put on your tin foil hat for this: The stocks' 20% decline happened right after the PR where the Q4 guidance miss was disclosed. It appears some players were in a hurry to sell or <u>push</u> the stock down. Yet, during the call the selling subsided as the management started explaining the nature of the guide miss. <br /><br />So, if one combines all this- the PAA defense, lack of analyst downgrades and the after market trading dynamics, a case for a bounce can be made. Some of the shorts may want to get out here and there may not be enough sellers around. After all, the short interest in the name (vs. float) is gigantic. Everyone and their mother is already short Zillow.<br /><b><br />If or when this reverses, I would not be surprised to see $30+ levels in the name today.</b> Most certainly a controversial name so adjust your risk accordingly. Use a scale-in approach if possible.</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com3tag:blogger.com,1999:blog-29297569.post-46194923163071933052012-11-01T08:12:00.000-04:002012-11-01T08:12:09.128-04:00Netflix (NASDAQ:NFLX): Icahn = Sale? Not so fast..<div class="separator" style="clear: both; text-align: justify;">
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So what to make of Carl Icahn's involvement in <b>Netflix (NASDAQ:NFLX)</b>? Is he going to push for a sale/takeover of the company or does the billionaire investor have a more cunning plan in mind?<br /><br />Here's what the analysts think:<br /><br />- <b>Oppenheimer downgrades Netflix to Perform from Outperform</b> noting that while they continue to believe the co has a strong competitive position, AMZN's future behavior toward subscription video is not predictable and will limit the stock's valuation to 13x US earnings.<br /><br />Oppenheimer also believes CEO Hastings is a key driver of the long-term success of NFLX, and they do not see him "working" for another company. As such, they think this limits the potential price another company would pay for NFLX.<br /><br /><b>- Barclays says they believe the perceived strategic value of Netflix is not related to growth or profitability</b>; it’s the value the service has to draw consumers into an ecosystem, similar to Amazon’s Prime Instant Video offering or Apple’s iTunes—loss leading or marginally profitable businesses that promote growth for core platforms like e-Commerce and premium hardware sales. <u>However, the firm is skeptical that a buyer would find more value in purchasing Netflix than building a content offering organically.</u><br /><br /><b>- Janney's Tony Wible notes Icahn's disclosure of a 10% stake in NFLX has generated a new round of optimism around the name.</b> His position and two more recent new long term holders essentially reduces the float by 33%; however, his entrance does not assure a turnaround and could disrupt growth if he were to challenge management's strategy as he did with Blockbuster. In a best case and least disruptive scenario he could push shareholders to embrace a sale of the company. His first press comments suggest he may be angling for a sale, although he notes he has no definitive plans, but his reference to US cash flows could also lead one to believe he sees international as a drag.<br /><br /><b>Strategy Trade-offs -</b> Icahn has typically sought to create value by targeting mismanagement and cost. If that is his angle and he is not pushing for a sale, Wible suspects he would target cutbacks on international. However, NFLX needs international to sustain growth, as the US shows early signs of maturity. The firm maintains that NFLX must hit certain sub milestones to fund its future content obligations (e.g. NFLX is obligated to pay for content in international markets regardless of its initial sub base). It cannot afford to lose sub momentum. Further, NFLX has not demonstrated that it can grow subs without a somewhat commensurate increase in cost. In fact, this past quarter saw a decline in incremental US streaming margin despite some cost controls.<br /><br />Wible maintains his Neutral rating and $48/share fair value estimate on NFLX.<br /><br /><span style="color: red;">Notablecalls:</span> So is Icahn's involvement setting Netflix up as a takeover target for the likes of Amazon.com, Microsoft or the movie studios? Possibly. Janney's comments regarding the reduced float are very intriguing as well. <br /><br /><b>In the very short term however the risk/reward appears to be tilting to the downside. People are likely to use the recent squeeze to take profits, I suspect. Levels around $70-$75 look prudent in the near term.</b><br /><br />Rememeber that at $80/share Ichan is already up 30% on his Netflix position.</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com0tag:blogger.com,1999:blog-29297569.post-60470524532669823062012-10-19T07:01:00.003-04:002012-10-19T07:01:41.161-04:00Chipotle (NYSE:CMG): 2013 SS guide - putting it into perspective<div class="separator" style="clear: both; text-align: center;">
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While everyone is freaked out by <b>Chipotle's (NYSE:CMG)</b> 2013 comps guidance, Baird's David Tarantino is about the only analyst out there that puts it into perspective:<br /> <br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYkk22o95LCCBjOVPP4vYU9sDA5bdqDUfT0QtG3a9RyitCnMhUS-5C9rg3Jhj1wn7wcWeHE14GiUlcgzaon6smhqsVXyKrNtrN9c-l4OZFI9e1iUMtk3ENDO62PYL52DafXp8-/s1600/CMG_guidance_historical_Baird.png" style="margin-left: 1em; margin-right: 1em;"> <img border="0" height="127" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYkk22o95LCCBjOVPP4vYU9sDA5bdqDUfT0QtG3a9RyitCnMhUS-5C9rg3Jhj1wn7wcWeHE14GiUlcgzaon6smhqsVXyKrNtrN9c-l4OZFI9e1iUMtk3ENDO62PYL52DafXp8-/s400/CMG_guidance_historical_Baird.png" width="400" /></a><br /> <br /><span style="color: red;">Notablecalls: </span>Not advocating a long here but thought it's worthwhile to highlight this. Looks like CMG has always guided conservatively and then beaten the guide.notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com2tag:blogger.com,1999:blog-29297569.post-1783010886240953092012-10-09T07:18:00.000-04:002012-10-09T07:18:27.820-04:00 Netflix (NASDAQ:NFLX): Taking the money and running; see risk to streaming adds - Merrill<div class="separator" style="clear: both; text-align: justify;">
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Merrill Lynch/BofA is downgrading<b> Netflix (NASDAQ:NFLX)</b> to Underperform from Buy this morning.<br /><br />- With the stock up 31% in past two weeks, risks outweigh reward heading into Q3.<br /><br />Since their upgrade on August 14th, several things have changed that make the firm unwilling to chase this stock after a 31% upward move in the last two weeks, including: 1) Amazon has continued its aggressive content acquisition, buying the Epix content as soon as it came off exclusivity with Netflix thus taking away the most valuable differential for marketing purposes (Epix has the closest thing either company has to recent Hollywood blockbuster content); 2) less comfort in Netflix’s ability to meet even the Street’s relatively low expectations of 6mn net additions to it domestic streaming business; and 3) less acquisition value support at these levels – Amazon is likely content to wait until Netflix is ex-growth in the US and thus cheaper before it considers an acquisition at >$4.09bn (current market capitalization plus some acquisition premium). <u>This quarter reminds them a lot of last quarter, with heavy short covering driving the stock up post quarter end on no or limited news; a set-up the firm doesn't like to see in any hyper-volatile stock like Netflix.</u><br /><br /><b>Will it be 7mn, 6mn or 5mn net US streaming ads?</b><br />Early this year, Netflix put out a “soft” guidance target of 7mn net sub additions to its domestic streaming business. From their conversations, as well as Street estimates, it is clear that few if any believed this number from the get go and fewer believe it now. Merrill doesn't think the company needs to guide to 7mn net adds for the year (3.5mn in Q4 assuming Q3 is at 1.4mn, the mid-point of guidance), but less than the ~6mn that the Street is modeling could hurt the stock. They see net additions significantly below estimates as the biggest risk to the stock due to: 1) signals Netflix has reached the second inflection point on its penetration curve and 2) domestic streaming subs will plateau sooner than expected, pressuring FY13 ests (they are currently modeling 33mn domestic streaming FY13 subs).<span style="background-color: red;"><span style="color: white;"><br /><br /></span></span><span style="color: red;">Notablecalls: </span>NFLX is up 17 pts since last Wednesday after the wonderful positive call from Citi (see below) and the relatively ill-timed upgrade from Morgan Stanley yesterday. As Merrill notes, this does remind a lot of last quarter, which ended in a rather painful 20 pt drop in stock price. <br /><br />In my humble opinion, yesterday's move can solely be attributed to short squeeze as fast money traders attempted to fade the MSCO upgrade. I also suspect many of them ended up covering their shorts by end of day as the stock failed to cave.<br /><br />These trading dynamics leave NFLX vulnerable to the downside today on the Merrill downgrade.<br /><b><br />I'm thinking below $70 level today.</b></div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com1tag:blogger.com,1999:blog-29297569.post-80904992365850678842012-10-03T08:30:00.000-04:002012-10-03T08:30:20.814-04:00Netflix (NASDAQ:NFLX): It’s our “Screaming” Buy, Citi says.<div class="separator" style="clear: both; text-align: justify;">
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Citigroup is out positive on<b> Netflix (NASDAQ:NFLX)</b> after their survey revealed surprisingly stable and improving customer satisfaction. <br /><br />- Firm reiterates their Buy rating and $120 target.<br /><br /><b>Netflix remains one of the most controversial stocks they cover, Citi notes. It’s their “Screaming” Buy --they say “Buy,” people Scream</b>. Risks here remain significant and include: a) Substantial Content Acquisition Requirements; b) Significant Competition; and c) Significant Uncertainty Re: NFLX’s International Investments. But they will stick with their Buy – highlighting what the firm views as a highly reasonable valuation, a generally positive execution track record, and the still early market opportunity for Internet Video Streaming. Three Updates:<br /><br /><b>1. Latest Proprietary Consumer Survey Suggests Satisfaction Inflection Point —</b> Citi very recently re-ran their consumer survey (approx 3,800 U.S. Internet users, incl. 1,200+ current & 700 past NFLX subs). Key Takes: 1)<u> Overall customer satisfaction with Netflix has begun to improve for the first time since last Summer’s "Apocaflix" </u>– 48% of current NFLX subs are Very or Extremely Satisfied vs. 44% to 45% levels observed in Q1 & Q2; 2) In terms of Online Video destinations, Netflix’s competitive position continues to rise – the % of respondents listing Netflix as a top destination has increased from 25% in Q2:11 to 30% in Q1:12 to 35% today – although YouTube and Amazon are also showing gains; 3)<u> Churn propensity appears to have improved YTD – the % “Not At All Likely To Churn” has reached a YTD record high of 57%; and perhaps most surprisingly…4) The perceived Streaming content selection appears to have improved – 37% believe that Streaming content availability has improved over the last 12 months vs. only 16% who believe it has worsened</u>.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlwS7wcaaK_hNBhh3ImjsCkDXT-N7cPdaierOk9agvHr95HgOsSLALCnGpn_EKswFVNbpG2gjE0UdyRoY2lp0rJm62egbR4njvn0c5Kj58mJ7Mnf4W645rzby263eR1EvvYs5H/s1600/NFLX_Citi_survey_Sept12.png" style="margin-left: 1em; margin-right: 1em;"> <img border="0" height="255" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlwS7wcaaK_hNBhh3ImjsCkDXT-N7cPdaierOk9agvHr95HgOsSLALCnGpn_EKswFVNbpG2gjE0UdyRoY2lp0rJm62egbR4njvn0c5Kj58mJ7Mnf4W645rzby263eR1EvvYs5H/s400/NFLX_Citi_survey_Sept12.png" width="400" /></a><br /><br /><b>2. Relatively Neutral Q3 Traffic Trends To Netflix.com —</b> Per comScore, Netflix’s U.S. Website visitors have declined 3% Y/Y in Jul & Aug, or a less worse trend vs. Q2’s 7% decline. And, 12.4MM unique visitors visited Netflix via Smartphones in Jul & Aug. That’s 43% Mobile traffic penetration. And a bit of a reminder that as a subscription service, NFLX benefits from Mobile usage growth – better consumer value proposition with no drag on monetization.<br /><br /><b>3. The Valuation Case – </b>They continue to see NFLX generating almost $5.50 in U.S. EPS in 2013. That means one can buy NFLX U.S. at 10X P/E, with a free call option on NFLX International. That’s highly reasonable, in Citi's opinion.<br /><br /><span style="color: red;">Notablecalls:</span> As many of you recall NFLX was a $200 stock when last summer's Apocaflix began. Not saying the decline was solely due to Qwikster etc. but with subs starting to accept the reduced level of content offered by the company, the extreme negative sentiment toward NFLX stock may start to fade. <br /><br />If churn goes down -> net adds go up. And that's what people are looking for. That's material new info that may actually show up next time NFLX reports.<br /><br />There is always the issue with international expansion but if the U.S. ops can carry the weight while international moves toward profitability, NFLX may indeed become investable again. NFLX seems at least on track to add 6MM Domestic Streaming subs in ’12 off a 22MM base (that’s hard-to-match growth & size);<br /><br />This call has a fair chance to generate some meaningful buy/cover interest in the stock n-t. <br /><b><br />I'm thinking toward $60/share today. </b><br /><br />Screaming Buy.. eh. Nice.</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com5tag:blogger.com,1999:blog-29297569.post-54473440555463498542012-09-26T09:30:00.001-04:002012-09-26T09:30:08.577-04:00GT Advanced Tech (NASDAQ:GTAT) : Sapphire cover glass opportunity not there; Sell - Canaccord<div class="separator" style="clear: both; text-align: justify;">
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Canaccord's Jonathan Dorsheimer downgrade<b>s GT Advanced Tech (NASDAQ:GTAT) </b>this morning to Hold from Buy while lowering their price target to $6 (prev. $9).<br /><br />- According to him, Asian meeting don't support the cover glass opportunity touted by management and Wall Street.<br /><br />Despite the recent optimism and announcements, after speaking with many companies within the sapphire supply chain Dorsheimer concludes that the sapphire cover glass opportunity is not a near-term possibility using GTAT’s ASF method.<br /><br /><b>He agrees that sapphire covers can come at a premium, but the $10 to $20 price point that GT talks about are possibly consistent for aftermarket but remain 2-4x the target levels for adoption of an iPhone. </b>Dorsheimer also agrees that by increasing charge size, changing things within the sapphire recipe like cycle time, perhaps quality, too, can reduce the cost of the crystal growth. However, the biggest roadblock that we have encountered from GT’s customers, its competitors and other equipment vendors is not necessarily the crystal growth, but the post processing.<br /><br />Supplier consensus is so far that sapphire windows machined and polished from bulk sapphire boules range from the $25 to $40 for a 4” window – most of it coming from processing – well above the required range.<br /><br />Asthey have previously indicated, this is an opportunity about which handset makers are seriously inquiring. However, Canaccord's meetings suggest this is Apple-driven and Samsung is heading towards more of a plastic-based OLED approach.<br /><br /><b>Canaccord says they learned that Apple has been investigating this opportunity since 2006, and Apple has signed NDA’s with many sapphire companies since. </b>So far nobody has been able to resolve the cost/performance issues. <u>They believe that the “signed agreements” GT has spoken about are of this nature and not purchase orders.</u><br /><br />They continue to believe that the existence of active mobile sapphire opportunities (camera lens, SOS) and rumors of cover glass de-risks the company’s existing backlog, but they do not see any new large NT orders given what they conclude is a limited commercial opportunity.<br /><br /><span style="color: red;">Notablecalls:</span> This is a significant call as Canaccord was first to upgrade GTAT on August 17, a day after management touted the sapphire cover glass oppy at Canaccords' growth conference. Other analysts followed and as you can see from the increased trading volume the comments didn't fall on deaf ears.<br /><br />Now it appears lots of fast money types are buried in the name after the co so conveniently issued a convert and now Canaccord comes in saying all this sapphire hype was for..pretty much nothing. No Apple deals on the horizon, not by a long-shot.<br /><br />Goldman murdered<b> Veeco (NASDAQ:VECO)</b> with their downgrade two days ago saying LED capital equipment market isn't going to recover much in '13-'14. Ugh.<br /><br /><b>I think this downgrade will take GTAT closer to $5/share level today.</b> Below $5 in a week?</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com5tag:blogger.com,1999:blog-29297569.post-80024076276863411112012-09-26T09:30:00.000-04:002012-09-26T09:30:38.921-04:00Sandisk Corp (NASDAQ:SNDK): Time to sell - JMP<div class="separator" style="clear: both; text-align: justify;">
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JMP Securities is making a somewhat out-of-consensus call this morning downgrading<b> Sandisk Corp (NASDAQ:SNDK)</b> to Market Perform from Outperform.<br />
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- Alex Gauna has been OP-rated in SNDK since 2009 when the stock was below $15.<br />
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JMP says they see near-term trading resistance ahead of 3Q12 results due to a combination of elevated expectations, recent sluggishness in NAND flash pricing improvements, computing and electronics market weakness, and iPhone 5 supply constraints.<br />
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<b>Shares of SNDK have risen ~45% from early June lows (SOX +10%) on improving NAND pricing trends and the correct anticipation of its inclusion in the new iPhone 5.</b> Firm believes these favorable developments are now fully reflected in the stock. Although fundamentals are now moving in the right direction for SanDisk and the NAND flash industry as a whole, weakness in computing trends and supply constraints are leading JMP to trim their previously more optimistic 2012 non-GAAP EPS estimate from $2.10 to $2.00 (Street $1.78). They are also revising down their FY13 non-GAAP EPS estimate from $4.00 to $3.50 (Street $3.07) to reflect lower intermediate-term gross margins that may stem from weaker end markets, Samsung looking to fill excess capacity, and Apple (MP) is coming to represent a greater percentage of sales. They view current SNDK trading levels of 13x PE/ FY13 as appropriate relative to our coverage universe average in the low- to mid-teens.<br />
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<b>JMP sees near-term trading resistance ahead of 3Q12 results due to a combination of elevated expectations, recent slowing in NAND pricing improvements, computing end market weakness, and iPhone 5 supply constraints. </b><u>Although inclusion in the iPhone 5 puts SanDisk in a good position to meet JMP's 3Q12 revenue growth assumption of +21% q/q (Street +17% q/q), they believe this is in the stock and that any wrinkle could weigh heavily on valuation as recently occurred when iPhone component peer Skyworks (MO, $40 PT, PE based) positively pre-announced, but not by enough.</u><br />
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It is likely premature to get overly upbeat on more rational NAND industry supply additions based on Toshiba's mid-summer announcement of a 30% production cut and a recent report out of Korea speculating that Samsung may reduce capital expenditures by up to 50% in 2013<b>. </b>In JPM's view, there is as much to worry over as cheer from the Toshiba moves represent a magnitude of downward adjustment not seen since the great recession. Also, whatever capex decisions Samsung ultimately makes for 2013, it will first have to absorb an almost 50% increase in capex (>$13B) slated for 2012, in the face of losing the iPhone 5 as a demand driver.<br />
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<b>Reducing 2013 gross margin assumptions due to the following: </b>1) to account for recent weakness in computing market trends and our diminished view of Windows 8 and Ultrabooks as near- to intermediate-term SSD demand catalysts; 2) to bake in the potential of Samsung pricing pressures as it absorbs excess capacity; and 3) to reflect their expectation that Apple sales will drive lower than average gross margins due to the inclusion of its own custom NAND controller architecture.,<br />
<span style="color: red;"><br />Notablecalls:</span> I love it when an analyst changes his/her long-held view, especially when he/she has been so right as Gauna has been in SNDK.<br />
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He may be right this time around as well. Avian Securities pinged me with the following Friday afternoon:<br />
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<i>SNDK feels heavy again today and I want point out our SNDK commentary from us yesterday.... The stock has had a great run as some competitors have discussed “improving fundamentals”. Other than stable pricing I’m not sure what they are seeing as improving other than more talk from producers saying they’ll cut CapEx (heard that before). This is the busiest time of year and there is plenty of supply. I think it’s time to be looking on the sell side of the name...might be a little early but upper end here and here is yesterdays comments.<br /><br />9/20 NAND - SNDK, Toshiba, Samsung - We are not nearly as excited at NAND as street is right now. Yes iPhone 5 build and other tablet/phone builds have taken up some supply but without any significant dislocation. SSD demand is not where it needs to be this time of year. SD cards / USB drive sales are still awful. While smartphone builds are good, device loading isn’t growing. This should be seasonally strongest time for NAND consumption and at best we have seen flat pricing after a 6 month freefall. Also Chinese New Year upcoming and our contacts point out that this year only represents 4 days for build vs. 7 days last year. Memory users have front loaded purchases. We acknowledge commentary from memory makers around “restraint” regarding capacity additions but we see little in a positive catalysts now until next summer. Pricing is stable right now but dealer and broker feedback points to plenty of availability and short lead times as evidence of surplus supply. We’d be wary of any rally here.<br /></i><br />
Avian knows the space well and has made some terrific out-of-consensus calls in the past. So now you know what the smart money is thinking.<br />
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I expect SNDK to get hit today and in the n-t as these cautious views spread. Gauna plays the SWKS card so well- the stock got hit -25% merely because they didn't produce blow-out numbers. Could easily happen to SNDK. <br />
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<b>Below $42/share today?</b> Below $40 in a week?</div>
notablecallshttp://www.blogger.com/profile/11353264365980606102noreply@blogger.com6