“The Trader” column highlights Hhgregg (HGG), whose shares have already tumbled 29% this yr. But the co may not be guilty of anything worse than bad timing. For a start, Hhgregg targets a higher-end clientele that appreciates same-day delivery, installation and some personal coddling. Sales and cash-flow growth have been healthy, and it even raised its forecast in Nov. Exports remain one part of the US economy that is still thriving, and fears about the demise of Hhgregg's rust-belt client base may be overblown. "The Midwest didn't participate in the recent economic boom in equal proportion, and I don't think it'll suffer in a recession to the same extent," says Jeff Lick, of Galt Investments. Analysts expect the co to earn $1 a share in F08, guidance Hhgregg recently affirmed. The street, clearly, is worried about ests for it to earn $1.24 for F09. Also, stock selling could pick up after Jan. 15, after its post-IPO lock-up period expires. But longer-term investors buying after that stand to pick up shares of a well-run, growing co at a discount. At about 9.80, shares trade at 9.8x ‘08 profits. Compared with Best Buy, Hhgregg boasts better growth and higher gross margins, Lick says. Hhgregg should rebound heftily if the consumer slowdown proves shallow. But even in a contraction, Lick thinks it is unlikely that EPS next yr will fall below $1.05.
Barron’s out saying that Foster Wheeler’s (FWLT) surge is overdone and suggests investors taking money off the table. Success has made the shares start to look pricey. They trade at 21x estd ‘08 earnings. Also, this is a cyclical co. Earnings multiples are supposed to contract as profits rise in anticipation of the cycle's downside. But that doesn't appear to be happening. If the cycle runs longer than expected, such exuberance will have been justified. If not, the stock could quickly correct. Foster doesn't give earnings guidance, but has said the engineering and construction business should enjoy organic growth, potentially bolstered by an acquisition in 2008. The co's business backlog may be signaling that the cycle is in the late innings. Investors look to the backlog, though lumpy, to predict future earnings growth. The backlog grew 98% and 47%, respectively, in the 3rd and 4th quarters of '06, and slowed to 25%, 11% and 3% in the 1st, 2nd and 3rd quarters of '07, notes John Rogers, an analyst at DA Davidson.
Barron’s Roundtable members like MDVN and WYN. Fund manager top holdings include JNJ, TV, GSK, IBB, MER and ADM.
Terex (TEX), now around 54, could hit 80 in a yr. If it becomes a takeover candidate, a winning bid might reach $100 a share. "Terex is absurdly cheap vs its peers," says Robert Marcin, of Defiance Asset Mgmt.
At 17.25, First Horizon (FHN) is selling for just under book value owing to mortgage woes. Bulls think the attractive state franchise is worth at least twice that. "I think with the recent announcement [about write-offs], we've finally hit bottom in this stock and it should bounce back," says Jerome Dodson, of Parnassus Investments.
Sunday, January 13, 2008
Barron's Summary (FWLT run overdone; HGG, TEX, FHN)
Friday, January 11, 2008
RUMOR MILL: XMSR/SIRI deal
Hearing XMSR/SIRI deal to be approved by the DOJ this evening at 5pm est
Notablecalls: Whew, I don't think this is credible stuff. Why?
1) Mel Karmazin said he didn't see the deal getting approved in January at a conf. That's when the stock made a low.
2) Do you really think stuff like this gets decided at 5pm on a Friday?
NC
Notablecalls: Whew, I don't think this is credible stuff. Why?
1) Mel Karmazin said he didn't see the deal getting approved in January at a conf. That's when the stock made a low.
2) Do you really think stuff like this gets decided at 5pm on a Friday?
NC
Nokia remains besieged by second-tier brands in Europe - Avian Securities
Tero Kuittinen from Avian Securities has some interesting comments on Nokia (NYSE:NOK):
Talks with operator and retail sources at this week’s CES conference indicate that Samsung, LG and Sony Ericsson continue their European market share gain surges. It is this combination of upgrade market share erosion in Nokia’s European heartland together with softening consumer spending in several markets that in firm's view has been underestimated by investors. Avian thinks Nokia’s share decline has been warranted and will continue later on. They see Ericsson as a more compelling rebound story in 2008 – partly because of the Sony Ericsson strength, partly because a severe network unit margin dip has been priced in.
Avian notes they don’t doubt that Nokia can do 43-44 euro cents in 4Q 2008, edging above the current EPS consensus. It’s the 1Q 2008 guidance that concerns them. Nokia has a tendency to avoid issuing mid-quarter warnings by issuing conservative guidance when it perceives a possible trend change. They think Nokia is currently evaluating the combination of its high-end market share erosion in Europe combined with possible overall softening of upgrade demand in Europe and Asia that may have emerged in December. How that shapes its 1Q 2008 guidance is the key issue here.
This morning’s RFMD warning is among the first signs of wobbles in the Asian telecom market. RFMD cut its F3Q earnings forecast by two cents from the former 7-9 cent range, citing both Asian handset customers and infrastructure market softness. Former RFMD warnings have been pinned on Motorola - this one seems wider in scope.
Thursday’s big phone announcement by Samsung highlighted the leadership position the Korean brands have taken in the European/Asian high-end camera phone market. The new Samsung F490 boasts a 5 megapixel camera and an expansive, 240x432 pixel display. Yet it weighs just 102 grams and is stunningly slim at 12 mm. The trade-off here is the lack of an operating system and GPS support. But as LG KU990 has demonstrated in the past month in Europe, a slim 5 megapixel camera phone with a huge display is exactly what many upgrade buyers want – even if the software support is meager.
Nokia has no slim or big-display high-end camera phones in the market. The company dominates the “Hummer” niche of big phones with GPS, 5 megapixel camera and HSDPA support, but is falling behind Samsung, LG and Sony Ericsson in the miniaturization race. The brand new Nokia N-82 is 5 mm thicker than the new Samsung. A size gap of this magnitude matters in the 5 megapixel camera phone category. Nimble Samsung is bringing the F490 out in Europe already in February. Nokia is likely gearing up for several announcements in February, but Avian does not expect it to announce a major new platform for sooner than 3Q 2008.
The European upgrade market share of Nokia is likely sliding, the US market share is not recovering and the Asian outlook hinges on the Chinese retail frenzy continuing unchecked. Nokia has been widely defended in recent days as a “recession proof” name. The firm could not disagree more. The company has sterling management and clearly superior manufacturing and distribution advantages. But they think Nokia has clearly missed the thin phone trend in the important 5 megapixel camera phone niche and is decisively behind Samsung and LG in the large-display race. The CES interviews they conducted support their theory that the new Nokia high-end platform featuring large touch displays is unlikely to arrive until September 2008 at the earliest. This gives Samsung and LG plenty of scope to deepen their already strong large-display portfolios. The strong CES launches of Sony Ericsson combined with the ongoing momentum of its 4Q models indicate that the powerful Walkman range will probably continue eclipsing Nokia’s bigger and heavier music models in Europe during the first half of 2008.
Notablecalls: While I usually don't post calls in their entirety, I'm going to make an exception here. For the past weeks Tero has been the lone wolf in an otherwise Nokia-optimistic world. A day doesn't go by without some positive chatter from firms covering the name. Yet, Tero's views differ from the crowd. He's looking at Europe while others are focused on US. Yet, Europe is Nokia's turf.
I continue to be cautious on Nokia here.
Thanks, Tero.
Talks with operator and retail sources at this week’s CES conference indicate that Samsung, LG and Sony Ericsson continue their European market share gain surges. It is this combination of upgrade market share erosion in Nokia’s European heartland together with softening consumer spending in several markets that in firm's view has been underestimated by investors. Avian thinks Nokia’s share decline has been warranted and will continue later on. They see Ericsson as a more compelling rebound story in 2008 – partly because of the Sony Ericsson strength, partly because a severe network unit margin dip has been priced in.
Avian notes they don’t doubt that Nokia can do 43-44 euro cents in 4Q 2008, edging above the current EPS consensus. It’s the 1Q 2008 guidance that concerns them. Nokia has a tendency to avoid issuing mid-quarter warnings by issuing conservative guidance when it perceives a possible trend change. They think Nokia is currently evaluating the combination of its high-end market share erosion in Europe combined with possible overall softening of upgrade demand in Europe and Asia that may have emerged in December. How that shapes its 1Q 2008 guidance is the key issue here.
This morning’s RFMD warning is among the first signs of wobbles in the Asian telecom market. RFMD cut its F3Q earnings forecast by two cents from the former 7-9 cent range, citing both Asian handset customers and infrastructure market softness. Former RFMD warnings have been pinned on Motorola - this one seems wider in scope.
Thursday’s big phone announcement by Samsung highlighted the leadership position the Korean brands have taken in the European/Asian high-end camera phone market. The new Samsung F490 boasts a 5 megapixel camera and an expansive, 240x432 pixel display. Yet it weighs just 102 grams and is stunningly slim at 12 mm. The trade-off here is the lack of an operating system and GPS support. But as LG KU990 has demonstrated in the past month in Europe, a slim 5 megapixel camera phone with a huge display is exactly what many upgrade buyers want – even if the software support is meager.
Nokia has no slim or big-display high-end camera phones in the market. The company dominates the “Hummer” niche of big phones with GPS, 5 megapixel camera and HSDPA support, but is falling behind Samsung, LG and Sony Ericsson in the miniaturization race. The brand new Nokia N-82 is 5 mm thicker than the new Samsung. A size gap of this magnitude matters in the 5 megapixel camera phone category. Nimble Samsung is bringing the F490 out in Europe already in February. Nokia is likely gearing up for several announcements in February, but Avian does not expect it to announce a major new platform for sooner than 3Q 2008.
The European upgrade market share of Nokia is likely sliding, the US market share is not recovering and the Asian outlook hinges on the Chinese retail frenzy continuing unchecked. Nokia has been widely defended in recent days as a “recession proof” name. The firm could not disagree more. The company has sterling management and clearly superior manufacturing and distribution advantages. But they think Nokia has clearly missed the thin phone trend in the important 5 megapixel camera phone niche and is decisively behind Samsung and LG in the large-display race. The CES interviews they conducted support their theory that the new Nokia high-end platform featuring large touch displays is unlikely to arrive until September 2008 at the earliest. This gives Samsung and LG plenty of scope to deepen their already strong large-display portfolios. The strong CES launches of Sony Ericsson combined with the ongoing momentum of its 4Q models indicate that the powerful Walkman range will probably continue eclipsing Nokia’s bigger and heavier music models in Europe during the first half of 2008.
Notablecalls: While I usually don't post calls in their entirety, I'm going to make an exception here. For the past weeks Tero has been the lone wolf in an otherwise Nokia-optimistic world. A day doesn't go by without some positive chatter from firms covering the name. Yet, Tero's views differ from the crowd. He's looking at Europe while others are focused on US. Yet, Europe is Nokia's turf.
I continue to be cautious on Nokia here.
Thanks, Tero.
Hess (NYSE:HES): Momentum name gets love from Deutsche
In conjunction with raising their long term oil price assumption (2010 onwards real) to $75 from $65/bbl, Deutsche Bank is offering positive comments for Hess (NYSE:HES). The majority of the effect is to net asset value (NAV) valuations.
According to DB, the mistake the market has made in the case of Hess is to look at the $30 move in the stock price in December and attribute it entirely to their exposure to the Petrobras Tupi. Of course, this was a catalyst, but in reality they believe the bigger issue for Hess has been a snap reduction in their management discount, combining with an NAV driven higher by both oil prices and exploration optionality. Why the reduction in management discount? Because there were two world class oil discoveries last year, Tupi in Brazil, and Mahogany in Ghana. On both occasions, Hess has had adjacent, deliberately obtained, acreage.
The net effect is that if once is lucky, but twice is skill, then discounting Hess's management is no longer appropriate. And at $75 long term, the firm gets a NAV of $100 per share, with no value for Ghana or Tupi, which could add $40+ value..
Firm is raising their price tgt to $110.
Notablecalls: So, assuming $75 oil price, HES is currently worth $100 and that assumes no value for Ghana or Tupi project, leaving additional upside. I suspect this call is major enough to generate strong buy interest in this mo-mo name today.
According to DB, the mistake the market has made in the case of Hess is to look at the $30 move in the stock price in December and attribute it entirely to their exposure to the Petrobras Tupi. Of course, this was a catalyst, but in reality they believe the bigger issue for Hess has been a snap reduction in their management discount, combining with an NAV driven higher by both oil prices and exploration optionality. Why the reduction in management discount? Because there were two world class oil discoveries last year, Tupi in Brazil, and Mahogany in Ghana. On both occasions, Hess has had adjacent, deliberately obtained, acreage.
The net effect is that if once is lucky, but twice is skill, then discounting Hess's management is no longer appropriate. And at $75 long term, the firm gets a NAV of $100 per share, with no value for Ghana or Tupi, which could add $40+ value..
Firm is raising their price tgt to $110.
Notablecalls: So, assuming $75 oil price, HES is currently worth $100 and that assumes no value for Ghana or Tupi project, leaving additional upside. I suspect this call is major enough to generate strong buy interest in this mo-mo name today.
eBay (NASDAQ:EBAY): 4Q will be ahead of consensus estimates - Piper Jaffray
- Piper Jaffray is out positive on eBay (NASDAQ:EBAY) saying believe eBay's 4Q will be ahead of consensus estimates due to strength in listings, likely upside to PayPal estimates, and FX benefits. While increased promotional activity in Q4 will likely have a modest negative impact on the take rate or rev/listing, they believe the strength in listings, FX (Euro up 5.4% q/q), and PayPal upside will offset the lower take rate. Based on listings count and positive FX benefit, the firm believes we could see approximately 2% of revenue upside and $0.01 EPS upside to their estimates of $2.156B in revenue and $0.41 PF EPS, which are both at the high end of guidance ($2.1-$2.5B & $0.39-0.41) and consensus ($2.138B and $0.41).
Maintains Buy and $43 PT. Valuation looks attractive at 17.5x '08 PF EPS.
Notablecalls: I suspect these comments may create some eraly buy interest in EBAY.
Maintains Buy and $43 PT. Valuation looks attractive at 17.5x '08 PF EPS.
Notablecalls: I suspect these comments may create some eraly buy interest in EBAY.
Mastercard (NYSE:MA): Target lowered to $200 from $250 at Deutsche Bank
- Deutsche Bank is lowering their Mastercard (NYSE:MA) tgt to $200 from $250 following warning from American Express (NYSE:AXP). Firm says they are keeping their Buy rating on the stock as they believe the stock is still a safe haven for long-term oriented investors given tremendous pricing power, massive discretionary cost controls that should enable MA to achieve firm's Street-high EPS, and a strong balance sheet that MA should use to aggressively buy back stock.
Yet, even these considerations may not be enough to overcome what could likely be near-term multiple compression in the wake of AXP's warning, coupled with increasingly negative sentiment in the broader mkt. The higher uncertainty within this turbulent market means that investors will be unlikely to pay the same premium they paid just a few months ago. Firm's revised twelve-month price target (20x 2009 estimate) acknowledges that further multiple compression is possible. Other risks include negative court rulings, regulatory decrees, SEPA delays, and weaker travel trends.
Notablecalls: Well, what does this really mean? It should read something like: "Dear customers, as you are well aware, we have been touting MA as a Buy for quite some time and maybe the loudest when the stock was near its current $220 peak. We do hope you have made money on the long side but would now suggest you take some off the table as we think things will get somewhat ugly. We cannot back off our Buy rating just yet (due our Street high ests) but we are kind enough to let you know what we really think!"
Thanks for the honesty, Chris. Appreciate it.
I think MA will be 15-20 pts lower over the coming weeks. Adjust your risk accordingly. Expect to see bounces along the way, though.
MSCO is out defending MA this AM but they too aknowledge there is very little to be said here.
Yet, even these considerations may not be enough to overcome what could likely be near-term multiple compression in the wake of AXP's warning, coupled with increasingly negative sentiment in the broader mkt. The higher uncertainty within this turbulent market means that investors will be unlikely to pay the same premium they paid just a few months ago. Firm's revised twelve-month price target (20x 2009 estimate) acknowledges that further multiple compression is possible. Other risks include negative court rulings, regulatory decrees, SEPA delays, and weaker travel trends.
Notablecalls: Well, what does this really mean? It should read something like: "Dear customers, as you are well aware, we have been touting MA as a Buy for quite some time and maybe the loudest when the stock was near its current $220 peak. We do hope you have made money on the long side but would now suggest you take some off the table as we think things will get somewhat ugly. We cannot back off our Buy rating just yet (due our Street high ests) but we are kind enough to let you know what we really think!"
Thanks for the honesty, Chris. Appreciate it.
I think MA will be 15-20 pts lower over the coming weeks. Adjust your risk accordingly. Expect to see bounces along the way, though.
MSCO is out defending MA this AM but they too aknowledge there is very little to be said here.
Paperstand (BRKA, NRG, DYN, RAD)
The WSJ’s “Ahead of the Tape” column discusses Berkshire Hathaway (BRKA), whose shares have taken a beating in recent weeks. Reason: The co is heading into a soft mkt in one of its core businesses, reinsurance. How Mr. Buffett maneuvers could affect Berkshire's earnings in years to come. Berkshire, with its deep pockets and strong credit rating, can sell a lot of it. This is the time of year when many property-catastrophe reinsurance policies are renewed, and prices are weakening quickly. Prices fell 9%, on avg, for annual contracts renewed on Jan. 1, said Guy Carpenter, of Marsh & McLennan. Berkshire tends to retreat from the mkt when prices get soft, shifting into areas where it has pricing power. That explains Mr. Buffett's recent moves into bond insurance, a potentially lucrative niche amid recent bond-mkt turmoil. "Berkshire appears to be backing away" from reinsurance, Citigroup analyst Joshua Shanker wrote in a report. If true, that may affect Berkshire's ‘08 profit.
Barron’s Online highlights NRG Energy (NRG) and Dynegy (DYN), whose shares have fallen 16% and 34%, respectively, since touching highs in Oct. But US demand for electricity continues to rise steadily while the ability to produce more power is restricted. That should turn those low-voltage shares into power plays over the next few yrs. Dynegy and NRG have a strong presence in the tightest mkts in Texas, California and the Northeast. They look even more compelling based on their diversified electricity-plant portfolios, growth rates, strong mgmt teams and the reasonable value of their shares. Higher prices of natural gas that is used to produce electricity should bolster power rates and expand profits. Both co’s should also continue to use strong free cash flow to buy back shares. Eric Green, od PENN Capital Mgmt, says this is a buying opportunity b/c "we are going to have demand in electricity that increases every year, recession or not."
“Inside Scoop” section reprots that frmr Harrah’s Entertainment exec, Philip Satre bought $201K in Rite Aid (RAD) shares Tue, just 3 trading days after the stock tumbled 15% on disappointing sales figures. Satre acquired 96K shares. For Satre, who has been a Rite Aid director since ‘05, the transaction increased his direct holdings in the co by more than sevenfold. He now owns 108K shares directly, plus approximately 117K exercisable options.
Barron’s Online highlights NRG Energy (NRG) and Dynegy (DYN), whose shares have fallen 16% and 34%, respectively, since touching highs in Oct. But US demand for electricity continues to rise steadily while the ability to produce more power is restricted. That should turn those low-voltage shares into power plays over the next few yrs. Dynegy and NRG have a strong presence in the tightest mkts in Texas, California and the Northeast. They look even more compelling based on their diversified electricity-plant portfolios, growth rates, strong mgmt teams and the reasonable value of their shares. Higher prices of natural gas that is used to produce electricity should bolster power rates and expand profits. Both co’s should also continue to use strong free cash flow to buy back shares. Eric Green, od PENN Capital Mgmt, says this is a buying opportunity b/c "we are going to have demand in electricity that increases every year, recession or not."
“Inside Scoop” section reprots that frmr Harrah’s Entertainment exec, Philip Satre bought $201K in Rite Aid (RAD) shares Tue, just 3 trading days after the stock tumbled 15% on disappointing sales figures. Satre acquired 96K shares. For Satre, who has been a Rite Aid director since ‘05, the transaction increased his direct holdings in the co by more than sevenfold. He now owns 108K shares directly, plus approximately 117K exercisable options.
Thursday, January 10, 2008
Research in Motion (NASDAQ:RIMM): All fine at RIMM - JP Morgan
- JP Morgan is positive on Research in Motion (NASDAQ:RIMM) following investor meetings at RIMM's headquarters in Waterloo on January 9th.
The firm noes they detected nothing in the story that might justify the stock’s recent trade-off. RIMM is a company in growth mode. The co-CEOs separately commented on their sense that the smartphone market is growing faster than the company can grow into it.
A radio station in Canada reportedthat the 9000 device will be introduced in May. Management would not comment directly regarding this particular device, however, the discussions suggest 2008 will be another year of innovation.
The company continues to add new carrier channels (currently over 300). However, though press announcements are issued in the local markets, the company has given up on issuing US press releases, simply owing to the volume of activity.
JPM believes RIMM is having particular success with its UMA capabilities sold through T-Mobile. Regarding AT&T, RIMM believes their wireless business will not be affected by cyclicality; the valueadd for enterprise users is just too strong. We sense that management attention has turned to expanding RIMM’s presence in the European retail market, heading into 2008.
Reits Overweight as the RIMM growth story remains intact.
Notablecalls: I would watch RIMM today for a continued bounce. Also, check out Garmin (NASDAQ:GRMN) as it's upgraded at Morgan Stanley. Mother Morgan has been neg on GRMN for a while now. Firm is upping their rating to Equal Weight (from UW) saying they wouldn't sell the stock short here.
Also, JMP is out positive on GRMN, reiting Outperform and $140 tgt saying Q4 will be strong. But that's something we know already, don't we?
Anyway, watch'em both.
The firm noes they detected nothing in the story that might justify the stock’s recent trade-off. RIMM is a company in growth mode. The co-CEOs separately commented on their sense that the smartphone market is growing faster than the company can grow into it.
A radio station in Canada reportedthat the 9000 device will be introduced in May. Management would not comment directly regarding this particular device, however, the discussions suggest 2008 will be another year of innovation.
The company continues to add new carrier channels (currently over 300). However, though press announcements are issued in the local markets, the company has given up on issuing US press releases, simply owing to the volume of activity.
JPM believes RIMM is having particular success with its UMA capabilities sold through T-Mobile. Regarding AT&T, RIMM believes their wireless business will not be affected by cyclicality; the valueadd for enterprise users is just too strong. We sense that management attention has turned to expanding RIMM’s presence in the European retail market, heading into 2008.
Reits Overweight as the RIMM growth story remains intact.
Notablecalls: I would watch RIMM today for a continued bounce. Also, check out Garmin (NASDAQ:GRMN) as it's upgraded at Morgan Stanley. Mother Morgan has been neg on GRMN for a while now. Firm is upping their rating to Equal Weight (from UW) saying they wouldn't sell the stock short here.
Also, JMP is out positive on GRMN, reiting Outperform and $140 tgt saying Q4 will be strong. But that's something we know already, don't we?
Anyway, watch'em both.
Paperstand (C, MER, SLM, SNE, GT)
The WSJ reports that 2 of the biggest names on Wall St. are going hat in hand, again, to foreign investors. Citigroup (C) and Merrill Lynch (MER) are in discussions to get additional infusions of capital from investors, primarily foreign govts. Merrill is expected to get $3-4bn, much of it from a Middle Eastern govt investment fund. Citi could get as much as $10bn, likely all from foreign govts. Such large investments would be the latest sign big banks are undergoing a rapid recapitalization to stabilize their shaky financial foundations. Already, foreign govts have invested about $27bn in Merrill, Citi, UBS and Morgan Stanley. The new investments are sure to complicate the so-far successful efforts of Wall St. firms to keep these purchases below the Washington radar screen. Multiple investments from govt funds will get closer scrutiny from regulators for signs the funds could work together and exercise control. Any questions will lengthen the time regulators need to review the deals. And federal lawmakers, who've given the string of govt investments a pass, will take another look in this election year. "The goal is to get a [page] B6 story in the WSJ and have no one mention it," said a Washington lobbyist.
“Heard on the Street” column out saying that raising $30bn of debt in today's credit mkts isn't an easy task, but it is especially tough for student lender SLM (SLM). The co is seeking to raise that sum to refinance an existing loan while trying to restore its reputation with investors and as the profitability of student lending is declining. Sallie Mae said Mon that it had appointed Anthony P. Terracciano as Chmn. Mr. Terracciano has helped revive the fortunes of several stricken banks over the past 10ys, so his appointment may reassure prospective creditors. The loan that needs to be replaced is large, however, and doubts remain about Sallie Mae's future profitability, so credit mkts remain nervous about the lender. And the refinancing may be expensive. Sallie Mae's credit-default swaps have widened to 425bps from 300bps at the end of last year. That means the annual cost of protecting $10m of Sallie Mae bonds for 5ys now costs $425K vs $300K at the end of ‘07. "The key driver behind that increase is growing concern that, first, Sallie Mae won't be able to refinance this $30bn, and, second, that if they do refinance it, the cost of a new loan may be high," Richard Hoffman, of CreditSights, said.
Barron’s Online out saying that Sony’s (SNE) win with its Blu-ray format for HD DVD this wk could signal a turning point for the co. All this wk, consumer electronics firms have had perhaps their best shot to convince Street's bean counters they'll be on top in ‘08. As the CES has unfurled across hotel suites and conventions halls here, analysts are dazzled by the seemingly endless progress offered by wave upon wave of new gadgets. While it's best to be skeptical of that warm fuzzy feeling, it's hard to deny that one co, Sony, seems to be on something of a roll. On Fri, the co was given a late birthday present, when Time Warner's Warner Brothers Entertainment announced that it will be making all of its HD DVD releases in the Blu-ray format. The move could put Blu-ray over the top in its battle with Toshiba's HD DVD, and that could lead to a lucrative royalty stream for Sony. Analysts have an average price tgt of $69 for Sony.
“Inside Scoop” section reprots that TPG-Axon Capital Mgmt disclosed it owned 13.25m shares, or a 5.5% stake in Goodyear (GT). TPG-Axon Capital, led by former Goldman Sachs partner Dinakar Singh, had no holdings in Goodyear prior to the 3Q07. It is now Goodyear's 2nd-largest shareholder behind Eton Park Capital Mgmt, which reported owning 16.15m shares or a 7.7% stake in a Dec. "TPG-Axon Capital and Eton Park have both been buying aggressively in the last couple of mo’s and both firms are very value focused," says Ben Silverman, of InsiderScore.com. "Goodyear fits [the profile] these firms look for of strong financials and strong mgmt, and good cash-flow generation. Their cost reduction program is an appealing value-unlocking catalyst."
“Heard on the Street” column out saying that raising $30bn of debt in today's credit mkts isn't an easy task, but it is especially tough for student lender SLM (SLM). The co is seeking to raise that sum to refinance an existing loan while trying to restore its reputation with investors and as the profitability of student lending is declining. Sallie Mae said Mon that it had appointed Anthony P. Terracciano as Chmn. Mr. Terracciano has helped revive the fortunes of several stricken banks over the past 10ys, so his appointment may reassure prospective creditors. The loan that needs to be replaced is large, however, and doubts remain about Sallie Mae's future profitability, so credit mkts remain nervous about the lender. And the refinancing may be expensive. Sallie Mae's credit-default swaps have widened to 425bps from 300bps at the end of last year. That means the annual cost of protecting $10m of Sallie Mae bonds for 5ys now costs $425K vs $300K at the end of ‘07. "The key driver behind that increase is growing concern that, first, Sallie Mae won't be able to refinance this $30bn, and, second, that if they do refinance it, the cost of a new loan may be high," Richard Hoffman, of CreditSights, said.
Barron’s Online out saying that Sony’s (SNE) win with its Blu-ray format for HD DVD this wk could signal a turning point for the co. All this wk, consumer electronics firms have had perhaps their best shot to convince Street's bean counters they'll be on top in ‘08. As the CES has unfurled across hotel suites and conventions halls here, analysts are dazzled by the seemingly endless progress offered by wave upon wave of new gadgets. While it's best to be skeptical of that warm fuzzy feeling, it's hard to deny that one co, Sony, seems to be on something of a roll. On Fri, the co was given a late birthday present, when Time Warner's Warner Brothers Entertainment announced that it will be making all of its HD DVD releases in the Blu-ray format. The move could put Blu-ray over the top in its battle with Toshiba's HD DVD, and that could lead to a lucrative royalty stream for Sony. Analysts have an average price tgt of $69 for Sony.
“Inside Scoop” section reprots that TPG-Axon Capital Mgmt disclosed it owned 13.25m shares, or a 5.5% stake in Goodyear (GT). TPG-Axon Capital, led by former Goldman Sachs partner Dinakar Singh, had no holdings in Goodyear prior to the 3Q07. It is now Goodyear's 2nd-largest shareholder behind Eton Park Capital Mgmt, which reported owning 16.15m shares or a 7.7% stake in a Dec. "TPG-Axon Capital and Eton Park have both been buying aggressively in the last couple of mo’s and both firms are very value focused," says Ben Silverman, of InsiderScore.com. "Goodyear fits [the profile] these firms look for of strong financials and strong mgmt, and good cash-flow generation. Their cost reduction program is an appealing value-unlocking catalyst."
Wednesday, January 09, 2008
Clearwire (NASDAQ:CLWR): Sprint/CLWR alliance could happen soon - Think Equity
- Think Equity is out with a very interesting call on Clearwire (NASDAQ:CLWR) after Sprint announced nine WiMax ecosystem partners, confirming its commitment to WiMax. The firm believes the next step will be a resumption of the Sprint/Clearwire alliance. They expected Sprint to move deliberately to name a CEO and reaffirm its WiMax commitment; this lends optimism that the Clearwire alliance could happen soon, perhaps during 1Q08. Combined with its open device/service strategy and the magnitude of its opportunity, the Sprint alliance will rebuild optimism in Clearwire, in their view.
Reits Buy and $33 tgt on CLWR.
Notablecalls: Wow! I'm going to call this one an Actionable Trading Call as I think Eric Kainer's comments may cause some serious buy interest in CWLR today. The stock has been absolutely destroyed over the past months and has begun to show signs of bottoming lately. This coupled with Think's comments creates what I think it one of the best calls I've seen this AM.
Reits Buy and $33 tgt on CLWR.
Notablecalls: Wow! I'm going to call this one an Actionable Trading Call as I think Eric Kainer's comments may cause some serious buy interest in CWLR today. The stock has been absolutely destroyed over the past months and has begun to show signs of bottoming lately. This coupled with Think's comments creates what I think it one of the best calls I've seen this AM.
Assurant (NYSE:AIZ): Momentum Trade + Economic Recession = Stalled Stock - Morgan Stanley
- Morgan Stanley is out with a very cautious call on Assurant (NYSE:AIZ) saying the stock benefited greatly from a momentum trade during the last few months of 2007. As the subprime crisis worsened and financial stocks fell, AIZ rose on the premise that Assurant’s specialty property business (~50% of earnings) would benefit. MSCO takes a more cautious view of the property business, but their focus here is on the faltering economy and the attendant risks to AIZ — largely overlooked during the subprime-fueled run in the stock.
Firm think investors are overpaying for Assurant’s Solutions business. In their sum of the parts analysis, attributing what they see as reasonable peer multiples to Assurant’s other businesses implies that investors buying AIZ in the mid-$60s are paying a healthy multiple for its Solutions business. The business has produced roughly a 10% return the past two years (the company’s target is 14–16%), and they see investors paying some 1.6–1.9x BV, ascribing some 2–3x the value to future growth of the S&P 500.
Notablecalls: Take a look at the chart. If this one goes below $63.40...it's going to be hell for the longs. Actionable Short Call!
Firm think investors are overpaying for Assurant’s Solutions business. In their sum of the parts analysis, attributing what they see as reasonable peer multiples to Assurant’s other businesses implies that investors buying AIZ in the mid-$60s are paying a healthy multiple for its Solutions business. The business has produced roughly a 10% return the past two years (the company’s target is 14–16%), and they see investors paying some 1.6–1.9x BV, ascribing some 2–3x the value to future growth of the S&P 500.
Notablecalls: Take a look at the chart. If this one goes below $63.40...it's going to be hell for the longs. Actionable Short Call!
Pharmaceutical Product Development (NASDAQ:PPDI): Cautious comments following Q4 results
Couple of firms are out somewhat cautious on Pharmaceutical Product Development (NASDAQ:PPDI) after the co released its Q4 results last night:
- Baird notes that on face, PPDI delivered an above-consensus forecast and shares bid to new highs after Market;however, PPDI reduced 4Q07 Development targets and delivered 2008 Development EPS targets below their (below-consensus) model. Core operating reductions were offset by lower Discovery dilution and inclusion of an unexpected, and potentially aggressive, milestone. Absent Compound Partnering, they would be more cautious, and are conflicted on whether a first-cycle SYR-322 milestone is appropriate in guidance.
Maintains Outperform and $48 tgt.
- Jefferies says that while PPD's CY08 EPS guidance exceeds both consensus and their estimates, extracting the milestones included within guidance brings PPD's results in-line with their estimates. Although the firm is encouraged by the increased earnings power from compound partnering milestones, PPD's guidance is now closely tied to a binary event.
Maintains Hold and $43 tgt.
Notablecalls: Based on these comments, I don't think PPDI deserves to trade 2-3 pts higher this AM. It's up there bc of the UBS upgrade and these guys are just LATE. PPDI to unch is my call here.
Btw, how can Baird stay at Outperform with a $48 tgt?
- Baird notes that on face, PPDI delivered an above-consensus forecast and shares bid to new highs after Market;however, PPDI reduced 4Q07 Development targets and delivered 2008 Development EPS targets below their (below-consensus) model. Core operating reductions were offset by lower Discovery dilution and inclusion of an unexpected, and potentially aggressive, milestone. Absent Compound Partnering, they would be more cautious, and are conflicted on whether a first-cycle SYR-322 milestone is appropriate in guidance.
Maintains Outperform and $48 tgt.
- Jefferies says that while PPD's CY08 EPS guidance exceeds both consensus and their estimates, extracting the milestones included within guidance brings PPD's results in-line with their estimates. Although the firm is encouraged by the increased earnings power from compound partnering milestones, PPD's guidance is now closely tied to a binary event.
Maintains Hold and $43 tgt.
Notablecalls: Based on these comments, I don't think PPDI deserves to trade 2-3 pts higher this AM. It's up there bc of the UBS upgrade and these guys are just LATE. PPDI to unch is my call here.
Btw, how can Baird stay at Outperform with a $48 tgt?
Tuesday, January 08, 2008
RUMOR MILL: Monster.com (NASDAQ:MNST)
Hearing News Corp's (NYSE:NWS) Rupert Murdoch has sent a letter to Monster.com (NASDAQ:MNST) board offering $4.8 bln for the co.
Notablecalls: Well, the rumor makes some sense here. First, as I have said before, I do think MNST is a co that is going to be sold. Sal Iannuzzi was hired as Chairman and Chief Executive Office in April 2007 to set the co up just for that. Remember, he was the one who sold Symbol Tech to Motorola (NYSE:MOT) in Jan 2007.
Ianuzzi brought in his boy, Timothy Yates as CFO in June 2007. Note that Yates had served as the CFO of Symbol Tech.
Now, Murdoch is a savvy guy. His acquisition of MySpace in 2005 is a perfect example of that. I think he knew that the valuation of MNST would come down as growth slowed. So he patiently waited.
He knew that Gannett (NYSE:GCI), the co-owner or CareerBuilder.com would love to buy Monster.com but didn't have the financing. Tribune, the other co-owner of CareerBuilder.com had too much debt and stuff going on with the Zell bid.
The only real threat is Yahoo (NASDAQ:YHOO) that would also love to buy MNST to grow their HotJobs offering. But no news from there.
Anyway, that's my 2c.
Hope it helps.
Notablecalls: Well, the rumor makes some sense here. First, as I have said before, I do think MNST is a co that is going to be sold. Sal Iannuzzi was hired as Chairman and Chief Executive Office in April 2007 to set the co up just for that. Remember, he was the one who sold Symbol Tech to Motorola (NYSE:MOT) in Jan 2007.
Ianuzzi brought in his boy, Timothy Yates as CFO in June 2007. Note that Yates had served as the CFO of Symbol Tech.
Now, Murdoch is a savvy guy. His acquisition of MySpace in 2005 is a perfect example of that. I think he knew that the valuation of MNST would come down as growth slowed. So he patiently waited.
He knew that Gannett (NYSE:GCI), the co-owner or CareerBuilder.com would love to buy Monster.com but didn't have the financing. Tribune, the other co-owner of CareerBuilder.com had too much debt and stuff going on with the Zell bid.
The only real threat is Yahoo (NASDAQ:YHOO) that would also love to buy MNST to grow their HotJobs offering. But no news from there.
Anyway, that's my 2c.
Hope it helps.
Sigma Designs (NASDAQ:SIGM): Competitors still not certified by Microsoft for its IPTV platform - Deutsche Bank
- Deutsche Bank is out with a positive call on Sigma Designs (NASDAQ:SIGM) saying their meeting with the management at CES indicated that the potential competition from Broadcom and ST Micro has not yet materialized. SIGM stock has recently declined in value over unsubstantiated speculation of competitive solutions taking market share in the IPTV and Blu-ray DVD segments. Firm's checks indicate that Sigma's competitors, despite announcing new products at the CES show, are still not certified by Microsoft for its IPTV platform. They view this as validation for Sigma's superior software/hardware IPTV solution and should help lay to rest concerns of market share loss in 2008.
In IPTV, Sigma is adding new features to its existing SoC solutions in order to enhance its ASPs. As a result, the company expects less than normal overall ASP erosion in 2008 (-10% y/y vs. DB est of -16% y/y).
In Blu-ray, the company is set to release a cheaper version of its chip this spring which should further distance its offering from the competition. Deutsche Bank notes that SIGM is currently the only supplier to both Sony and Samsung for high-def Blu-ray DVD players. In addition, they believe the format war has all but ended with Warner now choosing the Blu-ray with Sigma benefiting significantly.
Reits Buy and $75 tgt.
Notablecalls: I'm going to re-issue an Actionable call alert on SIGM here. The stock took a pounding despite very positive commentary from several firms yesterday. While I have failed to come up with a credible explanation for the decline, I think Deutsche's comments should at least temporarily bouy the stock.
I heard Kaufman as out with a call yesterday morning saying DTSI and DLB are the best ways to play Warner Bro's decision on Blu-Ray. One of my best contacts among the NCN opined that SIGM was sold in order to put money at work in DTSI & DLB. Go figure..
Sometimes the market sure does work in mysterious ways.
In IPTV, Sigma is adding new features to its existing SoC solutions in order to enhance its ASPs. As a result, the company expects less than normal overall ASP erosion in 2008 (-10% y/y vs. DB est of -16% y/y).
In Blu-ray, the company is set to release a cheaper version of its chip this spring which should further distance its offering from the competition. Deutsche Bank notes that SIGM is currently the only supplier to both Sony and Samsung for high-def Blu-ray DVD players. In addition, they believe the format war has all but ended with Warner now choosing the Blu-ray with Sigma benefiting significantly.
Reits Buy and $75 tgt.
Notablecalls: I'm going to re-issue an Actionable call alert on SIGM here. The stock took a pounding despite very positive commentary from several firms yesterday. While I have failed to come up with a credible explanation for the decline, I think Deutsche's comments should at least temporarily bouy the stock.
I heard Kaufman as out with a call yesterday morning saying DTSI and DLB are the best ways to play Warner Bro's decision on Blu-Ray. One of my best contacts among the NCN opined that SIGM was sold in order to put money at work in DTSI & DLB. Go figure..
Sometimes the market sure does work in mysterious ways.
First Solar (NASDAQ:FSLR): Expect Solar stocks to regain positive momentum here - BofA
- Banc of America is out on First Solar (NASDAQ:FSLR) and JA Solar (NASDAQ:JASO) saying that following the recent pullback in the group, they anticipate solar stocks will regain positive momentum ahead of the Chinese New Year in early February. First, the firm believes that Street estimates remain very low for the group, which should lead to upward revisions of estimates. Second, they believe that next week's Photon PV Show in Shenzhen should serve as a positive catalyst for the stocks. In particular, the program on Jan 15 - the day devoted to silicon - should provide additional confidence in new 2H08 and 2009 silicon supply, which remains a key industry risk.
FSLR remains firm's top pick in the group given strong visibility of its results and long-term viability of its business model. Firm expects substantial upside to the Street's FY08 EPS estimate of $1.99 partially due to the continued strength of the Euro (FSLR's FY08 guidance assumes an exchange rate of $1.31). BAC's FY08 EPS estimate of $2.41 is $0.42 above the Street estimate. Reits Buy and $300 tgt.
JASO: At 19x FY09 EPS estimate, they firm finds JASO attractive due to its relatively superior visibility on silicon supply among solar manufacturers. JASO has secured >300 MW of wafer supply for FY08, above BAC's production forecast of 280 MW. As a result, there may be upside their FY08 EPS estimate of $2.37, which is already $0.29 above the Street. Firm reits Buy and ups their tgt to $84 from $77.
Notablecalls: I expect FSLR and JASO to stage a bounce following BAC's comments. BAC's no axe in Solars but I've seen them successfully call a bottom in the space before. Plus we have a nice catalyst in the horizon in the form of the Photon PV Show in Shenzhen. Companies usually like to announce new deals during or ahead of these Shows and I suspect this will be the case this time as well. Would not be surprised to see FSLR touch $245 today.
High five to Eric Brown and his cabal from BAC's Alt Energy team.
FSLR remains firm's top pick in the group given strong visibility of its results and long-term viability of its business model. Firm expects substantial upside to the Street's FY08 EPS estimate of $1.99 partially due to the continued strength of the Euro (FSLR's FY08 guidance assumes an exchange rate of $1.31). BAC's FY08 EPS estimate of $2.41 is $0.42 above the Street estimate. Reits Buy and $300 tgt.
JASO: At 19x FY09 EPS estimate, they firm finds JASO attractive due to its relatively superior visibility on silicon supply among solar manufacturers. JASO has secured >300 MW of wafer supply for FY08, above BAC's production forecast of 280 MW. As a result, there may be upside their FY08 EPS estimate of $2.37, which is already $0.29 above the Street. Firm reits Buy and ups their tgt to $84 from $77.
Notablecalls: I expect FSLR and JASO to stage a bounce following BAC's comments. BAC's no axe in Solars but I've seen them successfully call a bottom in the space before. Plus we have a nice catalyst in the horizon in the form of the Photon PV Show in Shenzhen. Companies usually like to announce new deals during or ahead of these Shows and I suspect this will be the case this time as well. Would not be surprised to see FSLR touch $245 today.
High five to Eric Brown and his cabal from BAC's Alt Energy team.
Early morning tidbits from the NCN
- Merrill Lynch reits Buy and $105 tgt on Vmware (NYSE:VMW) saying overhang from lockup expiration seems overstated
- Jeffco is out positive on several casino names (MGM, WYNN, LVS, MPEL). They are lowering tgt's a bit but staying positive. Most tgt's offer 40-60% upside.
- Cowen is out cautious on Crocs (NASDAQ:CROX). This comes after a close to 10 pt downside move over the past 2-3 days...
NC
- Jeffco is out positive on several casino names (MGM, WYNN, LVS, MPEL). They are lowering tgt's a bit but staying positive. Most tgt's offer 40-60% upside.
- Cowen is out cautious on Crocs (NASDAQ:CROX). This comes after a close to 10 pt downside move over the past 2-3 days...
NC
Paperstand (DELL, HET)
The WSJ’s “Heard on the Street” column out saying that even as the credit crunch and weak housing mkt cause problems for the nation's banks, there is another goblin lurking in the wings: The basic business of collecting deposits and lending money is becoming less profitable. Many banks that are gearing up to report 4Q results in the next couple of wks are likely to report narrowing in net interest margins, already at the lowest level since ‘91. Much of the pinch is being attributed to a scramble for deposits. Even though the Federal Reserve has been cutting interest rates, many banks are still offering attractive rates for deposits. A qrtrly survey released last wk by Citigroup (C) found that "the competition to raise new deposits" via certificates of deposit and money-mkt funds "remains intense." The survey noted that while some banks have followed the Fed's lead and trimmed rates, others have been offering promotions that are well above the federal-funds tgt rate of 4.25%. CFC, ETFC, BAC, WB.
“Ahead of the Tape” column out saying that the next test for corporate debt mkts starts this wk. On Thu, banks arranging the buyout of Harrah’s (HET) by 2 private-equity shops are expected to begin trying to sell as much as $9bn of loans tied to the takeover. The banks, including Bank of America and Deutsche Bank, have agreed to supply about $20bn of debt financing to pay for the casino operator's takeover by Apollo Mgmt Group and TPG. B/c investors have become wary of holding this debt, the banks will likely need to carry most of it themselves. Wall St. bankers had hoped that easy credit, which disappeared more than 6mo ago, would have reappeared by now. Last year, they promised to underwrite hundreds of billions of dollars of buyout debt, with the expectation of passing that debt on to investors. Then the credit mkts went awry and the banks got stuck holding much of the debt. "There's more pain in store for arrangers," says Chris Donnelly, of Standard & Poor's Leveraged Commentary & Data.
Fund manager holds CNX, MEE, PXP, ACI, BTU, NFX, PVA, RIG, SWN and WFT – Barron’s Online.
“Inside Scoop” section reports that one insider has opted to sell nearly 50% of his holdings in Dell (DELL). On Wed longtime Director Michael Miles sold 284K shares for $6.9m. The sale represented 48.3% of his holdings in the co. Jonathan Moreland, of Ladenburg Thalmann Asset Mgmt, notes that when the stock was trading in the low $20s previously Miles not only stopped selling, but also acquired shares through options exercises, showing his belief that the stock would make a recovery. "This time it looks as if [Miles's] optimism is out the door, along with about half of his direct holdings," says Moreland.
“Ahead of the Tape” column out saying that the next test for corporate debt mkts starts this wk. On Thu, banks arranging the buyout of Harrah’s (HET) by 2 private-equity shops are expected to begin trying to sell as much as $9bn of loans tied to the takeover. The banks, including Bank of America and Deutsche Bank, have agreed to supply about $20bn of debt financing to pay for the casino operator's takeover by Apollo Mgmt Group and TPG. B/c investors have become wary of holding this debt, the banks will likely need to carry most of it themselves. Wall St. bankers had hoped that easy credit, which disappeared more than 6mo ago, would have reappeared by now. Last year, they promised to underwrite hundreds of billions of dollars of buyout debt, with the expectation of passing that debt on to investors. Then the credit mkts went awry and the banks got stuck holding much of the debt. "There's more pain in store for arrangers," says Chris Donnelly, of Standard & Poor's Leveraged Commentary & Data.
Fund manager holds CNX, MEE, PXP, ACI, BTU, NFX, PVA, RIG, SWN and WFT – Barron’s Online.
“Inside Scoop” section reports that one insider has opted to sell nearly 50% of his holdings in Dell (DELL). On Wed longtime Director Michael Miles sold 284K shares for $6.9m. The sale represented 48.3% of his holdings in the co. Jonathan Moreland, of Ladenburg Thalmann Asset Mgmt, notes that when the stock was trading in the low $20s previously Miles not only stopped selling, but also acquired shares through options exercises, showing his belief that the stock would make a recovery. "This time it looks as if [Miles's] optimism is out the door, along with about half of his direct holdings," says Moreland.
Monday, January 07, 2008
Sigma Designs (NASDAQ:SIGM): Two firms pounding the drums on Sigma
Two firms are out very positive on Sigma Designs (NASDAQ:SIGM) this morning after Warner Bros. Entertainment announced last Friday it will offer its high-definition DVDs exclusively using the Blu-ray format. The studio was previously backing both Blu-ray and HD DVD.:
- Baird notes Blu-ray could add an incremental $0.15-$0.20 to Sigma's EPS this year assuming Blu-ray player units double, a conservative assumption, in their view, given the aggressive pricing (starting at $273 currently) and higher visibility consumers now have regarding the prevalence of Blu-ray as the new DVD standard. Net, Warner's announcement it will only support Blu-ray going forward is a positive for Sigma given its 75% share position in this market.
Firm believes the recent weakness in the stock is unfounded and recommend buying on the weakness. Reiterating $75 price target and Outperform rating on SIGM shares.
- BWS Financial says the decline in shares of SIGM can only be described as breathtaking when considering that all aspects of the business continue to grow at a rapid pace. The earnings story is not over at SIGM. Firm believes the withdrawal of WB from HDDVD removes necessary content to make HDDVD a viable competitor to blu-ray. They consider the news from WB the death to HDDVD.
Notes they are pounding the drums once again just like they did in 2007 when the shares had declined due to competitive threat, and they are again reiterating their price target of $100.
Notablecalls: SIGM is going to see strong interest following this call. My guess is $2-3 upside range today. Be sure to grab it early. Actionable!
- Baird notes Blu-ray could add an incremental $0.15-$0.20 to Sigma's EPS this year assuming Blu-ray player units double, a conservative assumption, in their view, given the aggressive pricing (starting at $273 currently) and higher visibility consumers now have regarding the prevalence of Blu-ray as the new DVD standard. Net, Warner's announcement it will only support Blu-ray going forward is a positive for Sigma given its 75% share position in this market.
Firm believes the recent weakness in the stock is unfounded and recommend buying on the weakness. Reiterating $75 price target and Outperform rating on SIGM shares.
- BWS Financial says the decline in shares of SIGM can only be described as breathtaking when considering that all aspects of the business continue to grow at a rapid pace. The earnings story is not over at SIGM. Firm believes the withdrawal of WB from HDDVD removes necessary content to make HDDVD a viable competitor to blu-ray. They consider the news from WB the death to HDDVD.
Notes they are pounding the drums once again just like they did in 2007 when the shares had declined due to competitive threat, and they are again reiterating their price target of $100.
Notablecalls: SIGM is going to see strong interest following this call. My guess is $2-3 upside range today. Be sure to grab it early. Actionable!
Smith Micro (NASDAQ:SMSI): Could well be their best stock pick for price appreciation potential in 2008 - Morgan Joseph
Morgan Joseph is out with a major on saying they believe Smith Micro's (NASDAQ:SMSI) business is transforming for the better as both its customer list and its product portfolio grow. The changes should bode well in the manifestation of both improved consistency and predictability of sales and earnings. As the current year unfolds, investors' appreciation should build as its progress is demonstrated in reported results, and they see SMSI's valuation multiple being rewarded accordingly over the next 12 months.
Firm's 4Q07 checks indicate that data connectivity sales have remained robust. For Smith, data sales of $8.0mm in 3Q07 were up 38% Q-Q, and they suspect they have at least remained at those levels, if not increased slightly.
Music phones continue to rock Verizon. MJ's survey of 58 Verizon stores late last year found LG's Voyager phone to be the hottest seller. Smith Micro typically needs to see a high music software attach rate to benefit, but the current configuration, sold with a software CD included with the phone box, has proven to be quite lucrative. Importantly, converged devices appear to be winning share, and music bolsters the company's sales.
Shares could be firm's best performer this year. Trading at about 8x FY08 $1.00 EPS estimate, they think Smith Micro Software's shares could trade to 20x as new initiatives begin to prove themselves. On that basis, SMSI could well be their best stock pick for price appreciation potential in 2008.
Reits Buy and $20 tgt.
Notablecalls: This is a good call. One-time analyst darling seems to be a forgotten stock here but MJ's call is likely to generate some serious interest in the n-t.
Firm's 4Q07 checks indicate that data connectivity sales have remained robust. For Smith, data sales of $8.0mm in 3Q07 were up 38% Q-Q, and they suspect they have at least remained at those levels, if not increased slightly.
Music phones continue to rock Verizon. MJ's survey of 58 Verizon stores late last year found LG's Voyager phone to be the hottest seller. Smith Micro typically needs to see a high music software attach rate to benefit, but the current configuration, sold with a software CD included with the phone box, has proven to be quite lucrative. Importantly, converged devices appear to be winning share, and music bolsters the company's sales.
Shares could be firm's best performer this year. Trading at about 8x FY08 $1.00 EPS estimate, they think Smith Micro Software's shares could trade to 20x as new initiatives begin to prove themselves. On that basis, SMSI could well be their best stock pick for price appreciation potential in 2008.
Reits Buy and $20 tgt.
Notablecalls: This is a good call. One-time analyst darling seems to be a forgotten stock here but MJ's call is likely to generate some serious interest in the n-t.
Early morning tidbits from the NCN
Good morning,
I'm hearing two Solar calls this morning:
- First Solar (NASDAQ:FSLR) initiated at Merrill Lynch with Buy and $300 tgt
- Evergreen Solar (NASDAQ:ESLR) tgt upped to $30 at Think Equity
Subscribe to:
Posts (Atom)