Yingli Green Energy (NYSE:YGE): Tide turning? Avian & Piper upgrading

Yingli Green Energy (NYSE:YGE) is getting two upgrades from relatively smart operators this morning:

- Piper Jaffray is upgrading YGE to Overweight from Neutral with a $8 price target (prev. $11) noting the company solidly cemented its status as a tier 1 solar PV module supplier, as it continued to gain share through a difficult 1H11 by leveraging its low cost vertically integrated model and very strong brand recognition. YGE saw its shipments rise 36% q/q, while some tier 2/3 module suppliers struggled to maintain flattish shipments. Management expects shipment growth to continue in 2H11 as demand continues to improve, with expected price declines offset by declining costs, enabling YGE to maintain gross margins in the mid-high teens. Additionally,
YGE's PANDA module remains one of the highest efficiency modules shipping out of China today (20% of 2Q shipment, 80mw). Piper believes the significant pullback in the stock presents an excellent opportunity for investors to own one of the leading vertically integrated low cost module suppliers.

- Avian Securities is upgrading YGE to Positive from Negative with a $7.50 price target, representing 43% upside from current levels.

The seasonal trade in solar stocks will likely be compressed to just a few short months given the earlier demand delay caused by the subsidy uncertainty in Italy, but Avian finds YGE as a current outlier to the group that is likely seeing the early signs of the seasonal momentum coupled with increased market penetration. Following a decent Q2 report with both upside to revenue and EPS, the forward outlook was reaffirmed and is good enough to ease our near-term demand concerns. Avian notes waiting to upgrade after the PVSEC show in early September would put them in with the rest of the herd, but they hear the early signs from management’s comments that demand is increasing now for the seasonally strong solar installation period. The firm finds now is an opportune time to ride the wave of the solar trade, and to take the first dip with shares of YGE.

Notablecalls: Couple of points here:

- Piper's Zaman cut YGE back in March helping his clients avoid some of the slaughter in the name.

- Avian only recently picked up coverage in the space but their guys are well respected. I'm told by Avian they are definitely transitioning from a very negative opinion on the entire sector, to some positive opinions ahead of the seasonally stronger 2H.

That makes the YGE call potentially more significant. The co seems to be best-of-breed here (lowest cost producer etc.) and that's exactly the type of stuff you may want to be buying.

YGE has been crushed, so I expect a potentially explosive move off lows. The $6 per share level seems like the first logical stop in the n-t.

Research in Motion (NASDAQ:RIMM): Misek calling bottom

Jeffco's Peter Misek is upgrading Research in Motion (NASDAQ:RIMM) to Hold from Underperform while raising his target to $25 (prv. $22).

- I would probably have ignored the Hold rating from Misek but going over Marvell Tech's (MRVL) conference call transcript I noticed two interesting tidbits:

* MRVL was calling for RIM revenue to stabilize in H2

* Sehat Sutardja Marvell CEO had the following comments on the conf call:

I think investors should not discount RiM. We continue to work closely with RiM in delivering new solutions. They will make the product to look really, really nice, better performance as well. So, don't discount that. Don't discount RiM at all.


Here are the details:

We believe the share price has finally found a floor after months of misexecution, delayed products, and shrinking market share. Our reasons for the more positive view are: 1) patent values based on recent transactions point to higher sum of the parts; 2) build plans have stabilized; 3) focused on releasing QNX before expectations; 4) removal of WebOS. We are upgrading RIM to a Hold from Underperform and raise our price target to $25.

New value for patents: Based on the recent MMI acquisition by GOOG, Nortel acquisition by the consortium, and stock price activity of IDCC, it is clear there is significant interest in the market for patents. By our calculation RIM spent over $5B in acquiring and developing its patent portfolio but we RIM could monetize its patent portfolio for approximately $2B since many of the patents are uniquely security-related or cross-licensed.

Build plan stabilization: our checks indicate that builds plans have begun to stabilize.

Rush to release QNX: we believe that RIM will likely dump features to release new QNX based devices before expectations. While it may not be the superphone we hoped for, we believe it is slightly positive as it demonstrates to investors the ability to execute on time. Chance to become third ecosystem increased: The removal of HP WebOS as a competitor increase the low probability that RIM as an ecosystem vendor may recover.

Salvage value revisited: our scenario analysis assumes a breakeven hardware business, a subscription business run as a cash cow, a monetized patent portfolio, and a $700M restructuring charge. The share price calculation then is $3B net cash + $2B (patents) - $700M restructuring charge + subscription NPV all divided by 524M shares outstanding. Our new $25 target implies a 2.5% annual rate decline and 3% annual subscriber decline.

Blackberry Music Service: RIM is seeking to leverage the popularity of BBM by integrating a music service. According to CNet the company has already signed a deal with at least one of the "Big 4" record labels. We believe this is awfully late relative to competitors, but given the popularity of BBM, it may help the company gain more traction with the consumer market.

Valuation/Risks
Our $25 target is ~8x our FY13 ests (2-year range 7x-18x). Risks: 1) transition to new OS is poorly executed; 2) share loss in both consumer and enterprise.

Notablecalls: Misek turned negative on RIM at the end of April when the stock was still trading in the high $40s, slashing his price target way below the Street average. If my memory serves me correct his $22 price target was the Street low. Until this morning that is.

Bernstein's Ferragu & Misek were the two notable bears in RIM. Now both have told their clients to cover.

I think this coupled with the MRVL CEO comments, upcoming QNX launch and low expectations could produce a bounce in the name in the n-t. Barring a general market crash of course.

Needless to say, executing the trade will be difficult.

Notable Calls Network (NCN): Wedge Partners on BIDU

Notable Calls Network (NCN) caught a very nice call in Baidu.com (NASDAQ:BIDU) yesterday. We were super-early on it, which is just the way we like it.

- Around 10:30 AM ET a contributing member of NCN told me to get short BIDU fast as Wedge Partners, independent equity analysis firm with a focus on the technology and media industries was making a big negative call in the name.

A minute later I received the details:

VERY NEG BIDU (Confirmed just now by analyst in Beijing).... Just now (literally 10 mins ago) on CCTV2 a popular TV show, Baidu was exposed by CCTV about providing unreliable advertisement to consumers, accepting ad for healthcare companies without business license and etc.

Remember, at the end of 2008, Baidu's stock price more than halved by the 2-days continuous attack from CCTV. Baidu's stock might be materially impacted by this short term.

Knowing how potentially significant this call could be, I swiftly distributed the details to other Notable Calls Network (NCN) members. This was exactly the type of info people were looking for.

- Over the next 30 minutes the stock started breaking down as more details emerged:

1) BIDU provided links to fraudulent websites for consumer goods and travel agency services. Consumers who followed the BIDU search results to these sits and made online payments were victims of fraud as the online travel agencies and consumer goods companies were not real.

2) The show highlighted how BIDU’s own sales force (Wedge's Lin Juan actually believed they are probably BIDU’s distributor sales folks) actually advised and helped companies who did not have qualifying licenses help fake or bypass the issue.

3) The show also mentioned and brought up the entire 2008 scandal related to healthcare companies who did not have proper licensing.

Link: CCTV exposure caused by Baidu search site users provide false deceived


- By 11:30 AM ET the stock was down 7 pts. A hefty intraday trading gain.


PS: Morgan Stanley is out this morning with a cautious call on BIDU saying they expect some pressure on the stock price, as CCTV's claims appear more widespread this time (vs. 2008), covering more than only healthcare listings.

The firm has issued a Negative Research Tactical Idea saying the share price will fall relative to the country index over the next 30 days. They estimate that there is about a 70% to 80% or "very likely" probability for the scenario.

The stock is trading around $140 in pre market, another 4 pts lower from yesterday's close.

Obviously, Wedge Partners deserves a Kudos here. They beat the rest of the Street by a mile.


This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.

Want to be part of NCN?

It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.

Please do note that contacts via IM are limited to people with:

- 3+ years of trading experience

- Access to quality research/analyst commentary

- Ability to generate and share (intraday) trading calls

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.

MetroPCS (NYSE:PCS): Bargain hunting - Upgraded to Outperform at Bernstein

Bernstein's Craig Moffett is telling his clients to go bargain hunting in the Pre-Paid Wireless space this morning.

- Moffett is upgrading MetroPCS (NYSE:PCS) to Outperform from Market Perform with a $16 price target.

He writes:

The sell-off in telecom stocks has been nothing short of breathtaking in recent weeks, with many stocks in the sector down 40% or more. The pre-paid wireless operators have been particularly hard hit. Since July 1, a month before it reported Q2 results, Metro's stock price has declined -47.5%. Leap Wireless is down a mind-bending -58.9%. The S&P 500 has fallen -12.5% during the same timeframe.

Sector concerns are not unwarranted (we ourselves have been among the most bearish). But of all the stocks that have sold off in the telecom sector, MetroPCS looks to us to be uniquely oversold, and we believe it presents the best buying opportunity. In this report we take a fresh look at the pre-paid players. We’ve scrubbed our models from top to bottom, refreshed our valuations, and closely examined the segment’s recent performance.

- The pre-paid segment appears less profitable than it once had, as the margins associated with smartphones are lower than the voice-only margins of old. But the pre-paid operators continue to gain share, and the prepaid market does not look like it is fundamentally broken. Pre-paid and reseller captured 60% of industry net additions in Q2, 390 bps better than Q2 last year, and MetroPCS remains by far the industry's standout performer on a footprint-adjusted basis.

- By Bernstein's estimates, Metro's forward EBITDA multiple (just 3.9x 2012 EBITDA) is the lowest it has ever been on an absolute basis, and surprisingly, it is lower than Leap’s.

- In contrast, Leap Wireless’s outlook is far more uncertain, and its valuation far less flattering. Given its enormous effective leverage, optimistic scenarios could yield spectacular upside. But firm's valuations suggest that even in their base case scenario, there could still be additional downside to the name, and more pessimistic assumptions yield outcomes with no equity value at all.

Of all the stocks that have sold off in the sector, MetroPCS looks to be uniquely oversold, and Bernstein believes it presents the best buying opportunity for intrepid investors.

By most measures, MetroPCS posted Q2 results that only modestly missed investor expectations; certainly, its business shows no sign of existential distress. Indeed, it appears well positioned to benefit from a continued trade-down from high priced post-paid wireless plans into its discounted pre-paid plans. PCS's numbers were unquestionably far better than that of unlimited pre-paid peer Leap Wireless’s. To be sure, both MetroPCS and Leap missed consensus net additions, but Metro by a far smaller margin. And irrespective of the miss, Metro’s net additions were still a healthy positive number; Leap’s were - 103K (voice net adds of 29K and broadband net losses of -132K, compared to expectations of 89K and - 34K, respectively). And gross additions at MetroPCS actually beat expectations, in a clear sign of sustained strong demand (Leap's gross addition results, by contrast, fell short). ARPU was also close to expectations, missing by a narrow $0.17, while Leap actually outperformed, beating expectations by $0.46.



All in all, these results felt like ones that would normally have dinged MetroPCS’s stock price by several percentage points, but probably not much more. (Leap’s results were worse, and given their volatile trading history one might reasonably have expected a bigger drop).

As anyone who follows the space is surely aware, things did not exactly pan out that way.

.....

To be continued. This is a 32 pg. note so I can only pass on the broad stroaks.

Notablecalls: So Moffett is telling people to buy PCS, which has according to him has gotten unjustly punished.

Given he has been among the most cautious on the Pre-Paid space his change of heart will likely generate enough attention to get PCS moving up.

I'm guessing upwards to $10 in the n-t.

This may prove to be a significant call.

The Market - Bounce?

Pick your favourite high-beta names because it seems we're going to have a big bounce today

Notablecalls: Water pistol to head call!

Just a heads up - An indicator we follow technically just shot off a positive reading suggesting a bounce - Avian

I know we generally don’t put out technical analysis but I thought this was interesting enough to highlight.

Avian’s 10 Week Hi-10 Week Lo indicator fired off its extremely oversold reading of -556. As you can see on the below chart, whenever the red line spikes higher, especially above 400, the market is at a tradable low. The indicator does not shed any light on whether this bottom is a major or minor one. But it should provide a tradable bounce.

Notablecalls: Sometimes we have to rely of stuff like this.

Intermune (NASDAQ:ITMN): Next to blow up?

Jefferies is out with a rather well-timed call on Intermune (NASDAQ:ITMN) saying it could be the next Dendreon (NASAQ:DNDN) to blow up.

Ahead of Esbriet launch starting this September in Germany, they view ITMN shares as likely to come under further pressure given likely slow uptake (vs. consensus high expectations) and potential financing risk (cash enough thru 2012). On very modest sales of Shionogi's Pirespa in Japan and competitors in the works, high expectations for Esbriet may need to be adjusted near term.

- Firm is lowering their target to a Street low of $18 (from $24) & is reiterating Underperform rating.

New drug sales are increasingly dictated by drug efficacy/cost-benefits, not necessarily by a lack of other approved drugs or by the large # of eligible patients, particularly in the current HC cost-sensitive environment. Bull case for ITMN is that there is no alternative for IPF patients; so once launched, Esbriet would be rapidly/widely used, and eligible IPF patients would continue to be on the drug once started. However, given the very modest efficacy of Esbriet, the firm views uptake would be slower and adherence is debatable due to side effects (nausea ~20%, rash ~20%, dyspepsia ~11%, photosensitivity reaction ~11%, placebo-adjusted). While ITMN estimates Esbriet-eligible IPF patients in EU at ~70K, the real question is how many will actually receive Esbriet and continue to stay on the drug. Based on the disappointing launches of several biotech drugs, in jeffco's view it is hard to be convinced why the Esbriet launch would be drastically different.

Lowering their already below-cons Esbriet sales estimates by ~33% & their PT to $18; consensus #s need to come down significantly, in our view. Jefferies notes they now assume ~$400M/$400M in peak EU/U.S. annual sales for Esbriet (vs. ~$670M/$530M previously. For 2011/2012, consensus of $10M/$105M (vs. Jeffco's of $2M/$35M) implies ~880/~2,330 patients being treated with Esbriet (vs. their ~176/780 pts) at assumed $45K/pt/yr.

Estimated current cash balance of ~$200M may not be sufficient through 2012 by our estimates, thus posing financing risks. ITMN currently has ~$85M in convertible debt due in 2015 (coupon rate/conversion price of 5%/$18.88), with a long-term debt-to-capitalization ratio of ~33%.

Notablecalls: With Dendreon (DNDN) crushed last night on lower-than-expected Provenge ramp the timing of this call couldn't have been better (or worse, depending on one's point of view).

JPM's Biotech analyst Cory Kasimov notes this morning: 'As if investors needed another reason to “short the launch” of one-product biotech companies, DNDN just served up the ultimate case study.'

Kasimov's right, investors have seen too many one-trick ponies get slaughtered after analyst estimates collide with reality. Esbriet with its $45K price tag & low efficiency fits right in.

Now Jeffco is saying ITMN may end up being another disappointment. This means stock will likely be taken to the back of the woodshed today and shot.

ITMN could be down as much as 7-10% today, putting 28-29 levels in play.

This could serve as a meaningful overhang for quite some time, so the stock could move lower than that.



PS: I'm posting this at around market open 9:30 AM ET

AGP, CNC - Texas Medicaid Awards Largest in History

Texas announced the awards for its highly anticipated $10 billion Medicaid managed care program. The public MCOs dominated the RFP and captured most of the new contract awards.

This was the largest, and therefore the most highly anticipated Medicaid RFP in the history of the Medicaid program. Analysts believe the overall size of the Texas market after full implementation of this expansion will be roughly $12 billion, more than doubling its previous total. The operational start date is March 1, 2012, which suggests that the full earnings potential from these contracts will not be felt until 2013.

There are two major winners:

1) Amerigroup (NYSE:AGP) - AGP will remain the largest Medicaid plan in Texas and should generate around $1 billion in incremental revenue from the Texas expansion. Upon completion of the expansion, AGP should generate over $2.5 billion in annual revenues in Texas Medicaid.

2) Centene (NYSE:CNC) - Centene will generate around $1.5 billion of incremental new revenue in Texas expansion, thus continuing its hot streak as the company also recently won new contracts in both the Louisiana and Kentucky RFPs.

Here are some estimates of EPS impact across Tier-1 firms:

- Deutsche sees $0.40-0.60 2013 EPS impact for AGP, $0.55-0.83 for CNC.

- J.P. Morgan sees eventual run-rate EPS impact for both CNC and AGP to be about $0.50 per share additive

- Credit Suisse notes assuming a pretax margin of 3%, they estimate the following annualized aftertax EPS impact: AGP +36c, CNC +22c

- Barclays estimates that CNC will generate an incremental $0.25 in EPS in 2012, and an additional $0.54 in total run-rate EPS once the new members are fully phased in. They estimate that AMERIGROUP will generate an incremental $0.22 in EPS in 2012, and an additional $0.40 in total run-rate EPS once the new members are fully phased in.

Notablecalls: Considering AGP, CNC trade 10-11x EPS and the EPS impact is around $0.50 for both companies in 2013, both stocks should be up 3-4 pts (im sure some of the impact was already priced in).

Could be some more for AGP as the stock got crushed following earnings last week. I see Citigroup is raising their target on AGP to $76 (from $71) this morning.

Difficult to call any trades here but it's where the action will be this morning, I suspect.

Investment Technology Group (NYSE:ITG): Deep Value! Upgrade to OW - JPM

J.P. Morgan is upgrading Investment Technology Group (NYSE:ITG) to Overweight from Neutral with a $16.50 price target calling it a deep value stock.

- Upgrading ITG to Overweight – Unloved and Largely Ignored, But Management and the Board Have Options.

- With some help from ITG's balance sheet this could be a $18 stock, according to JPM.

With the stock underperforming materially in 2011, particularly since preannouncing soft 2Q11 results on July 12,
2011, the firm see management having capital management options that could be particularly positive for investors. The core of JPM's thesis is two fold –

1) ITG has the free cash flow to borrow against a cash rich balance sheet and buy a materially percentage of its stock.

2) An expense reduction program gives ITG meaningful flexibility should equity volumes remain subdued, but meaningful earnings potential should volumes rise.

JPM believes that ITG’s mgmt. is well positioned to be more aggressive in returning capital to shareholders, taking advantage of the recent steep drop in its stock. Over half of ITG’s ~$12 stock price is in cash – they estimate ~$7 per share. While much of this cash is trapped to support the business, ITG’s mgmt. has only been returning moderate capital to shareholders. However, with share price down 27.5% in 2011 and Private Equity in the sector, they think that pressure is on mgmt. to create additional shareholder value. Borrowing $170mn (1.5X trough 2Q11 EBITDA) and using the proceeds to purchase shares at $13 would increase ITG’s 2012 EPS by 30%, driving the stock to $18, at 12X earnings.

Management has listened to shareholders in the past, initiating a stock repurchase program following encouragement of D.E. Shaw in 2007. Given a significant decline in ITG’s stock price, they see the potential for the CEO and Board of Directors to take stronger action to deliver shareholder value.

ITG fundamentals challenged in 2Q11, but earnings outlook acceptable given cost cutting initiatives. ITG’s earnings are tied to equity trading commissions, which were solid in 1Q11, but struggled in 2Q11. However, mgmt. announced a meaningful expense reduction program in early July to offset recent softness in industry trading volumes. This program should not only mitigate weak volumes should they persist into 2H11, but increases ITG’s leverage to better trading volumes in a seasonally stronger 1Q12.

According to JPM, ITG’s market share of total NYSE and Nasdaq shares traded has increased from 2.75% in the beginning of 2010 to 3.3% at the end of June 2011.

ITG – A Deep Value Stock
Firm thinks ITG is especially inexpensive. After peaking earlier this year at ~$20 per share, the stock has declined as both industry volumes sank and as the perception of ITG’s customer mix deteriorated from higher fee paying mutual fund customers to lower fee paying brokers and lower touch customers. ITG stock has fallen 27.5% in 2011, including a 21% decline earlier in July following its earnings preannouncement.

ITG Trades at 10x JPM's 2012 Estimate of $1.18, FCF Yield Is An Attractive 13%. ITG trades at 15X what they expect will be trough earnings in 2011, and an inexpensive 10X times their 2012 estimate. Similarly positioned company, such as Knight Capital is trading at 8X JPM's 2012 estimate. However, ITG has a much higher FCF yield relative to Knight Capital – ITG's 13% based on 2Q estimates vs. Knight's 8%.

ITG Has No Sell-Side Support – No One on the Sell side Has a Buy on ITG! JPM believes there are a number of data points to suggest ITG is being ignored by the investment community. One example is that of the nine analysts that provide research coverage on ITG, there are no ‘Buy’ ratings – eight analysts have “Holds’ and one has a ‘Sell’. Firm notes that according to Bloomberg, 7% of the float is held short.

Notablecalls: What do you think will happen to a $500M company (a small-cap!), that nobody loves & seems to have forgotten about when a Tier-1 firm like J.P. Morgan comes out swinging calling it a Deep Value play with a hefty 50%+ upside price target.

It goes up! Big time.

I'm guessing +7-10%, putting 12.50-13.00 levels in play in the n-t.


PS: I'm posting this at Market Open 9:30 AM ET.

Bridgepoint Education (NYSE:BPI): Warburg files S-3 - 35 million shares

Bridgepoint Education (NYSE:BPI) may offer an interesting trade in the n-t after Warburg Pincus, majority owner & founder filed to sell their 35 million stake in the company.

Here's the S-3 filing

Here are some points why this may be a major event for the company:

- Bridgepoint Education Inc. (BPI) was formed in 2004 by current CEO Andrew Clark and Warburg Pincus to establish a for-profit post secondary education provider. The IPO was priced at $10.

Warburg & co can be considered 'smart money' & seeing them cash in their chips should be considered as a red flag.

- Warburg owns 34.6 million shares or about 57% of the fully diluted shares outstanding.

While short interest stands at a whopping 72% of float, the float is about get significantly larger. Current float stands around 18M shares.


I think the recent raise in BPI stock price can be attributed to a short squeeze. As you can see from the Bloomberg chart, short interest has been declining lately, while the stock has been going up.

All in all, Warburg filing is likely to have created a significant overhang for the stock in the near-term.

Notable Calls Network (NCN): InterDigital (NASDAQ:IDCC)

We caught a nice mover on Notable Calls Network (NCN) this morning:

InterDigital (NASDAQ:IDCC) has been on fire ever since the Nortel wireless patent estate was auctioned for $4.5 billion. InterDigital happens to hold patents related to the fundamental technologies that enable wireless communications.

The stock has gone from $35 in mid-July to a high of $82.50 as of this morning on speculation Google, Apple among others may be interested in buying the company for its patents.

All in all, it's been the main hype name that traders love to trade around on any new bits if info.

- This morning, around 8:00 AM ET a senior member of NCN brought to my attention that Peter Misek, an analyst at Jefferies & Co had an interesting call on IDCC saying Apple could potentially buy the company. What was even more interesting was the fact he thought IDCC patent estate would be worth up to $10 billion for Apple. IDCC's market capitalization was around $3.1 billion.

This was clearly market moving material, so I quickly distributed a short summary of the call to our wonderful members:

IDCC (Peter Misek) - InterDigital portfolio could be worth up to $10B to Apple = $200 per share!

InterDigital's patents could save Apple $3-$10 per handset and could substantially increase the price of the low-cost Android phones launching in H2:11.


- Sellers were scarce, so one had to buy up 4-5% to get decent fills. But as you can see from the chart it was well worth it. The stock went up another 10 pts.

You can probably imagine the profits some people have from this morning.


This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.

Want to be part of NCN?

It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.

Please do note that contacts via IM are limited to people with:

- 3+ years of trading experience

- Access to quality research/analyst commentary

- Ability to generate and share (intraday) trading calls

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.

OpenTable (NASDAQ:OPEN): Reduce Estimates on Slowed Subscriptions and Soft Spotlight - Benchmark

Benchmark is out surprisingly cautious on OpenTable (NASDAQ:OPEN) lowering their Q2 revenue estimates on increased competition and weakness at Spotlight, OpenTable’s deals product.

- Firm maintains Hold rating and $90 price target.

The details:

OpenTable appears to be facing more competition domestically from Urbanspoon’s RezBook, Livebookings and Eveve. CityPages recently reported that two notable restaurants in the Twin Cities dropped OpenTable. These restaurants apparently switched to Eveve, a European competitor that has 300 restaurants, due to lower cost and more flexibility. Competition may be slowing OpenTable’s restaurant growth. Our checks indicate OpenTable added meaningfully fewer restaurants in 2Q compared with prior quarters. We reduce our 2Q estimate for restaurant subscription revenue from $12.8 million to $12.4 million. This could affect reservations as well.

We believe at Spotlight, OpenTable’s deals product, revenue was down sequentially in 2Q11. For 2Q11, we now estimate Spotlight’s revenue at about $800,000, below our prior $1.5 million estimate, and down from $1.2 million in 1Q11. While there was an improvement in Spotlight revenue from April to June, no single month in 2Q11 was higher than March’s total. Large markets such as San Francisco (down an estimated 46% sequentially), Los Angeles (down 43%) and New York (down 34%) drove the projected soft result.

The National Restaurant Association reported weakening restaurant trends for May, the latest available data. The Restaurant Performance Index dropped 1% sequentially, from modest expansion to modest contraction. This was the first time in six months that the Index signaled contraction. Expectations for the next six months also declined slightly.

Consensus 2Q11 revenue, EBITDA and EPS are $35.5 million (45% y/y organic growth, $13.0 and $0.27 (91% y/y growth). Our revenue estimate drops from $36.3 million to $35.0 million. Our adjusted EPS drops from $0.32 to $0.29.

European competition remains a concern. Livebookings appears to have 8,700 restaurants in 23 countries, and seats one million diners monthly, mainly through its website bookatable.com. Livebookings main markets are the UK and Germany where it has about 5,000 and 2,000 restaurants, respectively. These are also OpenTable’s main European markets.

OpenTable closed at 62x and 32x 2011E adjusted EPS and EBITDA with about 50% average annual growth in both.

Notablecalls: Benchmark's Clayton Moran is making a potentially significant call here. If his checks are right, OPEN's huge valuation multiples are about to compress.

The weakness at Spotlight doesn't sound good either but seems to be well telegraphed by now. Still a big part of OPEN's valuation, though (based on Groupon-like multiple)

Imagine OPEN reporting slightly below consensus #'s on August 2. Ugh.

Note that 3 weeks ago PAA Research, a small shop with interesting ideas & a good track record published a very negative take on OPEN. They called it a short with a $55 price tag noting competition was quickly eating away OPEN's total addressable market. The stock is up 5 pts since.

Very volatile name so adjust your risk accordingly.

PS: I'm posting this around 9:30 AM ET.

Lam Research (NASDAQ:LRCX): Samsung's Gift to Semicon; Upgrade to Buy - Citi

Citigroup's Semiconductor Equipment team is making a significant call on the space, turning bullish again after several months of being very bearish. Title of the call is "Samsung's Gift to Semicon".

- Lam Research (NASDAQ:LRCX) is their new favourite pick in the space, after being on Citi Top Pick Live Sell list since April 6. They are upgrading LRCX to a Buy with $62 price target (prev. $43).

ASML and KLAC get upgraded to Hold from Sell. NVLS & AMAT remain at Hold.

Not only has LRCX meaningfully underpeformed the group in 2011 and back to historically attractive valuation levels, but should also be a significant near-term beneficiary from Samsung, according to Citi.

The details:

Samsung is finally coming back; increasing CQ3 from -10-15% to flattish — Citi's most recent checks indicate that Samsung is finally coming back to the table to place many of the orders pushed out in April. Specifically, the firm now thinks Samsung will take 20k wsm capacity for Line 16 phase 2 NAND ramp and ~30k wsm tool upgrades for Line 15 DRAM shrink, both of which should now order and ship in CQ3. They estimate this is nearly $1B of the ~$1.5B previously pushed out – a swing factor of ~15% on a wafer fab equipment order run rate of ~$6.5-7B for CQ2.

Overall, we believe this amounts to nearly ~$1B that should come back into CQ3, which should provide ~10-15% of the upside for CQ3 orders/shipments for the major front-end names. This essentially “fills the gap” between what the firm thought was previously a down 10-15% CQ3 and now looks more flat.

Importantly, Citi believes this should start to come through this week at the Semicon/WEST tradeshow and be reflected in surprisingly good sentiment for CQ3 relative to current Street expectations.

- Orders now below normalized levels, baking in $27B WFE — Citi estimates CQ2 wafer fab equipment (WFE) orders were back to ~$27B/yr run-rate, down from >$40B in CQ4:10 (fueled largely by ASML) and below the ~$29B/yr they consider “normalized”. Not only is this decline consistent with the correction magnitude in ‘04/’05 (the last supply-driven correction, ’01 and ’08 were demand-driven where GDP slowed meaningfully), but $27B WFE would be down ~15% from the $32-33B still suggested by equipment companies and bottom-up capex analysis for 2011.

Citi's sector view — While supply has ramped in face of end-market demand questions + IC inventory headwinds, the sudden and meaningful order pullback has mitigated risk while Street sentiment now very negative. Looking to 2012, it is hard to see a big down year given rising capital intensity, lack of memory over-spend, and INTC “changing the game” in the foundry segment. Their tgt increases are based on a new higher normalized mkt size due to higher capital intensity. LRCX/TER/FORM remain top ideas.

Notablecalls: Citi's Timothy Arcuri caused 8% intraday drop in LRCX on April 6, when he issued a Top Picks Live Sell rating on the name, claiming Samsung decided to push out shipments with the company.


April 20 results & guidance by LRCX confirmed his suspicions sending the stock further down.

Goldman Semicap analyst upgraded LRCX on May 5 but the selling pressure was so intense the stock failed to hold gains even for the day.

- Now we have Arcuri coming out saying his uber-negative thesis is now reversed. Following recent underperformance & Samsung resuming orders LRCX is his favourite name in the group.

If that's not a big call I don't know what is.

Plus we have Semicon/WEST the biggest Semi event starting tomorrow July 12. Citi thinks this could ignite the group.

All in all, I suspect LRCX will trade up markedly in the n-t. It will almost certainly produce a 3-5% upside move from open but given the significance of the call this could push the stock up for several days. So buying the pull-back could work here as well.

Buying the other names in the sector may prove to be somewhat more tricky as we have UBS & Merrill both out with cautious pre-Semicon comments lowering their cap-ex growth rates for the space. They are obviously lagging behind Citi checks wise.

Tape's drek so adjust your risk accordingly. It seems we're in a state of panic this morning. Quite the change from Friday's jolly bounce.

PS: I'm posting this at around 09:30 AM ET.

Google (NASDAQ:GOOG): Investment Ramp, Uncertain ROI, Downgrade to EW - Morgan Stanley

Morgan Stanley is downgrading Google (NASDAQ:GOOG) to Equal-Weight from Overweight with a $600 price target (prev. $645).

- Google is spending to innovate in social / local, retain talent, and to drive user adoption of key products, but those investments have uncertain ROI / payback periods. Morgan Stanley is reducing their PT to $600 (from $645) and C2012e EPS to $34, below consensus of $40.

Details:

Debate #1: Will margins decline from here? Yes. Given Google’s aggressive hiring plans, rising compensation expense, and significant advertising spend on Chrome & other Google products, we expect EBITDA margin to decline in C2011 / C2012.

Google is now hiring at a blazing pace (1,900+ net hires in CQ1) and is likely to attain its goal of making 2011 its “biggest hiring year in company history” – per Alan Eustace, Google’s SVP of Engineering & Research“. As a result, we believe the company is on track to hire 7,000 employees this year (an increase of 19% from year-end C2010), up from our prior estimate of 4,000 net additions.

Debate #2: Will “newer” businesses drive near-term revenue outperformance? No. We believe the consensus is too optimistic on the net revenue contribution of newer businesses, such as DoubleClick, YouTube, AdMob, Android Market, and mobile search. In 2011, we expect search & contextual ads to contribute ~90% of Google’s net revenue.

Debate #3: Will investments in local eCommerce and / or social pay-off? Too early to tell. We are encouraged by early progress of Google Plus and Google Offers, but Google faces stiff competition from incumbents who have first mover advantage. The pay-offs of such endeavors may be longer-term.

Google’s approach to capturing markets is to grow users / market share first, and monetization (profitability) second. We expect them to take a similar approach with Google Offers and Google Plus, which should limit near-term financial contribution even if both products prove successful. Further, these businesses appear to be scale businesses whereby the highest margin profile accrues to the market share leader. If Google is not able to capture a leadership position in the market, it may not enjoy EBITDA margins as high as in its core business.

As a Result, We Are Reducing Our Estimates
We are reducing our profitability estimates (now significantly lower than consensus) due to the following: 1) Google’s aggressive hiring plans, 2) rising salaries due to a competitive hiring environment, and 3) increased advertising spend to drive usage of new / existing products.

Our new CQ2 / C2011E EBITDA estimates are $3.44B / $14.5B, roughly 4% / 5% below consensus estimates. Our revised CQ2 / C2011E operating EPS estimates are $7.45 / $31.44, approximately 5% / 7% below consensus.

Notablecalls: Morgan Stanley has been a Google Bull since 2008. So that makes the call potentially a significant one.

LinkedIn (NASDAQ:LNKD): Initiating Coverage with a SELL and $45 price target - Capstone

Capstone Investments is making the call none of the other Wall Street firms want to make:

LinkedIn (NASDAQ:LNKD): Initiating Coverage with a 'SELL' and $45 price target - Price isn't the Only Risk

- The 18 pg note accuses the online recruiting firm of creative accounting, lower-than-advertised user base, high fixed cost business model and poor corporate governance.

All this they say, comes with a bubbly valuation not seen since 1990's. According to Capstone, their Street low $45 price target could prove to be too optimistic as the company fails to execute its ambitious business plan & insiders start dumping the shares. IPO lock-up expires in November 2011.

'... LinkedIn is an online professional identity and recruitment tool. Sprinkle on the "social media" moniker and in the Internet Bubble 2.0 you can price an IPO at $45per share, or 34% higher than the price talk midpoint, and the watch the stock rise to $94.54 - although it has been as high as $122.70 and as low as $60.14 over the sex weeks since LinkedIn's stock offering - to give this break-even business a $93.4 billion market cap. ... '

Paul Meeks, CFA at Capstone

The PDF file is copy-locked so I can only show you the Summary page of the note:


Notablecalls: There are two reasons why LNKD has only Buy ratings from major Wall Street firms:

- Merrill, JPM, Morgan Stanley & UBS were the underwriters. They need to keep their clients (both sides) happy.

- Facebook. The biggest IPO in recent memory is expected some time in 2012. Everyone wants a piece of the action and they are not going to get it by issuing Neutrals (or god forbid Sells) on other Social Media names.

That leaves the door open for Capstone to come in with a seriously scary story and a price target that should send people selling at least in the n-t.

I expect LNDK to trade down today, possibly to the tune of 5-10%, putting $89-85 levels in play.

Omnivision (NASDAQ:OVTI): Actionable Call Alert!

FBR Capital Market's Semiconductors team is out with a call on Omnivision (NASDAQ:OVTI) that I suspect could be a game-changer for the stock in the n-t.

- First I would note that FBR doesn't officially cover OVTI (yet!) but seems they stumbled upon the info while doing their Apple supply chain checks.

The firm discusses their iPhone/iPad estimates going up etc.. until it reads this buried in page 2:

We still expect the iPhone 4S (codenamed N94), to have an 8 mega-pixel camera though we hear reports that OmniVision may be having technical difficulties with its new CMOS sensor, possibly risking its iPhone socket supplier status. As reported previously, Apple’s iPhone 4S refresh has replaced Infinieon’s baseband processor with Qualcomm’s processor. Also of note, with 72.5M iPhones set for production through the first three quarters of 2011, 100M iPhone builds again seems reasonable for Apple this year. Given our new iPhone build estimates, for 2Q11 we now estimate Apple can sell a maximum of 21M units, and for 3Q11 we now estimate Apple can sell a maximum of 27M units (though actual sales will likely be lower as Apple builds more internal and channel iPhone inventory before holiday sales ramp in 4Q11.

Omnivision possibly out, Sony may pick up the slack. Our contacts tell us that Omnivision may have missed Apple’s commercial production deadline for products utilizing their BSI-2 architecture, and thus may have lost the lead supplier status for the image sensor socket to Sony. Omnivision’s BSI-2 technology is the world’s first 1.1-micron pixel architecture allowing for low-light sensitivity and accurate color reproduction for better overall image quality. Manufactured through Taiwan Semiconductor, it is built using a 300 mm copper process at the 65 nm node. However, we understand that yield rates at TSM have thus far been unacceptably low for commercial viability, and that the deadline for inclusion into the next iPhone has passed. Therefore, Sony could become Apple’s primary supplier of 8 mega-pixel CMOS image sensors for the next iPhone, with OmniVision possibly being a backup supplier. Many believed that Omivision would capture as much as 90% share of iPhone production, which may turn out to not be the case.

Notablecalls: FLASHBACK: February 23, 2011 - Sony could win all of initial iPhone 5 procurement orders - Baird

Baird's Tristan Gerra made a bold call just 2 days ahead of earnings saying Apple could potentially single source iPhone 5 sensors from Sony. This resulted in a 3 pt (15%) drop for the stock. OVTI was a 26 dollar stock back then.


The analyst was proven seemingly wrong as OVTI guided July qtr tad above guidance, implying all was good at Apple. The stock surged 10 pts as disgraced shorts fled the scene.

The consensus view became that OVTI's OmniBSI-2 technology would be in the iPhone 5 & Sony would at best be a me-too supplier.

That's until today.

FBR's ever-wonderful Semi team is saying OVTI is having real problems with the BSI-2 architecture as yields are way lower than expected. Low yields is the key to this call. You see, OVTI is converting its sensors to BSI technology because of better yields and lower defect densities.

I can't stress this enough but if OVTI cannot mass produce BSI-2 architecture, it means they can't get their stuff in the high end devices like the iPhones & iPads. That would mean consensus #'s are way too high.

Someone call the homicide unit because that would mean murder for the stock.

FBR could have it wrong with their checks. Maybe it was just a patch of BSI-2's that had bad yields & TSM being best in the business can turn it around for them. But with the stock 10 pts higher from where the concerns first surfaced, one can expect a rather painful reaction.

I would not be surprised to see the stock down 10% or more today after the FBR call makes the rounds.

That would be $31.50 or lower in the n-t.

Actionable Call Alert!

Netflix (NASDAQ:NFLX): Downgrade to Neutral - Merriman

Netflix (NASDAQ:NFLX) Merriman downgrading to Neutral on near-term margin pressures and limited upside to target

Netflix ran up to a new all time high yesterday on news of expanding into Latin America and Carribean. As such they confirmed what had been expected since earlier this year - that the most likely region for international expansion would be be Latin America. This is believed to be a very attractive market of broadband subscribers with expanding wealth due to less competition than in Europe or the UK. Netflix will offer its streaming-only subscription plan into 43 Latin American and Carribean countries during 2H11.

Merriman estimates that there are more than 40M broadband subscribers throughout Latin America and the Carribean, and given the 4% broadband subscriber penetration already achieved in Canada during the first 9 months, they see 5-10% penetration rate within the new regions during the first year. This would yield 1.9-3.8M subscribers and $180-360M in annual revenues(assuming $8.00/month subscription price).

Netflix seen to be entering a period of restrained operating margins. Although on the Q1 conference management increased their anticipated 2H11 operating losses from this year's international launch to $50-70M from $50M, the analyst believes the projected Y/Y declines in operating margins for at least the next year could begin to negatively impact investor perceptions of growth trends and appropriate valuation multiples.

Company could see increased international spend guidance as management has already increased the anticipated operating loss range with a likely desire to lock-up key content to gain a head-start over potential competition it would not be surprising if management increased the operating loss guidance again. While this decision would be positive for Netflix's long-term growth prospects, the analyst believes it would cause a near term shock to current earnings estimates and the valuation multiple.

Merriman's current valuation range of $300-330 is based on a P/E multiple of 45-50x FY12 EPS estimate (or a 1.0x PEG ratio). After the 89% increase in NFLX shares since their upgrade they now see less than 10% potential upside to the target valuation range. The analysts upgrade was based on the prospects of international expansion, which has now played out.

The analyst is recommending swapping into CSTR as a play on the ongoing transition within the physical home video segment along with a wild card on the pending announcement around Redbox's digital strategy and partner. He recently boosted the EBITDA estimates above guidance and consensus following a thourough analysis of 2011 DVD rental potential and he sees additional quarters of revenue/EPS upside near-term. Using a very conservative 5.5-6.0x FY12 EBITDA estimate multiple he believes CSTR shares can reach a valuation range of $72-79 (27-40% upside).

Notablecalls: You probably won't believe this but Merriman can actually move this name. Merriman had the Street high $300-$330 valuation range when the stock was in the low $200's.

What I like about this call is that it isn't too pushy. The analyst has been right but he is now becoming more hesitant regarding the upside. Tough yoy compares coupled with high valuation is not the best combo for a mo-mo stock.

Lots of trapped shorts there but the stock should come down on this. I'm thinking 285-280 range in the n-t.

This is the last thing people expect it to do, right?

Right?

First Solar (NASDAQ:FSLR): Home run on loan guarantees - Credit Suisse

The call of the day comes from Credit Suisse Solar team as they comment on First Solar (NASDAQ:FSLR) following an Associated Press report saying the company has won conditional loan guarantees for 3 of their Solar projects.

Here's the link: APNewsbreak: Solar loan guarantees announced

- CSFB is raising their CY11 EPS from $9.00 to $9.68; CY12 EPS goes from $9.92 to $14.03; their CY13 EPS goes from $8 to $12.62; CY14 goes from $3.70 to $9.29.

These are all hefty raises, now way above consensus.

- CSFB is raising their target on FSLR to $135 (prev. $100) noting the stock could over shoot to the $140-$150 level today to reflect longevity of earnings through 2013.

Here are some of the details:

Bottomline – raising estimates and target price. FSLR already had the Agua Caliente conditional loan guarantee in the bag, and had loaded the bases by submitting additional loan guarantees on three other projects to the DOE. Now the company has literally knocked the ball out of the park – with the Associated Press reporting that the DOE is expected to announce on Thursday that $4.5bb in additional conditional guarantees will be issued for FSLR projects.

Details: 1) $680mm for AV solar ranch; 2) $1.88bb for Desert Sunlight; 3) $1.93bb for Topaz. We had noted in several notes in the past, including most recently on Monday, that all three were in the running for a loan guarantee and the DOE had recently likely concluded the credit review of these projects. We had also noted that this week would be crunch time for additional loan guarantees. We were modeling FSLR will get one additional guarantee, but had noted all three projects were in the running. Getting all three additional guarantees is a positive surprise to our expectations, and we are therefore raising our estimates and target price.

The additional longevity of earnings at this high level is a key change in the equation – which could result in the stock trading up to $140-$150 levels. We are therefore using a simple DCF now to arrive at a new price target of $135 on the stock. Eventually the bear thesis will need to revert back to oversupply such that the panel business possibly loses money due to competition – but this is an issue the market may not focus on in the very near term.

Notablecalls: This is easily the most significant piece of Solar news this summer. These FSLR contracts were signed around 2008, which means the terms are very favourable in terms of pricing vs. today. The DOE loan guarantees provide very cheap financing, which further amplifies the profitability of the projects. The upside could be $5-6 in EPS in 2012/13.

Most analysts were expecting 1 or 2 of the projects to get DOE backing but NONE expected a slam-dunk (all 3) decision we got today.

Solar has been extremely out-of-favour sector evidenced by the whopping 46% short interest in FSLR. I would call this an explosive combo.

I expect FSLR to trade $140-145 range today. Yes, I'm expecting a $10-15 pt move.

U.S. Steel (NYSE:X): Deutsche upgrades to Buy; Goldman calls bottom in space

Steel stocks are getting very supportive comments from two tier-1 firms this morning:

- Deutsche Bank is upgrading both U.S. Steel (NYSE:X) and AK Steel (NYSE:AKS) to Buy from Hold with $56 & $17.50 price targets respectively.

Firm notes they could think of many appropriate titles for this report, but in a nutshell, they now view steel dynamics and investor sentiment as nearly the inverse of early 2011 when they downgraded the sector. Their upgrade is largely based on valuation, but they also believe that steel prices are nearing a 'floor'. Buy AKS and X in anticipation of steel price and demand inflection.

Steel correction healthy (necessary) and prices poised to bottom
DB says they viewed the HRC push to $900/st as negative, and reported average prices have declined to $740-750/st. Meanwhile, 'unreported' prices are below $700/st and inline with prior 'correction' expectation. They now forecast that benchmark US HRC prices will average $830/mt in ‘11 ($753/st) and $772/mt in ‘12 ($700/st); increased ~1% vs prior. Also, firm's demand outlook is unchanged as they expected NA growth of 7% and 5% in '11-‘12 and global gains of 8% and 6% respectively. Catalysts: steel prices and apparent consumption; seasonal trade could come earlier than normal

Deutsche believes that steel prices are approaching cost support (marginal cost) and could ultimately push supply out of the market. Scrap prices have been more supportive than expected in recent months and trade contacts suggest that nearterm (ex July) prices will be flat-to-up. Further, downtime announcements are likely forthcoming which they’d view as positive, if weakness persists (add’l declines of $100+/st are possible). Also, global steel prices are to become more supported including in China where they believe inventories and steel prices are near bottom. On demand, they expect the 'buyers strike' to end soon...here they find it interesting that recent conversations with consumers have focused on supply risks and when asked, most contacts recognize that end-demand remains 'ok. Also, they anticipate some improvements in industrial activity in 2H (ex. autos), and net-net, the firm thinks the seasonal steel 'trade' could begin earlier this year.

Valuation: risk-reward more favorable; AKS & X to Buy
DB notes their PTs imply average upside of 27% and steel stocks are near the low-end of trading ranges. AK Steel and US Steel shares are near levels from late ‘10 when US HRC was below $550/st. Also, their EV/t analysis shows that AKS and X are 'cheap' vs peers and historical trends, and their 'what's priced in’ analysis suggests the market is assuming below avg margins - AK appears particularly attractive using this tool. Regarding AK, the firm hasn't recommended it since early ‘10 and it has been a laggard on cost/other concerns.


- Goldman Sachs is out with a Scrap Steel sector call noting their latest channel checks indicate an upward bias (around $20 per ton) for July scrap prices, which is highly unusual considering seasonality and indeed very positive for providing cost support to steel prices. Almost all the input material costs (iron ore, coking coal and scrap) are either stable or rising going into seasonally slow summer months which underscores our view that steel prices could be close to a bottom.

Steel demand could also surprise to the upside in 3Q
Firm notes they had earlier estimated that the industry utilization rate would move close to 80% in seasonally strong spring period and then come down as we head into the summer months. Although this did not occur, they are pleased to see a steady state of demand and utilization rate hovering around 75%. Goldman believes that a typical summer slowdown in demand could be of a much lesser magnitude this year as auto industry is recovering at a rapid pace from the Japanese earthquake related supply chain disruptions.


Mini-mill margins at tipping point; steel prices should see support
Goldman notes that historically they have seen that when steel price reaches close to the cost of the lowest cost producers (mini-mills), it generally signals a bottom. And if there is some support from demand, prices generally bounce back. With expectations of busheling scrap to be around $530 per ton in July, they estimate mini-mill cost at around $680 per ton for HRC. At current level between $700 and $740 per ton, the firm sees very limited room for further degradation in steel prices. Barring any major downward correction in scrap prices in coming months, they believe that steel prices could bottom at above $700 per ton in this cycle, a very positive outcome considering that last year’s bottom was at round $540.


Notablecalls: Deutsche almost caught the recent top with their Steel sector downgrade, so with the firm now turning positive, people will likely take notice.

Regarding Goldman, this is a Scrap Steel call but as many industry watchers probably agree, scrap tends to lead the sector moves. I very much enjoyed reading their mini-mill comments.

So, with two tier-1 firms calling the bottom in Steel names, we can expect a strong upside move in the names today. The whole sector should be up.

My poison of choice is U.S. Steel (NYSE:X) which I think is the best mover in the group. I think the stock can do $45+ today.

Apple (NASDAQ:AAPL): Buy Apple for Summer Rally - Morgan Stanley

Morgan Stanley is making positive Research Tactical Idea call on Apple (NASDAQ:AAPL) this morning calling for a summer rally in the name.

- Deutsche analyst Chris Whitmore is also very positive this morning raising his #'s on AAPL.

Recent dip a buying opportunity. After meetings in Taiwan last week, they expect Apple order cuts to ease and iPhone / iPad production to begin ramping aggressively from August through year-end. Firm views the recent valuation pullback as a buying opportunity in light of the following factors, and issued a Research Tactical Idea on AAPL along with this note.

1) Post-Japan earthquake production constraints have eased, putting upward pressure on iPad shipments.

2) With improved component supply, Apple is negotiating price cuts with some suppliers, potentially boosting margins modestly in the June quarter and more in September.

3) Apple’s next iPhone will begin production in mid to late August and ramp aggressively into C4Q.

Shifting iPhone units into C4Q; CY11 estimates unchanged: To reflect a late C3Q iPhone launch, the firm shifts 2 million units from the September quarter to the December quarter but their full year estimate of 72 million units remain unchanged. An early September iPhone launch would drive upside to their lowered September quarter estimates, in their view.

Lower priced iPhones and TV are additional mid-term catalysts: Apple is forecasting a large iPhone unit increase in CY12 on the back of new products and potentially lower price points. Morgan Stanley also believes Apple is in the early design stages for a TV, which could add $19 billion and $4.50 of annual revenue and EPS longer-term.

- Deutsche Bank is also out positive on Apple this morning saying they expect the co to refresh the iPhone in September with two SKUs; namely the iPhone 5 and a lower-end iPhone 4S handset. With Nokia and RIMM struggling, the time is right for Apple to aggressively penetrate the mid range smart-phone market (i.e. $300-500 category) to dramatically expand its addressable TAM and market share.

Deutsche believes Apple could offer an unlocked iPhone 4S with a prepaid voice offering (parallels the 3G data plan vs. WiFi for iPad) which would drive significantly greater penetration into its 1.5B+ subscriber reach (2/3 are pre-paid) through 200+ carriers in 98 countries. They estimate an iPhone 4S model priced at $349 would likely be incremental to Apple’s corporate gross margin suggesting it can push down-market without negatively impacting profitability. The firm also believes near term iPhone 4 demand is tracking ahead of their previous expectation due to: the addition of 20+ new carriers in the Q, strong white iPhone uptake and wider global distribution.

Deutsche believes Apple’s international channel and related penetration opportunities are under appreciated and are raising iPhone and EPS estimates (DB at 74M iPhones in CY11 and 90M in CY12 vs. prior 71M and 85M, respectively). Although they expect Apple to move more aggressively into the midrange smartphone market, it is not currently captured in these estimates. Looking forward, they expect the upcoming iPhone / iOS upgrade and channel/carrier expansion to support strong iPhone demand over multiple quarters. Firm reiterates their Buy rating and $450 PT.

Notablecalls: It is certainly interesting to see two tier-1 firms out quite positive on Apple after a period of cautious-sounding data points. Needless to say, both are known bulls in the name.

Morgan Stanley has given their analyst teams a way to make shorter-term calls, called Research Tactical Ideas (RTI). For example, in AAPL's case they are calling for the stock to trade up in the next 60 days, giving this view a 70-80% or very likely probability of happening. That's a fairly bold statement & should generate some interest.

Also notice how the analyst is embracing the possibility of an Apple TV.

There are two interesting bits of info in the Deutsche call:

1) DBAB is calling for both unlocked iPhone 4S & a brand new iPhone 5. Lately, the consensus has shifted towards the view that there will be no lower-end iPhone. So there could be some upside there.

2) The firm is raising their iPhone ests for 2011 to 74M, which is actually above Morgan Stanley. I'm sure many of you know Morgan Stanley has been THE iPhone bull.

I think there could be some n-t upside in AAPL. RTI's usually generate immediate buy interest, so barring a market crash, the stock could be on the way up today.

I'm thinking $332+

Feedback appreciated.