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  • Will Molycorp Be Delisted?
    Yesterday, 6:24 PM MCP 6 Comments

    Summary

    • Molycorp recently received an NYSE notice that the stock could be delisted after trading below $1 for 30 consecutive days.
    • With consistent cash burn and operating losses, I do not see any near term catalysts to drive the stock back above $1 for an extended period.
    • Investors should avoid MCP as an NYSE delisting appears imminent.
  • FMC Technologies Is A Short
    Yesterday, 2:28 AM FTI 2 Comments

    Summary

    • FMC Technologies provides products and services to oil and gas companies involved in deep water exploration.
    • Oil prices are in free fall and big oil companies are reducing investment.
    • The U.S. oil rig count is at the lowest level in nearly 18 months. The rig count is expected to fall further.
    • I expect FMC's forward revenue and earnings to decline as the oil industry contracts.
    • At 15x trailing earnings FMC is a short.
  • AbbVie Earnings Preview: HCV Cocktail In Focus
    Yesterday, 2:13 AM ABBV 11 Comments

    Summary

    • AbbVie reports Q4 earnings Friday before the market opens.
    • The company is heavily dependent upon HUMIRA, which currently accounts for about 65% of total revenue.
    • Its HCV treatment, Viekera Pak, was approved by the FDA in December and has been competitive in the marketplace against Gilead's Harvoni.
    • If management confirms that Viekera Pak is being prescribed in large amounts, it could drive the stock dramatically higher.
  • Qualcomm: Caught Between Apple, Samsung And A Hard Place
    Thu, Jan. 29 QCOM 42 Comments

    Summary

    • In Q1 Qualcomm beat on revenue and earnings, but lowered forward guidance.
    • Management alluded that Samsung could drop Qualcomm's Snapdragon 810 processor for one of its units - most likely the Galaxy S5.
    • Management also alluded that Apple's increased share as an OEM has changed its business mix, and lowered average chip unit prices.
    • Revenue and profitability could decline for the foreseeable future in the QCT segment. Qualcomm is a sell.
  • Valero: Evaporating Brent/WTI Spread Spells Trouble
    Thu, Jan. 29 VLO 49 Comments

    Summary

    • Valero reports Q4 earnings before the market opens on Thursday.
    • The average Brent/WTI spread has declined from nearly $12 in Q4 2013 to less than $1 through year-to-date January 2015.
    • Ethanol prices have fallen over 25% from their peak in Q1 2014. Valero gets over 10% of operating income from ethanol operations.
    • I expect the company to report weak guidance for Q1 2015 and beyond. Investors should avoid Valero.
  • Qualcomm Q1 Earnings: 4 Things You Need To Know
    Wed, Jan. 28 QCOM 16 Comments

    Summary

    • Qualcomm reports quarterly earnings after-hours on Wednesday.
    • Royalty disputes with customers and China's anti-monopoly investigation have provided headwinds to the stock.
    • Apple reported explosive iPhone sales on Tuesday. As a chip supplier for the iPhone 6, Qualcomm could benefit from iPhone sales.
  • Molycorp Hits 52-Week Low On DA Davidson Downgrade
    Mon, Jan. 26 MCP 5 Comments

    Summary

    • Molycorp hit a 52-week low after DA Davidson downgraded the stock on Friday to Neutral from Buy.
    • DA Davidson noted that production issues at Mountain Pass remains a major concern.
    • Investors should avoid the stock as production issues could amplify cash burn.
  • Could Samsung Be Setting Up To Hurt Micron?
    Mon, Jan. 26 MU, SSNLF 43 Comments

    Summary

    • Samsung is rumored to become the main supplier of application processors for Apple's new iPhone 7, replacing TMSC.
    • Last week sources claimed Samsung was replacing Qualcomm's Snapdragon chip inside the Galaxy S5 for the Exynos which is made in-house.
    • As Samsung grows its semiconductor business, I expect it to seek more market share in DRAM and NAND, hurting Micron.
    • Micron remains a hold.
  • Skyworks Beats Q1 Estimates On iPhone Strength
    Sun, Jan. 25 SWKS 14 Comments

    Summary

    • Skyworks' fiscal Q1 revenue and earnings topped analyst expectations.
    • As a supplier for the iPhone 6 and 6 Plus, the company is benefiting from sensational sales growth of Apple's first entry into the phablet space.
    • At 28x earnings, Skyworks' expected revenue and earnings growth appear priced into the stock.
  • Bankruptcy Rumors Hammer Molycorp
    Fri, Jan. 23 MCP 23 Comments

    Summary

    • Molycorp hit a 52-week low Thursday on fears of a debt restructuring.
    • A potential restructuring could take the form of debt forgiveness or a debt-for-equity swap.
    • Investors should avoid MCP on the potential for another dilutive event.
  • Precision Castparts Earnings Preview
    Thu, Jan. 22 PCP Comment!

    Summary

    • Precision Castparts is set to announce Q4 earnings after-hours today.
    • Last week the company warned revenue and earnings would be negatively impacted by weak demand from oil & gas distributors and destocking by aerospace clients.
    • I expect the company to deliver a weak outlook for 2015. At 16x earnings, investors should avoid PCP.
  • BlackBerry: Samsung Takeover Rumors Persist
    Wed, Jan. 21 BBRY 146 Comments

    Summary

    • Canada's Financial Post is reporting Evercore Partners has outlined a case for Samsung to acquire BlackBerry.
    • BlackBerry was up over 7% after-hours Wednesday on the news.
    • The rumor comes as Samsung's smartphone sales are in free fall.
    • In my opinion, BlackBerry can offer superior returns to investors on its own.
    • Any potential deal would come at a huge premium to BlackBerry's current price of $9.93 per share.
  • 2 Metrics That Will Make Or Break Netflix
    Tue, Jan. 20 NFLX 3 Comments

    Summary

    • Netflix is set to report Q4 earnings after-hours today.
    • The market is expect 5% sequential growth in revenue and 4 million subscribers.
    • Cost of sales - currently 68% - will be another key metric as competition for content is expected from CBS and HBO.
    • A miss on any key metrics could cause double digit sell-off akin to Q3 2014. Netflix is a hold.
  • Baker Hughes To Lay Off 7,000 Employees As Oil Prices Free Fall
    Tue, Jan. 20 BHI Comment!

    Summary

    • Baker Hughes delivered stellar Q4 earnings, but announced 7,000 layoffs as oil drilling declines.
    • Oil prices are in free fall, and I expect the company's revenue and earnings prospects to decline in Q1 2015.
    • The company's 14x full-year 2014 earnings multiple is unjustifiable given declining growth prospects.
    • Baker Hughes is a sell.
  • Gilead, Abbvie Price War May Reach Fever Pitch In Europe
    Tue, Jan. 20 GILD 41 Comments

    Summary

    • Last week European regulators approved Abbvie's HCV cocktail.
    • European health systems have garnered steep discounts on Gilead's HCV treatment. Abbvie's presence may trigger a price war.
    • The HCV market is expected to exceed $19 billion in 2016 - big enough for both companies to make money.
  • Schlumberger's Q4 Earnings Portend Protracted Decline In Oil Industry
    Mon, Jan. 19 SLB 18 Comments

    Summary

    • Schlumberger's Q4 revenue and normalized earnings were flat sequentially.
    • A $1.8 billion restructuring charge included $296 million related to 9,000 job cuts, as Schlumberger and the overall oil industry contract amid declining oil prices.
    • Current oil prices are 56% below their June 2014 peak, and may fall further.
    • I expect revenue and earnings to decline going forward. At 15x normalized earnings, Schlumberger is a sell.
  • BlackBerry Up On Reported Samsung Takeover Interest
    Wed, Jan. 14 BBRY 18 Comments

    Summary

    • Reports have surfaced that Samsung has approached BlackBerry about a potential takeover. The stock soared 30% on the news.
    • The stock fell after hours after BlackBerry denied takeover talks.
    • Samsung appears desperate for any solution to its own smartphone woes.
    • A deal would be improbable since BlackBerry is months from executing its strategic plan and delivering superior value to shareholders.
  • Premier Oil Tanks 7% On $300MM Impairment Charge - Who's Next?
    Wed, Jan. 14 PMOIF 4 Comments

    Summary

    • Premier Oil opened down 7% after warning it would incur a $300MM (after-tax) impairment charge on assets due to declining oil prices.
    • Its slowing top line growth, declining operating margins and impairment charge may be a harbinger for the oil industry.
    • Rising oil prices appear to be correlated to the Fed's quantitative easing.
    • Now that the Fed has taken away the punch bowl, oil prices should remain low. Investors should avoid oil stocks.
  • Avoid SanDisk On Declining NAND Pricing Power And Gross Margins
    Wed, Jan. 14 SNDK 8 Comments

    Summary

    • SanDisk warned fourth quarter revenue would be at least 6% below previous estimates.
    • Weaker sales occurred in the retail channel and in iNAND products (from 24% - 32% of revenue).
    • Industry chatter suggests Samsung's crumbling smartphone sales left it with excess NAND supply, which it dumped onto the market.
    • Declining pricing power and gross margins are not expected to abate any time soon. Investors should avoid SanDisk.
  • Micron Hit By Reported Samsung DRAM Expansion
    Wed, Jan. 14 MU 40 Comments

    Summary

    • Northland Securities is reporting that Samsung has plans to ramp up capacity in DRAM.
    • Micron fell nearly 3% Tuesday on the news.
    • With 68% of its revenue coming from DRAM products, Micron is extremely vulnerable. Micron remains a hold.
  • Abbvie Retreats On Gilead, Anthem Deal. Buying Opportunity?
    Mon, Jan. 12 ABBV 66 Comments

    Summary

    • Abbvie declined nearly 3% on the recent HCV deal Gilead struck with Anthem.
    • BofA also downgraded ABBV, citing expectations are already priced into the stock.
    • If Abbvie receives its share of the HCV pie, it should exceed analysts' expectations for 2015.
  • Gilead Strikes Hep-C Deal With Anthem. Stock Remains Strong Buy
    Mon, Jan. 12 GILD 10 Comments

    Summary

    • Thursday Anthem made Gilead's Harvoni its primary HCV treatment for patients.
    • Anthem extracted a discount to Harvoni's $94,500 headline price.
    • Lower average sales prices from Abbvie competition and insurer demands are already priced into the stock.
    • At 14x run-rate earnings Gilead is ridiculously undervalued. The stock is a strong buy.
  • 3 Reasons Why Micron Is A Hold
    Fri, Jan. 9 MU 34 Comments

    Summary

    • Expected chip expansion by Samsung could hurt DRAM prices.
    • Increased pricing power by Apple - a key client - could also negatively impact chip prices.
    • Factor in stiff economic headwinds, sans QE, and Micron is a hold.
  • Samsung Warns Operating Profit Down 37% - Avoid The Stock
    Fri, Jan. 9 SSNLF 2 Comments

    Summary

    • Samsung warned that operating profit for December 2014 quarter-end was off 37%.
    • Smartphone sales may still be in free fall amid competition from Apple, Xiaomi and Lenovo.
    • Samsung is attempting to diversity its revenue stream, but investors should still avoid the stock.
  • Avoid Sony On Crumbling Smartphone Sales, Diminution Of Movie Franchise
    Wed, Jan. 7 SNE 15 Comments

    Summary

    • Crumbling smartphone sales are expected to cause Sony a loss of $2.1 billion for fiscal year-end March 2015.
    • Sony is retrenching from the smartphone market in China and has limited distribution in the U.S. The overall outlook is dismal.
    • In addition, leaked movies may cause a short-term diminution in the pictures segment.
    • Investors should avoid Sony.
  • Bankers Face BlackBerry Dilemma As EZ Pass Program Expires
    Thu, Jan. 1 BBRY 125 Comments

    Summary

    • Bankers are considering ending their love affair with BlackBerry once the EZ Pass program ends in February.
    • Bankers question BlackBerry's lack of popular consumer products and its ability to operate as a going concern.
    • BlackBerry's ability to manage non-BlackBerry devices securely should assuage bankers.
    • Going concern issues should dissipate by Q1 2016 when new handset sales kick in and EZ Pass customers migrate to BES 12.
  • 3 Reasons Why Morgan Stanley Is Wrong About BlackBerry
    Dec. 30, 2014 BBRY 131 Comments

    Summary

    • Morgan Stanley recently downgraded BlackBerry to "Underweight" with a $7 price target.
    • Analysts have lowered their BBRY FY16 revenue bogey, so meeting FY16 expectations is now easier.
    • Based on book value alone, BlackBerry is worth $6 - $8 per share.
  • BlackBerry: 2 Factors Working Against Shorts
    Dec. 29, 2014 BBRY 79 Comments

    Summary

    • Despite revenue declines of 34% Y/Y, BlackBerry delivered solid results for Q3.
    • Non-GAAP earnings per share was $0.01 and cash flow was $43 million.
    • Positive cash flow and over $3 billion of cash and investments may stymie shorts.
  • BlackBerry: Buy Downside Protection As Analysts Grow Cautious
    Dec. 18, 2014 BBRY 95 Comments

    Summary

    • BlackBerry reports fiscal Q3 results on Friday.
    • Incremental sales from the Passport could be muted by declining service revenue.
    • I advise investors to remain bullish long-term, but buy downside protection "just in case".
  • Molycorp Hits 52-Week Low On Debt-For-Equity Swap
    Nov. 24, 2014 MCP 35 Comments

    Summary

    • Molycorp announced a $38MM debt-for-equity swap with certain convertible bondholders.
    • The stock fell 10% to a 52-week low of $1.12 as the deal will increase shares outstanding.
    • The transaction is a de-facto equity raise.
    • I rate the stock a hold due to the potential for future debt-for-equity swaps.
  • Molycorp: After Q3 Cash Burn Of $48MM, Is S&P Upgrade Imminent?
    Nov. 21, 2014 MCP 19 Comments

    Summary

    • For Q3, Molycorp surprised the market with cash burn of $47 million.
    • With cash on hand of $313 million, it appears to have enough liquidity to sustain itself for the next 12 months.
    • An S&P upgrade could be imminent.
  • BlackBerry Needs To Sell 8MM - 9MM Smartphones To Meet FY16 Revenue Bogey
    Nov. 20, 2014 BBRY 112 Comments

    Summary

    • Morgan Stanley downgraded BlackBerry to "Underweight" due to concerns over revenue projections.
    • FY16P service and software revenue of $850MM and $500MM, respectively, implies the bogey for handsets/other revenue is $2.45B.
    • At a price of $275 - $300 per unit, BlackBerry needs to sell 8MM - 9MM handsets in FY16.
    • CEO John Chen previously estimated 10MM units sales were needed to break-even. I'm all in.