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  • Intuitive Surgical Earnings Preview: Procedure Volumes In Focus
    Oct. 20, 2014 ISRG 5 Comments

    Summary

    • In the previous quarter, the da Vinci robot maker surprised the market with better-than-expected results, although both the top and bottom line continued to decline.
    • When the company announces its third quarter earnings, we expect overall sales to remain under pressure owing to lingering concerns surrounding its da Vinci robotic surgical system and a reduction in the number of robot-assisted surgical procedures.
    • Although a new system is likely to help improve da Vinci system sales going forward, we expect its uptake to be slow in the near term.
  • Netflix Sinks On Subscriber Growth Decline: Is The Market Saturating?
    Oct. 17, 2014 NFLX 3 Comments

    Summary

    • Even though company revenues were more or less in-line with expectations, domestic streaming subscriber additions fell significantly short of guidance.
    • Despite strong international growth potential, the U.S. still accounts for roughly 65% of Netflix's value.
    • We find some evidence of subscriber growth moderating and we believe that incremental customer additions will become difficult for Netflix.
  • Intel's Expanding Presence In Mobile And IoT To Help Drive Future Growth
    Oct. 16, 2014 INTC 9 Comments

    Summary

    • While Intel's growth in Q3 was led by strong performances in the PC and Data Center businesses, the company fared well in mobile and Internet-of-Things segments as well.
    • While the company continued to see growth in IoT, which grew 14.2%, its mobile revenue declined from $353 million in Q3 2013 to $1 million in Q3 2014.
    • We believe IoT's contribution to the company's total revenue can double over our review period.
  • Recovering In China Will Be An Arduous Task For Guess
    Oct. 15, 2014 GES Comment!
  • Salesforce.com Plans Entry Into BI Market With 'Wave'
    Oct. 14, 2014 CRM 1 Comment

    Summary

    • Through its new business intelligence cloud offering, Salesforce intends to provide customers with predictive analytics features.
    • Salesforce Wave is designed to make it easier for everyone to explore data, uncover new insights and take action instantly from any device.
    • Salesforce could benefit from a SaaS analytics platform, but competition is intense in the BI Market.
  • Netflix Earnings Preview: Strong Topline Growth Accompanied By Cost Concerns
    Oct. 13, 2014 NFLX 7 Comments

    Summary

    • Netflix is likely to see strong topline growth driven by domestic and international subscriber additions.
    • Margin growth may slow down as a result of incremental investment in the international segment.
    • Additional costs due to interconnection fee agreements with Internet service providers may have a small impact on profitability as well.
  • Should Cisco Split?
    Oct. 10, 2014 CSCO 12 Comments

    Summary

    • Cisco's current structure has often been criticized for being too complicated to make quick decisions and effectively compete against smaller players.
    • The company's stock also has under-performed compared to competitors and the market in general.
    • However, an "intact" Cisco also stands to benefit from its existing customer relationships and industry partners.
  • UPS Access Point Network Could Help Improve Margins And Competitive Edge
    Oct. 9, 2014 UPS 1 Comment

    Summary

    • The primary benefit that UPS would generate from new services is improvement in margins.
    • Apart from that, it will give UPS an edge in the increasingly competitive logistics industry.
    • While competitors provide similar services, the difference between UPS's Access Point network and the FedEx and Amazon services is the scale.
  • Will Symantec Benefit By Separating Its Storage Software Business?
    Oct. 8, 2014 SYMC Comment!

    Summary

    • Symantec is reportedly in talks to spin off its storage software and security software businesses into independent entities.
    • The company entered the storage management software market in 2004 with the acquisition of Veritas Software for approximately $13.5 billion.
    • If Symantec spins off the storage management software business, it would add to the trend of tech majors breaking themselves into smaller pieces.
  • PepsiCo Earnings Preview: U.S. Beverages And Russia Sales In Focus
    Oct. 7, 2014 PEP Comment!

    Summary

    • Beverages and snacks giant PepsiCo is scheduled to announce its third quarter results on October 9.
    • The company’s stock is up over 12% so far this year, more than the growth in chief rival Coca-Cola’s stock and the S&P 500 Index.
    • Analysts expect Q3 revenues to be up 1.2%-1.8% year-over-year, following two quarters of relatively flat growth.
    • We estimate an $89.92 price for PepsiCo, which is roughly 4% below the current market price.
  • Why We Believe Constant Contact Is Worth $30
    Oct. 6, 2014 CTCT Comment!

    Summary

    • So far in FY14, the company's quarterly results were better than consensus estimates.
    • This outperformance from the company hasn't been rewarded by the market, with gains reigned in by profit booking activity.
    • Constant Contact managed to accelerate its year-on-year revenue growth rate from 13.4% in H1FY13 to 15.7% in H1FY14.
  • How Significant Can Keytruda Be For Merck?
    Oct. 3, 2014 MRK 5 Comments

    Summary

    • In this analysis, we will estimate Keytruda’s revenue generating potential.
    • The overall melanoma patient count in the U.S. is estimated at a little over 640,000.
    • If Merck can grab even 10% of the addressable patient pool, Keytruda can earn close to $5 billion in annual revenues.
  • The Positive Side Of The Split Between eBay And PayPal
    Oct. 2, 2014 EBAY 6 Comments

    Summary

    • With the spin-off, PayPal will become more nimble and focused, which is necessary given the recent innovations in the payment processing industry.
    • Additionally, eBay will have more cash to fund its own operations instead of fueling PayPal's growth.
    • Investors are likely to benefit from capital gains as a spin off is usually a tax-free transaction and could unlock hidden value by increasing transparency.
  • Here's Why We Believe Cree Is Still Worth $58
    Oct. 2, 2014 CREE 9 Comments

    Summary

    • Despite reporting strong earnings growth this year, Cree’s stock price has declined by approximately 40% year to date.
    • Lower gross margin, doubts regarding the company’s capability to sustain its growth in the long term, and rising competition are some of the key factors contributing to the negative sentiment.
    • Our price estimate of $58 for Cree is at a 40% premium to the current market price of $41.
  • Amazon's CEO Believes In India's Growth Story
    Sep. 30, 2014 AMZN 19 Comments

    Summary

    • Amazon's management is showing a strong belief in India's growth story.
    • The country's GDP growth could get back on track this year and recent developments suggest there is a lot of interest from investors in e-commerce companies.
    • We believe India's e-commerce market will grow multi-fold over the next five years and, at some point, the Indian government will allow foreign direct investment in the country.
  • Key Growth Drivers For SanDisk's Embedded Storage Division
    Sep. 30, 2014 SNDK 5 Comments

    Summary

    • The growth in the number of smartphones and tablets sold worldwide should contribute positively to SanDisk’s embedded storage division.
    • Despite an expected decline in average selling prices for NAND flash per gigabyte in the coming years, the company expects its addressable market to grow at a CAGR of nearly 10% in the next few years.
    • We expect embedded storage to generate over $2 billion in revenues for SanDisk by the end of the decade.
  • Zynga Not Out Of Troubled Waters
    Sep. 29, 2014 ZNGA 10 Comments

    Summary

    • Zynga's web bookings are declining and the company expects its full-year bookings to total between $695 million and $725 million.
    • NFL Showdown game app saw lower than expected downloads and the upcoming game Loony Tunes Dash again suggests a lack of creativity and originality.
    • The company's licensing agreements with big brands continue to cast a doubt over its ability to create original gaming content.
  • Harley-Davidson's Lower Near-Term Outlook Might Not Mean That It Is Past Its Glory Days
    Sep. 29, 2014 HOG 2 Comments

    Summary

    • Harley-Davidson's stock has declined by over 12% in the last three months, falling by roughly 3% in the last week.
    • The American maker of cult heavyweight motorcycles had a rough sales patch since hitting its peak in 2006.
    • What could worry Harley’s investors and enthusiasts is slowing volume-growth, which has declined sequentially in the last couple of years, and is expected to fall again this year.
  • Intuitive Surgical: Concerns Remain But Expansion Into Emerging Markets Could Revive Growth
    Sep. 29, 2014 ISRG 12 Comments
  • Intel's Collaboration With Tsinghua To Expand Its Footprint In The Chinese Mobile Chip Market
    Sep. 26, 2014 1 Comment

    Summary

    • Tsinghua Unigroup is a government-affiliated private equity firm funded by Tsinghua University in China.
    • Intel will invest $1.5 billion for an approximate 20% stake of the holding company under Tsinghua Unigroup, which will own Spreadtrum Communications and RDA Microelectronics.
    • Spreadtrum and RDA are fabless semiconductor companies in China, developing mobile chipset platforms for smartphones, feature phones and other consumer electronics.
  • A Look At Loan-To-Deposit Ratios At The Country's Largest Banks
    Sep. 25, 2014 JPM, BAC, C 1 Comment
  • Market Potential For Baidu's Popular PC Faster Software
    Sep. 24, 2014 BIDU 6 Comments

    Summary

    • Baidu made news this week by announcing that its PC Faster software completed over 70 million downloads worldwide.
    • PC Faster is a software that tunes personal computers to enhance performance features.
    • Baidu claims PC Faster will be free forever, but we feel the immense market potential could lead it to turn this software into a revenue stream.
  • China Unicom's 3G - 4G Subscriber Adds Slow Down In August On Growing Competition, Dual 4G Strategy
    Sep. 23, 2014 CHU 2 Comments

    Summary

    • China Unicom reported a marked decline in 3G and 4G subscriber additions in August with about 1.3 million adds, compared to over 2.5 million in July and over 3 million in June.
    • In terms of high speed (3G and 4G) user gains, this was the carrier's weakest monthly performance in over three years.
    • China Unicom's performance was dwarfed by market leader China Mobile as well as smaller rival China Telecom.
  • What Justifies A $445 Price Estimate For Netflix?
    Sep. 23, 2014 NFLX 16 Comments

    Summary

    • To justify $445, Netflix will have to accelerate its profit growth in international markets, resort to further price increases and demonstrate business stability.
    • There exists upside potential from higher growth in average monthly revenue per subscriber.
    • International expansion could push quarterly net additions to as high as 2 million, but would lead to a negative impact on profits in the short term.
  • Growth In Client Base Could Offset Impact Of Weak U.S. Job Market On Paychex's Earnings
    Sep. 22, 2014 PAYX Comment!

    Summary

    • Paychex is set to release its first quarter fiscal year 2015 earnings result on Wednesday, September 24, before the market opens.
    • The weak job additions and increasing number of people dropping out of the labor force is not a good sign for Paychex's checks per client metric.
    • With the deadline of adherence to provisions of the Affordable Care Act approaching, adoption of Paychex's products catering to the Affordable Care Act should help increase its clients.
  • Oracle: Weak Hardware, New License Sales Dim Earnings As Management Changes Loom
    Sep. 19, 2014 ORCL Comment!

    Summary

    • Oracle's quarterly earnings per share stood at $0.62, at the lower end of its quarterly guidance and lower than analyst estimates of $0.64.
    • Oracle's cloud sales grew 31% to reach $475 million, compared to $363 million in Q1FY14.
    • Fiscal first quarter sales for new licenses stood at $1.37 billion, 2% lower than its fiscal Q1 2014 sales of $1.4 billion.
  • Google's Android One Initiative: The Impact On Samsung
    Sep. 18, 2014 SSNLF 6 Comments

    Summary

    • Through Android One, Google is looking to improve the user experience on low-priced smartphones, enticing customers in emerging markets to upgrade.
    • We believe the move could pose a threat to Samsung, the world's largest smartphone manufacturer.
    • The initiative could potentially compound Samsung's market share woes in emerging countries, where we expect much of the growth in the smartphone market to come from.
  • Google's Android One Platform: More Than Just Phones
    Sep. 17, 2014 GOOG, GOOGL 6 Comments

    Summary

    • Google One targets the low-end smartphone segment in emerging markets.
    • While newly launched phones are currently available in India, the company plans to roll them out to other developing countries in the coming months.
    • The wide launch strategy signals that competition in the smartphone industry in emerging countries is heating up, albeit at a lower price point.
  • DirecTV's Latin America Operations See Subscriber Growth, But Declining Currencies Stall ARPU Growth
    Sep. 16, 2014 DTV Comment!

    Summary

    • DirecTV, one of the largest pay-TV operators in Latin America with more than 12 million subscribers, has been growing at an average rate of 25% annually over the past few years.
    • While the company has been consistently growing its subscriber base, depreciating regional currencies has stalled ARPU growth over the past few quarters.
    • Given the currency trends in the region, we expect ARPU to continue to decline in the near term and stabilize in the medium to long run.
  • Alibaba's IPO Price Likely To Boost Yahoo's Stock Price Estimate
    Sep. 15, 2014 YHOO 45 Comments

    Summary

    • Yahoo has performed exceedingly well over the past month as its price has soared from $35 to over $40.
    • The primary reason for this trend has been Yahoo's 22.5% investment in Chinese online retailing giant Alibaba.
    • Yahoo will sell 121.73 million shares at Alibaba's market debut and provide underwriters an option to purchase an additional 18.26 million shares.
  • GE Intensifies Focus On Infrastructure Businesses With Sale Of Its Appliances Unit
    Sep. 9, 2014 GE 12 Comments

    Summary

    • On Monday, September 8 2014, GE announced sale of its appliances unit to the Swedish appliances maker, Electrolux.
    • GE tried to sell this unit back in 2008 as well, but talks with potential buyers at the time got stalled due to the onset of the financial crisis.
    • We currently have a stock price estimate of $28.33 for GE, about 8% ahead of its current market price.
  • Adobe Is Overvalued At $71
    Aug. 27, 2014 ADBE 3 Comments

    Summary

    • Adobe has rallied from $31 in August 2012 to its current market price of over $71.
    • The rally coincides with the launch of Adobe's Creative Cloud and its rapid adoption among creative professionals.
    • We believe the current market valuation of Adobe is stretched, even as the company has entered the digital marketing market to diversify its product portfolio.