Wednesday, December 11, 2013
5:27 PMViolin Memory CTO leaves company
- Violin Memory (VMEM) CTO Jonathan Goldrick has left the company, Business Insider reports. A company spokesperson told the site, "I can confirm Jonathan has left on good terms. His responsibilities are being shared by Violin's Founder and CTO Jon Bennett and CTO Som Sikdar."
- Rumors have swirled that CEO Don Basile could leave soon as well. Violin's spokesperson: "that is a rumor, and we cannot comment on rumors."
- Given Violin's torrent of struggles (shares are down 61.4% since highs notched after its foray into the public markets at the end of Sept.), and Fusion-io's own problems, Nimble Storage (NMBL), which set its IPO price range at $16-$18, may get a chilly reception by investors.
3:51 PMBarron's: Forestar trades at a big discount to NAV
- The 20% dip in Forestar (FOR +1.7%) shares since mid-October looks like a buying opportunity, Barron's writes, as FOR sells lots and realizes income from its oil and gas properties over the next year.
- FOR, which owns 132K acres of real estate in 10 states including in attractive markets in Texas, is on track to sell ~1,900 residential lots this year, more than double last year's 926 lots, and production in its burgeoning oil and gas unit is up 170% Y/Y.
- Proceeds from a recent equity offering, which raised $145M, while dilutive, will further develop FOR's real estate and energy properties in 2014, which could lead to a higher NAV over time.
2:59 PMFBR starts Cameco at Market Perform amid favorable long-term outlook
- Cameco (CCJ -1%) is initiated with a Market Perform rating and $24 target price at FBR Capital, driven by CCJ's leading position in the nuclear energy industry, solid production growth profile, high-quality asset base and a strong long-term contracting book.
- FBR has a favorable longer-term outlook for the uranium industry, given the 71 nuclear reactors under construction, which alone reflect ~23% of the current annual demand.
- In the near term, however, the industry remains plagued by an oversupply situation, idled nuclear reactors in Japan reducing demand and building up utility stockpiles, all of which could keep pricing below economic return levels and lead to industry-wide production cuts.
- ETFs: NLR, NUCL
11:09 AMFreeport McMoRan target upped to $45 at Nomura, citing catalysts ahead
- Freeport McMoRan (FCX +0.6%) is reiterated with a Buy rating and a new $45 price target, u;p from $38, at Nomura, which cites citing significant catalysts and growth drivers ahead.
- Nomura sees stock valuation potential of $55-$60 by 2017 depending on the extent of the potential MLP opportunity and future copper prices, which will influence the pace of debt reduction at FCX in 2015-17.
- The firm adjusts its FY 2013 EPS estimate to $2.54 from $2.60 and maintains its 2014 EPS outlook at $3.25.
Tuesday, December 10, 2013
2:39 PMSimmons picks nat gas winners: Cabot, Range, Southwestern
- As the weather forecast calls for another blast of harsh wintry weather along the east coast after a storm last weekend, Simmons analysts pick three natural gas stocks to play the strength in the gas markets: Cabot Oil and Gas (COG -1.1%), Range Resources (RRC -0.8%) and Southwestern Energy (SWN -1.1%).
- The firm says the three stocks are cheaper on cash flow multiples than valuation sheets may show because natural gas futures prices used to make those calculations are ~11% below current spot prices.
- Also, the stocks have been middling performers of late, which may tell investors that "the move in the forward strip may not be fully reflected in the equities."
12:23 PMSterne Agee likes Consol Energy as a top pick for 2014
- Consol Energy (CNX +1.8%) is Sterne Agee's top stock pick in coal, metals and mining; the firm admires CNX's low costs and growing gas production, and sees shares rising to $60 from the current $37-$38 in the coming year.
- The firm believes investors will increasingly support CNX's steps toward becoming an energy growth vehicle; generating value for some of its capitalized, non-core thermal coal assets while de-risking its balance sheet and providing accretive growth capital for its shale holdings should allow valuation to improve as coal and natural gas markets normalize.
- Other top energy and industrial favorites: GM, DHI, HAL, EXP, EGN, RAIL, PCP, CRS.
11:58 AMTenaris to benefit from Mexico energy reform, Citi says Buy
- Tubular goods and steel pipe provider Tenaris (TS -1.3%) has a long-standing relationship with Mexico's state-run oil company Pemex and will be a major beneficiary of Mexico’s transformational energy reform, Citi says in reiterating its Buy rating on the company with $54 price target.
- Most of Mexico's resource potential is located in areas that demand high premium OCTG content, the firm says, and TS supplies almost 100% of the OCTG demand in Mexico through its just-in-time contract with Pemex.
10:57 AMPDCE Energy upgraded to Buy at Stifel, shares +2.3%
- PDC Energy (PDCE +2.3%) is upgraded to Buy from Hold with a $75 price target at Stifel, which looks for PDCE to increasingly direct its ramping drilling program toward its core acreage.
- After drilling most of its Niobrara wells in the Wattenberg Outer Core over the past three years in order to save acreage and minimize gas pipeline constraints, the firm looks for PDCE to shift its drilling emphasis to the Middle Core of the play where well economics are superior.
Monday, December 9, 2013
5:42 PMAlon USA jumped 7% today after Deutsche Bank upgrade
- Deutsche Bank upgraded refiners Alon USA Energy (ALJ +7.4%), Valero (VLO), Phillips 66 (PSX) and Delek US (DK) to Buy from Hold, citing a bullish outlook given the over-supply of light sweet crude and the limitation of the crude export ban.
- Cabot Oil & Gas (COG) also is upgraded as shares have lagged due to a combination of regional pricing and growth fears; DB believes both are overplayed and sees the stock as relatively attractive vs. Marcellus peers.
- The firm downgraded Noble Energy (NBL) and Continental Resources (CLR) to Hold from Buy primarily on valuation; NBL remains a best-in-class company but its high quality multi-year program is increasingly understood and de-risked by the Street.
11:59 AMMemorial Production Partners earns a Buy from UBS
- Memorial Production Partners (MEMP -0.5%) is initiated with a Buy rating and $25 price target at UBS, which feels investors could continue to undervalue the young MLP pending more performance history.
- The firm believes MEMP provides one of the more attractive yields (~11%) in the upstream space with what the firm feels is a limited risk profile vs. peers, it boasts a reserve base transitioning from gas-focused to a more balanced oil/gas mix, it's diversifying geographically, and distributions have been well supported and grown significantly with acquisitions.
10:47 AMValero, HollyFrontier, Marathon upgraded by J.P. Morgan on wider oil spreads
- J.P. Morgan is the latest investment banker to turn bullish on refiners, upgrading HollyFrontier (HFC +2%), Valero Energy (VLO +1.8%) and Marathon Petroleum (MPC +0.9%) on its expectation for a larger difference between Brent and West Texas oil prices.
- The firm revises its view on oil prices, forecasting Brent prices averaging $105.50/bbl for 2014 and $100.30 for 2015 vs. WTI prices of $91.50/bbl for 2014 and $85.30 for 2015, suggesting a $14-$15 differential, which should increase U.S. refining margins.
- In particular, the firm believes HFC's inland refining system is "well positioned to benefit from growth in production of disadvantaged inland North American crudes, and expect(s) HFC to capture Brent-WTI price differentials as higher gross margins across the majority of its throughput."
- HFC is upgraded to Overweight from Underweight, VLO and MPC are raised to Neutral from Underweight, and Phillips 66 (PSX +1.5%) and Tesoro (TSO +1.2%) are maintained at Overweight.
Sunday, December 8, 2013
Saturday, December 7, 2013
10:30 AMBarron's top picks for 2014
- Barron's top 10 stock picks for 2014 shows an affinity for low P/E ratios, with 6 of the group sporting multiples of 10 or lower. The 2013 picks - which are up 35.2% on average, 900 bps ahead of the S&P 500 - had five names with single-digit P/Es. This year's list:
- A depressed play on a depressed commodity, don't be surprised if Barrick Gold (ABX) gets the attention of an activist investor next year.
- Up just 11% YTD, Canadian Natural Resources' (CNQ) free cash flow is set to quintuple to $5B in 2018 once the Horizon oil-sands facility expansion is completed.
- A rising world population needs food. At less than 10x earnings, Deere (DE) is the kind of company Warren Buffett might like to buy if it became available. "Stranger things have happened," writes Andrew Bary.
- Even after gaining 55% YTD, MetLife (MET) sells for less than 10x 2014 EPS and just above book value, but bigger gains are ahead once the company is given regulatory permission to buy back stock and boost its dividend. Met's also a good hedge against rising rates, as life insurers will benefit by having higher yields to invest in.
- The rest: Citigroup (C), GM, Intel (INTC), Nestle (NSRGY, NSRGF), Simon Property (SPG), U.S. Airways (LCC).
8:25 AMMerrill Lynch unveils its top 10 stocks to buy for 2014
- BofA Merrill Lynch is a more cautious buyer of stocks after this year's gains, and its top 10 large-cap stocks to buy for 2014 are mostly under-owned and unloved on Wall Street: ADM, Caterpillar (CAT), CenturyLink (CTL), Citigroup (C), Cisco (CSCO), DaVita (DVA), Exxon (XOM), GM, NextEra Energy (NEE) and Nucor (NUE).
- On CAT, the Lynch analysts point to high foreign sales prospects for 2014, and see strength in energy-related profits offsetting weakness in global mining; the firm has a $100 price target vs. ~$90 consensus.
- XOM is considered inexpensive compared to many large-cap energy names, it is expected to continue its large share buyback program and should increase the dividend; Lynch's target is $110 vs. $96 consensus.
- NUE is the ultimate contrarian play, as Wall Street is underwhelmed by steel stocks, but Lynch sees a rebound in commercial building as a big boost for 2014 earnings; the firm has a $60 target vs. $55 consensus.
Friday, December 6, 2013
4:51 PMJPMorgan, Berenberg see Nokia improving IP monetization
- JPMorgan's Sandeep Deshpande, who started coverage on Nokia (NOK +1.9%) today with an Overweight and €8 PT today, thinks the company would be worth €15/share if it could raise its mobile device royalty rate to 1%. Berenberg's Adnaan Ahmad predicts Nokia's rate "should gradually inflate to 0.75% over time as it renegotiates existing deals and aggressively monetises its IPR pool."
- Qualcomm, which has profited far more than any company from mobile IP licensing, often receives royalty rates in the 4%-5% range, though certain firms have negotiated lower fees via cross-licensing deals.
- The sale of Nokia's phone unit to Microsoft frees the company to become more aggressive in its efforts to license its ~30K patents, since it now only needs cross-licensing deals for infrastructure gear. Thanks to the sale, Deshpande thinks there could be opportunities to unravel cross-licensing deals with firms whose IP Nokia no longer needs (such as Apple).
- He adds a recent U.K. injunction scored by Nokia in its patent battle against HTC could have big implications, since it suggests an OEM's use of baseband chips supplied by Qualcomm (a Nokia licensee) doesn't mean it's protected from having to separately pay Nokia.
3:54 PMChart Industries -7% after cautious comments from William Blair
- Consensus earnings estimates for Chart Industries (GTLS -7.1%) are likely to drop, William Blair says after meeting with management; the firm sees slower China activity, uncertainty in biomedical, and issues concerning large heat exchanger projects pressuring gross margins in 2014.
- The firm keeps a Market Perform rating on the stock and believes GTLS remains well positioned longer term.
3:30 PMGolar LNG Partners -6.2% but still seen positively after expected deal
- Golar LNG Partners (GMLP -6.2%) is defended at Clarkson Capital, which reiterates its Outperform rating and $38 price target after GMLP reveals plans to offer 5.1M units; parent Golar LNG (GLNG +0.4%) will sell 3.4M GMLP units as part of the offering.
- The acquisition of the Golar Igloo from GLNG was expected before the vessel begins service on a five-year contract to Kuwait National Petroleum in March 2014, the firm says; the transaction value is in-line with expectations, and the firm believes GMLP has solid distribution growth potential and strong unit coverage.
2:49 PMRBC pessimistic on Agnico-Eagle Mines but upgrades Franco-Nevada
- Agnico-Eagle Mines (AEM -0.2%) is downgraded to Sector Perform from Outperform with a $31 target price, down from $38, at RBC Capital, the result of lower financial estimates generated by the firm's reduced long-term gold price assumption from $1,400 to $1,300/oz.
- The firm forecasts negative free cash flow at AEM in 2014 and believes the market will need to see capital and operating guidance before it re-rates shares higher.
- Meanwhile, RBC upgrades Franco-Nevada (FNV -0.2%) to Outperform with a $53 target, up from $43, citing operating royalties and new feasibility and development stage gold assets (Brucejack, Golden Meadows, Kirkland Lake, ABX royalty portfolio), which the firm says have the potential to add 8%-12% in annual revenue.
2:27 PMInvestor sentiment in big oil stocks may rise, HSBC says
- Big oil has remained out of favor with investors, but the companies’ robust underlying cash flows aren't being recognized, and investor sentiment may shift next year, HSBC says as it tags Royal Dutch Shell (RDS.A +2.8%) and BP (BP +0.8%) with Overweight ratings.
- The sector is under-owned by large institutional investors that hold stocks for the long term, so “it may not need too much of a shift in sentiment towards the sector to prompt increased weightings,” HSBC adds.
- Shell is a "good buy-and-hold stock for long-term investors, particularly those with a cautious market outlook,” the firm says, while BP is "close to the end of [its] rehabilitation period."