MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, May 23, 2013
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2:57 PM Even as H-P (HPQ +15.6%) shares enjoy another big rally in the wake of last night’s quarterly results, Topeka Capital's Brian White sees only a "sugar high... not a sustainable trend." While the upside excites bulls in the short-term, the fact remains that H-P’s profits and sales have dropped for seven quarters in a row, he says, maintaining his Sell rating and $12 price target. Comment!
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2:18 PM Shanda Games (GAME +16.4%) rips higher despite a subdued Q1 earnings report. During an earnings call, the company highlighted its mobile game launch progress, saying Million Arthur launched already in Korea, and in Taiwan on the Android and iOS platforms and will hit Mainland China and Singapore this summer. (transcript) Comment!
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1:55 PM Topeka initiates InvenSense (INVN +0.2%) at Buy and assigns a $16 price target, representing a 29% upside from yesterday's close. Analyst Suji De Silva cites the company's market leading position in motion sensing functionality. (See also: Pac Crest says INVN to gain AAPL as client) 1 Comment
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12:17 PM Cirrus Logic (CRUS -17.2%) plummets after an investment presentation (Barclays Global Tech, Media, and Telecommunications Conference) in which it mentions "increased pricing pressures in the smartphone markets" and says "revenue for the fiscal year [will] likely [be] impacted by an expected decline in average selling prices" (slide 18). 3 Comments
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12:13 PM Dover (DOV +4.8%) is upgraded to Buy from Neutral with a $90 price target at BAML following news it is spinning its Knowles and Sound Solutions businesses into a new public company. The firm had been concerned about DOV's exposure to Nokia (NOK) and Blackberry (BBRY) platforms as well as the pace of the value ramp up on Apple's (AAPL) iPhone. Comment!
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11:11 AM The broad selloff isn't touching H-P (HPQ +14.2%) following last night's earnings. Jefferies' Peter Misek weighs in with an upgrade from Sell to Hold. He praises H-P for having the discipline to sacrifice PC market share to retain profitability (unlike DELL; Whitman (transcript): "Maybe that's what you do when you're about to go private.") Misek also likes the cash flow guidance of $7.5B - "(it) materially changed our view of H-P margin, cash flow, and EPS prospects." 1 Comment
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11:02 AM Dish Network (DISH -1.4%) warns the Committee on Foreign Investment review of the proposed SoftBank (SFTBF.PK)-Sprint (S +0.1%) transaction highlights the serious national security risks the deal could pose. In particular, the company points to the potential use of Chinese-manufactured equipment on a foreign-controlled Clearwire network. 1 Comment
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9:35 AM Deutsche's upbeat outlook for HDD names comes in a note which also contains cautious words from analyst Sherri Scribner on contract manufacturers. Fabrinet (FN -9.6%) may suffer from "continued struggles in the optical market," she says, and Sanmina's (SANM -5.9%) "lack of revenue growth" is disconcerting. Both names are downgraded as is Flextronics (FLEX -2.9%), whose price target is maintained at $8, but is cut from Buy to Hold. Comment!
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9:03 AM Sanmina (SANM) -3.6% premarket after Deutsche Bank downgrades shares to Sell from Hold after rising 23% YTD "without a change in fundamentals or an improvement in profitability or revenue growth." The firm also is more conservative on a back-half recovery in the telecom and networking markets, which comprise ~50% of SANM's sales. Comment!
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8:19 AM Deutsche Bank's Sherri Scribner (who likes the HDD space) upgrades Seagate Technology (STX) to Buy from Hold and raises the price target on it ($46 from $40) and shares of Western Digital (WDC). She says outperformance stemming from "the impact of the Thailand floods, which reset pricing and profitability higher" and industry consolidation will continue to benefit the two companies which Jim Chanos recently called value traps (STX is his favorite short). Meanwhile, SA contributor Sneha Shah also likes the industry consolidation thesis. (See also: Lazard's PT boost for WDC) STX +.85% premarket. 2 Comments
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7:44 AM Dover (DOV) will spin off certain of its communication technologies businesses into a standalone, publicly traded company. The transaction should be completed early next year. Upon completion, Dover's annual revenue, on a pro-forma basis for 2013, will be $7.4B-$7.6B. Comment!
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7:31 AM Motorola Solutions (MSI) is maintained a Neutral at MKM Partners despite upbeat management comments at an analyst meeting yesterday. MKM sees the potential for more guidance cuts this year, noting the company maintained H2 forecasts despite missing its Q1 target and cutting its Q2 outlook. MKM notes more significant news from the meeting: The implementation of a holding-company structure for overseas units that should lower the 2013 effective tax rate to 10-15% from 32-33%. Comment!
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7:14 AM Cisco (CSCO) is reaffirmed a Buy with $26 price target at Citigroup which says the firm's economic leverage is under-appreciated. More earnings surprises could drive the shares to $30, says the team. Cisco off 1% premarket, inline with the Nasdaq 100. Comment!
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5:18 AM Lenovo (LNVGY.PK): FQ4 net profit of $127M beats by $20M. FQ4 revenue of $7.83B (+4% Y/Y) misses by $140M. Full year net profit of $635.15M beats by $16.91M. Full year Revenue of $33.87B (+15% Y/Y). Comment!
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Wednesday, May 22, 2013
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6:37 PM In its earnings call today, Hewlett-Packard (HPQ) CEO Meg Whitman remarked that its position in the PC market has been boosted by recent efforts to sell tablets powered by Google's (GOOG) Android, thus allowing it to compete in tablets again after discontinuing its Palm/webOS TouchPad in 2011. "If we have the right product and the right price, the channel still loves H-P and they want to sell our products," Whitman said. "Frankly, having Android products helps a lot." (Webcast) Shares +13.3% AH. 3 Comments
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5:28 PM OCZ Technology (OCZ) says it's received a letter from Nasdaq indicating that the company's failure to timely file its 10-K for the fiscal year ended Feb. 28 would be considered in determining OCZ's continued listing on the exchange. The letter was anticipated by the company, which has presented a plan to regain compliance and requested additional time. Shares +3.8% AH. Comment!
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