Tuesday, October 25, 2016
- TheStreet's Adam Feuerstein says Corbus (NASDAQ:CRBP) is “headed for a big fall,” citing an unidentified healthcare fund manager who previously shorted Mast Therapeutics, CytRx, Immunomedics and others.
- Resunab, the only drug in Corbus' research pipeline, doesn't work, he says.
- Corbus is due to announce top-line results from mid-stage clinical trial of resunab later this quarter.
- Shares have gone from $1.50 in Jan. to almost $10 earlier this month. Today they're -23% to $6.85.
- For contrast, here are JMP and Noble's notes on CRBP.
- See J.P.Morgan note here
- JPM has a $13 price target on SGMO (vs. current $3.85).
- Says SGMO's hemophilia therapy may be more potent than BioMarin and Spark's.
Tuesday, October 18, 2016
- Halliburton (NYSE:HAL) reports earnings tomorrow morning. DA Davidson expects a beat (revenue/EBITDA/EPS of $3.95B/$486M/$(0.05) vs. consensus of $3.90B/$469M/$(0.07)).
- "Based on the strength of the recovery in the North American rig count and continued market share gains during the downturn, we expect HAL’s 3Q16 results to largely beat current top and bottom line expectations. Although, it may take a few more quarters for larger operators (HAL’s core customer base) to adjust capex budgets and increase activity, a slight miss would only add to the trajectory of future earnings."
- "We expect the level of service intensity to increase significantly in coming quarters as larger operators gain comfort with the recovery in commodity prices and adjust 2017 capex budgets higher."
- Increases price target to $57 from $54. Implied upside 23%.
- Recent conversations with industry partners indicate strong renewal and net new business in ServiceNow's (NYSE:NOW) Q3, Piper Jaffray analyst Alex Zukin writes in a note.
- Piper thinks NOW will beat consensus in Q3, which will act as a positive catalyst for the shares.
- NOW is -12% YTD, and trades at a 14% discount to Workday (WDAY).
- Zukin is Overweight NOW with a $90 price target. Implied upside 18%.
- Biotech industry offers "attractive buying opportunities" given pre-election weakness, Jefferies says.
- Valuation multiples are near-historic lows; policy concerns are likely overstated.
- Firm recommends using weak sentiment to buy attractive names. Likes: Gilead (NASDAQ:GILD) and Celgene (NASDAQ:CELG) in large-caps, The Medicines Co. (NASDAQ:MDCO), Alkermes (NASDAQ:ALKS) and Vertex (NASDAQ:VRTX) in mid-caps. Alder Biopharmaceuticals (NASDAQ:ALDR), Cempra (NASDAQ:CEMP), Ultragenyx (NASDAQ:RARE) and Immunomedics (NASDAQ:IMMU) in small-caps.
- Almost Family's (NASDAQ:AFAM) acquisition of Community Health's (NYSE:CYH) home health assets is "very accretive" and not adequately reflected in its shares, Jefferies analyst Brian Tanquilut says.
- The deal underscores Almost Family's low valuation. Tanquilut says AFAM is "meaningfully undervalued." Maintains Buy rating and $58 price target. Implied upside 44.5%.
- AFAM is up another 3.6% today to $40.15.
- Merck's (NYSE:MRK) Keytruda may get used more broadly than expected, with uptake in first-line lung cancer likely being “very rapid,” Bernstein says.
- Firm cites post-ESMO survey of 130 U.S./EU oncologists.
- Says Keytruda should gain market share in second-line lung cancer due to “halo effect.”
- Bernstein adds that the market perception of Bristol-Myers's (NYSE:BMY) Opdivo is “substantially diminished.”
- Price target on MRK is $74. Implied upside 19.4%.
Monday, October 17, 2016
- "After 18 months of intense corporate challenges caused by their prior rapid growth, regulatory fines and sanctions, and spillover from what I consider bad behavior from a conflicted lobby group, Ocwen (NYSE:OCN) has now turned the corner and is on road profitability," writes John Devaney updating his bull thesis on the company in a sizable report, which also touches on other industry participants like ASPS, NRZ, NSM, WAC, and PHH.
- "The past four months have seen a series of meaningful events that have greatly de-risked the company and added credibility to the management and the company’s reputation."
- The stock represents deep value, says Devaney, noting tangible book value north of $10 per share, a stock price of just $3.60, and possibly $1 per share in earnings next year. He's got a price target of $6.75 by year-end 2017.
- Appearing on CNBC following David Tepper ("pretty cautious, not downright bearish"), Carl Icahn says a lot of companies are "way overvalued."
- "Uniquely undervalued," however, are Xerox (NYSE:XRX), Cheniere (NYSEMKT:LNG), and AIG, says Icahn.
- Herbalife (NYSE:HLF): "I don't understand why there's a 25M share short position ... Could be the mother of all short squeezes."
- Twitter (NYSE:TWTR)? "I haven't looked at Twitter. I'm not going to comment."
Sunday, October 16, 2016
- "Value investing works like clockwork, but sometimes your clock has to be very slow," says Joel Greenblatt, asked in a Barron's interview about the recent underperformance of some of his funds. The man behind the classic "You Can Be A Stock Market Genius" also published a barely-read "The Big Secret For The Small Investor" five years ago, noting, among other things, that average investors tend to dump good strategies at precisely the wrong time.
- Favorite longs in his long/short portfolio now include Apple (NASDAQ:AAPL), with double-digit cash flow yields vs. the S&P 500 at less than half of that. "People worry that it’s effectively a hardware company that will crash and burn. But it’s also an ecosystem of products that play with one another and a brand people like."
- He owns not just Apple, he says, but a "bucket" of Apples - companies with gushing cash flow, huge returns on capital, and nice market niches. Qualcomm (NASDAQ:QCOM) and CVS fit the bill.
- On the short side is Salesforce.com (NYSE:CRM) at 218x pretax earnings and 7x sales. Even if optimistic earnings estimates prove true, it's still selling for 50x. Others include Costco (NASDAQ:COST) - a great retailer, but still a retailer - at 28x earnings, but not growing and also competing with Amazon. Another is Caterpillar (NYSE:CAT), which has fans thanks to its 3.5% yield, but doesn't earn enough to pay that dividend.
- Gotham funds: GENIX, GARIX, GONIX, GINDX
- Barron's recommends U.S. Steel (NYSE:X) for risk-tolerant investors.
- Says the company's prospects can improve as it continues its fight against predatory Chinese trade practices, slashes costs, and renews supply contracts at now-higher steel prices.
- But the stock is a gamble due to steel price volatility; analyst price targets vary wildly, ranging from $7 to $37.
- A rebound in results near-term could start a virtuous cycle that allows the company to invest in new furnaces that help better control output and shift to making more high-value steel, all while paying off debt and strengthening its pension plan.
- The $37 price target is held by JPMorgan's Michael Gambardella, who argues that China has begun to reduce steel capacity, and that U.S. Steel's profits should rise quickly as its supply contracts expire and new ones factor in this year's higher steel prices. At its historic average of 5.8x Ebitda, he says shares could reach his target by Dec. 2017.
- Shares closed Friday at $16.42.
Friday, October 14, 2016
- Cantor downgrades bluebird bio (NASDAQ:BLUE) to Sell from Hold.
- At an Investor/Analyst event yesterday, BLUE disclosed yesterday that all future LentiGlobin trials going forward will use its improved manufacturing process, and those trials are just beginning. Initial data may not become available until 2018. Meanwhile, the stock has rallied over the last couple of months in anticipation of the ASH conference in December.
- Drops price target to $37 from $42.
- See the full note here »
- Meanwhile, Leerink boosted its PT on BLUE ot $80 from $67, citing LentiGlobin improvements and what it sees as increased chances of success in more difficult to treat patients.
- See the full note here »
- Shares -2% premarket to $63.90.
- Wedbush lowers its price target on Tableau Software (NYSE:DATA) to $65 from $70.
- Remains positive on shares due to valuation and DATA's appointment of a senior AWS executive (Adam Selipsky) as CEO in late August.
- Says investors should wait until after Q3 results to gain more clarity on the trend for DATA's ratable bookings mix before accumulating shares.
- Channel checks suggest that ratable/subscription activity continues to expand modestly in the mix.
- DATA has a lot of work to do to build more enterprise selling capability at all levels of its sales organization; has made some progress.
- Shares are -48% YTD.
Thursday, October 13, 2016
- Dividend strategies in general have done well this year, and dividend growth has outperformed since interest rates began their sharp rise in late summer.
- Evercore's Ahbra Banerji suggests even better returns by adding a screen for low payout ratios. Banerji and team tested large-caps, mid-caps, and small-caps, and found combining dividend yield, payout ratio, and growth outperformed simpler dividend strategies.
- His top picks using that troika: VF Corp (NYSE:VFC), with a 2.6% yield and 53.4% payout ratio; Tiffany (NYSE:TIF) 2.3% yield and 48.2% payout ratio; Marathon Petroleum (NYSE:MPC) 3.3% yield and 36.3% payout ratio; Phillips 66 (NYSE:PSX) 3% yield and 41.1% payout ratio; BB&T 3% and 42.7% payout ratio.
- ETFs: DVY, VIG, SDY, SCHD, NOBL, SDOG, ADX, DLN, DGRW, DHS, FDL, DTD, FVD, DVYL, PFM, SDYL, DGRO, JTD, LCEAX, RDVY, DIVC, REGL, LEAD, FDRR, FDVV
Monday, October 10, 2016
Friday, October 7, 2016
Thursday, October 6, 2016
- The European banks have gone "from value trap to value trade," says the team at Citigroup, noting the group is the worst-performing region/sector out of 285 tracked over the last 10 years.
- Fundamentals still aren't great, they acknowledge, but bank valuations on both a relative and absolute basis make them a buy.
- ETF: EUFN
- Individual names: DB, SAN, CS, UBS, ING, BBVA
- BMO Capital upgrades Ionis Pharma (NASDAQ:IONS) to Outperform from Market Perform following yesterday's news that Alnylam (NASDAQ:ALNY) had discontinued its Revusiran program after observing an imbalance of deaths in treated patients.
- "We are increasing our TTR-Rx revenues in familial amyloidotic cardiomyopathy (FAC) and wild-type (wt) to reflect no competition, which is partly offset by a lower probability of success (45% from 50%), given similar drug mechanisms. Consequently, our price target increases to $48 from $42. We believe IONS shares could be pressured as investors perceive added risk to TTR-Rx. We recommend buying on weakness."
- In pre-market trading, IONS is -1% and ALNY is -43%.
Wednesday, October 5, 2016
Saturday, October 1, 2016
- A holder of the original Liberty Media in 2004 - prior to the split of its U.S. and international assets into separate companies - would have seen annualized returns of 13% vs. 7.5% for Berkshire Hathaway and 7.7% for the S&P 500, according to Gamco's Christopher Marangi.
- While the complex structure of Liberty's businesses and assets - housed under five main corporate structures, and within that group nine stocks, including seven tracking stocks - can make it challenging for investors, there's plenty to gain from taking the time to understand it.
- A handy guide is here.
- "The Malone magic formula starts with good businesses that are within his core competency, then putting the right management teams in place and leveraging those companies appropriately,” says Marangi, noting one of Gabelli's golden rules is be on the same side of the table as John Malone.
- Tickers: LSXMK, LMCK, BATRK, QVCA, LVNTA, LBTYK, LILAK, LBRDK, LTRPA, LMCA
Friday, September 30, 2016
- SA author Don Dion recommends going long Noble Midstream Partners (NYSE:NBLX) before the quiet period ends on Oct. 9. Thesis:
- NBLX has performed very well since the IPO, gaining 23.6%. The company went public on September 14, 2016 at a price of $22.50. The stock finished the first day of trading at $26.19, up 16.4%. Since then, the stock price has steadily risen.
- NBLX has a very strong group of underwriters backing the deal, including Barclays, Baird, J.P. Morgan, Band of America/Merrill Lynch, Citi, Deutsche Bank, DNB Markets, Mizuho Securities, Mitsubishi, Wells Fargo, BB&T Capital Markets, BNP Paribas, CIBC, Fifth Third Securities, PNC Capital Markets, Scotiabank/Howard Weil, Societe Generale, SMBC Nikko and TD Securities.
- The strong performance of the IPO and the high quality and high visibility of the underwriters will cause investors to pay close attention to reports when they are released, which could lead to a pop in price following the expiration of the quiet period.
Thursday, September 29, 2016
- S&P Global Market Intelligence’s Stewart Glickman highlights four stocks - EOG Resources (NYSE:EOG), Marathon Oil (NYSE:MRO), Noble Energy (NYSE:NBL) and Cabot Oil & Gas (NYSE:COG) - that can thrive even at $45/bbl oil.
- The firm estimates nearly 6% production growth for EOG in 2017, a current net debt to capital ratio of ~33%, and projected cash from operations at 114% of anticipated 2017 capex - fundamental metrics that give EOG "a measure of safety even if the macro picture refuses to budge."
- Glickman sees MRO with 2% production growth in 2017, which might seem mediocre but not in the context of its net debt to capital ratio (18%) and its free cash flow percentage for 2017 (128%).
- The firm notes NBL's sizable domestic and international operations, with the company's strong acreage position in natural gas offshore Israel as a key catalyst.
- Glickman sees COG with production growth of 8% in 2017, led by its prolific Northeast acreage, and with a net debt to capital ratio of just 23% and a free cash flow percentage of 146%.
Wednesday, September 28, 2016
Tuesday, September 27, 2016
- Leerink's Geoffrey Porges downgrades Gilead (NASDAQ:GILD) to Market Perform from Buy. Lowers price target to $94 from $112.
- Says GILD's hepatitis C franchise revenue forecasts have “turned outright bearish.” Notes that the U.S. hepatitis C market is “in steady secular decline,” and that global trends are similar.
- Notes that AbbVie (NYSE:ABBV) will soon have a 2-drug single pill combination drug, with Merck and J&J combos to follow.
- Says management has been slow to address HCV erosion. "Cynics will suggest that this scenario was always in the offing, and to an extent that is true, but we believed Gilead had more visibility to the availability of patients to sustain its market, share and price than we did. This does not appear to be the case; in fact Gilead has been surprised by the slowing in patient volume around the world."
- Shares -1.5% premarket.
Monday, September 26, 2016
- Tesoro (NYSE:TSO), along with Marathon Petroleum (NYSE:MPC), remains one of only two Buy ratings among independent refiners at BofA Merrill Lynch, even while the firm remains cautious on the sector.
- BofA analyst Doug Leggate believes TSO's marketing business deserves a 3x multiple uplift and that the market is ignoring the prospects of the business.
- Leggate also expects TSO to display improved operating margins vs. peers for Q3 on a reversal of seasonal margin trends, as the firm raises its price target on the shares to $109 from $95.
Sunday, September 25, 2016
- Taking a victory lap for his bullish stance on Sarepta Therapeutics (NASDAQ:SRPT), Barron's Andrew Bary says there's still considerable upside even after last week's more than doubling of the stock price. The company now has a market cap of $3B, but biotechs can often be valued at 5-10x annual revenue or more, says Bary, and Exondys 51 has the potential for annual sales of $1B globally.
- Sarepta is now one of the biotech sector's prime M&A targets, says RBC's Simos Simeonidis. upgrading to Outperform from Market perform while boosting the PT to $83 from $5 (Friday's close was $57.83). Baird's Brian Skorney says a multi-billion dollar franchise lies ahead, and jacks his PT to what could be a Street high of $102 (from $23). Already a bull prior of the FDA decision, Skorney likes the stock even more as the approval removes a major risk.
- Bary also notes the company took a step to fortify its balance sheet by quickly raising $300M in equity, with big-timers JPMorgan and Goldman Sachs - who previously had little to to with the company - underwriting the deal.
Friday, September 23, 2016
- RBC downgrades Wix.com (NASDAQ:WIX) to Sector Perform from Outperform. PT = $45 (vs. $45.29 close on Thursday).
- YTD, shares have dramatically outperformed the market, up over 97%.
- WIX has been a material outperformer in the internet sector this year. Given the steady improvement in WIX's fundamentals, firm believes the outperformance has been justified.
- However, with the stock now trading at 48X 2016E EV/Ebidta and 6.5X 2016E EV/Sales, among the highest in the sector, firm sees valuation upside as limited from here.
- More attractive risk/reward elsewhere in the internet small-cap sector.
Thursday, September 22, 2016
Wednesday, September 21, 2016
Tuesday, September 20, 2016
- via Bespoke - see table
- Five of the stocks have > 50% of their shares sold short.
- SHLD leads the pack.
- If there's been a sleeper in the retail sector over the last two years it's Ulta Salon (NASDAQ:ULTA).
- Sizzling same-store sales and a thriving on-trend e-commerce business has helped shares almost double in value.
- Did you know that by market cap Ulta Salon is now much larger than Macy's, Chipotle, Whole Foods Market, and Tiffany?
- A very good look at Ulta's success is highlighted in this interview of CEO Mary Dillon posted on Fortune.com. Dillon's strategy seems to back up the contention of SA contributors James Sands and Christoph Schrills that's it not too late for investors to jump on the Ulta bandwagon.
- The Ulta story may also be of interest to investors pondering the e.l.f. Beauty (Pending:ELF) IPO.
Monday, September 19, 2016
Friday, September 16, 2016
- Intel in August agreed to purchase deep-learning startup Nervana Systems for more than $400M, with Intel VP Jason Waxman at the time saying the shift to artificial intelligence could dwarf the move to cloud computing, says SA Pro author Jim Roumell, updating his bull case on GSI Technologies (GSIT -0.2%).
- Solutions for machine learning have been evolving, and new technology from the likes of Nervana and GSI Technologies (MikaMonu) are required to get to the next level, says Roumell. For certain applications like search, GSIT believes it will be the industry leader.
- Roumell: "We believe investors have a free option on Mika's next-generation AI chip technology (anchored by a rich patent portfolio) given GSIT's roughly $40M enterprise value, and a legacy chip business which is free cash flow positive."
Thursday, September 15, 2016
Wednesday, September 14, 2016
- It's no surprise that yield-starved financials are expected to be a big beneficiary of higher base rates, but the team at Goldman has six that stand to gain the most.
- Bank of America (NYSE:BAC), BNY Mellon (NYSE:BK), Citizens Financial (NYSE:CFG), Regions Financial (NYSE:RF), Schwab (NYSE:SCHW), and Zions Bancorp (NASDAQ:ZION) make the cut.
- Goldman sees an average 46% upside to normalized earnings for the group if rates go back to 3% (a long way off for even the most hawkish).
- Used to low and slow as far as rate hikes go, investors may be overlooking the potential for even one Fed move this year to be a positive catalyst. The team suggests taking a look at 6-month and 12-month calls on their recommendation list.
- Rosetta Stone's (NYSE:RST) new Catalyst program received an editor rating of Excellent from PCMag's Juan Martinez, says SA Pro contributor Jim Roumell.
- Martinez: "[Catalyst] made my introduction to a challenging language exciting, intellectually stimulating, and surprisingly addictive."
- A bull on Rosetta Stone, particularly thanks to its attractiveness as a buyout candidate sometime in the next year or so, Roumell says the Global English Digital market is estimated to be growing at 13%, and Catalyst should enable RST to get a piece of that.
Tuesday, September 13, 2016
Sunday, September 11, 2016
- Barron's "Sizing Up Small-Caps" profiles luxury hotel company Belmond (NYSE:BEL).
- At a recent analyst day, BEL presented an aggressive plan to double results by 2020.
- The Ebitda-focused presentation was met with skepticism, with one Q&A speaker saying it felt "not a whole lot different from what we heard a few years ago." One difference, however, is that during the investor day management said for the first time it will eventually eliminate the dual-class share structure, a source of angst around its governance.
- Telsey Advisory Group's David Katz thinks Belmond's new management team is credible, and the growth prospects are reasonable. "It's double or nothing," he says, adding that if management is successful, the stock ($10.87) could be worth $21 to $26 in five years. If not, he says Belmond's trophy properties should provide a floor for the shares.
- Management aims to lease or buy 15 to 20 new hotels and a handful of new trains and cruise ships. Belmond has a small hotel-management business, which it also plans to expand. With net debt under four times Ebitda, the company has financial flexibility.
- In July, billionaire real-estate and hotel investor Barry Sternlicht, CEO Roeland Vos' former boss at Starwood, announced a 4.9% stake in Belmond. The stock jumped 20% on the news, and hasn't declined much since; a vote of confidence from one of the most notable hotel investors around.
Saturday, September 10, 2016
- Energy MLPs enjoyed a lift this week (at least until yesterday) following news of the Enbridge-Spectra merger, particularly those lacking sponsorship by producers that may be targets for consolidation.
- Credit Suisse sees logical players to be involved in combinations to secure access to opportunities and capital including ETE/ETP, EPD, MMP, PAA/PAGP, OKE/OKS, WPZ, PSX/PSXP, MPC/MPLX, TRGP, NS/NSH, GEL and TEP/TEGP.
- FBR Capital says MLP valuations have improved ~45% from lows reached early this year, and expects macro trends to lift the sector; the firm thinks CAPL could enjoy double-digit growth for nearly seven years, and says MMLP is another notable outperformer whose valuation reflects more than enough discount for a distribution cut (which the firm is forecasting) - it also likes ENLK, EEP, TLP, SRLP, USAC, WLKP and USDP,
- RBC notes favorable sentiment in the MLP realm, highlighting attractive valuations particularly at ETP, BWP and AMID, and sees dropdown stories - out of favor YTD - such as VLP and SHLX offering visible growth that can support the stocks over the next 12 months.
- ETFs: AMLP, AMJ, KYN, TYG, KYE, SRV, CEM, MLPI, NML, FEN, NTG, KMF, MLPA, EMLP, FMO, AMZA, FEI, JMF, SRF, CBA, MLPN, GMZ, MLPX, GER, EMO, TTP, CTR, MLPS, CEN, SMM, DSE, FPL, AMU, MIE, JMLP, ENFR, ATMP, IMLP
Friday, September 9, 2016
Thursday, September 8, 2016
Wednesday, September 7, 2016
- "We think the asset management industry, which was always very fragmented and highly profitable (with low capital intensity), will become much more concentrated over the next five years - especially in U.S. retail with BlackRock (NYSE:BLK) and Vanguard clear winners," Credit Suisse says in a note.
- Firm says it prefers stocks that will exceed net flow/earnings expectations and can maintain or expand valuation levels.
- Top long is AMG, which CS thinks will post much stronger flows in 3Q16, has low exposure to the DOL rule (only 16% of AuM is from U.S. retail and less in retirement), and is one of the cheapest asset managers on cash earnings.
- Also likes LM, which is mainly a valuation and improving earnings visibility play.
- Likes BLK, which is one of the few beneficiaries of the DOL rule (through iShares and Aladdin/Solutions).
- On a longer-term horizon, likes BX (high FE AuM growth + improving cash earnings) and WETF (improving net flows + LT M&A target).
- Says BEN and WDR could both see among the largest net flow impacts from the DOL rule.
- Don't expect too much out of Q3 oil services results, Credit Suisse says. "While an impressive move off the bottom, the U.S. horizontal rig count is still only 31% of its 2014 average. Not going down anymore is fabulous. But it doesn’t translate into doing well very quickly."
- Still, CS says investors should be more aggressive in buying stocks that miss earnings estimates.
- Firm notes that the focus on efficiency continues. "Sand has replaced land rigs as the under-utilized fixed-cost-base leveraged play on the recovery." Recommends SLCA and HCLP.
- Says that technology and a more efficient client base makes HAL the top “demographic” play over SLB in the near term.
- "BHI and WFT are self-help stories in different stages of improvement, but both have reasons to be in energy portfolios. Manufacturing is challenged with its focus on deepwater, which drives FET as our top pick in the group."
- Deutsche Bank downgrades European airlines.
- "Forward looking data is simply too weak. Nominal profitability remains at elevated levels due to oil but structural improvement to cost bases has been slow to materialize. Capacity is stubbornly high, demand risks are weighted to
the downside and we see further pressure on pricing. In our view we need to see greater evidence of structural non-fuel cost improvement, margins to normalize for oil and/or the capacity outlook to improve before a re-rating is
- Downgrades Lufthansa to Sell from Hold. Air-France KLM to Sell from Hold. easyJet to Hold from Buy. Ryanair to Hold from Buy.
Tuesday, September 6, 2016
Saturday, September 3, 2016
- Affiliated Managers Group (NYSE:AMG) is lower by 22% over the past year, trailing by a mile not just the S&P 500's 13% advance, but also the asset manager sector as a whole, which is higher by 3%.
- The company is viewed as a bellwether for active stock picking and high-priced hedge fund management at a time when the business models of both are under severe challenge, writes Jack Willoughby in Barron's, and this year a full $131B has been pulled out of actively-managed mutual funds, while $242B has poured into passive funds or index-based funds.
- In addition to industry issues, AMG's Third Avenue's Focused Credit Fund blew up last year, prompting big withdrawals from a number of several unrelated funds. The wounds don't seem life-threatening, he writes, noting that fund is just 13% of Third Avenue's assets, and Third Avenue makes up less than 1% of AMG's $700B of assets.
- AMG is now cheap, trading for less than 10x 2017 estimates vs. peers at 13-16x, says Goldman's Alexander Blostein. He sees AMG as a $190 stock as inflows revive in H2, or 35% higher than Friday's close of about $140.
- Eaton Vance's Matthew Hereford reminds the company's mix of alternative assets and global mandates make it less susceptible than others to the move into passive investing. A full 59% of AMG's AUM come from institutions, and another 15% from wealthy individuals - customers who tend to have longer-term relationships with their money managers.
- CEO Sean Healey: "People piling into index funds are making one of the classic mistakes of assuming that the current condition will extend into the future indefinitely. The one certainty is markets change."
Friday, September 2, 2016
Thursday, September 1, 2016
- Salesforce's (NYSE:CRM) billings growth of 15% (vs. estimates of 21-22%, and 30% growth over previous two quarters) is perplexing, Deutsche Bank writes in a note to clients: "We haven't picked up strong evidence of an end-of-July slowdown from other tech firms and haven't heard of any material internal sales structure changes."
- It also came suddenly, suggesting secular issues are not the culprit. "Absent a good explanation and knowing that Salesforce has overcome air pockets in the past, we're not panicking," firm says - but does lower 2017 billings growth estimate to 22% from 27%.
- Deutsche says it's "disappointed" in CRM's results, and takes PT down to $90 from $95 (post-market, shares changed hands at $73.90). Maintains Buy.
- While Chico's FAS (NYSE:CHS) appears to be the winner of the 'missy' space, sales results remain choppy. That doesn't seem to be changing.
- CHS has taken steps to improve operational efficiency, which is effecting EPS positively. But actions seem defensive rather than offensive.
- CHS's growth vehicle - Soma - will take 6-7 years to reach maturity, and comps are only slightly positive.
- Closing underperforming Chico's and WH|BM stores does not appear to have had a positive effect on their comps - seemingly reflecting deeper structural issues.
- Still, Citi bumps PT to $13 from $11; shares changed hands at $12.68 yesterday. Firm has CHS at Neutral.
Wednesday, August 31, 2016
- via Drexel Hamilton:
- After close to 11 months of overhang from the pending Dell/EMC deal, we are pleased to see this transaction nearing completion.
- Moreover, VMware has started to deliver healthy quarterly reports with progress around its portfolio transition and an attractive valuation at less than 13x our 2017 EPS projection.
- Despite delivering a couple of healthy quarters in a row with strong growth in newer areas, VMware is still down nearly 6% since the Dell/EMC deal was announced last October. With more progress in its portfolio transition and new innovations in the cloud, we believe VMware has further upside potential from current levels.
- Analyst Brian White has an $85 price target on VMW, implying 15% upside. White is ranked 78 out of 4,129 analysts on TipRanks.
- S&P 500 remains vulnerable to a pull-back into early Sept. before rebounding into end of month, where U.S. market should hit an important medium-term top, UBS technical analysts write in a note to clients.
- As long as S&P trades below 2194, the market remains vulnerable for more consolidation; support at 2150 and 2134/2120.
- With the market starting to anticipate rising interest rates, defensive sectors are losing further ground, while financials are gaining momentum relatively.
- In a separate note, UBS said the odds of a stock-market crash are rising, noting that equities are trading at very high multiples and don’t appear to be pricing level of macro risk “that we’re witnessing in the market."
- Firm favors high-quality stocks with improving fundamentals and sustainable levels of gearing, such as: Alphabet (NASDAQ:GOOG), Nestle (OTCPK:NSRGF) , NTT DoCoMo (NYSE:DCM), China Mobile (NYSE:CHL) , and Amcor (OTC:AMCRF).
Tuesday, August 30, 2016
Monday, August 29, 2016
- Williams Capital believes oil industry fundamentals are solid despite current commodity price levels but is cautious overall and advises investors not to chase the recent run at current valuations.
- However, the firm recommends select underappreciated companies with lower expectations and re-rating potential, and thinks companies situated in core resource plays that can demonstrate further capital efficiency improvements with catalysts will continue to garner top valuations and M&A premiums.
- Two of Williams' favorites are SM Energy (NYSE:SM), which the firm says remains one of the cheapest names in the sector with a solid balance sheet and assets as well as a conservative management team, and Newfield Exploration (NYSE:NFX), which Williams sees thriving through the current downturn given its strong balance sheet, ample financial liquidity and strong hedge book.
- Also initiated with Buy ratings: Cabot Oil & Gas (NYSE:COG), Energen (NYSE:EGN), Gulfport Energy (NASDAQ:GPOR), Oasis Petroleum (NYSE:OAS), PDC Energy (NASDAQ:PDCE), Pioneer Natural Resources (NYSE:PXD).
- Driven largely by valuation, Williams assigns Hold ratings on Diamondback Energy (NASDAQ:FANG), Gastar Exploration (NYSEMKT:GST), Laredo Petroleum (NYSE:LPI), Parsley Energy (NYSE:PE), Rice Energy (NYSE:RICE) and Cimarex Energy (NYSE:XEC).
Saturday, August 27, 2016
- It's been a good year for gold and the companies that mine it, but Goldcorp's (NYSE:GG) 38% gain is badly lagging a near-doubling in the GDX, and even stronger advances for other sizable producers like Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX).
- Overpromising and underdelivering has been an issue, and investors right now are paying just 7.2x next year's forecast cash flows vs. the peer average of 9.8x. But new CEO David Garofalo (he's been on board for six months) has already made significant operational changes, and hopes to deliver $2B in NAV accretion over the next two years. Cost cuts could add $0.20 to EPS, says JPMorgan's bullish John Bridges.
- "There’s a value gap that should narrow without needing the gold price to take it there,” says Tocqueville Asset Management's Ryan McIntyre, who thinks there's 40% upside in Goldcorp at current levels for the metal.
- Source: Robin Goldwyn Blumenthal in Barron's
Friday, August 26, 2016
- Sentiment is improving and "recovery emerging” around energy MLPs, Citi's Faisel Khan says, citing Improving commodity prices and tighter credit spreads as the main reasons, as some companies are positioning for volume growth.
- The analyst offers six "value picks": TRGP, OKS, NS, BWP, TLLP and CQP.
- Khan's "key thematic picks" are Energy Products Partners (NYSE:EPD), as a play on growth in natural gas liquids, Plains All American Pipeline (NYSE:PAA) and Plains GP Holdings (NYSE:PAGP) on growth in the Permian basin, and EnLink Midstream (NYSE:ENLC), as a play on Oklahoma expansion.
Tuesday, August 23, 2016
- SA Pro Jake Gutwein - who last November recommended shorting GEO Group (GEO -3%) - nevertheless reminds that last week's DOJ decision affects only a small proportion of the company's business.
- An investor's outlook needs to be based on what route the states might pursue, says Gutwein, and the "heavy majority" of research agrees with the DOJ conclusion that for-profit prisons are worse than public prisons with safety and offer minimal price advantage, though this area of study is controversial.
- Regardless, continues Gutwein, the fundamentals of the company are not stable: The market size is decreasing, the political winds are blowing in the wrong direction, and the company offers an inferior service. If the precedent set by Justice holds, there is no definitive way the company survives.
- Only those with the most hearty appetite for risk should consider stepping in.
Thursday, August 18, 2016
Wednesday, August 17, 2016
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