Tuesday, May 5, 2015
- The 170% rally delivered by InterCloud (NASDAQ:ICLD) since last Friday's backlog announcement is wholly unjustified, argues White Diamond Research. "In time, the share price will return to below $2 per share, because the company hasn't improved to any degree to merit a higher share price."
- White Diamond notes InterCloud merely stated its backlog had risen by $4M since December to $36M. It also considers yesterday's announcement regarding the launch of its NFVGrid network functions virtualization (NFV) orchestration software platform (helps telecom systems run on commodity hardware) old news. "ICLD has already been selling its NFV to its customers. NFVGrid is an upgrade to its NFV, but isn't a big development change."
- The firm dismisses comparisons between InterCloud and Voltari; the latter skyrocketed after Carl Icahn disclosed a 52.3% stake on March 31. "VLTC was a wild card, a misunderstood company that legendary investor Carl Icahn increased his stake in ... Whereas ICLD is a well known IT network company that has been pumped and dumped many times before, and doesn't have the backing of a great investor."
- InterCloud rose 78% on Friday, and another 54% on Monday. Shares still remain well below a 52-week high of $7.89.
- Believing restructuring efforts and an industry shift towards programmatic (automated) ad buys are pressuring near-term sales, Goldman's Debra Schwartz has downgraded AOL to Sell ahead of Friday's Q1 report, and cut her target by $6 to $38.
- Schwartz also notes a "monetization gap" exists between AOL's mobile and PC traffic - about half of the company's Q4 traffic came from mobile - and thinks AOL's ad ops could underperform long-term as firms such as Facebook expand their off-platform ad offerings.
- The downgrade comes after Yahoo, Yelp, and LinkedIn reported soft Q1 sales that were blamed in part on programmatic. AOL has been investing heavily in its programmatic ad tech offerings - the company's ONE platform, which aims to provide an integrated programmatic ad-buying solution across various media channels and data sources, launched last month.
- Last year: Programmatic ads pose challenge for Web publishers
Monday, May 4, 2015
- Continuing his bull thesis on Yum Brands (YUM +1.7%), Keith Meister starts to sound more like the activist he is, telling Ira Sohn attendees Yum should separate its China unit into an independent Chinese company.
- He sees 50-90% upside, with the current stock price of about $90 per share giving investors the Chinese operation for free.
- Meister's Corvex owns $1.5B of Yum, making it a top five shareholder in the company.
- Follow conference on Twitter
- Previously: Corvex's Meister touts Yum Brands at Ira Sohn (May 4)
1:08 PM| 5 Comments
- Yum Brands (YUM +1.9%) is a great way to play the middle class growth in China, says Icahn alum Keith Meister, telling the Ira Sohn conference his funds own $1.5B of the stock.
- The company, he says, has first-mover advantage in China which has no mature franchise model. Meister thinks Yum will have 18K locations in that country at some point vs. 6.5K today.
- Live blog of the conference
- Follow on Twitter
Friday, May 1, 2015
- Believing the company gives investors "an excellent opportunity" to gain exposure to "a quality, high-growth SaaS company in a rapidly growing and underpenetrated semgent of the software market, at a discount to typical SaaS valuations," Bernstein has launched coverage on Marketo (MKTO +2.1%) with an Outperform rating and $40 target.
- Bernstein notes IDC expects the broader market for digital marketing software to grow to $32B in 2018 from $20B in 2014, and thinks the total addressable market (TAM) might actually top $40B within several years.
- The launch comes a week after the cloud marketing automation software vendor sold off in spite of posting a Q1 beat and providing strong Q2/2015 sales guidance.
Thursday, April 30, 2015
Wednesday, April 29, 2015
- On the lookout for closed-end funds with room to move higher over the next 12-18 months while paying out a solid distribution, Michael Jabara and team at Morgan Stanley Wealth Management find 11 top picks.
- On average, they have a 7.5% payout (vs. 6.7% for peers) and a discount to NAV of 8.7% (vs. 7.9% for peers).
- The list: Royce Value Trust (NYSE:RVT), Neuberger Berman MLP Income Fund (NYSEMKT:NML), ClearBridge Energy MLP Fund (NYSE:CEM), John Hancock Financial Opportunities Fund (NYSE:BTO), Gabelli Dividend & Income Trust (NYSE:GDV), Eaton Vanco Tax-Advantaged Global Dividend Fund (NYSE:ETG), Nuveen S&P 500 Buy-Write Income Fund (NYSE:BXMX), Eaton Vance Tax-Managed Diversified Equity Fund (NYSE:ETY), BlackRock International Growth & Income Trust (NYSE:BGY), Eaton Vance Tax-Managed Diversified Global Equity Fund (NYSE:EXG), and BlackRock Global Opportunities Equity Trust (NYSE:BOE).
- Source: Barron's
- Firm notes Barclays' (NYSE:BCS) otherwise strong Q1 was led by strong investment banking numbers. Says shares (£259.40) could rise above £300 this year.
- "In the near term provisions for another £800M will temper enthusiasm, but in doing so create buying opportunities."
- Previously: Barclays puts more aside for forex fines (Apr. 29)
- Related: Barclays Is The Stock I'm Putting Into The IRA (Feb. 15)
Tuesday, April 28, 2015
- Waters' (NYSE:WAT) 15% organic growth beat the consensus' mid-single estimates, and Q1 EPS of $1.21 blew out the Street's $1.02, Janney says.
- "About 50% of Agilent's (NYSE:A) and 22% of Bruker's (NASDAQ:BRKR) product lines overlay with Waters. Liquid chromatography (LC) and mass spectrometry (MS) demand is clearly increasing as the recent strength in capital funding for small and mid-size biopharmaceutical companies is driving additional placements."
- Firm raises WAT price target to $134 from $120, and "expects continuing beats."
- WAT +2.9% today to $125.59.
- Previously: Waters beats by $0.19, beats on revenue (Apr. 28)
- "EIGI shares will go to $0.00 per share, as the company will struggle to service its debt," says Gotham City Research in its summary of a bearish report on Endurance International (NASDAQ:EIGI) titled "A Web of Deceit."
- Gotham asserts 40%-100% of the SMB Web services provider's reported profits are suspect, and that its organic growth is overstated by ~3x. It thinks EIGI's average revenue per subscriber fell 13% in 2014; the company reported 11% growth in its 2014 10-K.
- It also accuses EIGI of hosting thousands of spam/malware sites, and of hosting terrorist sites as recently as a few weeks ago. Heavy insider selling, negative free cash flow, and poor customer reviews are cited as other reasons to be bearish.
- Believing new promotional tools for sellers will give a lift to its top line, Credit Suisse has upgraded MercadoLibre (NASDAQ:MELI) to Outperform, and hiked its target by $55 to $191.
- The tools consists of ads that can appear on MELI's home page or within search results, and which lead to a seller's product listing page - Alibaba has plenty of experience with such ad formats. CS expects Latin American sellers will adopt the ads in much the same way Chinese and South Korean sellers have, and in doing so life MELI's take rate.
- CS has cut its near-term estimates due to the Venezuelan bolivar's ongoing weakness against the dollar, but lifted its longer-term estimates. The upgrade comes two weeks after MELI struck a deal to buy Brazilian online retail software provider KPL Soluções for at least R$50M ($16M), in an effort to better cater to merchant needs.
- Shares have risen to $140.90 premarket. The 52-week high is $144.23.
Monday, April 27, 2015
- Needham's Alex Henderson has upgraded Oclaro (NASDAQ:OCLR) to Buy ahead of its May 5 FQ3 report, and set a $3 target.
- Henderson: "For much of the last year, we have been gradually getting more positive on OCLR. Management has fixed the balance sheet, cleaned up the product line, started to rebound margins, shifted to Data Comm and managed to be first to market in the important CFP2 100G coherent module market."
- Though still seeing execution risk in the optical component/module vendor's new product ramps, Henderson thinks "the strong demand growth in Optical suggests Oclaro should be able to show solid improvements and earlier than forecast return to profitability."
- Shares currently trade for just 0.4x an FY15 (ends June '15) sales consensus of $344.5M, after backing out $73M in net cash.
- Believing the company can deliver a 46% GMV CAGR from 2014-2018 (with potential upside) and will eventually post an 8%-9% net profit margin, JPMorgan's Alex Yao has launched coverage on JD.com (NASDAQ:JD) with an Overweight rating and $42 target.
- Yao estimates JD had 49% of the Chinese online direct retail market in 2014, and sees its share of the broader Chinese e-commerce market (where Alibaba's platforms still dominate) rising to 16% in 2018 from 9% in 2014, as the company's competitive pricing and logistics infrastructure continue driving share gains. JD's expansion into new product segments such as home appliances and baby/maternity products is also seen as a growth driver.
- A 34% GMV CAGR is forecast for JD's internal sales, and a 60% CAGR for its 3rd-party seller marketplace, which is expected to monetize better than Alibaba's Tmall thanks to JD's ability to offer logistics services (Alibaba is making its own logistics investments). Yao's 2016/2017 EPS estimates are respectively 15% and 25% above consensus.
- Shares have made fresh highs. They're up 59% YTD.
- Target cut to $39 from $40 (current $38.53).
- Downgrade reflects increased competition for SNF deals and valuation.
- Related: Omega Healthcare Puts The Purr In Performance (Apr. 22)
- Previously: Omega Healthcare holding off guidance until after Aviv REIT deal closes (Feb. 23)
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