Seeking Alpha
  • Today - Tuesday, April 21, 2015

  • 4:06 PM
    • "ServiceNow (NYSE:NOW) continues to execute on its massive opportunity, and increasing traction within the enterprise creates an opportunity to be over $4 billion in revenue in 2020," writes Pac Crest following the cloud IT service management (ITSM) software firm's Monday analyst day. "We believe the recent pullback in shares creates an opportunity to buy a disruptive software company with quickly ramping free cash flow."
    • Pac Crest note ServiceNow "continues to add over 20 new Global 2000 customers per quarter while also increasing the average annual contract value to $746,000 currently from $555,000 a year ago," and that revenue is expected to reach a $1B/year run rate by year's end.
    • Like other bulls, it sees ServiceNow's expansion into non-ITSM markets such as HR service management, field service management, and IT financial management software acting as a catalyst, and is also upbeat about its recently-launched app store for 3rd-party apps that integrate with ServiceNow's offerings (similar to Salesforce's Force.com).
    • ServiceNow rallied to $77.50 today, recovering a portion of the big Friday losses seen after the company offered light Q2 guidance to go with a smaller sales/EPS beat than seen in recent quarters.
    • Analyst day slides (.pdf)
    | Comment!
  • 3:54 PM
    • The REITs are down about 8% from their January highs while the homebuilders have posted gains, bringing the ratio of homebuilders to REITs to long-term resistance, says MKM Partners' Jonathan Krinsky, who suggests fading the move.
    • Most vulnerable to tactical pullbacks are those homebuilders/suppliers showing the weakest relative strength: Beazer Homes (NYSE:BZH), Lennar (NYSE:LEN), Louisiana-Pacific (NYSE:LPX), Taylor Morrisn (NYSE:TMHC), Toll Brothers (NYSE:TOL), and TRI Pointe Homes (NYSE:TPH).
    • The best long REIT ideas are those showing the best relative strength: AvalonBay (NYSE:AVB), Crown Castle (NYSE:CCI), Essex Property (NYSE:ESS), Extra Space Storage (NYSE:EXR), Federal Realty (NYSE:FRT), General Growth (NYSE:GGP), SL Green (NYSE:SLG), and UDR.
    • Those REITs showing poor relative strength or to be avoided or sold: American Tower (NYSE:AMT), American Realty Capital (NASDAQ:ARCP), Brixmor (NYSE:BRX), Host Hotels (NYSE:HST), and Omega Healthcare (NYSE:OHI).
    • Source: Barron's
    | 2 Comments
  • 2:08 PM
    • Declaring the company to be "a premier SaaS secular growth story benefiting from a huge horizontal multi-geography market opportunity and several compelling trends," Needham's Michael Huang has launched coverage on cloud sales/marketing automation software provider HubSpot (NYSE:HUBS) with a Buy rating and $50 target.
    • Huang: "Key business metrics, including recurring rev growth, billings growth, ARPU growth, retention rates, and gross margins are impressively up and to the right ... At the end of the day, the traditional function of marketing is getting disrupted, and we believe HubSpot stands to benefit disproportionately given brand and product leadership."
    • Shares are up 63% from last October's $25 IPO price. Q1 results arrive on May 6.
    • Previously: HubSpot buys contact app developer Rekindle
    | Comment!
  • 1:48 PM
    • Pleased with 58.com's (NYSE:WUBA) deal to buy a 43.2% stake in smaller rival Ganji.com, Credit Suisse has upgraded the Chinese online classifieds leader to Outperform, and hiked its target all the way to $90 from $41.
    • CS notes 58/Ganji have 90% of the Chinese online classifieds market between them, and sees the deal helping 58 expand into new services/verticals. "The new co-CEO structure stabilizes both the teams, and could give management more room to maneuver the business in the near term … They will jointly realize major cost, revenue and strategic synergies."
    • Shares +43% since the FT first reported of a deal. Morgan Stanley offered a positive take shortly before the deal was announced.
    | Comment!
  • 12:35 PM
    • With gross margins improving and major 2014 capex and ad platform investments out of the way, Tremor Video (NYSE:TRMR) is "on the cusp of profitability," argues Charles Moscoe in a column embargoed until 5AM ET Wednesday.
    • Moscoe adds Tremor (down over 75% from 2013's $10 IPO price) will benefit from the online video ad industry's rapid growth, and considers the company "uniquely strategically well-positioned as an independent complete online video advertising platform versus competitors that offer only limited point solutions." Its $78M cash balance (equal to 62% of Tremor's current market cap) and minimal cash burn "provide safety net protection if the profitability story fails to imminently materialize."
    • The bullish take comes ahead of Tremor's May 7 Q1 report. Excluding cash, Tremor trades for just 0.24x 2015E sales; this year's revenue growth consensus is at 23.2%.
    | Comment!
  • 9:47 AM
    • Citing accelerating revenue growth and fading patent expiration concerns, Morgan Stanley has upgraded Align Technology (NASDAQ:ALGN) to Overweight ahead of Thursday's Q1 report, and hiked its target by $23 to $79.
    • Align's partnership with Sirona Dental, the growing digitization of dental offices, and rising international penetration are also seen as catalysts. "We believe customer base expansion and digitization will grow both top-line and bottom-line results, and more than offset expected volume and price declines resulting from the entrance of competitors upon patent expirations relative to expectations" International is expected to rise to 46% of 2020 volumes from 30% of 2015 volumes.
    • The upgrade comes less than a month after Align announced a CEO change.
    | Comment!
  • 8:59 AM
    | 2 Comments
  • 6:52 AM
     
  • 4:26 AM
    • "This round of market rally is clearly boosted by ample liquidity instead of strong fundamentals; bear in mind the sector is experiencing only single-digit growth."
    • Yesterday Daphne (OTCPK:DPNEF, OTCPK:DPNEY) reported a 16% drop in same-store sales, sending shares down 14%.
    | Comment!
  • Monday, April 20, 2015

  • 12:19 PM
    • Susquehanna's Chris Caso has upgraded Intersil (ISIL +2.4%) to Positive ahead of its April 29 Q1 report, and hiked his target by $4 to $18.
    • Caso: "We’ve been Neutral on the stock for a long time ... we’ve been waiting for the impact of the new management’s product development efforts to show results. We think we’re now very close to having new products in ISIL’s consumer segment begin to positively impact earnings."
    • He also sees Texas Instruments' exit from the PC power management IC market as a positive, and expects Intersil to benefit from higher chip content for Intel's Skylake CPU platform (set to launch in 2H15). Hitting a target for 10% 2015 computing/consumer growth is declared to "provide a clear path to $1 in annualized EPS."
    • Should Intersil fail to hit the target, Caso still thinks the company could be an attractive M&A target in a rapidly consolidating chip industry.
    | 1 Comment
  • 6:44 AM
     
  • Saturday, April 18, 2015

  • 8:04 PM
    • Nokia (NYSE:NOK) and Alcatel-Lucent's (NYSE:ALU) planned merger could unravel Nokia's R&D partnership/reseller deal with Juniper (NYSE:JNPR). Juniper, which has partnered with Nokia on solutions that pair the former's routers with the latter's base stations and mobile core network gear, counts Alcatel as its second-biggest rival (after Cisco) in the carrier router market, and also squares off against the company in other markets such as carrier SDN software.
    • Ruckus (NYSE:RKUS) is another Nokia partner that could be in the crosshairs: The company competes against Alcatel in carrier Wi-Fi hardware, and has a reseller deal with Nokia that goes back to 2012. The deal was recently expanded to cover Wi-Fi/4G small cell systems.
    • At the same time, the merger has fueled speculation one or more rivals could respond with acquisitions of their own. A potential acquisition of Juniper by mobile infrastructure giant Ericsson (NASDAQ:ERIC) has especially been the subject of much talk.
    • Ericsson is also viewed as a potential suitor for optical networking hardware vendors/fellow Alcatel rivals Ciena and Infinera. Ruckus has been seen as a potential M&A target for a long time. However, it currently competes against Ericsson, which bought Wi-Fi hardware vendor BelAir Networks in 2012.
    • RF backhaul hardware maker DragonWave (NASDAQ:DRWI) could also lose business thanks to the merger; it bought Nokia's RF backhaul business in 2012. and maintains a reseller deal. However, H.C. Wainwright recently downplayed those concerns, arguing Alcatel's RF backhaul systems are expensive and clunky.
    • Juniper and Ericsson report earnings on April 23, and Ruckus on April 30.
    | 15 Comments
  • 5:57 PM
    • Though 3D printer makers have seen their shares pummeled in 2014 and early 2015 thanks to a mixture of earnings disappointments, margin/spending concerns, and multiple compression, Canalys forecasts total sales of 3D printers and related materials/services will rise another 56% in 2015 to $5.2B. It also forecasts a 44% industry CAGR from 2014-2019, leading revenue to reach $20.2B.
    • Canalys' Joe Kempton notes improving printer speeds, the availability of new materials, and the launch of new manufacturing methods have boosted growth. He also observes patent expirations have helped the vat polymerization segment of the 3D printer market grow rapidly; material extrusion printers have historically held a much larger shipment share.
    • At the same time, Kempton points out there has been a major increase in the number of industry players, particularly from Asia. "In the next five years, more companies will move in to establish their own niches ... Long-existing vendors such as Stratasys (NASDAQ:SSYS) and 3D Systems (NYSE:DDD) are well placed to take advantage of this growth but may find their dominant positions challenged by newer rivals."
    • The aerospace, automotive, and medical markets are expected to remain major enterprise growth drivers, as firms such as GE, Boeing, and BMW continue investing heavily in 3D printing. On the consumer side, $500 is seen as the "sweet spot at which many consumers are likely to make impulsive purchasing decisions; " 3D Systems' Cube printer goes for $999. Kempton also argues performance, materials, and software improvements are still needed for consumer adoption to take off.
    • Other 3D printing industry firms: XONE, VJET, OTCPK:AMAVF, MTLS, CAMT, ARCW
    • Yesterday: Stratasys' MakerBot unit conducts layoffs
    • Three days ago: 3D printing stocks up strongly amid NYC conference
    | 22 Comments
  • Friday, April 17, 2015

  • 7:14 PM
    • "We believe ServiceNow (NYSE:NOW) saw increased seasonality in Q1, which is in part the result of the company's shift to Services Automation beyond IT, where the company will be focusing on larger cross-enterprise deals," writes Brean (Buy) after ServiceNow (NOW) provided light Q2 guidance and a smaller top-line beat than has been seen in recent quarters amid heavy forex pressures.
    • On the CC (transcript), CEO Frank Slootman stated ServiceNow "had quite a bit of deal slip" in Q1, and was also dealing with a drained deal pipeline (as of January) and a salesforce reorg. Brean isn't worried. "This is a common occurrence for enterprise software companies, but appears to have unfortunately caught many by surprise (ourselves included). However, we believe the after-market reaction reflects strong outperformance into the print, as well as overall anxiety in the market, as opposed to deteriorating fundamentals."
    • "When you trade at 9x 2016 revenues you don't get a pass...on anything," admits Canaccord (Buy). It's not thrilled with the Q1 numbers, but also thinks there was nothing to change its belief ServiceNow will grow to $3.5B-$4B/year business with 20%+ free cash flow margins by 2020. The firm still sees shares reaching $200 in 4 years.
    • TechStockRadar's Rob DeFrancesco: "[T]he longer-term outlook remains bright because the company continues to benefit from the broad enterprise transition to the cloud (it faces little legacy vendor competition) and gain traction in IT operations management (ITOM), a $10-billion market that is significantly larger than its core [IT service management] market. In the latest quarter, ServiceNow generated about 10% of its business from ITOM, indicating plenty of room for expansion."
    • Shares fell 11.5% in regular trading to $73.29. They're still up 38% from where they traded a year ago.
    • Yesterday: ServiceNow's Q1 results, guidance/details
    | Comment!
  • 1:46 PM
    • Cloud IT service management software leader ServiceNow is down 14.5% after providing soft guidance (thanks in part to forex) to go with a Q1 beat. Many high-beta enterprise tech names are off sharply amid a 1.5% drop for the Nasdaq.
    • In addition to Salesforce and Workday (previous), cloud software firms posting big losses include NetSuite (N -4.8%), Constant Contact (CTCT -3.3%), InContact (SAAS -3.9%), Paycom (PAYC -3.6%), Ultimate Software (ULTI -3.6%), and Textura (TXTR -3.7%). NetSuite reports on April 23, Ultimate Software on April 28, Constant Contact on April 30, and Paycom on May 6.
    • Big data/analytics software plays have also been hit hard. Tableau (DATA -6.3%), Splunk (SPLK -5.2%), Hortonworks (HDP -6%), and Varonis (VRNS -4.3%) are all off sharply. Though its growth rates and multiples are similar to those of many analytics software firms, ServiceNow generally isn't seen as an analytics play. This morning, D.A. Davidson launched coverage on Tableau and Splunk at Buy, and Hortonworks at Neutral.
    • Tableau, which surged yesterday following bullish Stifel and William Blair coverage launches, reports on May 7. Stifel praised Tableau's "superior product performance and simplified user experience," data discovery market lead, international growth potential (less than 25% of license revenue is from outside of North America), and ability to capitalize on "free demo downloads by front-line information workers evangelizing [Tableau's] product."  William Blair stated its survey work "indicates that the perceived value of Tableau exceeds that of other self-service [business intelligence] vendors."
    • Pac Crest hiked its Splunk target to $82 yesterday after attending a user conference. "[T]he economic value derived from expanding Splunk implementations ... into new areas like security intelligence, compliance and real-time capacity planning results in cost avoidance that can far overshadow the historical pricing objections to Splunk. This is a significant change in customer behavior and pricing perception ... It was clear that the appetite of existing Splunk users to find new use cases remains fierce..."
    | Comment!
  • 12:39 PM
    • Believing the company's core privileged account management (PAM) software could be a multi-billion dollar market in time, JMP's Erik Suppiger has launched coverage on CyberArk (CYBR - unchanged) with an Outperform rating and Street-high $72 target.
    • Suppiger, echoing some recent sell-side notes: "The cyber-security landscape is undergoing a paradigm shift, with more investments directed at internal security and we believe PAM is becoming a core component of internal security infrastructure. We also feel the adoption of cloud computing represents a significant long-term catalyst that is in the very early stages of development."
    • Citing channel checks, Suppiger asserts CyberArk is "emerging as the premier [PAM] brand leader, with key competitive advantages that include differentiated features, product breadth, and integration with ecosystem partners." He sees the company respectively posting 35% and 34% 2015 and 2016 sales growth, above consensus estimates of 29% and 25%. His target implies a steep 12x 2016E EV/sales ratio.
    • Shares are close to breakeven in spite of a 1.4% drop for the Nasdaq. Many security tech peers are down over 2%.
    | Comment!
  • 6:46 AM
     
  • Thursday, April 16, 2015

  • 12:22 PM
    • Believing shares will benefit from "the continued secular shift towards mobile payments," Macquarie has launched coverage on Xoom (XOOM +1.7%) with an Outperform rating and $20 target.
    • The firm observes Xoom has underperformed (slower-growing) money transfer peers Western Union and Moneygram in 2015 thanks to soft guidance and a fraud disclosure. It adds Xoom has averaged a 21% gain in June over the last two years, something Macquarie believes was aided by strong Mother's Day remittances.
    • Q1 results arrive on April 28. 4.8M shares (nearly 20% of the float) were shorted as of March 31.
    | Comment!
  • 6:53 AM
     
  • Wednesday, April 15, 2015

  • 3:41 PM
     
    • “Whenever I see a stock market explode, six to 12 months later you are in a full blown recovery,” he says, expecting the Chinese economy to therefore do better than most expect after the Shanghai Composite has doubled over the last year. A recovery in China, says Druckenmiller, means - among other things - good times for European exporters and higher oil prices.
    • As for the Fed, Druckenmiller stands among the few not expecting any rate hike this year. ZIRP, he says, encourages companies to take on debt, buy back stock at record-high pries, and pursue mergers, rather than build businesses.
    • As for Greece, he sees an exit from EMU coming, but isn't worried about contagion as the banks have unloaded their Greek debt and Mario Draghi has QE underway.
    | Comment!
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