Friday, April 24, 2015
- Price target is $66, previously $46 (current $53.87). Implied upside 22.5%.
- Shares +1.3% premarket.
- Related: The Market Is Finally Recognizing Broadridge's Earnings Power (Feb. 11)
Thursday, April 23, 2015
- Noting top-line growth is slowing and believing marketing spend will eventually have to pick up, Northland Securities has downgraded Angie's List (NASDAQ:ANGI) to Underperform following yesterday's Q1 report, and cut its target by $2 to $5.50.
- After initially soaring in response to the numbers, the local services is now up only 1% from where it traded before posting a Q1 EPS beat (to go with a revenue miss) aided by a 31% Y/Y drop in marketing spend.
- Up sharply AH yesterday after the WSJ reported the company is weighing strategic options such as asset sales, spinoffs, and dividends/buybacks, NCR (NCR -0.9%) has turned negative today. The timing of the report - it arrived ahead of the point-of-sale hardware/software giant's April 28 Q1 report - could have some investors on edge.
- Also: SA PRO author/hedge fund manager Ben Axler has issued a bearish column this morning (under embargo until 8:15AM ET Friday). Axler argues NCR is facing secular headwinds and has limited strategic options, and that its efforts to offset hardware declines with software growth are likely to fail. He's also critical of the company's handling of its pension obligations, and thinks EPS and free cash flow "appear 30-70% overstated."
- The excitement over Carl Icahn's recent 52.3% Voltari (NASDAQ:VLTC) stake disclosure is overdone, argues Paulo Santos in a column now out of embargo. He observes Icahn owned 30.4% of Voltari's common shares and 95.5% of its preferred stock as of March '13, and that the company already had two Icahn-affiliated directors.
- Santos: "Yes, between then and now Carl Icahn increased his exposure, which probably means he's keeping Voltari alive. But he's doing it because no one else will, not because he is making great efforts to increase his share." Bulls have argued Icahn's stake increase could yield an effort to find a buyer for the company (current market cap of $137M) and its huge NOLs.
- Shares have fallen 38% from a Wednesday intraday peak of $21.75. They're still up nearly 13x from where they traded before Icahn's March 31 disclosure.
- Adam Feuerstein notes that Santhera (OTCPK:SPHDF) isn't getting much attention from investors, despite the fact that it is the only company with a successful phase III study in treating Duchenne muscular dystrophy.
- High-profile pharma companies pursuing approval for DMD drugs include BioMarin (NASDAQ:BMRN), PTC Therapeutics (NASDAQ:PTCT), and Sarepta (NASDAQ:SRPT).
- On Friday, results from the positive phase III study involving Santhera's DMD drug idebenone will be presented at the American Academy of Neurology's annual meeting. Earlier this week, the study was published in The Lancet.
- If idebenone is approved in the U.S. and Europe for DMD, peak sales could exceed $500M according to RBC Capital analyst Simos Simeonidis. He also believes Santhera is likely to put itself up for sale if idebenone is approved.
- Related: Sarepta's Long Road Ahead (Apr. 6)
- Related: BioMarin: Expect First-Pass Drisapersen Approval (Mar. 16)
- Related: RBC's initiation of coverage report on SPHDF (Jan. 22)
Wednesday, April 22, 2015
Tuesday, April 21, 2015
- There’s not much value to be found in the stock market by traditional metrics, but the equity strategists at Jefferies think they’ve found five companies that are still bargains.
- The firm cites HollyFrontier (NYSE:HFC), Reliance Steel (NYSE:RS) and Universal (NYSE:UVV) as three value picks whose assets are at least double their liabilities, their long-term debt is less than their working capital, each has enjoyed positive earnings growth the past five years and made consecutive dividend payouts over the past decade, and their P-E ratio is less than 15x over the past 10 years, among other criteria.
- Patterson-UTI Energy (NASDAQ:PTEN) and Tidewater (NYSE:TDW) are seen as more aggressive value picks, meaning their current ratio of assets to liabilities is higher than 1.5x, long-term debt is less than 110% of working capital, and current price-to-book ratio is 1.2x.
- “Investors ought to be mindful that the market is no longer inexpensive,” the Jefferies strategists sum up.
- "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)
- 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
- 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
- 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.
- 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%.
- 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.
- SA author Jeff Eiseman says shares could be worth anywhere from $54 to $225, and thinks other (bullish) analysts aren't bullish enough.
- Source: Tonix Pharmaceuticals: Four Data-Based Valuations Of A Deeply Underappreciated Pharmaceutical Company
- Jason Napodano, who also covers the stock, thinks Eiseman's estimates are "wildly too high." He has a $14 target on TNXP.
- Shares are up 12% premarket on light turnover of 17K.
4:26 AM| Comment!
Monday, April 20, 2015
- 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.
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