Seeking Alpha
  • Friday, July 3, 2015

  • 6:28 AM
  • Thursday, July 2, 2015

  • 5:45 PM
    • EBAY closed up 2.4% following news PayPal (Pending:PYPL) is buying top online international money transfer service XOOM for $890M. With PayPal now just 18 days away from trading separately, eBay is within $1.50 of a 52-week high of $63.30. Western Union had a less favorable reaction to the deal.
    • Street reactions to the purchase have been largely positive. SunTrust's Bob Peck: "We see synergies/opportunity between Xoom and [mobile payments platform] Venmo inside the PayPal ecosystem enabling lower cost (ACH, or debit worse-case) wallet funding (PayPal, Paydiant) and in-market and cross-border [consumer-to-consumer] and [consumer-to-business] transactions. This could serve to sustain relevance on the consumer side and (interrelated) preserve/lower funding cost and strengthen the value proposition on the merchant side."
    • Baird's Colin Sebastian: "Both PayPal and Xoom have competitive advantages from fraud-detection technology underlying their respective products. While Xoom’s engine was initially built using concepts borrowed from PayPal, they have since extended the functionality to peer-to-peer international remittance..."
    • Keefe, Bruyette & Woods' Sanjay Sakhrani: "[I]nternational money transmittance is a highly adjacent business to P2P payments and digital wallets, which is PayPal's core business…Despite a fairly rich valuation, XOOM is growing quickly and brings to the table a scalable, bolt-on platform to help offer additional value-add..." Morgan Stanley's Brian Nowak sees an opportunity to significantly expand Xoom's op. margin (4% in 2014).
    • Xoom closed at $25.05, slightly above PayPal's $25/share buyout price. SunTrust's Andrew Jeffrey thinks Western Union and/or Internet companies could make a rival bid. Baird's Sebastian: "Higher bid from traditional money transfer company still plausible given a PayPal-Xoom combination presents a much greater (and better-capitalized) competitive threat."
    | 1 Comment
  • 7:18 AM
  • Wednesday, July 1, 2015

  • 4:26 PM
    • GrubHub (NYSE:GRUB) tumbled below $32 after ITG Research stated checks pointed to Q2 share loss in newer markets, and forecast quarterly revenue of $84M (below an $85.3M consensus). Shares are now barely $1 above a 52-week low of $30.62.
    • ITG's note overshadowed a bullish coverage launch from Guggenheim Securities' Jake Fuller (Buy, $45 target), who argued the selloff seen following GrubHub's Q1 report (was accompanied by soft adjusted EBITDA guidance) was unjustified, and that growth investments (pressuring EBITDA) will pay off.
    • Fuller also speculates the online food-ordering/delivery leader could be acquired. "We see consolidation unfolding across the broader restaurant services vertical, which runs from discovery to reservations, ordering, delivery and payments ... GOOG recently added order-now links, TRIP and YELP have acquired a number of restaurant reservation services, and Priceline bought OpenTable ... GRUB can certainly be a buyer in the discovery, delivery and payments area in its own efforts to vertically integrate, but could also be a key link for larger players looking to build out a viable restaurant services offering."
    | Comment!
  • 1:27 PM
    • Though many have argued the link between oil prices and solar demand is limited (given oil accounts for a small % of global electricity output), solar stocks are once more dropping in tandem with a selloff in crude prices - WTI crude is down 3.6% to $57.35/barrel after the EIA reported U.S. oil inventories rose by 2.4M barrels last week, their first weekly increase since April.
    • Notable decliners include Canadian Solar (CSIQ -3.6%), SolarCity (SCTY -2%), Yingli (YGE -2.4%), Vivint (VSLR -3%), Sky Solar (SKYS -2.8%), and Solar3D (SLTD -5.3%). The Nasdaq is up 0.4%.
    • Deutsche's Vishal Shah is once more defending the group (previous), arguing solar project YieldCos remain "a significant growth catalyst for the solar and broader renewable sector."
    • Shah adds YieldCos are lowering the cost of capital for renewable firms, and that existing YieldCos (TERP, CAFD) have strong long-term visibility thanks to large backlogs of projects they carry the right of first offer for (via their parent companies). Canadian Solar is among the firms planning to launch a YieldCo soon.
    • ETFs: TAN, KWT
    • 2 days ago: Solar stocks hit hard amid market selloff
  • 6:51 AM
  • Tuesday, June 30, 2015

  • 6:51 AM
  • Monday, June 29, 2015

  • 6:15 PM
    • Barclays has named enterprise software giant Oracle (NYSE:ORCL), glass giant Corning (NYSE:GLW), network processor/ARM server CPU vendor Cavium (NASDAQ:CAVM), and  payment services provider Total System Services (NYSE:TSS) its top Americas tech picks.
    • On Oracle: "Oracle is emerging from an extended period of product development and internal changes that position it well to capitalize on key tailwinds through 2016. With better execution in software and stabilization in hardware, we think investor sentiment will become more positive, specifically as quarterly results have been better, and the current valuation makes Oracle shares attractive." Shares are less than two weeks removed from selling off due to an FQ4 miss and light guidance.
    • On Corning: "The launch of Gorilla Glass 4 has been successful and additional glass industry dynamics remain beneficial. Other new glass products highlight Corning’s ability to move with the market and compete with non-glass solutions over time. Capital allocation will remain a major component of the story and the company’s large share repurchase program (roughly $1bn remaining) and $0.48 annual dividend should lend support to the stock." Barron's made a bull case earlier this month.
    • On Cavium: "CAVM’s base business is levered to strong end market growth trends within the security, wireless infra, and data center end markets, but we also see [addressable market] expansion through its Fusion-M (doubles base station content and likely drives share gains), Liquid IO (gen 2 ramps 2H15), 2/4 core Octeon (addresses FSL $500+ business), and Fusion (small cell) products. ThunderX (ARM server SoC) and XPliant (switch silicon) both add incremental $1bn+ TAMs with disruptive solutions. CAVM will likely need to weather one more quarter without real upside but multiple products are progressing toward material revenue in 2016." CLSA and Needham cited some of the same catalysts in bullish June notes.
    • On TSS: "Despite recent accounts on file (AOF) wins (e.g., BMO, TD, BAC) TSS expects to be able to grow North American revenue by mid- to-high single digits organically on an annual basis over the longer term. Given strong drivers such as card transactions (Nilson projects transactions on cards to grow ~7% from 2013 to 2018), and AOF outsourcing trends, we see the implied 5-9% y/y longer-term growth guidance as achievable, particularly when combined with nominal GDP growth."
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  • 9:03 AM
    • Believing the company could join the wave of U.S.-traded Chinese firms to receive going-private offers, Mizuho has upgraded SOHU to Buy, and hiked its target by $24 to $70.
    • Mizuho adds it thinks the Chinese search/online video/gaming firm trades at a 17% discount to its fair value on a sum-of-the-parts basis.
    • No movement yet premarket. Sohu fell 7% on Friday, taking part in a broader Chinese tech rout. The Shanghai exchange was down another 3.3% overnight.
    | Comment!
  • 8:50 AM
    • Oppenheimer's Andrew Uerkwitz, upgrading Synaptics (NASDAQ:SYNA) to Outperform with a $105 target: "Synaptics has declined 14% over the last seven trading days (vs. NASDAQ +0.3%) on what we believe is unjustified fear over a Digitimes article. It claimed that Apple is developing an in-house TDDI [touch controller/display driver] solution. We see this as highly speculative. And even if true, Apple's TDDI is unlikely to come to fruition until 2018. While we fully respect Apple's ability to integrate and build leading-edge solutions, we believe it is far too difficult to build a TDDI solution for the resolution and touch capabilities needed for an Apple device."
    • Shares haven't yet moved premarket; Nasdaq futures are down 1.2%. Based on Friday's close, Synaptics goes for just 12.3x an FY16 (ends June '16) EPS consensus of $7.01. The FY16 revenue growth consensus is at 18.9%.
    | 1 Comment
  • 6:47 AM
  • Friday, June 26, 2015

  • 11:36 AM
    • "Underlying real estate dynamics aren't going to change," says Scott Crowe, portfolio manager of the Real Estate Diversified Income Fund (MUTF:RREDX). The fund has about one-third of its money in REITs, the rest in private real estate equity and credit.
    • Though the direction of short-term rates remains a risk, Crowe isn't expecting long rates to move a lot more. If REITs continue to sell off as the Fed hikes, investors should stand ready to buy. His top themes:
    • Not only are more people renting, but immigration is fueling population growth. Essex Property Trust (NYSE:ESS) is his favorite in apartment REITs.
    • The most popular places for office space these days are the fringy neighborhoods of big cities. That's bad for suburban office complexes, but good for companies like the West-coast's Kilroy Realty (NYSE:KRC) and NYC's SL Green (NYSE:SLG).
    • The move of retail shopping to online makes things tough for shopping malls and retail-focused REITs, but more warehouses will be needed with which to house goods prior to shipping. Los Angeles' Rexford Industrial Realty (NYSE:REXR) stands to benefit.
    • Source: Barron's
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  • 6:42 AM
  • Thursday, June 25, 2015

  • 4:01 PM
    • "The valuation gap doesn't make sense," says Macquarie's Tom White following a recent WSJ report stating online home-rental platform Airbnb is in talks to raise ~$1B at a whopping $24B valuation. HomeAway's (AWAY -1.2%) market cap is currently $2.97B.
    • White does admit Airbnb is growing much faster - the company is reportedly targeting 2015 revenue of $900M, a figure implying a 90% CAGR from 2013-2015. HomeAway did 2014 revenue of $446.8M, and is respectively forecast by the Street to grow 11.3% and 16.5% in 2015 and 2016.
    • However, White also notes HomeAway is solidly profitable. Airbnb reportedly expects a $150M 2015 op. loss as it continues investing aggressively. It expects to turn profitable in future years, and deliver $3B in 2020 EBITDA (on the back of $10B in revenue).
    • Airbnb is often viewed as a major long-term threat to HomeAway. HomeAway CEO Brian Sharples has insisted his company, which primarily handles secondary home rentals, has limited overlap with Airbnb.
    | 1 Comment
  • 12:26 PM
    • Needham's Kerry Rice, hiking her LendingTree (NASDAQ:TREE) target by $14 to $84 and reiterating a Buy. "Lending Tree is evolving into a financial products marketplace that provides consumers with tools and the ability to comparison shop in order to save money and provides lenders with consistent consumer volume."
    • Rice expects LendingTree's core personal loans services to act as its main growth engine, and thinks newer service offerings could drive upside. ""We believe Tree's new products, scale, and technology innovations should lift conversions across its financial product categories."
    • Shares have made new 52-week highs, and are now up 226% from a May 2014 low of $22.94.
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  • 11:31 AM
    • Believing Mobileye (MBLY +3.9%) will continue posting 50%+ annual sales growth through 2020, CLSA has launched coverage on the driver-assistance tech leader with a Buy rating and $67 target.
    • Shares are at their highest levels since last October, and are now up 36% YTD.
    • Recent bullish commentary: Ron Baron, Wells Fargo, Citi
    | Comment!
  • 11:20 AM
    • After meeting with CFO George Laplante, Stifel's Kevin Cassidy is "more convinced that Ambarella (NASDAQ:AMBA) is methodically expanding on its core competencies (video capture, compression and energy efficiency) which is increasing competitive barriers to entry." His target has been hiked by $10 to $115.
    • A next-gen SoC due in 2016 will rely on an advanced 14nm manufacturing process, and leverage video analytics to provide increased camera intelligence. Cassidy: "Once in hardware, [analytics] decisions can be made much faster than in software. We see analytics as a critical barrier to entry for competitors and providing additional camera features."
    • His FY17 (ends Jan. '17) revenue and EPS estimates have respectively been raised by $20M and $0.31 to $404M and $3.50; consensus is at $393M and $3.65. Shares remain down 17% from where they traded before Citron Research issued a critical report last Friday; part of Citron's bear case rests on a belief Ambarella will have trouble differentiating outside of the high-end.
    • Recent Ambarella coverage
  • 6:55 AM
  • Wednesday, June 24, 2015

  • 6:02 PM
    • "We see lots to like with Criteo (NASDAQ:CRTO) ...  We look at Criteo as a leader in the programmatic [ad] space and a disruptive force within digital advertising," writes Cowen's Thomas Champion. He launched coverage on the e-commerce ad services firm with an Outperform rating and $58 target today.
    • Champion thinks Criteo, which relies on user browsing activity and algorithms gauge shopper intent and deliver targeted ads, will have a $20B market opportunity by 2018.
    • For his part, Criteo COO Eric Eichmann has argued the transaction-focused nature of his company's business sets it apart from online ad firms dependent on brand ad campaigns (and with them, the whims of marketing departments and ad agencies). "If you look at it from a client perspective, we are a cost of sale item, as opposed to a discretionary marketing item. It's very comparable to search."
    • Shares closed unchanged today; the Nasdaq was off 0.7%. Two weeks ago, Criteo sold off in response to news Apple (judging by iOS 9 documentation) will begin allowing ad-blockers for Mobile Safari.
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  • 5:49 PM
    • In addition to a downgrade to Neutral from Baird's Jayson Noland, Fortinet (NASDAQ:FTNT) saw Citi's Walter Pritchard made a similar ratings cut today. Like Noland, Pritchard hiked his target (by $3 to $44) while downgrading.
    • Pritchard expects share gains to remain a driver for Fortinet, but expects them to be on "less of an upward trajectory" than for other security tech plays such as Palo Alto Networks and Proofpoint. "FTNT has gained nearly 200bp of share a year over five years, but this pace of gains has slowed somewhat in the last two years ... model ~125bps of share gains per year in core firewall/UTM [hardware] through 2019."
    • He adds attach rates for Fortinet's value-added subscriptions are already high, and that the subscriptions are an "all or nothing" decision for buyers. "Thus, while on paper there is room to gain from attach, we view it as more linked to sale of product than incremental success with attach on installed base."
    • Noland is a little more upbeat, predicting Fortinet's fundamentals will remain strong, that checks "have remained consistent and mostly positive," and that major sales/marketing investments are paying off. "The company has a clear advantage in applications requiring high throughput (e.g., HFT) which is a function of custom silicon versus a competitive landscape reliant on merchant silicon."
    • At the same time, he states security resellers "tell us they prefer Palo Alto (NYSE:PANW) to Fortinet as a long-term, strategic partner." Noland also observes Fortinet's U.S. growth has skewed heavily towards enterprise sales (+70% Y/Y in Q1), and that SMB and service provider sales (roughly flat) have been softer.
    • Fortinet closed down 3.5%, and Palo Alto down 1.5%. Other cybersecurity plays also sold off on a day the Nasdaq fell 0.7%.
    | Comment!
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