Seeking Alpha
  • Today - Thursday, October 8, 2015

  • 2:02 PM
    • "Qualys (NASDAQ:QLYS) guided to a meaningful uplift in the company's target operating model as compared with both past guidance and current buy- or sell-side expectations," reports Credit Suisse's Philip Winslow after attending the cloud security/compliance software vendor's investor day. He has upgraded to Outperform, and hiked his target by $10 to $45.
    • Winslow notes management's new 5-year plan aims for a 42%-46% op. margin and revenue of "at least" $500M. He estimates that respectively implies revenue and expense CAGRs of 24.7% and 15.8%-17.4%.
    • Also: Winslow believes Qualys could be an attractive buyout target given its relatively low valuation, and (with 40% of clients still only using one product) sees ample cross-selling opportunities. New product launches are expected for the core QualysGuard cloud platform.
    • Yesterday: Qualys names field operations chief, announces partnerships ahead of investor day
    | 2:02 PM | Comment!
  • 11:24 AM
    • Believing the company's margins are "steadily deteriorating" and that customer growth is slowing, Cowen's Kevin Kopelman has launched coverage on Groupon (GRPN -2.4%) with an Underperform rating and $2.75 target.
    • Seen pressuring Groupon's margins: Fee cuts for retail service partners, merchant subsidies, and a mix shift (has been going on for a while) towards e-commerce/goods sales relative to local deals/services.
    • Kopelman also observes Groupon's North American active customer growth has slowed to 10% Y/Y, and argues the company's core market is getting saturated. Meanwhile, he's skeptical about Groupon's prospects in the food delivery market in light of competition from the likes of GrubHub, Amazon, Yelp, and Uber.
    • Shares are lower a day after rising 8.2% following news Chinese local deals leaders Meituan and Dianping are merging at a combined $15B valuation that makes Groupon's market cap (currently $2.4B) seem paltry by comparison.
    | 11:24 AM | 27 Comments
  • 9:55 AM
    | 9:55 AM | Comment!
  • 9:46 AM
    • Activist Elliott Management has disclosed a 4.4% stake in videroconferencing and unified communications (UC) hardware/software vendor Polycom (PLCM +10%), and a 6.3% stake in UC peer Mitel (MITL +17.1%). Each position was worth ~$100M going into today.
    • In an open letter, Elliott declares the unified communications/collaboration space is overdue for consolidation, and calls on Polycom and Mitel to merge. "The combination would double the scale of Polycom to $2.5 billion in revenue. Between Mitels $164 million of EBITDA in 2014 and $100 $150+ million of synergies available, Polycom would quickly become a $500+ million EBITDA company following a combination with Mitel. Scale provides important competitive advantages in addition to the financial benefits of greater diversification, stability and access to capital markets."
    • The firm also argues Polycom faces tough videoconferencing competition from Cisco, Avaya, LifeSize (Logitech), and others - "The smaller, newer players continue to take share with cheaper and simpler products while the larger, diversified vendors use their marketing power and bundling to squeeze out companies like Polycom." - and that Mitel's Canadian incorporation could yield tax benefits.
    • Elliott: "Polycom's stock can increase by over 30% to $14.75 per share by the end of 2016 and nearly 85% to $20.50 per share by the end of 2017. The best part is that we assume the exact same multiple and absolutely no improvement in revenue trajectory ... the transaction is so compelling that Polycom could pay $10.00 per share for Mitel in an all-stock transaction and still yield a 70% return by the end of 2017 and a 95% return by the end of 2018."
    • Also: Elliott notes it has a stake in another UC product provider, ShoreTel (SHOR +0.9%). Mitel made a failed attempt to acquire ShoreTel last year; Elliott argues a deal between the two still makes sense.
    | 9:46 AM | Comment!
  • 6:54 AM
  • Wednesday, October 7, 2015

  • 5:37 PM
    • Schlumberger (NYSE:SLB) is out and Frank's International (NYSE:FI) is in, praising FI's “self-help improvements with a good underlying business.” as Credit Suisse analysts update their top energy stock picks in 10 different subsectors.
    • Credit Suisse names Devon Energy (NYSE:DVN) as its favorite oil and gas E&P stock, which should ultimately outperform despite near-term oil price risk “given its defensive valuation, top quartile oil growth profile, and further accretion potential from EnLink."
    • Top independent refiner is Marathon Petroleum (NYSE:MPC), as the firm believes the synergy of the company’s recently-acquired Hess retail business  is exceeding plans, and it is confident MPC will continue to benefit from self-help initiatives.
    • Among MLPs, Genesis Energy (NYSE:GEL) is defensive in terms of its direct exposure to commodity price weakness and offensive in terms of the distribution growth expected following its recent acquisition of offshore assets from Enterprise Products Partners.
    • Other subsector favorites:MRO, PDCE, EURN, SCTY
    | 5:37 PM | 7 Comments
  • 7:06 AM
  • Tuesday, October 6, 2015

  • 7:01 PM
    • "I've been hearing Juniper (NYSE:JNPR) may go private for a while," says an "experienced [Silicon] Valley technology executive" speaking with Light Reading. "It's the same threat as Riverbed ... In Juniper's case, it would be cool…it is needed."
    • The "threat" in question is pressure from activist Elliott Management, which had a stake in Riverbed prior to its acquisition by P-E firm Thoma Bravo, and has prodded Juniper to carry out major job cuts and capital returns. To date, Elliott hasn't publicly demanded a sale.
    • Meanwhile, a "senior executive in the router sector" states Juniper has been looking for a buyer. In addition, Benzinga recently reported hearing "unconfirmed market chatter" (doesn't always pan out) that Juniper has hired Goldman to "assist it in handling offers to take the company private for $32 per share."
    • Earlier this year, the Nokia/Alcatel-Lucent deal fueled speculation Ericsson would counter by bidding for Juniper. Ericsson has said it's open to a major acquisition, but hasn't yet pulled the trigger on such a deal.
    • With a $10.9B market cap - a buyout might require a $13B+ price - Juniper would be a big fish for a peer or P-E firm to swallow.
    • Yesterday: Juniper rallies after landing Stifel upgrade, announcing AT&T deal
    | 7:01 PM | Comment!
  • 10:18 AM
    • Arguing the growing pace and sophistication of corporate data breaches will act as a tailwind, Sidoti's Stan Berenshteyn has launched coverage on Vasco (NASDAQ:VDSI) with a Buy rating and $34 target.
    • Berenshteyn also likes Vasco's low tax rate and balance sheet/cash flow profile. His launch comes a day after the authentication hardware/software provider named a new CFO.
    • Shares still -34% YTD. They go for nearly 19x a 2016 EPS consensus of $1.00.
    | 10:18 AM | Comment!
  • 9:16 AM
    • Believing consensus estimates are too high and that the company is likely to cut guidance over the next 6 months, Citi's Jim Suva has launched coverage on F5 (NASDAQ:FFIV) with a Sell rating and $105 target.
    • Suva notes he's the only analyst with a bearish rating on F5. He has also started Cisco at Buy, and Juniper at Neutral.
    • F5 has fallen to $116.22 premarket. Suva's coverage comes as smaller F5 rival Radware tumbles in response to a Q3 warning. F5's FQ4 (calendar Q3) report arrives on Oct. 28.
    • Yesterday: F5 partners with FireEye
    | 9:16 AM | Comment!
  • 7:12 AM
  • Monday, October 5, 2015

  • 8:29 PM
    • Sirius XM (NASDAQ:SIRI) gained 1% today to close at $3.87, its highest point in three weeks.
    • Buckingham Research is recommending getting exposure to the company, which it has Buy-rated -- but instead through Liberty Media (NASDAQ:LMCA) rather than a direct purchase.
    • The vast majority of Liberty's market cap has been tied up in holding a majority stake in Sirius XM (59.4% as of July 24). And while Sirius is market priced, Buckingham says, Liberty Media's at a 17% discount to net asset value.
    • Analyst James Ratcliffe has a $4.50 price target on Sirius XM; that implies 16%-plus upside from today's close. He has a $48 target on Liberty Media, which closed today up 1% to $37.55, implying 28% upside.
    • Previously FBR had reiterated its Outperform rating on Sirius XM in looking at strong auto sales providing a good funnel. Buckingham agrees, expecting an above-guidance 1.95M net added subscribers for 2015.
    | 8:29 PM | 27 Comments
  • 8:09 PM
    • Scripps Networks Interactive (SNI +3%) and Viacom (VIA +2.6%, VIAB +2.6%) gained today amid a solid market rally, despite downgrades by Goldman Sachs (which admits that overall, media stocks it covers are trading at a "near trough").
    • The two stocks are "squarely in the middle of cord cutting," analyst Drew Borst writes. He cut Viacom to Neutral and lowered its price target to $46, from $69; VIAB closed at $45.46 today. The firm cut SNI to Sell with a $47 target, down from $74; that stock closed at $51.30 today.
    • But Goldman maintained its Buy ratings on Time Warner (TWX +0.7%) and Twenty-First Century Fox (FOX +1.4%, FOXA +1.1%) "because well-positioned, vertically-integrated media companies should be able to navigate a landscape of steady but not sharp pay TV sub erosion."
    • Despite the Buy rating, Time Warner came off Goldman's Conviction Buy list amid the more general pay TV concerns. For subscriptions, Goldman sees "2% per annum declines; every 1% additional decline equates to 80-170 bps decline in EPS. The big bundle will not be for every consumer, especially as more Internet substitutes arise, but this will also create new revenue opportunities for some media companies to offset declines in pay TV subs."
    | 8:09 PM | 2 Comments
  • 7:02 PM
    • Believing chip industry capex will drop 13% in 2016 to $46B due to weak memory spend, RBC's Mahesh Sanganeria downgraded Applied Materials (NASDAQ:AMAT) and Lam Research (NASDAQ:LRCX) to Underperform today, while respectively cutting his targets to $12 and $52.
    • Sanganeria expects DRAM capex to drop 38% next year, and NAND flash capex 17%. Foundry capex is expected to be "flattish," and spending by IDMs (pressured this year by Intel's capex budget cuts) up 3%. "DRAM spending is positioned to decline in 2016 after two years of high level spending on new capacity and 20nm conversion. 3D NAND in CY16 appears to be limited after Samsung filled up Xi’an fab with 90k capacity as Micron and Toshiba need to expand current fabs for 3D conversion ... IDM/foundry spending will likely remain muted until 10nm ramp."
    • He thinks Applied's 2016 outlook is too optimistic. "During JulQ earnings call, management expected DRAM spending to be down 10% and NAND to remain at a high level driven by continued 3D NAND investment in CY16. Additionally, the company expects big 10nm foundry spending."
    • Regarding Lam, he observes DRAM/NAND now account for ~60% of total shipments. and thinks calendar Q4 shipments could miss estimates. DRAM and NAND prices have come under pressure in 2015, fueling speculation memory makers (Samsung in particular) could pare their investments.
    • In spite of the downgrade, AMAT rose 1.1% in regular trading, aided by a 1.6% Nasdaq gain. Lam fell 0.4%. Both companies have had some bad news priced in over the last several months.
    | 7:02 PM | 3 Comments
  • 12:06 PM
    • Believing the company's core microphone business is back on track after having regained share at Apple, Stephens' Harsh Kumar has upgraded Knowles (NYSE:KN) to Overweight, and hiked his target by $4 to $25.
    • FBR upgraded a week ago, while stating an iPhone 6S teardown indicated Knowles has 4 microphones inside the 6S (up from 3 in prior models). Knowles is at its highest levels since April, the month in which the Audience acquisition was announced.
    | 12:06 PM | Comment!
  • Friday, October 2, 2015

  • 2:01 PM
    • Arguing two new ad products will put Google (GOOG +1.7%, GOOGL +1.5%) on better competitive footing with Facebook, Oppenheimer's Jason Helfstein has upgraded to Outperform, and hiked his target by $30 to $700.
    • Helfstein notes Google's recently-announced Customer Match product, which lets marketers send targeted ads to users who have already provided them with an e-mail address, helps Google counter Facebook's Custom Audiences, which does something similar. Meanwhile, Universal App Campaigns (announced in May), which enables app install ad campaigns running across search, mobile sites, Google Play, YouTube, and the AdMob mobile ad network, takes aim at Facebook's lucrative app install ad business.
    • He also downplays concerns about ad-blockers, citing Google's control over Chrome and Android, financial clout to pay for whitelist status on ad-blockers (provided a particular ad-blocker supports the arrangement), and a mix shift from display to search ads. Worth noting: Chrome supports ad-blockers on PCs, and some blockers remove search ads.
    • Meanwhile, Helfstein thinks Google's bread-and-butter search ad business remains healthy. "While desktop search is losing share to emerging formats (video, mobile, etc.), total search will still represent the majority of Internet ad spend in the U.S. (45%) and internationally (47%). Mobile search is growing at a ’13-’18 compound annual growth rate (CAGR) of 34% in the U.S. and 36% internationally."
    • Separately, Google's restructuring into a holding company called Alphabet will officially go into effect after today's close. Google's stock tickers and board will remain the same. Alphabet's units include core Google (run by Sundar Pichai), Nest, Fiber, Calico, Google Ventures, Google Capital, and the Google X long-term R&D unit.
    | 2:01 PM | 8 Comments
  • 11:35 AM
    • Up 5.3% on Wednesday (aided by a report Jack Dorsey will soon be named by permanent CEO) and down 8.4% on Thursday as markets digested the news, Twitter (TWTR) is rallying again today following a spirited defense from Deutsche's Ross Sandler, who again compares the microblogging platform to Facebook in 2012 (when mobile monetization concerns were running high).
    • Sandler asserts Twitter's anticipated Project Lightning (could be called Moments), which will let users follow curated feeds for major events, will launch on Tuesday. He argues the feature could be pivotal in boosting slowing MAU growth and converting casual Twitter users into regulars.
    • He forecasts slightly above-consensus Q3 revenue, and notes Twitter should have about 3 weeks of Lightning/Moments data by the time its Q3 report arrives. "Our checks continue to point to solid revenue trajectory in most markets, including US direct sales, self-serve and international."
    • Sandler's note is overshadowing a neutral coverage launch from Wedbush's Michael Pachter, who remains concerned about the user growth, engagement, and ease-of use issues Sandler sees Lightning help address.
    | 11:35 AM | 12 Comments
  • Thursday, October 1, 2015

  • 12:30 PM
    • Citing optimism about "new products, better positioning around the value proposition for financials, a growing ecosystem, [and] a revived go-to-market approach," Stephens' Alex Zukin has upgraded Workday (NYSE:WDAY) to Overweight amid the company's Workday Rising customer conference, and in the wake of its analyst day. His target remains $85.
    • Zukin is now more optimistic about Workday's ability to land Fortune 500 clients for its Financials product (still accounts for a much smaller portion of revenue than Workday's HCM/HR product), and notes there are now over 4,800 trained Workday implementation consultants, up 35% Y/Y. IBM is set to acquire Workday consulting/implementation firm Meteorix.
    • Shares are rallying on a down day for equities.
    • Analyst day slides (.pdf), more analyst commentary
    • Previously: Workday unveils employee-learning software, takes aim at Cornerstone
    | 12:30 PM | Comment!
  • 11:33 AM
    • "Sure the company is highly levered and complex but it is almost certain that the past deals have been good deals," writes Bronte Capital while disclosing a long position in SunEdison (SUNE -0.3%). "Any solar farm deal you put in place 3-5 years ago has worked out. Both solar panel prices and interest rates are lower than you would have baked into your cash flow models."
    • Bronte does caution SunEdison will be hard-pressed to produce good deals in the future unless it "repairs its relationship with capital markets." It's also not a fan of the pending Vivint Solar acquisition - "[T]here are good reasons why roof top solar is less attractive than utility scale solar farms. The main one is that rooftop solar gets under-priced use of the grid."  - and thinks CEO Ahmad Chatila should be axed. "Visionaries running financial institutions end in disaster. Mr Chatila has built an institution for which he is profoundly unsuitable to run."
    • Nonetheless, Bronte considers solvency fears overblown, and references to "Sun Enron" fear-mongering. "[A]ll construction finance automatically can be termed out as project finance (over the life of the project and linked to the project) when the construction is done. If this is true the market fear for this company cannot cause insolvency. Given that the company is priced as if insolvency is likely this stock should produce a good return from here."
    • SunEdison briefly spiked higher following Bronte's disclosure, but has quickly given back its gains. Shares are less than $0.60 above a Tuesday low of $6.56.
    • Prior SunEdison coverage
    | 11:33 AM | 16 Comments
  • 8:33 AM
    | 8:33 AM | 7 Comments
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