Seeking Alpha
  • Today - Monday, April 27, 2015

  • 11:14 AM
    • 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.
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  • 10:55 AM
    • 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 (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.
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  • 8:20 AM
  • 7:44 AM
    • In his "We Are Full of Bull" note this morning, Morgan Stanley's Adam Parker says the economy will accelerate in Q2 and Q3, bringing stocks along for the ride. If investors are gun-shy thanks to record levels for the averages, Parker suggests looking for names with decent long-term earnings forecasts trading at a discount to the market.
    • The ten largest U.S. stocks trading at a discount, but with above-average expected growth rates: Apple (NASDAQ:AAPL), Citigroup (NYSE:C), Gilead (NASDAQ:GILD), Union Pacific (NYSE:UNP), Actavis (NYSE:ACT), Twenty-First Century Fox (NASDAQ:FOXA), Time Warner (NYSE:TWX), Ford (NYSE:F), BlackRock (NYSE:BLK).
    • Conversely, one might want to avoid those stocks selling for substantial premiums. The ten largest stocks trading at a premium to the market while growing at a below-average rate: Exxon (NYSE:XOM), Procter & Gamble (NYSE:PG), Chevron (NYSE:CVX), Coca-Cola (NYSE:KO), Pepsico (NYSE:PEP), Schlumberger (NYSE:SLB), MMM, McDonald's (NYSE:MCD), UPS, Nike (NYSE:NKE).
    • Source: Bloomberg
  • 6:43 AM
  • Friday, April 24, 2015

  • 8:55 AM
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  • 6:42 AM
  • 5:24 AM
  • Thursday, April 23, 2015

  • 11:34 AM
    • 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.
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  • 11:17 AM
    • 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."
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  • 10:47 AM
    • 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.
  • 10:44 AM
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  • Wednesday, April 22, 2015

  • 6:38 AM
  • Tuesday, April 21, 2015

  • 7:30 PM
    • 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.
  • 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
    • 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)
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  • 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
  • 2:08 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
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  • 1:48 PM
    • Pleased with's (NYSE:WUBA) deal to buy a 43.2% stake in smaller rival, 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.
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  • 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%.
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  • 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.
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