Seeking Alpha
  • Saturday, October 18, 2014

  • 4:00 PM
    • Sony (NYSE:SNE) has 40% upside if management shrinks its electronics exposure and steps up profits from its healthy movies, music, insurance, games and imaging chips businesses.
    • Bad news is already priced into shares, Jefferies analyst Atul Goyal says.
    • Sony has scheduled a Nov. 25 investor event during which it’s likely to give more details on restructuring plans.
    • Source: Barron's
  • Friday, October 17, 2014

  • 6:59 PM
    • Zulily (NASDAQ:ZU) is "early with its unique value proposition to the affluent but value-conscious mom," writes Canaccord's Michael Graham, arguing the online women's/children's apparel retailer has differentiated itself in a very competitive market.
    • Graham, who launched coverage with a Buy rating and $45 target, even goes as far as to say Zulily has "turned shopping into a daily, serendipitous experience beginning promptly at 9:01 a.m., offering moms entertainment and shopping for non-mainstream fashion bargains."
    • He adds Zulily's suppliers "get valuable exposure to their target customers with economics that are competitive with those from a conventional retailer," and that his cohort analysis suggests "potential revenue upside."
    • The note arrives with shares down 49% from a February high of $73.50.
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  • 3:17 PM
    • UBS is upgrading the U.S. land drillers, believing that the selloff in the sector has been overdone, even assuming a more cautious North America environment.
    • The firm stresses that buying the land drillers is partially a play on oil prices - it sees upside risk of 40%-80% if oil prices return to $90/bbl for WTI but downside risk of 25% if oil prices slide to $75 for a sustained period of time - but it says underlying industry fundamentals also are positive and the demand for pad-capable rigs will grow.
    • Helmerich & Payne (HP -2.1%), Nabors Industries (NBR +1.1%) and Patterson-UTI Energy (PTEN +0.2%) are all upgraded to Buy from Neutral.
    | 1 Comment
  • 11:49 AM
    • Mark Cuban on Twitter: "I'm buying NFLX stock. At half of YHOO, 10B<Twitter and small pct of major media companies, Someone will try to buy them."
    • Netflix (NFLX -3.8%), which has a current market cap of $20.9B, ticked slightly higher on Cuban's remarks, but continues to sell off for the second day in a row after reporting soft Q3 subscriber adds.
    • The outspoken Dallas Mavericks owner has plenty of industry experience: He once sold to Yahoo for $5.7B, and now controls multiple studios and TV network AXS TV. He was less positive on Netflix back in 2010, predicting (not too accurately) the company would struggle to land deals for high-profile Hollywood content.
  • 11:47 AM
    • AK Steel (AKS +11.2%) surges after Nomura upgrades shares to Buy from Neutral and raises its price target to $10 from $7, citing $2 of EPS power by 2016.
    • Nomura foresees a material increase in EBITDA and free cash flow for AKS in 2015, owing to significant raw material cost down, accretion from the Dearborn acquisition, improvements in electrical steel markets, higher automotive margins, elimination of substantial weather and outage costs from 2014.
    • The firm forecasts 2015 EBITDA of $795M vs. the consensus estimate of $697M and free cash flow of $1.95/share, and sees 2016 EBITDA of $856M and free cash flow of $2.57/share, thanks to additional synergies at Dearborn, further declines in ore prices, and a full-year of contribution from Magnetation.
    | 1 Comment
  • 8:39 AM
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  • Thursday, October 16, 2014

  • 2:54 PM
    • Cloud Peak Energy (CLD +4.1%) is upgraded to Buy from Hold with a $13 price target at Brean Capital, based on valuation and potentially lower costs with reduced diesel prices in 2015.
    • The firm believes the risk/reward on CLD has turned more favorable as the consensus view on the PRB became increasingly more negative as persistent rail issues suppressed YTD demand and buying activity.
    • Lower diesel pricing in 2015 would help CLD, as fuel and lubricants are reported to contribute 12%-13% of the company's costs.
    | Comment!
  • 11:27 AM
    • Seadrill (SDRL +1.2%) is downgraded to Reduce from Neutral at Nomura, which lowers earnings estimates for the next three years as it forecasts ultra-deepwater dayrates will fall to $350K/day in 2015-18, lower than most estimates for $400K-$450K.
    • Against this backdrop, Nomura says its analysis reveals a $2B funding gap in 2015 that incorporates a 50% dividend cut; even if SDRL wound up cutting its dividend entirely, a $1B funding gap would remain.
    • Options available to SDRL, such as asset sales and/or issuance of new equity or debt, may be a challenge given the deteriorating industry outlook for deepwater drilling.
    • SDRL -1.3%.
  • 8:30 AM
    • Rio Tinto (NYSE:RIO) -3.2% premarket as Cowen downgrades shares to Market Perform from Outperform with a $54 price target, down from $64, assessing a more neutral stance on the iron ore space given market fundamentals.
    • The firm is impressed by the level of integration of technology into RIO's operations, but it is concerned that capacity expansions coupled with slowing Chinese steel growth will continue to weigh on iron ore prices.
    | Comment!
  • Wednesday, October 15, 2014

  • 3:59 PM
    • Oil services companies are rising after Citigroup issued positive comments on a number of stocks in the sector.
    • Baker Hughes earns a Buy rating, seen as having a strong chance of meeting EPS estimates before tomorrow's open given recent contract wins in Norway and Brazil, and the stock's valuation is "compelling."
    • Among small- and mid-caps, Citi starts Patterson-UTI (PTEN +5.7%) and RPC (RES +2.3%) with Buy ratings, seeing each as likely to outperform if, as the firm forecasts, crude prices rebound and E&P companies' capital expenditures are higher than expected.
    • Citi tags Schlumberger (SLB +0.5%), Halliburton (HAL +2.1%), Weatherford (WFT +1%), Superior Energy (SPN +2%) and Helmerich & Payne (HP +5.1%) with Neutral ratings.
    | Comment!
  • 3:34 PM
    • Peabody Energy (BTU +1.2%) has held up a bit better than most other coal stocks lately, but that does not stop Imperial Capital from assigning an Underperform rating and $5 price target to the stock.
    • While BTU enjoys a stellar reputation and strong management team, the firm sees its shares and senior notes remaining under pressure from rising leverage and instability in global coal markets.
    • Like more distressed coal producers, BTU's troubles stem from the debt-financed acquisition of coking coal assets in 2011 when it issued $4B of debt to purchase Macarthur Coal, Imperial adds.
    • Most coal names are enjoying a nice bounce today: ANR +9.3%, ACI +8.3%, WLT +8%, CNX +3.8%, CLD +0.1%, YZC -0.8%, WLB -3%.
  • 3:01 PM
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  • 2:43 PM
    • Declaring Applied Materials' (AMAT -2.1%) recent selloff has made shares "very attractive," BofA/Merrill's Krish Sankar has upgraded the chip equipment giant to Buy, while reiterating a $25 target.
    • Though bullish on the semi capital equipment cycle, Sankar argues Applied is "more of a restructuring story, making it cycle-agnostic in the intermediate term and not as susceptible to the noise around demand/yield."
    • He sees the Tokyo Electron (OTCPK:TOELF) merger (still being pored over by regulators) potentially closing in Q1, and thinks the post-merger company will have normalized earnings power of $1.80/share, assuming the wafer fab equipment market is worth $31B - Gartner has forecast $30.8B in 2014, and $34.1B in 2015. That implies shares only trade at 10x-11x normalized EPS.
    • Moreover, if the deal somehow fails to clear, Sankar only sees Applied falling to the $17-$18 range.
    • The upgrade hasn't done much to lift Applied, which is following the market lower. CLSA upgraded the company last week.
    | Comment!
  • 12:40 PM
    • Energy XXI (EXXI +3.9%) is upgraded to Buy from Neutral with a $12 price target at Global Hunter, which believes management is considering various realistic ways to increase liquidity, decrease leverage, and highlight that the company's assets are worth a lot more than what the current market valuation.
    • EXXI is down an outsized 66% since FQ4 earnings and now trades below its PV10 value, not just at $95 oil but at $67 oil, the firm says.
  • 10:15 AM
    • JMP Securities has upgraded Cavium (NASDAQ:CAVM) to Outperform, and set a $50 target.
    • The firm says checks suggest the network processor vendor's upcoming product cycles will fare well. This year has seen Cavium unveil an application-specific ARM server CPU platform that supports up to 48 cores per chip, as well as acquire programmable switching chip developer Xpliant.
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  • 8:54 AM
    • JPMorgan upgrades Micron (NASDAQ:MU) to Outweight from Neutral, saying it should benefit from industry consolidation and strong demand in memory markets.
    • Near-term server and PC upgrade cycle should improve, and mobile and gaming should drive long-term demand for NAND and DRAM.
    • Price target $36. Shares -0.9% premarket to $27.14.
    | Comment!
  • Tuesday, October 14, 2014

  • 6:47 PM
    • Goldman Sachs downgrades Ford (NYSE:F) even though shares have slipped more than 20% during the past three months.
    • The firm cuts Ford to Neutral from Buy with a $17 price target, lowered from $21, noting that the stock looks cheap but might be "dead money in the near-term" as it now expects Y/Y EPS declines until Q2 2015 since the ramp up in truck production looks like it will happen more slowly than expected, with the F-150 not producing at full capacity until H2 2015.
    • Also, Goldman foresees less cash deployable to shareholders given lower EBITDA and higher capex spending relative to previous forecasts, plus annual pension contributions of $1.5B over the next two years.
    • GM is removed from Goldman's Americas Conviction List but remains Buy-listed, as the firm sees some pressure on North American margins next year.
  • 4:38 PM
    • Shares of Eaton (NYSE:ETN) rose 1.1% today after Barclays upgraded shares to Outperform from Equal Weight.
    • Firm believes fears of a global slowdown as overblown, and says investors should, "want to own the most-disliked names into a reversal. ETN is a poster-child." ETN trades at a discount to its peers.
    • "We continue to see a high likelihood of a 2015 recovery in capex and capex-related markets. We also see healthier housing markets and do not buy into the current oil/gas fear trade."
  • 11:49 AM
    • Energy Transfer Equity (ETE +8%) and Plains GP Holdings (PAGP +4.4%) are higher after Baird upgrades both stocks to Outperform from Neutral with respective price targets of $65 and $32.
    • Baird notes the crude oil marketing at underlying partnerships Sunoco Logistics (NYSE:SXL) and Plains All American (NYSE:PAA) create partial crude price exposure to ETE and PAGP, but the firm says it is comfortable with the risk given that the marketing business is relatively less exposed to price levels.
    • Spread volatility is most important for ETE and PAGP, and the firm expects increased volatility to partially offset any volumetric headwinds in the event crude continues to fall and remain there for a prolonged period.
    | 1 Comment
  • 10:55 AM
    • Helmerich & Payne (HP +1.3%) is upgraded to Outperform from Market Perform at FBR Capital but with a lower price target of $108 from $120.
    • FBR thinks HP offers a total potential return of 40% before factoring the high probability of future dividend increases, and believes HP has become compelling by the firm's primary valuation metrics.
    • FBR cuts price targets by 10%-15% for several other oilfield services stocks, including Halliburton (HAL -0.3%), Baker Hughes (BHI -0.5%), Schlumberger (SLB +0.4%), RPC ([[RES] -2%), Independence Contract Drilling (ICD +0.3%) and Tesco (TESO +0.4%).
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