Today - Tuesday, March 31, 2015
- MaxPoint Interactive (MXPT -3.9%) has received four bullish coverage launches (from Deutsche, Needham, Pac Crest, and William Blair) on underwriter coverage day, and just a single neutral one (from Goldman).
- Deutsche's Ross Sandler ($13 target): "Our Buy rating is based on our belief that MaxPoint will buck the negative stock performance for most of public ad tech, based on the company's unique approach and somewhat insulated competitive landscape."
- He sees the local online ad services firm going after a $50B addressable market, and argues its contextual ad solutions (i.e. ads based on the content a user is seeing, rather than a user's browsing history) are differentiated from rival local ad offerings.
- Shares are now down 17% from an $11.50 March 6 IPO price.
- Declaring the mobile accessory maker to be "a classic deep-value turnaround play," Wunderlich's Rommel Dionisio has launched coverage on ZAGG at Buy, and set a $13 target.
- Dionisio: "Following disappointing sales and earnings performance in 2013 and first half 2014, shares of Zagg remain valued at an approximate 25% discount to the peer group average on an EV/EBITDA basis." He notes Zagg respectively holds 40% and 25% of the screen protector and tablet keyboard markets, and predicts new products, retail channel expansion, better international distribution, and product line rationalization will bolster the company's fortunes.
- Though off its recent highs, Zagg remains up 32% since soundly beating Q4 estimates on Feb. 24. Shares go for 17x 2015E EPS and a little under 1x 2015E sales.
- With the company's lockup expiration out of the way, Summit Research has upgraded CyberArk (CYBR +2.8%) to Hold. The firm still isn't a fan of the privileged account-protection software leader's valuation; its $45 target is 21% below current levels.
- With the help of a bullish BofA/Merrill launch, CyberArk is up 16% since its lockup expired 8 days ago. Summit CYBR)+at+Sell/10108220.html" target="_blank">launched coverage at Sell on Dec. 18 - it praised CyberArk's "early lead" in the privileged account software market, while criticizing its multiples - when shares were only at $38.62.
- Three years after taking an $8.8B write-down on its $11.1B Autonomy acquisition while levying fraud allegations, HP's (HPQ -0.9%) battle with the enterprise search/indexing software vendor's former leaders is far from over: Autonomy co-founder/ex-CEO Mike Lynch and ex-CFO Sushovan Hussain have been sued for $5.1B over their alleged accounting misdeeds.
- Lynch has responded by promising a counter-suit over an alleged HP "smear campaign" against him and other Autonomy execs.
- Though it's quite unlikely HP will get anything close to a $5.1B payout, a favorable verdict would give the the company more legal/PR cover as it continues dealing with the Autonomy deal's fallout. The DOJ and the U.K.'s accounting regulator are still probing the deal; the U.K.'s Serious Fraud Office dropped its probe in January.
- Last year, HP paid $57M to settle a shareholder suit regarding the decision-making of ex-CEO Leo Apotheker and his management team (including the Autonomy deal). More recently, a U.S. court approved an Autonomy-related shareholder settlement that doesn't involve monetary payments, but does require HP to make governance changes.
- Wells Fargo has upgraded Zebra Technologies (ZBRA +2.9%) to Outperform. Shares are less than $2 away from a 52-week high of $92.48.
- Though the Street's initial response was less than enthusiastic, Zebra is now up 33% since announcing a $3.45B deal to buy Motorola Solutions' enterprise hardware unit 11 months ago.
- U.S. Cellular (NYSE:USM) says a network expansion will bring 4G service to 98% of its customers by year's end.
- The company says it's adding 600 LTE sites this year, expanding service in 10 states: California, Maine, Maryland, New Hampshire, North Carolina, Oregon, Vermont, Virginia, Washington and West Virginia.
- U.S. Cellular is working with 700 MHz spectrum provided by partner King Street Wireless to speed up 4G implementation in its networks.
- Previously: U.S. Cellular up 4.2% on earnings beat, 2015 outlook (Feb. 25 2015)
- Wunderlich has launched coverage on Turtle Beach (HEAR -2.5%) with a Hold rating and $2.50 target (still 29% above current levels).
- Shares are barely above a 52-week low of $1.92 (set 6 days ago). They're down 19% from where they traded before the gaming headset maker provided soft guidance to go with mixed Q4 results on March 16, and now go for only 0.6x trailing sales after factoring net debt.
- BioTime (BTX -0.6%) subsidiary LifeMap Solutions launches a pilot study of COPD Navigator, an Apple HealthKit-compliant iOS app that helps patients with chronic obstructive pulmonary disease (COPD) monitor and manage their symptoms.
- After the patient's physician specifies the app's settings and communications, COPD Navigator tracks patient data including symptoms, medication, treatment adherence and overall quality of life. The information, concurrently sent to the doctor, is presented in an easy-to-understand configurable graph that enables the patient to recognize patterns in their own health history. In addition, the app assists patients in avoiding environmental risk factors by providing real-time alerts regarding local air quality and extreme weather and delivers educational content from National Jewish Health hospital.
- The COPD Navigator app is the first component of LifeMap's COPD management platform, which includes Bluetooth-enabled inhaler technology and a dashboard for care providers. The app accepts inhaler usage information from any HealthKit-compliant Bluetooth-enabled "smart" inhaler device. During the pilot program, LifeMap will provide a smart device of its own design, which allows the app to know automatically when the patient uses the inhaler. This enables it to track medication compliance and identify potential environmental and behavior triggers of exacerbations, situations where COPD symptoms suddenly get much worse.
- The clinician dashboard for care providers offers a view of the health status of their patient populations. They can flag high-risk patients, set rules for event-based alerts and intervene early in order to reduce the exacerbation risk. They can also send health alerts and reminders to their patients.
- COPD Navigator is expected to be commercially available in H2.
- Pitched as a cheaper alternative to the Surface Pro 3 (starts at $799, launched last May), Microsoft's (MSFT -0.6%) Surface 3 tablet starts at $499 and eschews the Pro 3's Core i3/i5/i7 CPUs in favor of Intel's (NASDAQ:INTC) less powerful/recently-launched Atom x7 (Cherry Trail). Its display is smaller (10.8" vs. 12"), and resolution slightly lower (1920x1080 vs. 2160x1440). In what might be the final nail in the coffin for Windows RT, the tablet runs on Windows 8.1 (free upgrade to Windows 10 later this year).
- The Surface 3 weighs just 1.37 lbs. and is only 0.34" thick (the Pro 3 is at 1.76 lbs. and 0.37"), and goes without its costlier sibling's fan. The rear and front cameras respectively have 8MP and 3.5MP resolutions vs. 5MP apiece for the Pro 3. Other features - a kickstand, an included stylus, optional type cover accessories, a business-friendly 3:2 aspect ratio, stereo speakers with Dolby (DLB -0.2%) audio support - are similar.
- Microsoft claims 10 hours of battery life when playing video. The Surface 3 begins shipping on May 5 (pre-orders start today); Verizon and T-Mobile will sell 4G-capable models later this year. To win over consumers, Microsoft is throwing in a free year of Office 365 Personal (normally $70/year).
- Following a rough start in 2012/2013, the Surface line has gained a following among businesses and consumers wanting a tablet that can double as a PC/productivity device. Microsoft's Surface revenue rose 24% Y/Y in calendar Q4 to $1.1B. IDC estimates Windows devices had a 5.1% 2014 tablet unit share via 11.6M shipments.
- Sprint (NYSE:S) has settled a class-action suit that charged it with fraud around its 2005 $36B merger with Nextel Communications -- for $131M in cash.
- The suit claimed former CEO Gary Forsee and others hid integration struggles around the merger and falsely inflated stock and bond prices from October 2006 to February 2008, when Sprint took a $29.7B goodwill writedown.
- Lead plaintiffs were institutional investors: the United Steelworkers' Pace Industry Union-Management Pension Fund, Skandia Life Insurance Co and the West Virginia Investment Management Board.
- Believing the company's risk/reward and (free cash flow-based) valuation are favorable after months of underperforming equity markets, Stifel has upgraded Priceline (PCLN +1.3%) to Buy, and set a $1,400 target.
- The online travel giant is up 17% from a Jan. 29 low of $992.12, but remains 13% below its March 2013 highs thanks to European macro and forex concerns; the Nasdaq has risen over 10% during this time. Shares trade for 20x a 2015 EPS consensus of $57.24, and 17x a 2016 EPS consensus of $67.77.
- Stifel downgraded Priceline to Hold on Jan. 8, when shares were at $1,069.57.
- Elephant Talk (NYSEMKT:ETAK) is off 8.5% after its Q4 revenue missed expectations and it started restating past results to reflect a new business model.
- With the company finishing a transition away from its legacy landline business to mobile/security, it's restated past results, and recognizing revenue from the past couple of years over a longer time frame ("a number of years").
- The restatement means that Q4 revenue of $5.5M (-8.8% Y/Y) was up sequentially from $4.4M, and deferred revenue at year's end was $11.2M compared with the prior year's $2.6M.
- Net cash used in operations up to -$2.1M from prior year's -$6M.
- The company noted that its Iusacell contract isn't likely to continue due to Iusacell's new owner AT&T's preference for existing legacy vendors.
- Conference call at 11 a.m. ET.
- Press release
- Believing strained ties between (major Brocade OEM partner) EMC and (top Brocade rival) Cisco will help the company gain Fibre Channel switching share, William Blair has upgraded Brocade (BRCD +1.6%) to Market Perform.
- EMC/Cisco recently restructured their VCE converged hardware JV to leave Cisco with just a 10% stake. Meanwhile, Cisco and EMC-owned VMware have become fierce rivals in the SDN/networking virtualization software market.
- Brocade currently trades for 13x FY15 (ends Oct. '15) consensus EPS. Shares have mostly traded in an $11-$13 range for several months.
- Facebook has deployed Infinera's (NASDAQ:INFN) mainstay DTN-X optical transport/switching systems on its European network. The route on which the hardware is deployed delivers up to 8Tb/s of capacity and span 3,998km - Infinera calls it "the world's longest terrestrial multi-terabit route" - and connects Facebook's Lulea, Sweden data center with network hubs.
- The DTN-X systems rely on Infinera's photonic integrated circuits (PICs) to deliver 500Gb/s of capacity per line card, with the potential to expand to 1.2Tb/s in the future. A Facebook exec: "[Infinera's solution] makes it easy for us to rapidly grow network capacity while keeping operations simple. Once the equipment is in place we are able to turn up as many terabits as we need."
- Web giants such as Facebook and Google have turned into a major growth engine for Infinera and its peers, helping offset sluggish demand from telcos. Aside from DTN-X, Infinera is targeting Web clients via its Cloud Xpress metro point-to-point interconnect systems.
- Shares have rallied to $20.04, and are up 13% since MKM issued a bullish note last week.
- Charter Communications (CHTR, up 5.2% premarket) has reached agreement to acquire Bright House Networks for $10.4B.
- The outlines of a deal were there, but it's early -- it was expected that a ruling would come down on Comcast's (NASDAQ:CMCSA) merger with Time Warner Cable (NYSE:TWC) before Charter made a move.
- The structure: a partnership where Charter owns 73.7% and Advance/Newhouse owns 26.3%. Charter will pay $2B in cash.
- There's still several conditions to wrapping the deal, including Charter transactions with Comcast.
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