Upgrades and Downgrades for Tuesday May 24

by: Richard Saintvilus




Brokerage Firm

Ratings Change

Price Target

Gentiva Health Svcs


FBR Capital

Underperform» MKT Perform

$23 > $25



Stifel Nicolaus

Sell » Hold

Mylan Labs



Hold » Buy


Gentiva's first quarter 2011 highlights include: Total net revenues of $458.8 million, an increase of 54% compared to $297.1 million for the quarter ended April 4, 2010. Net revenues included home health episodic revenues of $220.4 million, a decline of 4% compared to $228.5 million in the 2010 first quarter. Hospice revenues were $195.1 million in the first quarter of 2011, compared to $19.7 million in the 2010 first quarter. Hospice represented 43% of total net revenues in the first quarter of 2011, compared to 7% in the 2010 first quarter.

In the most recent quarter ending March 31st, Gladstone reported 273 million in total assets consisting of 257 million in investments at fair value and 15 million in cash and other assets. The company borrowed approximately 33 million in lines of credit and had approximately 235 million in net assets which resulted in less than 1:1 leveraged. This placed the company at less than 15% leverage. Management believes this is a safe balance sheet for a finance company, which are usually levered much higher. They also believe that their overall risk profile is low. I would have to agree.

Mylan Inc. said Monday it started selling a generic version of Abbott Laboratories' anti-seizure treatment Depakote Sprinkles capsules. The Canonsburg, Pa., generic drugmaker said it is selling 125-milligram capsules of divalproex sodium, the drug's generic name. Mylan said U.S. sales for divalproex sodium capsules totaled about $89 million in the 12 months that ended March 31, citing IMS Health.




Brokerage Firm

Ratings Change

Price Target

Longtop Financial


BMO Capital Markets

Outperform» Market Perform


Research in Motion



Buy» Hold

$76 > $46

CBOE Holdings


Stifel Nicolaus

Hold» Sell

The Rosen Law Firm, P.A. announced today that it has filed a securities fraud class action on behalf investors who purchased the common stock of Longtop Financial, Inc. The complaint asserts violations of the federal securities laws against Longtop and its officers and directors for misrepresenting the true financial condition of the company and failing to disclose material related party transactions during the class period. Beginning on April 26, 2011 a series of reports issued by Citron Research and others exposed potential accounting fraud and nondisclosure of related party transactions at Longtop.

On May 17, 2011 a trading halt was instituted on Longtop's common stock. On May 23, 2011 Longtop issued a press release announcing, among other things, (1) the resignation of its auditor, Deloitte Touche Tohmatsu CPA Ltd. ("DTT"); (2) the resignation of Longtop's Chief Financial Officers; (3) the initiation of an SEC inquiry; (4) and the initiation of an independent investigation. According to the announcement, DTT was resigning because of "(1) the recently identified falsity of the company's financial records in relation to cash at bank and loan balances (and possibly in sales revenue); (2) the deliberate interference by certain members of Longtop management in DTT's audit process; and (3) the unlawful detention of DTT's audit files."

Regarding RIMM, I've said previously, there is obvious cause for concern if you are a shareholder. The signs have been on the wall since late 2007 when the original Iphone entered the market. Now that market share is being lost at a rapid pace, we wonder what management will do to mitigate the inevitable "throwing of the towel." While I would not advocate throwing in the towel just yet, I can clearly see the white fabric in management s hand, where this was once an unthinkable option. As an investor, you need to ask, will RIMM make it to the next round?

The Chicago Board Options Exchange Volatility Index , or VIX (a measure informally known as the " fear index") jumped a startling 15% so in yesterday’s trading, exceeding a value of over 20 for the first time in two months. The VIX measures the future volatility of markets over a projected 30-day span, and the major spike in today’s VIX levels is thought to be a product of investors’ concerns related to uncertainty in the European debt market.

Coverage Initiated



Brokerage Firm

Ratings Change

Price Target










Sonic Automotive





Zix Corp


Morgan Keegan





Morgan Keegan



Antares Pharma










Rising overseas demand for two coal types produced in Appalachia will likely boost mine operators' profits in the coming quarters, despite plans by U.S. electric companies to use more natural gas, an analyst said Friday. "We believe this shows just how scarce good-quality met (metallurgical) coal is becoming," the Brean Murray note said. It said Patriot Coal Corp. (PCX) looks ripe for a takeover, given its high-quality reserves of the steelmaking coal. Brean Murray affirmed "buy" ratings for Arch Coal Inc. (ACI), Alpha Natural Resources Inc. (ANR), Peabody Energy Corp. (NYSE:BTU), CONSOL Energy Inc., James River Coal Co. (JRCC), Patriot Coal Corp. and Walter Energy Inc. (NYSE:WLT).

AutoNation Inc lost 5.7% since the end of March. Lampert had $2.2 billion of AN shares at the end of the first quarter. There have been several insiders buying and selling AutoNation’s stock.

Sonic Automotive, a leader in automotive retailing, announced that company executives will present at the Wells Fargo Consumer Conference. The presentation will cover Sonic's operating strategy and financial results. The company's presentation will be at 2:40 PM Pacific on May 24, 2011 at the Wynn Las Vegas hotel. A webcast of the presentation will be available here.

Zix has a P/E ratio of 5.1 and an EV/FCF ratio of 29.1 over the trailing 12 months. If we stretch and compare current valuations to the five-year averages for earnings and free cash flow, Zix has a P/E ratio of 83.9 and a five-year EV/FCF ratio that's not meaningful because of losses. A positive one-year ratio under 10 for both metrics is ideal. For a five-year metric, under 20 is ideal. Zix has a mixed performance in hitting the ideal targets, but let's see how it compares against some competitors and industry mates. In the past five years, Zix's net income margin has ranged from -71.9% to 123.1%. In that same time frame, unlevered free cash flow margin has ranged from -59.2% to 19.2%

LogMeln, a provider of cloud-based connectivity solutions, recently announced that management will present to the investment community at the Barclays 2011 Global Communications, Media and Technology Conference in New York, NY on May 24, 2011 and at the Cowen 39th Annual Technology, Media and Telecom Conference in New York, NY on June 2, 2011.

LogMeIn provides cloud-based remote access, support and collaboration solutions to quickly, simply and securely connect millions of internet-enabled devices across the globe -- computers, smartphones, iPad and Android tablets, and digital displays. Designed for consumers, mobile professionals and IT organizations, LogMeIn's solutions empower nearly 12 million users to connect more than 100 million devices. LogMeIn is based in Woburn, Massachusetts, USA, with offices in Australia, Hungary, the Netherlands, and the U.K.

Antares Pharma, Inc., last week announced the closing of its previously announced firm commitment underwritten public offering of 12,500,000 shares of the company’s common stock at a purchase price of $1.60 per share.

The underwriters have exercised in full their over-allotment option to purchase an additional 1,875,000 shares of the company’s common stock at a purchase price of $1.60 per share. The net proceeds to the company are expected to be approximately $21.4 million, after deducting underwriting commissions and estimated offering expenses payable by the company.

Zipcar is the world's leading car sharing network with more than 575,000 members and over 8,000 vehicles in urban areas and college campuses throughout the United States, Canada and the United Kingdom. Zipcar offers more than 30 makes and models of self-service vehicles by the hour or day to residents and businesses looking for an alternative to the high costs and hassles of owning a car.

Coverage Reit/Price Tgt Changed*



Brokerage Firm

Ratings Change

Price Target



Brean Murray


$24 » $19

Sirius XM Radio


Morgan Stanley

Overweight» Overweight

$2 > $2.60

Chinese insurer CNinsure Inc. said its first-quarter net income more than tripled to $36.3 million as it saw big gains in its property and life insurance businesses and kicked off an internal restructuring to cut costs. The earnings, of 72 cents per American depositary share, compared with earnings of 22 cents per share in the January-March period a year ago. Revenue rose 28 percent to $47.9 million. CNinsure said that was primarily due to a 32 percent increase in property and casualty insurance business and a 35 percent increase in life insurance business. U.S. share of CNinsure rose 30 cents, or 1.9 percent, to $16.19 in after-hours trading. In the regular session, the stock lost 30 cents to $15.89.

Morgan Stanley issued a new research report on Sirius XM Radio reiterating their previous OVERWEIGHT rating and raising their base price target from $2.00 to $2.60. In tandem, their "bull case" price target was raised from $2.75 to $3.35.

We believe SIRI commands pricing power given its premiere content and extended period of flat pricing. Furthermore, given its low price point today, relatively small changes in price lead to significant ARPU contribution, with a $1.00 price increase driving an 8.5% increase to total revenue per sub. – Benjamin Swinburne, Morgan Stanley

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Author may initiate a long or short position at any point in SIRI.

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