Oracle and FedEx tipped for Wednesday releases

Wednesday – Oracle

Last quarter Oracle’s (ORCL) long serving frontman Larry Ellison stepped down from his role as CEO and appointed 2 co-CEO successors. Heading into Oracle’s first quarter in the post-Ellison era Estimize community members are expecting the technology company to continue growing steadily and slightly outperform Wall Street’s earnings expectations.


Wednesday Estimize contributors are looking for a 1 cent gain in earnings per share while year over year revenue rises 3%. These results would maintain Oracle’s rate of sales expansion over the past 5 quarters and represent a slowing of profit growth to a rate between 1% and 2%.

Wednesday – FedEx

At one point this summer crude oil was trading at over $100 per barrel. As we enter the final stretch of the year that price has collapsed to just $56. As a major player in logistics FedEx’s (FDX) financial performance is greatly impacted by the price of oil, falling gas prices throughout the fall could provide FedEx an opportunity to post gains to its bottom line.


Over the past 3 months EPS estimates and revenue projections from both Estimize and Wall Street have been rising. With the final picture clearing up the Estimize community’s EPS forecast is settling at $2.16 per share, 2 cents lower than the Wall Street consensus, but still an impressive 38% higher than the number FedEx reported in the same quarter of last year.

On the top line Estimize analysts are calling for $11.99 billion which is marginally higher than Wall Street’s prediction and would mark a 5% improvement from last year’s total.

RF Micro Devices Update BUY


15.01 BUY 
Target: US$20.00

RF Micro Devices is a leading supplier of power
amplifiers, front end modules and other RF components
for mobile devices (handsets, smartphones, tablets) and
communications infrastructure.
All amounts in US$ unless otherwise noted.

Technology — Communications Technology — Semiconductors
Investment recommendation

Based on our analysis of global LTE
network deployments and the improving LTE subscriber growth trends,
we forecast a 20% handset RFIC TAM CAGR from 2014-2016. We believe
this strong RFIC TAM growth will be driven by a 40% LTE smartphone
unit growth CAGR with stable RF $-content/handset in LTE smartphones
during this period combined with a modest 3.8% growth in 3G
smartphones due to share shifts from 2G/EDGE feature phones to 3G
smartphones. Following the final China MOFCOM approval, we believe the
merger between TriQuint and RFMD remains on track to close by
December 31, 2014. We believe the combined company, Qorvo, will have a
broad mobile device related RFIC portfolio and is well positioned to benefit
from the strong RF TAM growth. Further, we believe Qorvo can leverage
significant cost synergies through consolidating fab facilities, optimizing
R&D expenditures, and eliminating duplicate costs. We reiterate our BUY
rating and increase our PT to $20.
Investment highlights
Anticipate 20% handset RFTAM CAGR from C’14-C’16 due to ramping LTE growth and 2G to 3G
migration; Avago, Skyworks, Qorvo and Qualcomm should benefit’  on the RFIC handset market TAM growth drivers
and technology trends.
 We believe Qorvo is well positioned to benefit from this strong RFIC
TAM growth. We also believe Qorvo could benefit from potential RF $-
content increases in Apple’s next-gen iPhone products and also grow
$-content at Samsung as this OEM focuses on fewer handset SKUs but
potentially higher RF $-content per SKU. Further, the increasing mix
of affordable LTE smartphones from Chinese OEMs could help Qorvo
grow RF $-content and improve margins as it ships higher-margin
integrated products into this base.
 We believe these trends combined with execution on the $150M cost
synergies target should result in expanding LT margins and solid EPS
growth through 2016. This in turn could drive potential multiple
expansion for Qorvo to levels more in-line with higher multiple analog
semiconductor companies trading currently at 15x C’16 EPS estimates.

Our $20 price target is based on shares trading at roughly 14x
our C2016 pro forma EPS estimate of $1.42 for the combined company
and then assigning 50% of the value to RFMD.

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Upland Software : NASDAQ BUY  Target: US$15.00


US$12.10 BUY 
Target: US$15.00 

Upland Software is a software consolidator that provides
a suite of cloud-based applications for Enterprise
Workforce Management. The company was founded in
2010 as Silverback Acquisition Corporation and is
headquartered in Austin, Texas.

Technology — Enterprise Software — Software as a Service
Investment thesis
Upland is a software consolidator in the enterprise work management space
that looks to us to be sufficiently inexpensively valued that the stock has the
potential to be quite rewarding over the long term. We are initiating coverage
with a BUY rating and a $15.00 price target.
Investment highlights
 What they do. Upland provides a cloud-based work management software
platform that enables businesses to plan, manage and execute projects and
tasks. The suite of enterprise work management applications enables
companies to better optimize the allocation and utilization of their
workforce, time, and money. The firm has more than 1,200 customers of
varying sizes in 50 different countries.
Growth via M&A, but this team has successfully run this playbook before.
CEO Jack McDonald and CFO Mike Hill have successfully executed the
consolidation strategy before as the executive team at Perficient (PRFT :
NASDAQ), an IT services firm. They have proven themselves to be
disciplined acquirers and have identified targets, this time in the software
market, that go largely unnoticed by other potential acquirers.
Target market upgrading from legacy or siloed apps. Upland’s suite of
software products addresses a market that is currently dominated by
legacy system software and/or ad hoc spreadsheet-based processes. This
market is moving its processes to the cloud and Upland looks well
positioned to benefit from this upgrade cycle in years to come.
 UPLD shares are relatively inexpensive. The stock is currently valued at
2.3x EV/revenues based on our C2015 estimates, which is reasonably
inexpensive by most standards and a discount to our assembled comp set.
With disciplined M&A execution and moderate organic growth, there is a
legitimate case for multiple expansion in the future.

Autodesk BUY

NASDAQ : US$58.41 BUY 
Target: US$70.00

Autodesk is a global design software company that sells highfunction,
low-cost 2D and 3D computer-aided design (CAD)
applications. The firm also provides visualization and simulation
tools, which in conjunction with the company’s design apps,
enable customers to experience their ideas early in the design
process through the development and analysis of virtual
All amounts in US$ unless otherwise noted.

Technology — Enterprise Software — Applications
We have long argued that ADSK has the best, broadest suite of design, visualization,
simulation and collaboration tools of any firm in its space. The transition to subscription is
a means to help customers cost effectively access this suite with more alacrity than we’ve
seen in past years. This should put Autodesk in a very good position in 3-4 years. In the
short-run, the firm’s results were quite good. ADSK remains our favorite large cap GARP
stock. Reiterate BUY.
 Bullish items. Material billings upside with 25% growth in the quarter; all three major
geographies grew in the double digits on a constant currency basis; the number of
transactions >$1M grew by nearly 60% and the value of these deals increased over
200%; ADSK reported 121k net subscription additions (including 25k from Delcam),
well ahead of initial expectations, and increased guidance for this metric.
 Bearish items. Operating margins under near-term pressure driven by Delcam
dilution and higher incentive comp (driven by strong billings); strengthening dollar
will be a headwind to reported revenue growth; very limited visibility into the pace of
the perpetual license wind down, which will muddy consensus forecasts.
 The numbers: another good print. Autodesk reported Q3/15 revenue and non-GAAP
EPS of $618M and $0.25, which were respectively $17M and $0.02 ahead of our
estimates. Revenues were up 12% on a constant currency basis in the quarter and
non-GAAP operating margins were 13.0%. Calculated billings were $643M, which
was up 25% y-o-y and nicely ahead of our $539M estimate.
 Outlook:

Guidance for revenue, billings, and subscribers all inch higher. ADSK now
expects F2015 calculated billings to fall in the 15-17% growth range, which is well
ahead of the firm’s targeted 12% CAGR through F2018. We have adjusted down our
F2016 estimates as we are now forecasting the transition to subscription to have a
slightly more negative near-term impact on reported growth and profitability (which
we think could be even more pronounced in F2017 as the firm discontinues perpetual
licenses). We would remind investors that we will evaluate ADSK’s execution on
metrics like billings growth, subscriber count and cash flow during this transition.

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Intel Corporation HOLD


US$35.95 HOLD 
Target: US$35.00

Intel Corporation is the world’s largest semiconductor
chip maker, in terms of revenue. The company develops
advanced integrated digital technology platforms and
components, primarily integrated circuits (ICs), targeted
at the computing and communications industries.
All amounts in US$ unless otherwise noted.

Technology — Hardware — Semiconductors and Related Technologies
Investment recommendation:

Intel’s analyst day in Santa Clara – mixed feelings as to upside to the stock from
current levels following the significant (and well-earned) appreciation over
the last 12 months. While the management team presented very strong
product portfolios and growth prospects for both DCG and IoTG, as well as
confidence to continue Moore’s Law beyond 10nm as a key differentiator,
Mobile loss forecasts for 2015 were worse than our expectation and only
modestly improved Y/Y.

Further, despite 2015 guidance for PCs that was
better than feared, market stabilization continues to become more dependent
on a recovery in consumer PC spending versus enterprise, which drove the
recent resurgence. We believe Intel is well positioned for solid earnings
growth while delivering attractive capital returns over the next few years.
However, we believe much of this fundamental strength is already reflected
in the stock given the recent appreciation, and lingering questions regarding
mobile ROI remain. We maintain our HOLD rating and $35 price target.
Investment highlights
 2015 guidance for mid-single digit revenue growth and gross margin of
62% were both slightly below our prior 6.2%/62.8% estimates, with
slightly lower 14nm yields potentially dragging down 1H/15 gross
margin. Guidance for modest Mobile revenue in 2015 with a loss still
over $3B was below our expectations for a more material improvement.
 However, key growth sectors of Data Center and IoT were guided above
our estimates for 2015. Further, management guided to slightly lower
capital spending Y/Y at $10.5B, and underpinned confidence in the longterm
business model by raising the annual dividend from $0.90 to $0.96,
bringing the dividend yield to 2.7%. Finally, while 2015 guidance for
only slightly down Y/Y sales in PCCG will be viewed as a relief to some
given an expanded channel, we wait for evidence of improving consumer
notebook sales into the headwind of the iPhone 6 upgrade cycle.
 We adjust our 2015 revenue, GAAP EPS, and non GAAP
EPS estimates from $59.3B/$2.45/$2.68 to $58.6B/$2.35/$2.57.
Valuation: Our $35 price target is based on shares trading at roughly 14x our
2015 non-GAAP EPS estimate, excluding stock-based compensation.

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November 2014 – 40 % cash position

Year End Review and Forecast

A decade of increasing productive capacity has fattened supplies of commodities just as the world economy grows less commodity-intensive and investment demand wanes with traditional equity and bond markets performing well.

The idea that commodities were even a proper investment asset class for long-term investors was never fully demonstrated. Commodity prices tend to be mean reverting through successive cycles rather than instruments that produce cash income or build economic value.

Yet many in the financial industry promoted the idea of a “supercycle” fed by global industrialization and “peak oil” supply constraints. For sure, commodities look quite oversold in the short term and sentiment has turned severely against them, supporting the chances for a trading bounce or pause in the declines.

Yet even if the lows are in for oil or gold, the big picture is now looking decidedly less “super” for long-term commodity bulls. In one representative example of flagging investor interest in commodities, assets in the bellwether Pimco Commodity Real Return Strategy fund (PCRIX) have fallen below $13 billion – down by more than a third in two years.


: NASDAQ : US$4.45
Target: US$7.00

Five9 provides cloud-based software solutions for contact
centers. The company’s solutions help call centers
improve business dexterity and reduces the complexity of
contact center operations, while also significantly
reducing costs for the firm. The suite of applications
enables a firm to provide a breadth of call center
functions, including inbound, outbound, and blended
solutions. Five9 was founded in 2001 and is
headquartered in San Ramon.
All amounts in US$ unless otherwise noted.

Technology — Enterprise Software– Software as a Service
Investment thesis
Following a June quarter earnings shortfall due to the drop-off of call volumes as
scheduled Obamacare signups ceased, Five9 had something to prove to investors.
The firm took the first step of what we hope is many more consistent “meet or beat”
quarters needed to give investors confidence about future execution. At this
juncture, with a modicum of execution, we believe FIVN shares should provide
above-market returns. We have retained our Buy rating.
 A good bounce-back –upside across the board. FIVN reported Q3/14 revenues
and Adjusted EBITDA of $25.9M and loss of ($5.0M), which were respectively
$1.4M and $2.6M ahead of our estimates. Revenue growth was 23% in the
quarter, despite headwinds of the healthcare segment slowdown noted last
quarter, and FCF losses of ($7.9M) were $4.4M ahead of our estimate.
 Enterprise bookings remain healthy. Five9 had another record bookings
growth quarter; management suggested that Enterprise bookings have
advanced in-step with sale rep hiring that has paced in the 30-40% growth
range (SMB hiring has been closer to 10%). This quarter was highlighted by a
several hundred seat replacement of Avaya/Cisco/Aspect at a large pharma
company, a senior living referral placement service with ~400 agents, and a
nationwide energy company that came in through the channel.
Dollar-based retention was 97% in the quarter, which is consistent with C2013
levels and down marginally from 98% in Q2/14.
 Outlook: a slight increase,

Q4 should be a bottom in growth. FIVN laps a
difficult Q4 compare against a 2013 period that saw heavy ACA call volumes,
but the December quarter should mark a bottom in growth declines at ~15%,
according to our estimates. We have slightly increased our C2015 projections
and are forecasting 20% revenue growth and more than 500 bps of EBITDA
margin expansion (~19% EBITDA margin losses). We believe there remains an
upward bias to our current growth assumptions.

Applied Micro Circuits

Target: US$11.00

Technology — Hardware — Semiconductors and Related Technologies
Investment recommendation:

We maintain our belief APM is well
positioned for long-term growth and significant operating leverage as the
first vendor with 64-bit ARM chips designed specifically for the $13B+
server market. While our legacy business estimates were Street-low into
results, lower Connectivity sales in the face of softer service provider capital
spending levels were even below our estimates. We remain cautious on
near-term legacy business trends, but continue to believe in the long-term
ARM server opportunity and HeliX design wins provide a path for embedded
sales recovery in C2016. We reiterate our BUY rating, PT to $11 from $12.
Investment hInvestment highlights
Results/guidance recap: APM report Q2/F2015 revenue of $41.0M and
non-GAAP LPS of $(0.06) or below our estimates of $42.1M/$(0.04) due
to disappointing Connectivity sales of $24.9M, down 20% Q/Q. While we
had anticipated softer Connectivity sales for the next few quarters with
softer service provider spending (particularly in North America), SeptQ
sales and DecQ guidance were below our expectations. With 4-5 month
lead times typical in these markets, we believe a book-to-bill of 1.2x in
the quarter indicates DecQ Connectivity sales have bottomed
X-Gene ARM server opportunity unaffected

 HeliX embedded design wins provide path for C2016 base business
:APM recently announced a family of HeliX embedded ARMv8
chips targeted at Networking, Storage, Industrial, and Imaging markets.
We believe tier-1 design wins have already been secured, and we
anticipate first material sales in Q1/C’16 should begin to regrow APM’s
embedded processor business back toward $25M/quarter run rates


Our $11 price target (was $12) is based on shares trading at
roughly 14x our F2017 non-GAAP EPS estimate of $0.80.

Broadcom Update :BUY Target Price $46

BRCM : NASDAQ : US$37.33
Target: US$46.00

Technology — Hardware — Semiconductors and Related Technologies

Investment recommendation:

Broadcom posted strong Q3/14 results with sales above our estimate driven by strong 20% Q/Q growth in Connectivity
sales with the inclusion of new 802.11ac WiFi solutions in key smartphone
launches including iPhone 6. Further, service provider sales were down only
roughly 2.5% Q/Q, better than feared given recent market commentary.
Finally, faster operating expense reductions post the decision to shut down
the cellular baseband business helped drive a solid beat on the bottom line.
We believe the stock will likely rebound post the recent sell-off in the group
and all eyes will then turn to Broadcom’s December 9 analyst day for future
growth strategy and increased capital returns commentary. We reiterate our
BUY rating and raise our target to $46 from $45 on increased estimates.

Investment highlights

 Q3/14 revenue of $2.26B was above our and consensus estimates of
$2.18B (see Figure 1) driven by a surprising rebound in baseband sales,
20% Q/Q Connectivity growth, and only a roughly 2.5% Q/Q service
provider sales decline in ING versus. Non-GAAP gross margin of 54.3%
was a bit below 55% guidance midpoint, but was very strong
considering the unexpected increase in baseband sales (roughly a 170
basis point gross margin headwind in total) and a greater mix of
Connectivity sales to large customers. We believe additional upside
exists to gross margin into 2015 for Q4/14 guidance of 55%. Non-GAAP
operating expenses were $10M below our estimate at $646M, and
management expects another $50M reduction in Q4/14 as baseband
costs continue to be wound down. Non-GAAP EPS was $0.91, $0.07
above our estimates and consensus.
 Given these significant cost savings of the baseband exit, we believe
gross margin can remain in the mid-to-high 50s and operating margin
will expand into the mid-to-high-20s during 2015. We maintain our
belief Broadcom’s core Home and Infrastructure businesses are well
positioned for solid growth and will benefit further from increased
management attention and investment post the baseband exit.


Our $46 price target is based on shares trading at roughly 14x
our 2015 pro forma non-GAAP EPS estimate.

Splunk – Analyst Day Update Target Price $68

SPLK : NASDAQ : US$57.25
Target: US$68.00

Technology — Enterprise Software — Infrastructure

With the 26% increase in SPLK shares since the firm last reported results at the end
of August, the stock is again sporting a top decile valuation, at more than 11x
C2015E EV/revenue. While this may be hard for some to stomach in today’s skittish
tape, we continue to believe that continually increasing use cases will drive capacity
expansion (and revenue growth) beyond what current estimates capture. An upside
estimate bias combined with the scarcity value of being the only public company, big
data pure play on the “Internet of Things” warrants a premium valuation. Our call on
SPLK continues to be that we anticipate revenue growth to more than outpace a
gradual multiple compression so that investors can expect 15%+ gains over the next
9-12 months. Reiterate BUY.

Analyst day.

On Tuesday SPLK hosted an analyst day in conjunction with its 5th
Annual Worldwide User’s Conference in Las Vegas.
 Splunk Enterprise 6.2. From a product standpoint, news centered on the firm’s
end of October release of the latest version of its machine data analytics
platform. Highlights include: enhanced event pattern detection to make the
software more intuitive to less technical users, simplified onboarding of any
machine data, and efforts aimed at reducing total cost of ownership through
increasing concurrent user capacity and eliminating shared storage
requirements (reducing underlying infrastructure investments).
 Evolving to a segment-focused sales model. This area of continued investment
will focus on augmenting normal field reps with subject matter and industry
vertical experts – not only will this help to drive new customer adoption, but it
should also increase horizontal expansion (i.e. new use cases) within the firm’s
nearly 8,000 customer installed base.

 What’s it mean for the numbers?

An increase in ratable bookings, while tough
to predict in the near-term (~25-35% of deals, up from 10-20% at the time of
IPO), will drive improved revenue visibility over time. Longer-term, SPLK
continues to manage the business towards a 20-25% operating margin, the
timing of which will be determined by the pace of top line growth.

CalAmp Update Target price $28

MP : NASDAQ : US$16.50
Target: US$28.00

CalAmp supplies tightly integrated M2M hardware with its
COLT M2M Application Enablement Platform (AEP) cloud
to add cellular and GPS connectivity solutions into
several M2M verticals including: fleet management,
asset/trailer tracking, vehicle finance/recovery/remote
start, rail, and smart energy. In its legacy business,
CalAmp supplies outdoor reception/amplification and
indoor network products for DBS satellite TV application

Technology — Communications Technology — Wireless Equipment
Investment recommendation:


CalAmp reported solid Q2/F2015 results, with
sales consistent with and pro forma EPS above our estimates. Consistent
with our expectations for stronger H2/F2015 Wireless DatacCom sales
versus H1/F2015 levels, CalAmp issued H2/F2015 guidance basically
consistent with our estimates. We believe CalAmp’s Wireless DataCom
business is well positioned to drive strong H2/F2015 and F2016 sales and
earnings growth trends driven by strong initial sales to Caterpillar that
started in September, growing insurance telematics opportunities, improving
international sales, increasing product offerings and customers in the
pipeline, and anticipated steady growth of higher-margin recurring revenue
sales. We maintain our BUY rating and $28 price target.
Investment highlights
 Q2/F’15 sales of $59.2M were consistent with our $59.2M estimate, with
CalAmp reporting Wireless DataCom sales of $50.2M and Satellite
division sales of $9.0M versus our $50.9M/$8.4M estimates. Stronger
gross margin and slightly lower operating expenses resulted in pro
forma EPS of $0.21 versus our $0.18 estimate.
 Q3/F’15 guidance of $63M in revenue and pro forma EPS of $0.23 at the
range midpoints were slightly below our $65.7M/ $0.25 estimates.
However, full-year F2015 were in line with our estimates. Consistent
with our expectations for stronger overall H2/F’15 trends due to strong
initial sales to Caterpillar ($10M+ in H2/F’15E), solid core MRM trends
with international growth and steady UBI hardware sales, management
guided F2015 sales of $253M and pro forma EPS of $0.91 at the range
mid-points. This guidance was basically consistent with our
$256M/$0.91 estimate. We anticipate the strong H2/F’15 trends should
create a foundation to drive steady long-term sales and earnings growth
in F2016 and beyond.
 With H2/F2015 guidance basically consistent with our estimates, we
maintain our F2015 pro-forma EPS estimate of $0.91 and slightly
increase our F2016 pro forma EPS estimate from $1.11 to $1.12.

Our $28 price target is based on shares trading at roughly
25x our F2016 pro forma EPS estimate.


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