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GT Advanced Technologies

GTAT : NASDAQ : US$11.67
Target: US$15.00

GT Advanced Technologies is a manufacturer of capital
equipment for the solar and LED market. Specifically, its
CVD reactors and DSS furnaces have enhanced and
enabled many of the world’s largest solar companies in
the field of polysilicon production and ingot casting. The
company has also entered the sapphire ingot and
furnace business to expand the LED substrate market.

Sustainability — Energy & Power Technologies
Investment recommendation
We maintain our BUY rating on GTAT shares and are raising our target as
we have increased confidence that 1) the sapphire and polysilicon markets
are tightening and 2) the cover glass for smart phones is gaining significant
Investment highlights
 As detailed in our concurrent LED whitepaper The Third Cycle V5.1, we
see significant growth in sapphire volumes to support increased LED
adoption in general lighting. GT should continue to benefit from
investments in capacity over this cycle as a leading merchant equipment
provider for both sapphire as well as other LED technologies.
 We are seeing signs that the solar market is tightening as well, with
polysilicon prices stabilizing and even rising again. New capacity
projects have not yet begun but we see the need for capacity heading
into 2015/16 timeframe.
 The bigger driver to GT’s stock in the near term, however, is the cover
glass opportunity.
 Given conversations we have had in Asia with other sapphire suppliers
we are confident that Apple is indeed serious about sapphire cover glass
for an upcoming iPhone. We believe that there will be a model
introduced this year.
 We do not yet know GT’s economics and do not expect much color until
later this year. However, we are confident that this will be a lucrative
top- and bottom-line business given GT’s various sapphire-related
investments along with Apple’s commitment to the technology. We could
even see upside potential as Apple’s competitors rush into the market as

IMRS Jumps On FDA Clearance

Readers will have received several trading alerts on this AMP Portfolio position.

Two weeks ago the stock was at $2.00. Today the company announced a step forward in the next generation of equipment.


IMRIS receives FDA clearance for next generation VISIUS Surgical Theatre

PR Newswire

IMRIS Inc.30 minutes ago


Most advanced Siemens MR scanners provide highest intraoperative image quality and best workflow available

MINNEAPOLIS, Feb. 13, 2014 /PRNewswire/ – IMRIS Inc. (NASDAQ: IMRS; TSX: IM) (“IMRIS” or the “Company”) today announced US Food and Drug Administration clearance of the newest generation VISIUS® Surgical Theatre which integrates Siemens’ latest high-field MR scanners.

The new core imaging technology based on Siemens Aera 1.5T(tesla) and Skyra 3.0T technology helps IMRIS deliver better image quality with higher signal-to-noise ratio, faster 3D image acquisition, and improved ease-of-use and workflow during neurosurgical procedures using intraoperative MRI (iMRI).


As of 13 Feb 2014 at 3:39 PM EST.


Open 2.32 P/E Ratio (TTM)
Last Bid/Size 2.51 / 2 EPS (TTM)
Last Ask/Size 2.52 / 2 Next Earnings
Previous Close 2.34 Beta
Volume 1,792,384 Last Dividend
Average Volume 317,315 Dividend Yield 0.00%
Day High 2.79 Ex-Dividend Date
Day Low 2.26 Shares Outstanding 52.0M
52 Week High 4.31 # of Floating Shares
52 Week Low 1.16 Short Interest as % of Float

IMRS Trading Alert

Volume is equal to the average day after less than an hour

Reports the qrt results this month.


Above Average
As of 12 Feb 2014 at 10:29 AM EST.
    • Quote DETAILS
Open 2.18 P/E Ratio (TTM)
Last Bid/Size 2.32 / 2 EPS (TTM)
Last Ask/Size 2.34 / 7 Next Earnings
Previous Close 2.15 Beta
Volume 520,285 Last Dividend
Average Volume 180,110 Dividend Yield 0.00%
Day High 2.45 Ex-Dividend Date
Day Low 2.17 Shares Outstanding 52.0M
52 Week High 4.31 # of Floating Shares
52 Week Low 1.16 Short Interest as % of Float

Yamana Gold Inc. BUY Target Price $12.25

YRI : TSX : C$10.78
Target: C$12.25

Yamana Gold is a significant gold, silver, and copper
producer with mining operations in Brazil, Argentina,
Chile, US and a pipeline of exploration and development
projects throughout the Americas. Yamana Gold
produced 1.2 Moz gold equivalent in 2012, which is
expected to grow to more than 1.5 Moz by the end of
All amounts in C$ unless otherwise noted

Metals and Mining — Precious Metals and Minerals
Investment recommendation
It was clear to us that YRI was going to have difficulty meeting its 2013
guidance. Given the continuing delays at the three growth assets C1 Santa
Luz, Pilar, and EPP, it was also evident that 2014 guidance was vulnerable
to a potential downgrade. YRI’s shares have underperformed its peers 13%
YTD in anticipation. As expected, the new production guidance was weaker,
but the shares have responded strongly on the view that YRI has turned the
corner on its growth assets and at higher cost assets Gualcamayo and
Jacobina. The company also stated that costs in 2014 would be stable
despite new higher cost production, which suggests that the cost savings
program is bearing fruit. Yamana is currently trading at 0.88x NAV, in-line
(vs. typical +20% premium) with the peer average of 0.86x NAV. We are
maintaining our BUY rating.
Investment highlights
 Yamana announced full year operating results that were well below its
guidance of 1.32-1.37mozs AuEq at 1.2 mozs AuEq. Preliminary cash
costs of $596/oz AuEq) were in line with our estimate of $600/oz AuEq.
 Yamana expects to produce 1.4mozs AuEq in 2014, below previous
guidance of 1.4 to 1.5mozs. Excluding pre-commercial production, the
revised guidance implies 1.32mozs AuEq approximately 5% below CG
expectations given growth delays. Cash costs in 2014 are expected to be
in line with 2013. We had forecast an 8% increase in costs YoY.
 Our 2013 EPS and CFPS estimates have been revised to $0.39 (from
$0.40) and $0.80 (from $0.84), respectively. Our Q4/13E EPS is $0.08.
We are revising our target price to C$12.25 (C$11.50 previously), which is
predicated on a 1.0x multiple (0.95x previously) to our forward curve
derived operating NAV estimate of C$14.30 (previously C$13.91) plus net
debt and other assets. YRI appears to have made significant progress in
advancing its development assets, higher cost mines Gualcamayo and
Jacobina appear to be turning the corner, and general market sentiment has
improved. Recent M&A (search for Osisko alternative) and a lagging share
price has increased interest in YRI. We also expect Yamana to replace
reserves at year-end. YRI utilizes one of the sector’s most conservative
reserve gold price assumptions of $950/oz, contrary to many of its peers.

Nanometrics BUY

NANO : NASDAQ : US$16.41 BUY Target: US$20.00 COMPANY DESCRIPTION: Nanometrics is a provider of high-performance metrology and inspection systems used primarily in the fabrication of semiconductors to improve yields, increase productivity and lower manufacturing costs. Nanometrics’ systems address numerous applications, including critical dimension and film thickness measurement, device topography, defect inspection, overlay registration, and analysis of the optical, electrical and material properties of films. All amounts in US$ unless otherwise noted. Sustainability — Energy & Power Technologies MORE TOOLS TO BE FOUND IN THE FOUNDRY Investment recommendation We reiterate our BUY on NANO as we believe that the company will continue benefitting from increased memory spending and new design wins at major foundries in 2014. Investment highlights Nanometrics beat Q4 and issued a solid guide for Q1. Revenues were $46.2M compared to our $46.0M estimate and consensus of $44.9M. Non GAAP EPS were $0.04, compared to our and consensus estimate for a loss of one cent. The company guided for revenues of $48M-$54M with EPS of $0.01 – $0.13 compared to consensus of $51M and $0.08. While Q4 reported revenues were strong on their own, we highlight that shipments were even better as the company began delivering systems to a new fab and to a new customer, which we believe is Samsung’s massive Xian 3D NAND fab and TSMC, respectively. These revenues as well as what should be significant follow-on systems will begin to be recognized in Q1. Nanometrics has long been well-entrenched in memory and at Samsung specifically. Samsung is currently the most aggressive with respect to 3D NAND but Nanometrics also mentioned pilot 3D NAND wins at 2 other memory manufacturers. We believe that 3D NAND will require more etch steps and thus more insertion points for critical integrated and stand-alone etch OCD measurements. Furthermore the win at TSMC, which was pulled in to 20nm from 16nm is also incremental to the model from the previous peak and ramping faster than expected. We believe that the increased capital intensity of leading edge nodes and continue share gains will lead to above-industry growth and a return to strong profitability.

Thoratec Target Price $40

THOR : NASDAQ : US$34.37
Target: US$40.00

Thoratec manufactures medical devices used for
circulatory support, vascular graft applications, and blood
coagulation testing. Thoratec’s ventricular assist device
(VAD) systems are currently marketed in the US and
internationally for use as a bridge to heart transplant and
for recovery of the heart after open-heart surgery. The
company has the only VAD currently FDA-approved for the
destination therapy indication.
All amounts in US$ unless otherwise noted.

Life Sciences — Biomedical Devices and Services
Investment recommendation
We remain bullish about the near- and long-term growth profile of the LVAD
market, which grew 15% globally in 2013. We estimate this duopoly – THOR and
HTWR – now represents a $670M WW market, which is on track to approach
our $1 billion 2017E (+12% CAGR, which could prove conservative, in our view).
The low penetration level of the patient population (10%E in US/Europe; <5%E
in Japan), increasing referral patterns, new center development and nextgeneration
technology coming down the pipe form the basis of our bullish macro
perspective on VADs.
We continue to favour Heartware (HTWR : NASDAQ : $95.07 | BUY), but also
believe owning the “VAD ETF” (both) is a valid strategy to play the market
growth and potential for M&A, while mitigating risk associated with
uncertainties around each company’s upcoming clinical trials and pipeline. We
expect THOR to face another competitively challenging year in the US in 2014 as
HTWR enrolls its DT revised-protocol study and commences MVAD trials, but
we are optimistic about the potential for THOR’s HM3 (on track to begin trials in
Europe & US in ’14) and longer term in the acute HF market with HM-PHP (not
in our estimates). We adjust our target from $45 to $40 on a lower target
multiple (4x EV) applied to a virtually unchanged 2015 revenue target.
Investment highlights
Q4 WW sales ($128M; +7%) were in line (CGe: $130M; consensus:
$128M) as US VAD revenue beat our estimates, offset by OUS VAD
revenue, which missed. Reported pro forma EPS of $0.38 missed our
$0.41E, but excluding a one-time inventory adjustment (-8 cents), EPS
beat, as pro-forma GM (72%), OpEx control, and share buyback drove a
solid P&L in Q4.
2014 revenue guidance ($520-535M) bracketed our estimate/consensus
($529M/$535M), while EPS guidance ($1.72-$1.82) was slightly below
our estimate ($1.88) as the company plans to re-invest improving
GM (71%E) back into R&D

Ultimate Software Target Price $ 185

ULTI : NASDAQ : US$159.72
Target: US$185.

Founded in 1990 and based in Weston, Florida, Ultimate is
emerging as a clear leader in the domestic payroll market.
Ultimate’s proprietary HR/payroll applications, which now service
more than 2,300 customers, are targeted primarily at the
domestic middle market, or companies typically with between
200 and 10,000 employees.
All amounts in US$ unless otherwise noted.

Technology — Enterprise Software — Software as a Service
Investment thesis
While Ultimate’s success over the decade that we’ve followed the company
might seem both epic and perhaps over-extended, the reality is that the firm
has less than 10% of the addressable North American market. Meanwhile, the
one-two punch of Workday and Ultimate pitching business has begun to
soften up the large, 5,000+ employee market away from ERP firms Oracle and
SAP. This should mean more large deals landing more often for both firms.
For now, barring shocking and unprecedented missteps, we believe there are
few things standing in the way of this firm breaching the $1 billion revenue
mark sometime in mid-to-late 2018. The firm should be able to bring $250
million to the pre-tax line at that point which, with the help of likely balance
sheet cash, could mean a $7-8 billion market cap sometime in 2017; this
implies an 11-15% annual price appreciation from current levels. Our rating
remains BUY.
A solid finish to the year: slight upside across the board. ULTI reported
revenues and non-GAAP EPS of $111.9M and $0.54, which were
respectively $1.4M and $0.11 ahead of our estimates (~$0.08 of the EPS
upside was driven by lower tax and a capitalized R&D acceleration).
Recurring revenues grew 23% in the quarter and non-GAAP operating
margins of 20.9% improved 60 bps y-o-y. Quarterly OCF of $19.9M beat
our $13.7M estimate, and for the full year C2013, ULTI grew OCF by 78%.
Outlook: delightfully boring 25% subscription growth and 20% operating
margins. ULTI reiterated previous C2014 guidance for 25% growth on the
subscription line and increased operating margin targets by 100 bps to
20%. We have modestly increased our services revenue estimates on the
heels of the firm’s strong Q4 bookings, and in keeping with revised
margin targets, our C2014 non-GAAP EPS estimate increases $0.11 to

Vascular Solutions

VASC : NASDAQ : US$23.50
Target: US$28.50

Vascular Solutions manufactures and markets high-margin
products addressing the needs of the cardiac catheterization lab
as well as the IR suite. The company went public in 2000 as a
single product, vascular closure company. Over the last three
years, Vascular Solutions has broadened its product offering with
such devices as the D-Stat Dry hemostatic bandage, the Pronto
thrombus extraction catheter, GuideLiner catheter and the Vari-
Lase laser.
All amounts in US$ unless otherwise noted.

Life Sciences — Biomedical Devices and Services
Investment recommendation
VASC finished off the year in great form and reported fourth quarter
results that zoomed past expectations. In fact, 2013 marked the 10th
consecutive year of double-digit revenue growth, and management
provided 2014 guidance that suggests a continuation of this impressive
record. We think valuation of VASC common does not reflect this track
record, as the Street may either be ignoring or under-appreciating the
strength and consistency of VASC’s revenue, margin and EPS growth
track record. We recommend investors accumulate shares, as we think
the VASC story will have more of both “steak & sizzle” in 2014, noting
the potential of a new reprocessing service (not yet finalized, nor in our
estimates) that is anticipated to launch by year-end. We think this new
reprocessing service has the potential to become a meaningful
contributor to a franchise that should continue to generate strong
organic growth and operating margin expansion. In sum, we see
materially more upside for the stock.
We reiterate our BUY rating on shares of VASC and increase our price
target to $28.50 from $25.00 (target derived from relative comparison to
small-cap comp group on both EV/Sales & P/E bases).
Investment highlights
Q4 sales grew 15% Y/Y to $29.1M, above the top-end of its guidance
range and our $28.7M estimate and the Street’s $28.6M.
Pro-forma EPS (excluding litigation settlement cost), came in
at $0.22, above our/consensus projection of $0.19.Vascular solutions,

Belden BUY Target Price $75

BDC : NYSE : US$65.58
Target $ 75

Belden produces and sells a comprehensive portfolio of
connectivity and networking products into a variety of
markets, including industrial, enterprise, and broadcast

Transportation and Industrials — Industrial Technologies
Investment recommendation
Our thesis stays intact, as Belden continues to perform despite a variable
demand environment. Migration towards higher margin areas
(Broadcast, Industrial IT) stays successful, while a reinvigoration of the
Enterprise business offers enhanced margin opportunity. Maintain BUY.
Investment highlights
 The deal to add ~$300M in accretive Broadcast business (~$0.50/yr)
overshadowed an overall solid quarter, as a resilient portfolio and
robust operating strategy (including share gains) keep margin
growth in tact despite unexpected lumpiness (e.g. Brazil).
 Grass Valley (close Q2E) adds complementary
switches/servers/camera systems to the portfolio, along with clear
in-sourcing and sales synergies. The balance sheet stays robust
(FCF ~$200M for the year), with cash ($613M) and credit line
supporting the ~$220M Grass Valley purchase (~9x EBITDA) and
additional strategic M&A (“dry powder” ~$600M+), as well as
accretive buyback ($130M available).
 F2014 guidance is reiterated, while the pending acquisition of Grass
Valley looks to contribute an incremental ~$225M/$0.20 (in our
new ‘14E numbers). Our revenue/adjusted EPS estimates change to
reflect reported results and Grass Valley. F2014 to $2.35B/$4.20
from $2.14B/$4.00. We introduce F2015 at $2.5B/$5.00.
Our 12-month target of $75 equates to P/E and EV/EBITDA multiples of
~15x/~10x our ‘15 estimates, respectively.


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