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PROCTER & GAMBLE BUY Target $ 87

Former P&G logo

Former P&G logo (Photo credit: Wikipedia)

PG : NYSE : US$77.13
BUY
Target: US$87

What’s new?


In light of the significant decline in the share price following the Q3 results we are compelled to reiterate our BUY recommendation on Procter & Gamble, especially considering our forecasts are essentially unchanged. Though some disappointment on the results day was probably warranted, given that the FY guidance range was not raised despite the 3c beat and that, against the backdrop of a slowing HPC market, organic sales remained tepid (+3%), the 7% sell-off on the day was a considerable overreaction in our view. A slowdown in HPC is unhelpful, but the share prices of other HPC companies (e.g. L’Oréal, Unilever, Colgate) have not come under similar pressure, and P&G arguably has the advantage thanks to its $10bn of savings to come over the next 3+ years, some of which is already being re-deployed behind the brands in the current year.
P&G met top-line targets and exceeded bottom-line targets during Q3, and market share trends are moving in the right direction across more of the portfolio. FY guidance was not raised due to brand investments expected in Q4, FX headwinds and a slowing HPC market – the latter two factors are hardly unique to P&G (nor self-inflicted) and the former is a sensible step timed around new launches.
Impact 
The restructuring programme remains on track, with improving market share performance the clearest measure of this. The phasing of savings drop-through and organic sales re-acceleration will not always be steady each quarter but this is normal during restructurings and is no cause for alarm (see Unilever’s quarterly progress throughout its 4 yr. turnaround on pg. 6). P&G remains committed to returning cash to shareholders; in the current year it has raised the dividend 7% and is repurchasing $6bn worth of shares. We tweak our F13 forecast down 4c to $4.04, the high end of the guided range, but our medium-term forecasts already incorporated a weak HPC market and are left virtually unchanged.
Valuation
P&G currently trades at a discount to peers (16x cal ’14E PE vs. peers on almost 19x). We can easily reach our $87 target using Quest™ by delaying the fade in cash returns by just 2 yrs, which we consider very conservative (we delay by 3 yrs for Unilever).
Share performance catalyst
P&G presents at a competitor conference in Paris (June 11-13), where investors are likely to demand an update on its brand investments and sales growth trends.

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by jackbassteam on April 29, 2013  •  Permalink
Posted in Consumer Stocks
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Posted by jackbassteam on April 29, 2013

http://amp2012.com/2013/04/29/procter-gamble-buy-target-87/

CHEVRON

Chevron Corporation

Chevron Corporation (Photo credit: Wikipedia)

CVX : NYSE : US$120.1
BUY
Target: US$136.0

What’s new?
Chevron’s 1Q EPS of $3.18 came in 3% ahead of the $3.09 consensus. The company raised its quarterly dividend by 11% and reiterated guidance on share buybacks.
Impact
We reiterate our BUY stance on Chevron, and our $136 price target. In our view Chevron’s growth outlook remains the strongest of the supermajors, and its valuation looks reasonable. Although its near-term free cash yield is limited, this is to be expected given the scale of growth capex, and Chevron continues to have the financial strength to maintain good cash distributions through this phase of the cycle.
Chevron produced 1Q earnings of $6.18bn, with EPS down 3% y/y. Relative to consensus, the main positive variance was in International E&P (c.$0.6bn ahead and +3% y/y), partly due to a lower effective tax rate. Downstream results were mixed. In the US, R&M income was weak at $0.14bn (vs $0.46bn a year ago). Refinery throughputs were down 38% y/y, with heavy maintenance at the Pascagoula and El Segundo refineries. With these now back on line and Richmond now restarting crude processing after its previous fire, results should start to return to normal. International R&M was strong, with income of $0.57bn vs $0.35bn a year ago.
Upstream production volumes were 2645kboed, up 1% y/y. Chevron expects upstream output to grow 1.5% in 2013, and retains its 2017 volume target of 3.3mbd (4.8%pa vs 2012). We forecast 2017 output of 3.12mbd, +4%pa.
Chevron’s 1Q cash flow from operations was weak at $5.7bn. However, this was mostly because of a $3.4bn adverse move in working capital (mostly in downstream), which is expected to reverse in the coming quarters. As a result, the company’s net cash position shrank to $4.9bn at end-1Q vs $9.7bn at YE12.
Cash distributions remain strong. Chevron raised its quarterly dividend from $0.90 to $1.00 (+11%), giving a prospective dividend yield of 3.3%. In addition, it guided to 2Q share buybacks of $1.25bn, unchanged vs previous levels. Combined with the new dividend, this puts Chevron on a healthy distribution yield of 5.5%.
Valuation
Chevron’s shares have 29% upside to our SoP valuation of $155/share vs the supermajor average upside of 34%. The shares trade on a 2014E EV/DACF multiple of 5.5x vs a supermajor average (ex-XOM) of 4.8x.

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by jackbassteam on April 29, 2013  •  Permalink
Posted in Energy, Oil
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Posted by jackbassteam on April 29, 2013

http://amp2012.com/2013/04/29/chevron/

Chevron Target $ 136

Chevron Corporation

Chevron Corporation (Photo credit: Wikipedia)

CVX : NYSE : US$120.1
BUY
Target: US$136.0

What’s new?
Chevron’s 1Q EPS of $3.18 came in 3% ahead of the $3.09 consensus. The company raised its quarterly dividend by 11% and reiterated guidance on share buybacks.
Impact
We reiterate our BUY stance on Chevron, and our $136 price target. In our view Chevron’s growth outlook remains the strongest of the supermajors, and its valuation looks reasonable. Although its near-term free cash yield is limited, this is to be expected given the scale of growth capex, and Chevron continues to have the financial strength to maintain good cash distributions through this phase of the cycle.
Chevron produced 1Q earnings of $6.18bn, with EPS down 3% y/y. Relative to consensus, the main positive variance was in International E&P (c.$0.6bn ahead and +3% y/y), partly due to a lower effective tax rate. Downstream results were mixed. In the US, R&M income was weak at $0.14bn (vs $0.46bn a year ago). Refinery throughputs were down 38% y/y, with heavy maintenance at the Pascagoula and El Segundo refineries. With these now back on line and Richmond now restarting crude processing after its previous fire, results should start to return to normal. International R&M was strong, with income of $0.57bn vs $0.35bn a year ago.
Upstream production volumes were 2645kboed, up 1% y/y. Chevron expects upstream output to grow 1.5% in 2013, and retains its 2017 volume target of 3.3mbd (4.8%pa vs 2012). We forecast 2017 output of 3.12mbd, +4%pa.
Chevron’s 1Q cash flow from operations was weak at $5.7bn. However, this was mostly because of a $3.4bn adverse move in working capital (mostly in downstream), which is expected to reverse in the coming quarters. As a result, the company’s net cash position shrank to $4.9bn at end-1Q vs $9.7bn at YE12.
Cash distributions remain strong. Chevron raised its quarterly dividend from $0.90 to $1.00 (+11%), giving a prospective dividend yield of 3.3%. In addition, it guided to 2Q share buybacks of $1.25bn, unchanged vs previous levels. Combined with the new dividend, this puts Chevron on a healthy distribution yield of 5.5%.
Valuation
Chevron’s shares have 29% upside to our SoP valuation of $155/share vs the supermajor average upside of 34%. The shares trade on a 2014E EV/DACF multiple of 5.5x vs a supermajor average (ex-XOM) of 4.8x.

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by jackbassteam on April 29, 2013  •  Permalink
Posted in Energy, Oil
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Posted by jackbassteam on April 29, 2013

http://amp2012.com/2013/04/29/chevron-target-136/

Acuity Brands TOP-LINE MOMENTUM

Acuity Brands

AYI : NYSE : US$71.84
BUY 
Target: US$78.00

COMPANY DESCRIPTION:
Acuity Brands is one of the world’s largest lighting products and services companies. The company primarily serves the North American indoor and outdoor commercial/industrial luminaire market through more than a dozen separate brands with a particular emphasis on fluorescent and HID technologies. Headquartered in Atlanta, GA, the company employs over 6,000 people, and has hundreds of separate lighting and controls product families.

Investment recommendation


We maintain our BUY rating on AYI shares as we continue to believe the company outperforms during the macro recovery and adds incremental value throughout this secular transition to intelligent lighting and controls.
Investment highlights
 No surprises in Acuity’s conference call. Revenue upside in the seasonally weakest quarter was driven by pent-up demand delayed from FQ1. Slightly offsetting this growth was the mix of these projects, including renovation, national accounts and the home improvement channels, which weighed slightly on GMs sequentially. Acuity remains optimistic for 2013/2014, although with a hint of its usual caution.
 While SD&A spending grew a bit faster than revenues this quarter, Acuity has historically executed over the previous cycles in slowing overall OPEX relative to revenues. We also point out that adjusted OMs are at the same level as last year, but with 2.5x the LED revenues. This helps counter the negative thesis that LED is either dilutive or will require higher spending to develop and support.
 There are likely more positive than negative catalysts in the near term, such as Light Fair and entering the seasonally strongest period.
 Despite the momentum and expectations of continued execution, we are already bumping up against a reasonable upper limit in the model and feel the same about sentiment given current levels of visibility.
 We continue to like the company’s position over the long term but prefer shares on pullbacks given limited room for incremental upside to estimates. We may reassess our position should the shares trade up to our price target, which is looking more like fair value at this point.

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by jackbassteam on April 5, 2013  •  Permalink
Posted in Infrastructure
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Posted by jackbassteam on April 5, 2013

http://amp2012.com/2013/04/05/acuity-brands-top-line-momentum/

Demandware

Um playmobil e um Domo-kun

Um playmobil e um Domo-kun (Photo credit: CesarCardoso)

DWRE : NYSE : US$25.32
BUY 
Target: US$36.00

COMPANY DESCRIPTION:
Demandware provides an enterprise-class, cloud platform that enables brands to build and manage eCommerce sites for omni-channel commerce. The software is multi-tenant, single instance and the platform has an extensive integrated partner network (LINK).

Investment thesis


DWRE shares have become the punching bag of aggressive competitive commentary and uncoordinated venture investor distributions. Execution can overcome skepticism, but distributions now appear likely to roil the stock until completed or an organized offering materializes. Meanwhile, we believe it is likely that investors will receive positive sell-side commentary later this week following DWRE’s analyst day at the firm’s user conference. Reiterate BUY.
 Analyst event this Thursday. DWRE plans to assemble a customer panel highlighting success with Brooks Brothers, PacSun, Tory Burch and Jones New York in addition to the typical analyst presentations. Investors should expect a slew of favorable commentary at the end of this week as the event wraps.
 In the end, consistent execution is the cure-all. Ratcheted up competitive commentary and ungainly venture distributions can cause short-term share price dislocation. We continue to fall back on the fact that DWRE is attacking a quite large addressable market riddled with legacy technology
vendors. We hold the notion that eventually this will materialize in results.
 Meanwhile, conservative estimates set up well. It’s likely that services revenue and operating cost estimates set up for 2013 upside surprises. In
addition, we believe the optics of accelerating subscription growth in 2014 should enable DWRE to at least maintain its forward trading multiple.
Valuation and price target
Our unchanged $36 price target is based on a 7.6x EV/revenue multiple applied to our 2014 revenue estimate of $134.0M plus roughly $90M in prospective net cash, which would put DWRE in line with other well-executing cloud applications vendors.

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by jackbassteam on April 3, 2013  •  Permalink
Posted in software, Tech stocks
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Posted by jackbassteam on April 3, 2013

http://amp2012.com/2013/04/03/demandware/

Kraft Foods Group : Update Target $ 56

KRFT : NYSE : US$51.37
BUY
Target: US$56

Update

We are increasing our target price (to $56 from $50) to reflect our increased confidence in the cost savings opportunity.

We see several years of improvements ahead following good initial progress on costs in Q4, the first quarter reported as a standalone company.
Besides the expansion of Lean Six Sigma and de-layering the organisation (the two major sources of efficiency that we detailed in our November 2012 initiation report), the rollout of Integrated Business Planning, supply chain rationalisation, SKU rationalisation and distribution efficiencies should between them provide ample scope for margin improvement over the medium term.

However, near term, we think the top-line is likely to be weak given pressure on the U.S. consumer, commodity deflation and difficult comps.
Impact :
We raise our forecasts (by about 5% in 2014 & beyond), and our target price by 12% to reflect this increased confidence in the cost savings. We now expect an 8% CAGR in EBIT over the medium term vs. around 5% previously; the Q1 expectations are detailed on pg. 5 (CG est. EPS $0.66). The shares have risen 14% since November and we see 9% further upside from the current level. BUY.
Valuation
Our new $56 target implies a 2014E PE of 17x and a 3.8% dividend yield. These ratings would put KRFT in-line with global Food companies but ahead of U.S. Food companies; however, the internal improvement at KRFT is a unique attraction, along with the high yield.
Share performance catalyst
Upgrades to consensus forecasts should drive the shares higher. The next opportunity for upgrades should be the Q1 results in early May.

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by jackbassteam on March 28, 2013  •  Permalink
Posted in Commodities, Food
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Posted by jackbassteam on March 28, 2013

http://amp2012.com/2013/03/28/kraft-foods-group-update-target-56/

Dollar General

Dollar General 300

Dollar General 300 (Photo credit: Wikipedia)

DG : NYSE : US$50.91

Dollar General said sales growth this year could surpass the strength it saw in 2012 as increased demand for food
and other basics helps drive gains despite consumers’ concerns about the economy.

The company’s fourth-quarter profit came in well ahead of analysts’ expectations despite lighter-than-anticipated sales growth. Dollar General earned $317.4 million, or $0.97 per share, in the fourth quarter ended on February 1, up from $292.5 million, or $0.85 per share, a year earlier.

Sales rose 0.5% to $4.21 billion. Analysts, on average, expected $0.90 per share on sales of $4.26 billion. Sales at stores open at least a year, or same-store sales, rose 3%. The same-store sales surpassed a 1% rise in such sales at Wal-Mart (WMT) U.S. in its fourth quarter, yet came in at the low end of Dollar General’s forecast of 3 to 4% growth.

The sales gains at existing stores were  helped primarily by consumables, or items such as food and household basics. More shoppers came into the stores and spent more on their purchases, the discount chain said. Dollar General expects to earn $3.15-3.30 per share on an adjusted basis this year, with total sales up 10-12% and same-store sales up 4-6%.

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by jackbassteam on March 27, 2013  •  Permalink
Posted in Retail Stores
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Posted by jackbassteam on March 27, 2013

http://amp2012.com/2013/03/27/dollar-general/

Ameresco THE WAITING IS THE HARDEST PART

AMRC : NYSE : US$7.55
BUY 
Target: US$10.50

COMPANY DESCRIPTION:
Ameresco is a leading provider of energy efficiency solutions for facilities throughout North America. Principal services include the development, design, engineering, and installation of projects that reduce the energy and operations & maintenance costs of facilities. The company also constructs and operates small-scale renewable energy plants.

Investment recommendation


Not surprisingly, visibility stays challenged given the heavy exposure to federal/muni customers (conversions pushed later in ’13+). That said, the
profitable (and cash-flowing) platform stays intact, with opportunities ready for when activity picks up. We stay constructive, as AMRC appears
well positioned longer term within the $5B energy services market.
Investment highlights
 Market disruption looks to persist in the mid-term (sequester impact), while longer-term trends stay firmly positive (growing backlog, record pipeline). 2013 revenue/net income guidance is set conservatively at $620-670M/$18-22M, factoring continued backlog conversion delays (with improvement starting later in ’13).

 Ameresco reported Q4/12 revs/EPS of $156.6M/$0.11 vs. our $175M/$0.16 and the Street at $174.8M/$0.20. Contracted backlog increased ~15% q/q to $367M, signalling a potential trough.
 Importantly, the balance sheet remains healthy and well-positioned to weather this protracted period of weaker visibility (with potential for
additional strategic M&A, in our view).
 Our estimates adjust to reflect persistent lengthening of backlog conversion. F2013 goes to $635.5M/$0.42 (from $715M/$0.62), while
we introduce F2014 estimates at $682M/$0.55.


Valuation
Our $10.50 target (from $12) is based on a 19x (no change) P/E off 2014E.
Risks
Long and lumpy sales cycles, governmental customer concentration, project financing dependency, insider control.

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by jackbassteam on March 20, 2013  •  Permalink
Posted in Energy, Tech stocks
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Posted by jackbassteam on March 20, 2013

http://amp2012.com/2013/03/20/ameresco-the-waiting-is-the-hardest-part/

Pernix Therapeutics Q4

English: A bottle of LSD from a Swiss clinical...

English: A bottle of LSD from a Swiss clinical trial for end-of-life anxiety in cancer patients, circa 2007, conducted by Dr. Peter Gasser, sponsored by the Multidisciplinary Association for Psychedelic Studies. The opaque bottle has a red cap and a yellow, cyan, and white label. The label says in part: Clinical Study, EK # 2007/016, d-LSD hydrate Capsule, Only for research purposes. (Photo credit: Wikipedia)

PTX : NYSE MKT : US$5.49
BUY 
Target: US$12.00

COMPANY DESCRIPTION:
Pernix Therapeutics Holdings is a specialty pharmaceutical company that develops and manufactures generic and branded prescription and OTC
products, with particular emphasis on pediatrics. PTX is focused in the areas of allergy, upper respiratory, antibiotics and dermatology. PTX is headquartered in The Woodlands, TX.

PTX reported Q4 EPS and revenue that came in slightly below consensus. The lower 2013 outlook will temper forecasts and was driven by both top line and spend assumptions and caught us and most by surprise, driving the volatility today.

While we like the platform the company is building across brand, generics and OTC products, the transition away from the legacy, less profitable cough and cold business is taking time. We still see solid growth ahead for PTX driven by the relaunch of Silenor, the launch of Dr. Cocoa OTC, and a much broader pipeline acquired from Cypress/Hawthorn.

Execution on the business development front is still a big focus, with potential to add to the P&L as PTX looks to layer on additional assets with its sales force. We remain BUY-rated as we continue to see long-term value in the platform, but lower our price target to $12.
Model update – lowering estimates on revenue guidance, spend assumptions There are two main drivers of our reduced estimates: (1) lowered
revenue guidance (new range is $125-135M versus prior $135-145M pre-Somaxon deal) and (2) significantly higher SG&A and R&D spend (Phase III clinical study for pediatric product, OTC-related spend). A slower transition away from legacy cough and cold products and several product opportunities that haven’t met internal expectations (Natroba, Omeclamox-Pak) have exacerbated the transition.

Our EPS estimates from 2013-2016E are now (-$0.20), $0.01, $0.25 and $0.50.
Valuation – target to $12, which implies over 100% upside We are lowering our target to $12 (prior $14) which is based on an equal-weighted ~29.0x P/E and ~11.0x EV/EBITDA multiple applied to our 2016 forecasts discounted back

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by jackbassteam on March 19, 2013  •  Permalink
Posted in Life Sciences
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Posted by jackbassteam on March 19, 2013

http://amp2012.com/2013/03/19/pernix-therapeutics-q4/

World Wrestling Ent. In This Corner Weighing Too Much Jack Bass !

WWE wrestler Hulk Hogan

WWE wrestler Hulk Hogan (Photo credit: Wikipedia)

WWE :

NYSE : $8.33

World Wrestling Entertainment reported that it turned a profit in the fourth quarter after experiencing a loss in the same period a year earlier. Adjusted net income was in-line with analyst estimates while revenue topped expectations.

It said its fourth quarter net income was $0.6 million, or 1 cent per share, compared to a loss of $8.6 million, or 12 cents per share, in the same quarter a year earlier. Adjusting for one time, the WWE’s net income was $1.3 million, or 2 cents per share, compared to $1.8 million, or 2 cents per share, in the prior year quarter.

Revenues for the WWE totaled $115.1 million in the fourth quarter compared to $112.9 million in the prior year. This beat estimates as analysts were expecting a revenue of $114.6 million. “In the fourth quarter, we continued to make important progress on our key strategic initiatives, expanding the production and licensing of new programs and enhancing our brands,” commented Vince McMahon, Chairman and CEO of WWE. “Although we did not announce the launch of a domestic television network during the year, we believe, now more than ever, that we can realize the full value of our intellectual property using a variety of approaches in our global markets. Our confidence is based on the rising value of content and the tremendous global appeal of our brands.”

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by jackbassteam on March 4, 2013  •  Permalink
Posted in entertainment
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Posted by jackbassteam on March 4, 2013

http://amp2012.com/2013/03/04/world-wrestling-ent-in-this-corner-weighing-too-much-jack-bass/

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