Joy Global : Less Joy

Joy Mining Machinery Founder Joseph Francis Joy

Joy Mining Machinery Founder Joseph Francis Joy (Photo credit: Wikipedia)

Joy Global (JOY : NYSE : US$49.16), Net Change: -2.15, % Change: -4.19%, Volume: 7,519,489
Joy Global, a maker of mining equipment, reported a 36% slide in quarterly orders and warned of
sharply lower revenue for a further year as coal producers cut back capital spending in the face of a supply glut and low prices.
Net income fell 5% to $183.2 million, or $1.71 per share. Revenue dropped 5% to $1.32 billion.

Excluding items, Joy Global earned $1.70 per share while analysts expected earnings of $1.37 per share, excluding items, on revenue of $1.18 billion. Joy Global maintained its 2013 forecast for earnings of $5.60-5.80 per share.

The company, which derives two-thirds of its revenue from sales to coal miners, said it would increase cost cutting to offset the slide in orders. Management maintained its forecast of revenue for the year to October 2013 of $4.9-5.0 billion, down from last year’s $5.66 billion, and it warned the following year would be worse.

“The current outlook (for 2014) is unlikely to support annual revenue above $4 billion,” Chief Executive Mike
Sutherlin said in a statement. This is sharply lower than the previous average expectation from analysts for revenue of $4.57
billion for the year ending October 2014.

Social Media Stocks Are Back on Top

facebook

facebook (Photo credit: sitmonkeysupreme)

 

By George Leong, B.Comm. for Profit Confidential

 

Social media stocks appear to be sizzling on the charts once again in what has largely been an on-again, off-again trading pattern.

Facebook, Inc. (NASDAQ/FB) proved this after surging 30% on July 25, following its reporting a blow-away second quarter in which the social media giant beat on earnings (36%) and revenue growth (53%) year-over-year. The company’s 1.15 billion monthly active users as of June 30 was impressive. Better yet, of this amount, about 819 million of these users were mobile, up 54% year-over-year.

The numbers are excellent. I continue to like Facebook. But more importantly, I see major growth going forward for Facebook in the critical mobile market, from which the company derived 41% of its total advertising revenue. The company remains a buying opportunity, especially if it can monetize its massive subscriber base.

 

A highflyer in the Internet space, Yelp, Inc. (NASDAQ/YELP) operates local business sites across many cities and countries and links consumers to local businesses. Yelp’s valuation is high, but revenues are estimated to grow 59.7% this year and 43.0% next year, according to Thomson Financial. Yelp is also estimated to turn a profit of $0.18 per diluted share in 2014.

On the speculative side is social games developer Zynga Inc. (NASDAQ/ZNGA), which holds some promise in spite of it being down from its $14.00 level in May 2012, when Facebook dropped games from its offering. Zynga is at best extremely speculative and only for traders.

 

Google BUY Target Price $ 940

Google 貼牌冰箱(Google Refrigerator)

Google 貼牌冰箱(Google Refrigerator) (Photo credit: Aray Chen)

GOOG

 NASDAQ : US$910.68
BUY 
Target: US$940.00

COMPANY DESCRIPTION:
Google owns the world’s largest search engine, some of the most visited websites on the web, including YouTube.com, as well as the telecommunications equipment corporation Motorola Mobility. Google generates the vast majority of its revenue through advertising on the web and mobile devices.

Summary


Google’s Q2 results saw both revenue and EPS below consensus. Q2 and Q3 seem like quarters of transition, first to a new Enhanced Campaign
paradigm for AdWords, and to a better user experience (and slower growth) for Google Network. We remain attracted to secular positives,
while recognizing that Google’s admirable quest to stay young and innovative may continue to push out realization of an “optimal” model.
The next chapter may be a big hardware cycle, which could draw questions about structural margins. However, we continue to like Google’s dominant competitive position in a large and growing market.
Key points
Bullish – Enhanced Campaigns now represent 75% of all AdWords campaigns, showing fast adoption; Android continues its massive climb with ~900 million activated devices; Web sites TAC slowed its pace of expansion at only 8.0%, up from 7.9% in Q1, the smallest expansion in years.
Bearish Revenue and profitability miss; 6% CPC decline despite adoption of Enhanced Campaigns; self-inflicted slowdown in Google
Network growth should persist for two more quarters, along with an associated pick up in Google Network TAC to over 72% of revenue
compared to long-time run-rate of ~70%.
 Estimate changes – We lower our 2013/2014/2015 combined gross revenue to $59.4B/$68.6B/$78.6B from $61.7B/$71.5B/81.6B, and
non-GAAP EPS to $43.99/$52.54/$62.99 from $46.72/$56.48/$64.82.
Valuation
We raise our price target to $940 from $890 as we roll over to 2014E EPS. Our new target is based on 18x our slightly lower 2014 EPS estimate of $52.54.

 

Advanced Micro Devices AMP Raising Target Price

AMD

AMD (Photo credit: Majiscup – The Papercup & Sleeve)

AMD : NYSE : US$4.64
BUY 
Target: US$6.00

NOTE: This Company was an ” avoid” in the Apprentice Millionaire Portfolio ( available at Amazon.com ) just six months ago .

COMPANY DESCRIPTION:
Advanced Micro Devices designs and produces microprocessors, graphics and media solutions for the computing, communications and consumer electronics markets. AMD is the world’s second-largest producer of microprocessors.
All amounts in US$ unless otherwise noted.

Investment recommendation
We are increasing our estimates and raising our price target to $6 following meaningfully higher Q3 revenue guidance versus consensus
expectations and our above consensus estimate. While upside to Q3 is largely console derived, AMD management is confident they are gaining
share in GPU in the 2H13 following small gains in Q2, and going forward growth will increasingly involve gross margin accretive areas
including embedded (STB, medical devices, digital signage), professional GPU and dense servers. Our rating remains BUY as we believe this
turnaround story appears to have legs.
Investment highlights
 AMD reported Q2/13A (Jun) after the close. Revenues and EPS were $1.161B/($0.09), better than our estimates of $1.110B/($0.12) and
consensus expectation of $1.108B/($0.13). The 7% sequential increase in revenues came in above their guided range (-1% to +5%) driven by a 12% Q/Q growth in Computing partially offset by a 5% Q/Q decline in Graphics and Visual solutions.
 AMD guided revenue in Q3 to increase 22% Q/Q, plus or minus 3% mainly driven by the ramp of the semi-custom game console chip sales. At the mid-point, revenue guidance of $1.42B was above our prior estimate of $1.29B and consensus estimate of $1.22B. Operating expenses for Q3 are expected to be $450 million and gross margins are expected to decline to 36%.
Valuation
AMD’s price target of $6 is 0.7x our C2014 sales estimate of $5.835B.

E2open

EOPN : NASDAQ : US$17.41
BUY 
Target: US$20.00

COMPANY DESCRIPTION:
E2open sells cloud-based supply chain management solutions for sophisticated trading networks. Powering 7 of the world’s 10 most complex supply chains, the firm’s software provides visibility into trading processes via technology for planning, execution, real-time modifications,
and deeply functional analytics. E2open is headquartered in Foster City, CA and went public in July, 2012.

Investment thesis


EOPN’s solid quarter, positive commentary on business outlook, and our view that growth will be modestly better than our previous forecast are likely enough to drive the shares higher at least in line with subscription revenue growth of about 25% longer term. Reiterate BUY, increase target to $20.
Investment highlights
 A solid quarter: slight revenue and EBITDA upside. Non-GAAP revenues and adjusted EBITDA loss of $16.1M and ($3.6M) were respectively $0.3M and $0.9M ahead of our estimates. Subscription revenue grew 26% y-o-y (slightly better than forecast) and total revenues were up 4% as the firm’s transition of implementation services to partners will be a near-term drag on overall growth. FCF loss of ($3.3M) was in line with our estimate and bookings in the quarter were skewed slightly towards upsell into existing customers versus new logos (EOPN signed 4 new customers in the quarter).
 Outlook: F2014 more or less unchanged. Management inched higher the low end of revenue guidance and noted that new/upsell bookings growth is now expected to be at the high end of the guidance range (roughly +30% to $91.5M). Our F2014 estimates are effectively unchanged; we increased our F2015 revenues by $1M and expect EOPN to be roughly FCF breakeven.
Valuation and price target
We are increasing our price target by $2 to $20, which is based on a 5.4x EV/revenue multiple applied to our C2014 estimate of $94.5M plus roughly $35M in prospective net cash.

Dollarama Inc.

Dollarama

Dollarama (Photo credit: Wikipedia)

DOL : TSX : C$70.13
BUY 
Target: C$81.00

COMPANY DESCRIPTION:
Dollarama Inc. is a leading Canadian dollar store, carrying general merchandise, consumables and seasonal products in locations across Canada. Products are sold at fixed price point intervals between $1.00 and $2.00.

Investment recommendation
We are reiterating our BUY rating and C$81.00 target price following Dollarama’s Q1/F14 earnings results.
Investment highlights
 Dollarama reported its first quarterly miss in 13 quarters on Wednesday morning, before the market open. EPS of $0.62 was below consensus of $0.67, but above last year at $0.56.  The bulk of the earnings miss was attributed to lower than expected gross margins, and a slight step-up in SG&A expense. Gross margin as a percentage of revenue declined 40 bps YoY to 35.9%, as additional costs related to occupancy and logistics of new stores, which have not yet reached maturity, impacted the gross margin rate. This is anticipated to subside during the back half of the year.
Similarly, SG&A was impacted by both the timing of new SG&A initiative roll-outs, and the ramp up of new stores, with SG&A as a percentage of revenue increasing 30 bps YoY.
 While Q1/F14 results disappointed, we believe the margin challenges experienced during the quarter are transitory, and should subside during the back half of the year. Importantly, we believe SG&A expense as a percentage of revenue will decline during the back half of the year, as the company’s numerous SG&A initiatives gain traction.

Marvell Technology Group

Marvell Technology Group

Marvell Technology Group (Photo credit: Wikipedia)

MRVL : NASDAQ : US$11.31
HOLD 
Target: US$12.00

COMPANY DESCRIPTION:
Marvell is a global leader in semiconductor products for storage, networking, mobile and wireless end markets. The company is structured into four key business groups: Mobile & Wireless, Storage, Networking and Other Products.

BUSINESS IMPROVES, BUT DEMAND AND COMPETITIVE CONCERNS REMAIN
Investment recommendation
We reiterate a HOLD rating for MRVL following upside results and
strong guidance. While the company is delivering upside to near-term
expectations, we remain on the sidelines as we believe a weak market
for traditional PC weighs on storage revenues, while the Mobile &
Wireless rebound could be short lived due to an increasingly crowded
competitive environment in the emerging market. We note that strong
foundry demand in Q2 appears to be driven largely by components
shipping into the Chinese smartphone market from multiple vendors.
We are increasing our estimates and price target.
Investment highlights
 MRVL reported CQ1/13A (Apr) yesterday after the close. Revenues and EPS were $734.4M/$0.19, above consensus estimates of $722M/$0.14 and our estimates of $720M/$0.14. Revenue upside was driven by better than expected Storage and  etworking sales partially offset by weaker than expected Mobile & Wireless sales.
 Marvell repurchased 20 million shares in CQ1 for approximately $200 million and paid a quarterly dividend of $0.06/share.
 The company guided CQ2 revenue to range from $770 million to $810 million ($790 million at the midpoint, up 8%), above the consensus view of $764 million, with EPS guidance of $0.19 at the midpoint above consensus of $0.18. This compared to our prior estimate of $762 million and $0.17.

BE Semiconductor Industries N.V.

Flip Chip, flipped, attached to the carrier, u...

Flip Chip, flipped, attached to the carrier, underfilled, illustration made for Flip Chip (Photo credit: Wikipedia)

BESI : ENXT : €6.83
BESIY : OTC
BUY 
Target: €8.00

COMPANY DESCRIPTION:
BE Semiconductor Industries N.V. (Besi) develops, manufactures, and sells semiconductor assembly equipment designed to increase productivity, improve yields of defect-free devices and reduce cost of ownership. The company’s products are designed for use in two manufacturing  echnologies: leadframe assembly and wafer level packaging.

ADVANCED PACKAGING DRIVES UPSIDE
Investment recommendation
We reiterate a BUY rating on shares of BESI following strong results and
guidance. We believe BESI will benefit from continued strong demand
for flip chip die bonding advanced packaging systems from new Asian
subcontractors in the smartphone and tablet supply chain. We expect
EPS to benefit from expanding gross margins and tighter opex controls.
We are increasing our estimates and raising our price target to €8.00.
Investment highlights
 BESI reported Q1/13A (Mar. Revenues and EPS were €64 million and €0.10, compared to our estimates of €59 million and €0.03. Revenue was up 14% Q/Q (+15% Y/Y), and came in above guidance of 5% sequential growth, driven by strong demand for advanced packaging systems. EPS benefited from better-thanexpected gross margins (39.6% vs. guide of 37%-39%).
 Management guided Q2 revenue to be up 10% Q/Q, based on the 23% sequential order increase in Q1 and continued strong demand for advanced packaging systems.
Valuation
BESI’s price target of €8.00 (was €7.00), is 8x our C2014 EPS estimate of €0.78 plus net cash of €1.72/share.

OmniVision – Rebound Ahead ?

Suffrage paraders: Mrs. McLennan, Mrs. Althea ...

Suffrage paraders: Mrs. McLennan, Mrs. Althea Taft, Mrs. Lew Bridges, Mrs. Burleson, Alberta Hill, Miss Ragsdale (LOC) (Photo credit: The Library of Congress)

OVTI

NASDAQ : US$13.61

Disappointing revenue guidance sent shares of Omnivision lower on Friday, but Canaccord Technology Analyst Bobby Burleson expects a rebound considering:

1) design wins are strong with Chinese smartphone OEMs, who are likely to grow global market share;

2) OVTI’s Apple (AAPL) smartphone prospects were already dim; and

3) valuation is compelling even with a number cut.

OVTI reported Q4 Revenues and EPS of $423.5 million and $0.56, compared to consensus estimates of $411 million/$0.41 and Burleson’s estimates of $410 million/$0.41. Management guided Q1/C13 (Apr) to be down sequentially 25% Q/Q at the mid-point, with revenues expected to be $300-330 million and EPS is expected to be $0.14-0.29. This compared to consensus estimates of $371 million/$0.32 and Burleson’s estimate of $375 million/$0.36.

On the weak guidance, Burleson revised his estimates for the company, now seeing Q1 revenue coming in at $315 million (down from $375
million) and full-year revenue being $1.415 billion (down from $1.587 billion). On the earnings front, he sees Q1 EPS of $020 (down from $0.36) and for the full year, he sees $1.62 (down from $1.24).

Cooper Tire & Rubber – Wall Street : Where The Rubber Hits The Road

Cooper Tire & Rubber Company

Cooper Tire & Rubber Company (Photo credit: Wikipedia)

CTB : NYSE :

US$26.03

Cooper Tire & Rubber’s fourth-quarter earnings fell 65% as the year-earlier period had a large taxbenefit, masking revenue growth and sharply higher margins as the company benefited from declining raw materials costs.

The company reported a profit of $73 million, or $1.15 a share, down from $209 million, or $3.33 a share, a year earlier while revenue increased 2.3% to $1.06 billion. Analysts had projected earnings of $0.85 on revenue of $1.03 billion.

Sales in the  company’s North American segment, which provides the majority of revenue, grew 5.2% thanks to improved volume and higher prices. “A strong fourth quarter capped off a great year,” said Chief Executive Officer Roy Armes. “Due in large part to successful product launches and demand for our products, the company has increased unit volumes and outpaced the industry in our key markets for the full year.”

However, the company views 2013 with cautious optimism amid continued uncertainty about the economy. Cooper expects that raw material costs in the current quarter will be about the same as during the fourth quarter, which represented a 2% decrease from the third quarter. However, over the longer term raw material prices are expected to generally trend higher.

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