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AKAM : NASDAQ : US$46.12
Akamai provides content delivery and cloud infrastructure services for accelerating and improving the delivery of content and applications over the Internet, ranging from live and on-demand streaming videos to conventional web content, to c-commerce tools. The company is headquartered in Cambridge, Massachusetts.
With strong volume momentum in the underlying business and continued improvements in the company’s cost structure as spelled out in the 10-Q, we increasingly believe Akamai is once again set to deliver impressive results for the balance of the year despite the incremental investments in the business this and next year. Accordingly, we are increasing our estimates and our price target to $51 from $46 on the belief of an upward bias to estimates and the recognition that volume growth might offset the incremental margin pressures associated with investments announced earlier this year.
Strong growth likely sustainable – With multiple companies in the sector reporting similar trends, we believe the surprisingly accelerating revenue growth reported by AKAM in Q1/13 is sustainable throughout the year. We believe guidance remains conservative.
Cost improvements continue – Based upon details reported in the company’s 10-Q, we believe it is likely that key fixed components of the company’s cost structure will continue to improve. Although additional investments are likely in Q2/13, we expect margins could improve starting in 2014.
AKAM remains a BUY-rated stock – Even though the stock has recovered from the lows of the year, we continue to recommend the shares for purchase. Although volatile, we continue to believe shares represent an attractive risk/reward for investors
Posted by jackbassteam on May 24, 2013
English: The new Conn’s logo (Photo credit: Wikipedia)
CONN : NASDAQ : US$47.37
Conn’s is a specialty retailer selling home appliances, consumer electronics, furniture and mattresses, home office, and lawn and garden quipment. The company operates approximately 70 retail stores located primarily in Texas, as well as Louisiana, Oklahoma, Arizona, New Mexico and online. Conn’s provides its own proprietary inhouse credit program, including sales of related credit insurance products.
All amounts in US$ unles
Consumer & Retail — Specialty Retail
TOP-LINE GROWTH AND EXPANDING RETAIL GROSS MARGINS REMAIN SIGNIFICANT ATALYSTS
We expect Conn’s to generate average annual revenue growth of 21% over the next five years supported by the company’s proprietary in-house financing program. We believe Conn’s square footage growth potential is the highest in the retail group, and increasing penetration of the higher-margin furniture and mattress business should continue to expand retail gross margin.
We are raising our FY14 retail gross margin forecast of by 120bps to 37.7% driven by our expectation for a faster mix shift to the furniture assortment. As a result, our FY14 EPS estimate moves $0.13 higher to $2.63, $0.14 above consensus and the highest estimate among sell-side analysts. We are raising our FY15 projection by $0.18 to $3.61, which is $0.43 ahead of consensus and the high estimate.
Store surveys indicate Conn’s is on track to grow square footage in line with our +31% FY14 estimate. Furniture penetration appears as high as 75% at new locations.
We are raising our price target from $53 to $63 using an equal blend of the peer group multiple, our sum-of-the-parts valuation, and our DCF valuation model.
Posted by jackbassteam on May 22, 2013
VNET : NASDAQ : US$9.46
The largest carrier-neutral Internet data center service provider in China, 21Vianet hosts customers’ servers and networking equipment and provide interconnectivity services. The company also provides managed network services through its data transmission network
We maintain our BUY rating and $15.00 price target following 21Vianet’s Q1/13 report that demonstrates its ability to sustain its growth
momentum and overcome some of the temporary disruptions from capacity upgrades. We believe that the incremental investments in new
data centers, network capacity and cloud computing, while temporarily dampening margins, will result in higher growth and profitability in 2H13
and beyond. Priced at 5.7x 2014E adj. EBITDA, the shares of VNET offers compelling risk/reward for investors, in our view.
Solid revenue, slightly soft margin on investments – Q1/13 revenue came in stronger than expected (RMB 435.7M vs. 433.3M CGe) with
slightly lighter-than-expected EBITDA (RMB 80.1M vs. 82M). We note that higher-than-expected operating costs were attributed to higher
bandwidth costs with greater network capacity and continued investments ahead of revenue contribution from cloud computing.
Signs of hope from Q2/13 outlook – Although Q2/13 guidance is not as strong as we had hoped, it nonetheless confirms our view that the
disruption from recent capacity upgrade is now behind and that the company’s growth momentum is picking up again. Following two quarters of decelerating growth, we believe the change in trajectory marks an important inflection point for investors.
shift to higher MRR cabinets in large cities and revenue contribution from Microsoft cloud will likely improve both revenue and margins
Posted by jackbassteam on May 21, 2013
English: Tournament Logo (Photo credit: Wikipedia)
DKS : NYSE : US$52.98
Dick’s Sporting Goods operates as a sporting goods retailer in the United States. It provides apparel, athletic shoes and accessories for sports. It also engages in ecommerce and catalog operations. Dick’s Sporting Goods was founded in 1948 and is headquartered in Pennsylvania.
When DKS reports Q1 results on Tuesday, May 21, we are anticipating an in-line quarter (48c on 0% comp), which in our opinion would be a
welcomed result given the challenges it faced during Q1. To no surprise, unfavorable weather likely muted any potential upside, particularly in
golf and team sports/baseball. That said, we believe there were pockets of strength (e.g., guns/ammo, footwear, and apparel) that mitigated the
weaker categories. Looking to the balance of the year, we believe the opportunity to drive outsized comps improves as weather normalizes
and compares ease, while the fundamental long-term growth thesis stays intact. We reiterate our BUY.
We are looking for GG comps to be down mid-teens with DKS store comps flat. Golf and baseball/team sports faced tough comparisons from last year’s perfect Q1 weather and the bat replacement cycle. That said, we believe guns/ammo experienced a significant increase that we estimate added 1% to comp. Also, the UA/NKE/adidas shopin- shops should continue to drive strong sales gains.
According to our industry checks, the competitive environment has remained rational as promotional activity has stayed in check. As such, we do not see risk to merchandise margins and commensurately we expect inventory levels to be clean.
Our $59 PT is an average of 18x 2014E EPS estimate/9x EBITDA
Posted by jackbassteam on May 17, 2013
TEAR : NASDAQ : US$7.96
TLB : TSX
TearLab Corporation has commercialized a proprietary tear testing platform, the TearLab Osmolarity System, that enables eye care practitioners to test for highly sensitive and specific biomarkers using nanoliters of tear film at the point of care. Their first product measures tear film osmolarity for the diagnosis of dry eye disease (DED). The company is headquartered in San Diego, California.
TEAR crushed our Q1 bookings estimate driven by strong growth in its
Master’s program with large ophthalmology practices. We expect the
strong ramp to continue through FY13. We raise our price target to $10
Strong Q1. TEAR reported very strong Q1 revenues of $2.5M (up 54% sequentially), which topped our/Street’s $2.2M estimates. TEAR booked 388 orders, well ahead of our 234E. TEAR placed 324 instruments in Q1, well ahead of our 114E and up from 103 in Q4.
Master’s program paces growth. Multi-instrument placements into high-volume group ophthalmology practices accounted for over 40%
of its 388 bookings. Use of implementation specialists is helping practices implement testing.
Strong ASCRS sets up Q2. TEAR had a good show at ASCRS, which gives us added confidence in our Q2 forecast of 375 orders.
Sales force. TEAR ended Q1 with 27 direct reps, up from 23 in Q4.
Model update. We increase our 2013 and 2014 revenue estimates to $15.5M (from $13.4M) and $30.1M (from $27.1M), respectively, as its Master’s program gains traction. Additional investment in sales and marketing spend keep our EPS estimates intact.
We raise our price target to $10 from $8, which assumes a 5x P/S multiple to our 2015E sales of $65M, discounted at 15% to 2014.
Posted by jackbassteam on May 15, 2013
BrickArms BA-M5 and BA-M6 Prototypes (Photo credit: Dunechaser)
DDD : NYSE : US$43.85
3D Systems is a leading provider of rapid 3D printing, prototyping and manufacturing solutions used to create product concept models, precision and functional prototypes, master patterns for tooling, and end-use production parts for direct manufacturing. 3D Systems’ products allow complex three-dimensional objects to be manufactured directly from computer-aided design and manufacturing (CAD/CAM) software tools.
CONTINUED MULTIPLE EXPANSION
We are increasing our price target following healthy appreciation for DDD shares over the past month. While share count increases slightly on recent secondary, we believe DDD can deliver upside to consensus estimates driven by strong printer and services revenue. We also expect multiple expansion as the company moves into the commercialization phase for Bespoke (carpal tunnel braces) in H2 of this year. Reiterate BUY.
3D Systems completed a 7.5 million (includes 1.3 million insider shares) secondary share offering on Friday, May 10 before the open.
The secondary offering was priced at $40/share and DDD raised $300 million through the offering. DDD intends to use the proceeds to
finance further acquisitions and for general corporate purposes.
We are adjusting our model for the share dilution. Our C2013 EPS is revised down from $1.12 to $1.06 and our C2014 EPS is revised down from $1.62 to $1.52. Our revenue estimates remain unchanged.
DDD’s price target of $50 (was $45) is 33x our C2014 EPS estimate of $1.52, in line with Stratasys (SSYS : NASDAQ :$83.39 | BUY), which is
currently trading at 34x our C2014 EPS estimate. In the last two years on a NTM P/E basis, DDD has traded in the range of 16x to 43x compared to
SSYS at 16x to 47x.
Posted by jackbassteam on May 14, 2013
Dietary supplements, such as the vitamin B supplement show above, are typically sold in pill form. (Photo credit: Wikipedia)
NGVC : NYSE : US$25.20
Currently operating over 65 store locations, Natural Grocers by Vitamin Cottage is a retailer focused exclusively on natural and organic groceries (60% of sales), dietary supplements (30% of sales), and body/pet care products and health-minded books (collectively 10% of sales). Store locations span 13 states primarily across the Western US, with a particular geographic concentration in Colorado (31 stores) and Texas (10 stores).
We believe Natural Grocers is well positioned in a favorable industry with a growth equation that should drive high revenue and earnings growth. We anticipate high-single-digit comps and 20% unit growth should drive industry leading internal growth.
NGVC delivers $4.5 million of revenue upside vs. our forecast on a 10.6% comp. EPS was a penny above consensus while F2013 EPS guidance was unchanged.
F2013 guidance appears very achievable while increased unit growth (now 13 vs. 12) adds a penny to our F2014 EPS estimate to $0.61. F2013E EPS of $0.48 is unchanged.
New unit visibility is improved with all of F2013 leases signed, as well as 4 in F2014, while virtually all of the 2014 new locations have been identified.
The shares sport a premium valuation of 13x F2014E EBITDA reflecting the 20% unit growth and 10+% comps. Our $30 target (from $24) assumes 12.5x our preliminary C2015 EBITDA forecast in the $50+M range.
Posted by jackbassteam on May 13, 2013
C-3PO vs. Data (137/365) (Photo credit: JD Hancock)
XOMA : NASDAQ : US$3.13
XOMA, Ltd. operates as a biopharmaceutical company that discovers and develops commercialization antibodies, and other genetically-engineered protein products to treat immunological and inflammatory disorders, cancer, and infectious diseases.
UPGRADING TO BUY, RAISING TARGET TO $8
Upgrading to BUY, raising target to $8 on increased confidence of gevokizumab (gevo) succes in non-infectious uveitis based on new supportive Ph2 data released yesterday. This data resembles earlier Ph1/2 data supporting gevo’s potential benefit in Behcet’s and noninfectious uveitis. We are raising our pNPV-based target to $8 based on increased chances of gevo’s success in inflammatory eye disease.
$(0.30) GAAP EPS missed our estimate/consensus of $(0.20)
Top-line Ph2 Servier data of gevo in 15 Behcet’s uveitis patients gives us increased confidence in Ph.3 success. Yesterday XOMA discussed this new top-line data on its call and anticipates partner Servier will present and publish the full data in the near future.
Catalyst-rich Q4/13 and H1/14 with data from three pivotal NIU trials coming. We see positive read-through for all three from yesterday’s new Servier data.
Posted by jackbassteam on May 10, 2013
Black Diamond Bullet (Photo credit: Boris Lau)
BDE : NASDAQ : US$9.92
Black Diamond Inc. is a leading provider of outdoor recreation equipment and lifestyle products. BDE also develops, manufactures and distributes a broad range of products used for climbing, mountaineering, backpacking, skiing, and various other outdoor recreation activities under the Black Diamond and Gregory brands
BDE reported 1Q EPS of -10c (-9c adjusted) vs. our/cons. +6c/+4c estimates. The shortfall relative to our model was both sales (-$4M) and
gross margin (-260bps) driven. Not surprisingly, the extended winter season helped clear excess inventory, however, spring deliveries were
pushed out to Q2. The Gregory Japan transition also hurt Q1 as sales are now spread out over 1Q-3Q vs. historically being weighted to Q1.
Clearance activity and FX (yen hurt 30-40bps) pressured margins.
Looking forward, Q2 deliveries are strong and sales/margin guidance for the year is unchanged ($216-221M in sales, 40%-41% GM). While
anomalous Q1 weather disrupted the cadence of sales/earnings, our growth thesis is unchanged and the drivers toward building a much
larger company are intact. We reiterate our BUY rating.
BDE will deliver apparel in Aug./Sept. for which we anticipate a high degree of retailer support. The positive feedback on the spring ’14 line is promising as it continues to validate BDE’s opportunity to generate $250M in sales by 2020.
POC/PIEPS integration is tracking to plan. In addition, POC’s entry into the road bike category should provide incremental door expansion opportunity that we estimate could double to ~6000 doors over time.
Our $13.50 target is derived by DCF analysis.
Posted by jackbassteam on May 8, 2013
Progressive Waste Solutions (Photo credit: Wikipedia)
BIN : NYSE : US$22.79
BIN : TSX
Progressive Waste Solutions is currently the third largest fully integrated North American waste management firm by sales. The company operates in Canada and the United States with approximately 6,500 employees
Q1/13 beat driven by Superstorm Sandy cleanup. Progressive Waste (BIN) reported strong Q1/13 EPS of $0.24, beating our and the consensus $0.20 estimate. The beat was driven by a surge in revenues related to the cleanup of Superstorm Sandy; as these are not expected to continue, we do not ascribe much significance to the Q1/13 beat.
2013 guidance maintained.
Despite an outperformance in the quarter, BIN maintained its guidance for 2013. We continue to expect little growth in 2013E, followed by a much stronger performance in 2014E driven by easing competition, performance improvements, and the benefits of the ongoing infrastructure improvements.
Beyond 2013E, our thesis is unchanged. We continue to expect strong EPS growth and share price gains from: 1) stable organic revenue growth, 2) considerable acquired growth, and 3) solid margin expansion.
Maintaining BUY rating and increasing one-year target to US$25.50
We are increasing our target to US$25.50 from US$24.25 as a result of our usual one-quarter valuation period roll forward on our recovery
forecast. We have maintained our 7.25x EV to NTM EBITDA multiple in one year (in line with the current multiple) to reflect what we believe is a
valuation period that does not reflect the earnings potential of the company.
We are maintaining our BUY rating for the potential 14.3% ROR to our target, which includes the C$0.56 dividend (2.4% yield).
Posted by jackbassteam on May 3, 2013