Mitel Networks

Image representing Mitel Networks Corporation ...
Image via CrunchBase


 NASDAQ : US$4.52 BUY 
Target: US$6.00

Mitel is a premier provider of IP telephony infrastructure, principally to small and mid-size organizations characterized by 1,000 or fewer lines. Products include IP-PBX systems, desktop hardware, UCC applications and managed services. Based in Ottawa, Canada, Mitel employs ~2,400 individuals and has 1,600 channel partners across 90 countries.
All amounts in US$ unless otherwise noted.

Semiconductor Devices and Related Technologies
We reiterate our BUY rating and increase our price target to $6 from $5 following largely in line Jul Q results and healthy gross margin guidance.
While the outlook for Oct Q revenue is a little light versus our previous model, gross margin expansion is proceeding at a strong clip, and we expect MITL to further capitalize on traction for its MiCloud UC-as-aservice offering and recently-acquired prairieFyre’s contact center  solution. We continue to view MITL as well positioned in leading virtualized UC applications and see upside potential to our estimates on continued gross margin expansion driven by expanding software sales.
Investment highlights
 MITL reported Q2/C13 (Jul) results. Revenue was $141.6 million compared to our estimate of $142.5 million and consensus of $143.5 million. EPS was $0.17, compared to our inline estimate of $0.15.
 Management guided Q3/C13 (Oct) to revenue of $142-148M, and implied EPS at the mid-point of $0.19. This compared to consensus estimates of $149M/$0.21 and our estimate of $148M/$0.21.
Management highlighted that the guidance includes caution based  on the softness seen by Avaya and Cisco.
 Mitel completed the acquisition of prairieFyre, a contact center  software provider, for $20 million in cash in the quarter.
prairieFyre provides Mitel’s existing contact center solutions and  management highlighted the acquisition was accretive in the  quarter.
MITL’s price target of $6 (was $5) is 6x our C2014 EPS estimate of $.95

Painted Pony Petroleum Ltd.

Montney, British Columbia Location
Montney, British Columbia Location (Photo credit: Wikipedia)

PPY : TSX-V : C$8.21
Target: C$16.00

Painted Pony Petroleum is a junior oil & gas explorer focused primarily on the Montney in northeast British Columbia. Painted Pony is listed on the TSXV under the symbol “PPY”.
All amounts in C$ unless otherwise noted.

Investment recommendation
Painted Pony released Q2/13 results that were largely as expected given that the company had provided a full operational update on July 25.
While there was not a lot of new information in the release, current production levels of 9,200 boe/d (vs. Q2 average of 7,928) are are promisingng, and have the company poised to exit 2012 close to the 10,000 boe/d mark. Painted Pony remains one of our favourite names in the Junior E&P space, as we believe it offers enormous resource potential with a path to value realization.
Q2/13 highlights
 Production: PPY announced Q2 production of 7,928 boe/d, which was slightly above the pre-announced figure of 7,800 boe/d from two weeks ago. Production during the quarter was hampered by wet weather conditions and facility constraints. In July, production averaged 8,700 boe/d and has increased again to a robust 9,200 boe/d in the first week of August. In our view, strong production
figures through the back half of the year have the potential to be a
material catalyst for the stock.
Cash flow: PPY’s CFPS for the quarter came in at $0.14, which was one penny shy of our estimate and consensus. The slight miss to our estimate was largely the result of marginally higher cash costs.
 Montney drilling: Year-to-date, PPY has drilled (or is now drilling) eight (5.6 net) Montney horizontals in NE BC, with another five (4.0 net), planned for the remainder of the year. The latest set of well results, released in the company’s July 25 operational update, included positive well rates from Townsend and Blair


Rubicon Technology

De :fr:Image:SaphirSynthetique.jpg Categoría:M...
De :fr:Image:SaphirSynthetique.jpg Categoría:Minería (imagen) (Photo credit: Wikipedia)

Target: US$12.00

Based outside of Chicago, IL, Rubicon Technology is a materials company specializing in growing monocrystalline sapphire products mainly for the LED and RFIC markets. It supplies 2″, 3″, 4″ and 6″ sapphire cores and wafers as well as sapphire optical products for the aerospace and defense market.

Investment recommendation

We maintain our BUY rating on RBCN shares as we believe sapphire trends are improving and valuation is favorable.
Investment highlights
Rubicon’s Q2 was largely in-line but Q3 guidance disappointed as a gradual ramp in volumes is still limiting the positive pricing effects we have been talking about in 2” and 4” products, plus 6” sales remain slow.

Revenues were $10.6M and EPS were ($0.25), compared to our estimates of $9.9M/($0.23) and consensus of $10.8M/($0.21). Guidance was for revenues to be similar to Q2 while we and the Street were looking for a ~$5M sequential uptick.
 $3.7M of the losses were due to underutilization, and the company was able to work down inventory and AR collections, resulting in $5M in cash generation in the quarter. Overall inventory levels still remain high and idle crystal growth capacity is not expected to come back online until next year. These effects may contribute to losses on the income statement, but
at least cash burn will be muted going forward.
The soft Q3 results were deeper than we expected; however, we remain convinced that overall trends in sapphire are improving driven by increased lighting adoption and new possible handset applications.
Cash burn is slowing/reversing, plus Rubicon can generate a meaningful amount of operating leverage once both pricing and volumes increase.
Furthermore, as a volume play to two exciting secular trends we continue to believe the company will see multiple expansion over the 2014/2015
timeframe. We would therefore use pullbacks on near-term quarterly
weakness to add to positions.

Globus Medical


 NYSE : US$16.75 BUY 
Target: US$24.00

Globus is a medical device company focused exclusively on the design, development, and commercialization of products that
promote healing in patients with spine disorders.
All amounts in US$ unless otherwise noted


Investment recommendation
We maintain our BUY rating on shares of Globus following a mixed Q2/13. Best-in-class top-line growth (albeit a bit light vs expectations) combined with strong operating margins reinforce our thesis of Globus offering investors multiple opportunities to create value.

Our thesis remains intact and we are buyers of Globus on any weakness as the company is well positioned for growth in 2013 and beyond via continuous new product flow, distribution expansion and best-in-class financial discipline.
Investment highlights
 Q1/13 results of $107.0M/$0.21 were mixed relative to our and consensus estimates of $107.6M/$0.20 and $107.5M/$0.20.
 Breakdown of Y/Y revenue growth in the Q2/13: Innovative fusion +3%, Disruptive technologies +26% Y/Y, US grew +11%, and International +20%. Innovative fusion drove upside vs our estimate.
 New rep adds in 1H/13 in-line with all of 2012 with more to come.
 Management reiterated 2013 guidance for revenues of $432M and EPS of $0.81.
We are raising our price target to $24.00 from $22.00 based on a 26.4x PE multiple applied to our 2014 EPS estimate of $0.92.

Boulder Brands : Tasty!

Several gluten-free beers from Germany. Españo...
Several gluten-free beers from Germany. Español: Algunas cervezas de Alemania y sing gluten. (Photo credit: Wikipedia)

BDBD : NASDAQ : US$13.67
Target: US$15.00

Boulder Brands (formerly Smart Balance) is a rapidly growing brand of healthy foods focused on the buttery spreads category (40% of sales), as well as peanut butter, oils, popcorn and mayonnaise and gluten free foods (over 40% of sales). The company owns the number two brand in the spreads category and the top two gluten free brands (Udi’s and Glutino). The spreads utilized a patented blend of fats and oils to make a product lower in cholesterol

Investment recommendation
We continue to believe that Boulder Brands has a favorable financial model and platform for growth in the healthier foods arena that is highlighted by its rising exposure to gluten-free.
Investment highlights
 Boulder announced the completion of its refinancing, a small acquisition, and a meaningful strategic development with the licensing of its Smart Balance milk business.
 The 225-basis-point improvement in its effective interest rate equates to nearly a $0.05 annualized EPS savings, which is in line with our expectations. Given we estimated $4M to $5M of losses in milk this year, the milk licensing deal is also worth about $5M of profit swing.
 We are raising our 2013 EPS estimate to $0.28 from $0.27 and our 2014 EPS estimate to $0.46 from $0.42 to reflect the lower interest rates (we had previously assumed milk would reach break-even in 2014).
Raising price target to $15 from $13 to reflect higher forecasts and an increase in our EV/EBITDA target to 13x from 12x.

lululemon athletica inc.

Luon cropped pant for yoga or running
Luon cropped pant for yoga or running (Photo credit: lululemon athletica)

LULU : NASDAQ : US$63.55
Target: US$87.00

lululemon athletica Inc. is a designer and retailer of technical athletic apparel operating owned retail stores primarily in North America and Australia. The company offers a range of performance apparel and accessories for women, men and female youth. Its apparel assortment, including items such as fitness pants, shorts, tops and jackets, is designed for healthy lifestyle activities like yoga, running and general fitness.

Investment recommendation
After what has been a series of negative news events for LULU over the past few months punctuated by the Luon recall and CEO Christine Day’s announced resignation, we see a number of positive catalysts that we believe should turn the momentum in the stock. These include continued replenishment of Luon yoga pants that is yet to reach 100% pre-recall levels, explicit advertisements to customers indicating its “back in black” status, and the announcement of key management hires. We continue to fundamentally believe the demand for the brand has not ebbed and the growth opportunity both domestically and internationally is robust. With the stock having dramatically underperforming the SPX by 2800bps in H1/13, we believe these positive data points bode well for a recovery in H2/13 and into 2014. We reiterate our BUY.
Investment highlights
 Despite LULU’s “soft restocking” of its recalled Luon pants that began in late May, we expect a more broadly disseminated ad message this week announcing its in-stock position, particularly now that the Wunder Under crop is back in stores. This messaging should spur incremental traffic into stores, helping comps recover.
 New hire announcements in supply chain are expected to occur in the coming weeks, with a new head of design announcement likely coming by summer’s end, thus alleviating “empty seat” concerns.
Our $87 target is a blend of 30x 2014E EPS/20x EBITDA/DCF.

Bed Bath & Beyond

English: Bed Bath & Beyond
English: Bed Bath & Beyond (Photo credit: Wikipedia)

BBBY : NASDAQ : US$70.69
Target: US$79.00

Bed Bath & Beyond sells a wide assortment of merchandise including home furnishings, domestics, giftware, health and beauty care items, and infant and toddler merchandise. BBBY operates around 1,000 Bed Bath & Beyond stores, 265 Cost Plus World Markets, 75 Christmas Tree Shops, 80 buybuy BABY locations, and 45 Harmon stores.

Investment recommendation

BBBY has launched the first of two new e-commerce sites, and we are raising our estimates as we incorporate growth of the online channel into our model. Behind sizable investments in a new e-commerce platform, including data analytics and web marketing teams, we believe BBBY can increase e-commerce penetration from its current level of 2% to 10% by the end of FY15. As the higher-margin e-commerce business accounts for a greater portion of sales, we expect the company will be able to better leverage expenses, leading us to raise our FY13 EPS estimate by $0.21 to $5.16, which is the highest forecast among sell-side analysts, and FY14 by $0.19 to $5.85. We don’t believe BBBY’s full growth potential is priced into shares at 13x our FY13 EPS estimate (excluding $4.56/share in cash) and 7x FY13E EV/EBITDA.
Investment highlights
 We are raising our annual EBIT margin estimates by nearly 40bps on average over the next five years. Our estimates reflect over 30bps of annual SG&A expense leverage, versus our prior forecast of 12bps of improvement.
 Our price target increases from $75 to $79 as we incorporate our updated projections into our DCF model.