Kaufman Bros. Initiates Coverage on Synnex Corp. (SNX) with a Buy; Sees Continued Margin Expansion
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Kaufman Bros. initiates coverage on Synnex Corp. (NYSE: SNX) with a Buy. Price target $34.
Kaufman analyst says,"We believe the key question investors are asking about Synnex these days is: can it continue to expand margins in light of competition and as it enters some lower profit segments such as consumer? In short, we believe the answer is yes...We believe the company has been careful in choosing to enter segments where it can be accretive and value added. For example, in the consumer space it is focused on higher value-added segments including digital TV and audio-video installations...In addition, we see great opportunity in value-added services as well as networking and unified communications. The value-added services include supply chain management, call centers and logistics where we estimate the contribution to be only 2% of Synnex's revenue but roughly 10% of profits. We believe there is opportunity for this to double over the next few years. Networking and unified communications is arguably one of the most profitable segments within hardware."
"Today we estimate networking consists of only 5%-6% of Synnex's revenue compared to 10%-15% at its key competitors. Today the company works with key players including HP (NYSE: HPQ), Siemens (NYSE: SI), ADTRAN (Nasdaq: ADTN), Belkin, Enterasys, Falconstor (Nasdaq: FALC), and others. We see the opportunity to potentially work with Cisco (Nasdaq: CSCO) and Juniper (Nasdaq: JNPR) in the future."
"We are modeling $7.65 billion in revenue and $2.60 in EPS for fiscal 2009 and $8 billion in revenue and $2.85 in EPS for fiscal 2010 vs. consensus estimates at $7.7 billion and $2.59 and $8.1 billion and $2.80, respectively."
To see more analyst ratings on SNX Click Here.
Kaufman analyst says,"We believe the key question investors are asking about Synnex these days is: can it continue to expand margins in light of competition and as it enters some lower profit segments such as consumer? In short, we believe the answer is yes...We believe the company has been careful in choosing to enter segments where it can be accretive and value added. For example, in the consumer space it is focused on higher value-added segments including digital TV and audio-video installations...In addition, we see great opportunity in value-added services as well as networking and unified communications. The value-added services include supply chain management, call centers and logistics where we estimate the contribution to be only 2% of Synnex's revenue but roughly 10% of profits. We believe there is opportunity for this to double over the next few years. Networking and unified communications is arguably one of the most profitable segments within hardware."
"Today we estimate networking consists of only 5%-6% of Synnex's revenue compared to 10%-15% at its key competitors. Today the company works with key players including HP (NYSE: HPQ), Siemens (NYSE: SI), ADTRAN (Nasdaq: ADTN), Belkin, Enterasys, Falconstor (Nasdaq: FALC), and others. We see the opportunity to potentially work with Cisco (Nasdaq: CSCO) and Juniper (Nasdaq: JNPR) in the future."
"We are modeling $7.65 billion in revenue and $2.60 in EPS for fiscal 2009 and $8 billion in revenue and $2.85 in EPS for fiscal 2010 vs. consensus estimates at $7.7 billion and $2.59 and $8.1 billion and $2.80, respectively."
To see more analyst ratings on SNX Click Here.
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