Oscar Gruss Starts Tekelec (TKLC) at Buy; Series of Unfortunate Events Leads to a Lemony Deal Price
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Price: $11.00 --0%
Rating Summary:
0 Buy, 2 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
0 Buy, 2 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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Oscar Gruss initiates coverage on Tekelec (NASDAQ: TKLC) with a Buy. PT $12.25.
Oscar analyst said, "We believe the recently announced transaction with Siris Capital Group, LLC and affiliates (“Siris”) is at an opportunistic price. On 10/19/11, the Company announced (1) a stronger-than-expected preliminary 3Q11 revenues and EPS, (2) a $20M Diameter Signaling Router (“DSR”) related order in early October 2011 (largest Broadband Network Solutions order in TKLC’s history), and (3) the increased CY11 guidance ranges disclosed in TKLC’s 3Q11 financials. TKLC has legacy voice- and text-centric products revenues that are expected to decline by ~20%; TKLC also has next generation data- and video-centric products revenues (mostly DSR orders) that are expected to grow by ~35%."
"We believe TKLC is an attractively priced option at or near the $11.00 deal price.
TKLC’s cash balance comprises ~35% of the deal price; the Company was cash flow positive in 3Q11. A normalized deal spread would be $0.25-$0.30; our $12.25/ share target implies a ~20% probability of an overbid based on the current price.
We believe there is better than a 1 in 5 chance that a strategic buyer will express
renewed interest in acquiring TKLC."
For an analyst ratings summary and ratings history on Tekelec click here. For more ratings news on Tekelec click here.
Shares of Tekelec closed at $11.05 yesterday.
Oscar analyst said, "We believe the recently announced transaction with Siris Capital Group, LLC and affiliates (“Siris”) is at an opportunistic price. On 10/19/11, the Company announced (1) a stronger-than-expected preliminary 3Q11 revenues and EPS, (2) a $20M Diameter Signaling Router (“DSR”) related order in early October 2011 (largest Broadband Network Solutions order in TKLC’s history), and (3) the increased CY11 guidance ranges disclosed in TKLC’s 3Q11 financials. TKLC has legacy voice- and text-centric products revenues that are expected to decline by ~20%; TKLC also has next generation data- and video-centric products revenues (mostly DSR orders) that are expected to grow by ~35%."
"We believe TKLC is an attractively priced option at or near the $11.00 deal price.
TKLC’s cash balance comprises ~35% of the deal price; the Company was cash flow positive in 3Q11. A normalized deal spread would be $0.25-$0.30; our $12.25/ share target implies a ~20% probability of an overbid based on the current price.
We believe there is better than a 1 in 5 chance that a strategic buyer will express
renewed interest in acquiring TKLC."
For an analyst ratings summary and ratings history on Tekelec click here. For more ratings news on Tekelec click here.
Shares of Tekelec closed at $11.05 yesterday.
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