Notable Calls

From Notable Calls

Merrill Lynch/BAM is out with a rather significant Semicondutor sector downgrade, downgrading 4 large players to Neutral and 4 to Underperform:

Firm notes they are downgrading their view on the sector given unfavorable indications from our cyclical framework suggesting a modest inventory correction, even in the face of improving electronic demand and a more constructive outlook for the global economies. They are also downgrading shares of (Nasdaq: INTC), (NYSE: TXN), (Nasdaq: MRVL), and (NYSE: LSI) to Neutral, and (Nasdaq: MXIM), (NYSE: NSM), (Nasdaq: POWI) and (Nasdaq: MCHP) to Underperform. Merrill now rates a modest 5 stocks (Nasdaq: BRCM), (Nasdaq: XLNX), (Nasdaq: ALTR), (NYSE: ADI) and (Nasdaq: LLTC) as Buys within their coverage group (19 stocks in total).

In particular, Merrill's industry model suggests that following a normalization of semiconductor IC shipments to “true” consumption levels, inventories in the supply chain are approaching a level suggesting a modest ...

From Notable Calls

Smith International (NYSE: SII) is getting some interesting comments following yesterday's sell-off on the announced secondary:

- Citigroup is upgrading SII to a Buy from Hold while raising their price target to $35 (prev. $29).

Smith shares plunged nearly 13% as the company tried to place a 28 million common share offering that no one expected and that seemed to be poorly timed. Citi notes they have lowered their EPS estimates slightly to reflect the dilution from the share offering. Their EPS estimate for 2010 is revised to $1.05 from $1.10 and their EPS estimate for 2011 is revised to $1.60 from $1.65. They believe that Smith is a company with high quality products and services and a premier brand name in oilfield services. That Smith is the one of the poorest performers among the major oil service stocks in 2009 makes this stock worth of a ...

From Notable Calls

Credit Suisse Telecommunication team is making a major call on Sprint (NYSE: S) upgrading the shares to Outperform from Neutral with a $6 price target (prev. $4) and adding it to their Focus List.

Investment Thesis: CSFB notes that while they rarely add turnaround stories to the Focus List and fully recognize the degree of risk and volatility involved in this case, the Credit Suisse Investment Policy Committee (IPC) believes that Sprint is one of the few stocks in their coverage universe with a legitimate chance of doubling over the next 18 months (their optimistic scenario yields even greater upside with a fair value of $9). More importantly, based on extensive valuation and credit work, they believe the stock has limited downside risk with a floor value in the $2 range, particularly as consensus 2010 EBITDA estimates have recently moved down to very achievable levels.

CSFB believes ...

From Notable Calls

J.P. Morgan is out defending Apollo Group (NASDAQ: APOL) following management meeting and campus visit.

Firm notes they met Apollo Group’s co-CEO Greg Cappelli and visited the company’s campus in Jersey City. Overall, they came away reassured about APOL’s approach to accounting, student retention, and 90/10.

Management’s tone around compliance and accounting was comforting to JPM.
While co-CEO Cappelli did not give any updates to the timeframe or the scope of the SEC inquiry, he sounded credible and engaged in the business. Mr. Cappelli reiterated his confidence with APOL’s accounting policies, particularly related to revenue recognition, and operational controls in various parts of the firm. He reminded JPM that members of the current senior management team (including ...

From Notable Calls

Merrill Lynch/BAM is out very positive on Palm (NASDAQ: PALM) this morning following meeting with management. Firm reiterates their Buy rating and $20 price ...