Notable Calls

From Notable Calls

Wanted to highlight some comments on STEC Inc (NASDAQ: STEC) following results (stock was down 30% in after hours trading):

- Needham says they remain positive about enterprise SSD opportunity in 2010, but recognize that the EMC inventory overhang clouds the story temporarily. Despite this dynamic, they are comfortable with at least $2 in earnings power for 2010, leaving the stock compelling following the overreaction to 3Q/4Q earnings.

ZeusIOPS revenue improves slightly. ZEUSIOPS revenues were approximately $60.7 million, up from roughly $57 million in the previous quarter but below firm's original estimate for $68 million.

Estimated reserves announced against recent $120 million supply arrangement (who they believe is EMC) for sales & marketing efforts to facilitate sell-through at customer, which indicated it may now carry inventory into 1Q2010.

Adjusting estimates. Revising 4Q estimates to $102 million in revenue and $0.52 in non-GAAP EPS, vs. their prior $105 ...

From Notable Calls

J.P. Morgan is out with a major call on Petroquest Energy (NYSE: PQ) upgrading it to Overweight from Neutral with a $12 price target.

The 21% stock price decline over the past week offers an attractive entry point for investors, in JPM's view. Catalysts include the near-term drilling and completions of four Woodford Shale wells and the results of a Gulf Coast exploration well. The company has acreage in East Texas that is 14 miles from CHK’s recently announced 9.4MMcfepd Bossier Shale well, so PQ has potential in the Bossier as well as the Haynesville.

Re-starting Woodford drilling. PQ re-started its drilling program in the Woodford two weeks ago. During 4Q09, PQ ...

From Notable Calls

Apollo Group (NASDAQ: APOL) is under pressure this morning after announcing its results and yet another SEC inquiry into its revenue recognition practices:

- Merrill Lynch/BAM is downgrading the stock to Neutral from Buy with a $73 target (unch)

- RBC Capital is downgrading APOL to Underperform from Sector Perform and lowering their target to $66 from $73.

- Morgan Stanley is downgrading APOL to Equal-Weight from Overweight.


The downgrades are what they are. I'm going to focus on the defenses and other comments:

- JP Morgan maintains their Overweight rating and $95 target noting that two most obvious areas of SEC review could be revenue impact of refunds and bad debt. In general, both of these areas use a relatively limited amount of “judgement”, thus perhaps limiting the exposure. They acknowledge that Apollo’s (and for-profit sector’s) business model is highly attractive from the cash flow perspective ...

From Notable Calls

Lorillard (NYSE: LO) is getting some surprisingly positive commentary from analysts this morning after yesterday's hefty sell-off:

- UBS is raising their target to $100 from $80 noting every stock has its role in a given portfolio. Investors own companies because they are best-in-class, others look for cash return/income stories and another type of investor looks for event driven ideas. Lorillard has all 3 of these traits. UBS believes Monday’s 7% (unwarranted) pull back offers many types of investors an opportunity to buy a best in class company that is a legitimate M&A candidate.

How Much Do You Get Paid to Wait for the Take-Out? 15% Per Year
While they have limited visibility on when Lorillard will get taken out, they would be surprised to see the company as a stand alone entity beyond 2 years. Firm sees Reynolds American or Imperial Tobacco as logical buyers. They ...

From Notable Calls

I'm seeing some interesting comments on Leap Wireless (NASDAQ: LEAP) & Metropcs (NYSE: PCS) after T-Mobile USA launched its new pricing plans, which have been speculated about recently as part of "Project Black/Dark".

- Piper Jaffray notes the the new plans are more benign than investors' initial fears and could relieve some pressure on wireless stocks.

Firm notes they think T-Mobile's new plans most directly target Sprint's prepaid and Simply Everything plans, as well as AT&T's new GoPhone offer. The pricing levels are generally too high to be a major competitive threat to Leap or MetroPCS, yet don't offer the robust 3G networks of AT&T or Verizon.

It will also be interesting to gauge consumer interest in plans without a handset subsidy; recall iPhone sales were tepid prior to a price drop when ...