Benzinga's Top Upgrades with Color for April 27, 2012
Listed below are today's Top Upgrades at Benzinga:
JP Morgan said, "Expedia reported 1Q results ahead of expectations on strong hotel bookings growth and higher air ticket volumes. We are encouraged by the sequential acceleration in room nights growth to mid single digits for the Expedia brand, which we believe was driven by early platform benefits. Following the completion of the migration, we believe Expedia is likely to see higher bookings, increasing conversions, and operating leverage in 2013. Furthermore, we are encouraged by the increased buybacks and a new authorization for 20M shares."
Citi said, "We are upgrading CE to Buy as we think: 1) The weakness in the acetyls chain is now reflected in the stock price and CE recently idled its “high cost” Singapore plant to send a strong signal to the market; 2) The new CEO, Mr. Mark Rohr, who was a successful CEO of Albemarle, is likely to make changes after having to lower long-term 2013 EPS guidance on his first earnings conference call. Mr. Rohr has a successful track record of delivering earnings growth; and 3) The shares, having underperformed the S&P Chemicals by ~ 600 bps YTD, trades at only 9x forward EPS and could easily move to the mid- $50 range as visibility on new ethanol projects improves and the company begins to return more cash to shareholders (as seen by the recent 25% quarterly dividend hike)."
J.P. Morgan commented in the report, "Mobile DAUs increased from 12M to 22M Q/Q—now 1/3 of total DAUs—and mobile represented the majority of bookings growth Y/Y and Q/Q. We know it's early days in mobile, but we're encouraged by newer games like Scramble With Friends and the high recurring pay levels of Zynga Poker on mobile. Draw Something, which hardly showed up in numbers given the late 1Q closing, should further add to mobile strength."
Miller Tabak commented, "SLAB had a good quarter and offered solid guidance. The near term fundamentals are sound but the discussion on the call regarding the potential to exit the Smartphone touch market is clearly a negative for longer term fundamentals and also for sentiment on the stock. A significant growth vector for the company has been taken away. However, the stock took an absolute beating in yesterday's trading and we think the decline more than reflects the disappointment in touch."
JP Morgan said, "Since WPZ's secondary offering announcement on January 24, 2012, WPZ has underperformed the AMZX by 12% (-11% vs. +1%). We believe this weakness was driven by the ~$3bn of new equity issued in connection with the Caiman and Laser acquisitions. Due to the lower initial cash flows and subsequent ramp in cash flows as these projects mature, we believe Williams sought to over-equitize the B/S to protect the investment grade rating. However, this large chunk of equity has lead to a certain level of capital indigestion."
Jefferies said, "Street NTM EPS estimates have been cut by 60%, and SNDK has underperformed the SOX by 3,800 bps YTD. We think product mix and NAND price improvements are likely to drive higher CY12 gross margins of 36% (vs. Street's 31%) and position SanDisk to jump over a very low bar. Also, with ~$15/sh in net cash and investments, and a stable IP business, we think downside risk is low."
Bank of America said, "1Q results were ahead of consensus at revenue of $320mn vs. street at $315mn, with EBITDA at $87mn vs. $80mn and adj. EPS at $0.06 vs. $0.05. Bookings were up 15% y/y and 7% q/q to $329mn, with upside to our estimate driven by strong Mobile growth (PC games up q/q, mobile up much more). Zynga's higher 2012 bookings outlook was also positive, but upside was driven by the OMGPOP acquisition. Overall, 1Q DAU and payer metrics were in-line with our ests., but PC bookings growth was better than implied by AppData DAU estimates."
Bank of America said in the report, "GAAP EPS beat at $13.2bn/$0.28 vs. Street at $12.9bn/$0.07. The biggest 1Q surprise was gross margin upside to 24.0% vs. our 22.5% estimate, driven by 3rd party mix and AWS. However, 1Q opex grew 54% (above 40% gross profit growth) and employee adds (+73%) and capex spend is unprecedented, so 2012 margins will decline. However, we were too cautious on revenue trends with our earlier downgrade and are more constructive on the stock as 1Q results addressed two concerns: 1) growth seems more stable after two tough quarters; & 2) gross margins are improving despite shipping, content, & Kindle HW pressure."
Bank of America said, "TV reported much stronger than expected numbers in 1Q12 across all its businesses. Though we think that seasonality helped in 1Q12, pick up in advertising across industries and the revenue acceleration seen in all the other Televisa businesses suggest upside potential to our forecasts."
Dahlman Rose commented in the report, "We are upgrading JetBlue to a Hold from a Sell and believe there is limited downside risk to the shares. Maintenance costs will continue to be a major area of concern as JetBlue's fleet continues to age. We believe JetBlue's revenue growth will cover the rising costs."
All of Benzinga's Analyst Ratings new can be viewed here.
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