Benzinga's Top Upgrades with Color for May 14, 2012
Listed below are today's Top Upgrades at Benzinga:
Dougherty & Company said in its report “CBOU has developed a strong track record on its turnaround initiatives in recent years. Solid retail execution founded on expanding AUVs has been its key accomplishment. Accelerating unit growth and new products provide visibility for retail growth in 2012 and beyond. The CPG business is stepping on the pedal with distribution expansion and the CROSSMARK relationship, which should enhance quality of channel management and enable scalability in the business. Looking into 2H 2012 and 2013, commodity costs as an earnings headwind will abate meaningfully. With a sharp correction in equity value below our $15 price target and our confidence in CBOU management's execution track record, we are raising our rating on CBOU shares from Neutral to Buy. Our $15 price target, which is unchanged, reflects 6.5x our 2013 EBITDA estimate based on our projected 2013 balance sheet.”
Feltl and Company said they upgraded their rating “on the basis of improved visibility for strong profitability and an attractive valuation relative to peers. When we first initiated coverage on RNF back in March we estimated distributions earned in the calendar 2012 (paid out through early 2013) would total $2.40. RNF is now guiding to $2.86, and as can be seen below we believe EPS at RNF will actually exceed $3.00 in 2012. Also, valuations of the two most closely associated peers – Terra Nitrogen (TNH – not rated) and CVR Partners (UAN – not rated) are markedly higher, with TNH trading at a yield of 7.8% and UAN at 9.2%. We assume that RNF should trade at least at a yield comparable to UAN given its leverage from natural gas and its margin-enhancing location in the central Corn Belt (East Dubuque, Illinois). Hence, our price target of $31.09 reflects a yield of 9.2% on RNF's self-projected distribution of $2.86.”
Sterne Agee notes, "While perhaps somewhat late to the game, we are upgrading the shares of US Airways from Neutral to Buy - the primary catalysts are lower fuel prices, stronger-than-expected domestic yields, and the ability to navigate the current tight capacity environment better than we had expected. With recent news out of AMR (AAMRQ - $0.52, Neutral), LCC may now have additional optionality into that outcome."
JP Morgan commented, "While we are not constructive on the ultimate returns that are likely to be achieved on the GPRO deal, and we question the top-line outlook for the combined diagnostics segment, we believe that the risk/reward is now too compelling to ignore, in light of the significant potential for cost synergies ($75M+), strong free cash flow generation ($700M+ in 2013E), low probability of further deals in the near term, and now attractive valuation (>15% FCF yield), following a >20% pullback in the stock."
Goldman Sachs said, "The drivers of our call are: 1) we now believe there's more inherent leverage as higher costs associated with payment services are depressing gross margins but offer significant earnings potential longer term, 2) we expect accelerating revenue growth in the back half of the year, partially driven by two large rollouts, and 3) we now are more confident in sales capacity growth. Since being added to the Sell List on December 2, 2011, shares of ULTI are +17% vs. the Russell 3000 +9%. Over the past 12 months, shares of ULTI are +36% vs. the Russell +0%."
JP Morgan commented, "We think there are still a lot of open questions on the strong VX-809 phase 2 data and the opportunity for Vertex in F508del cystic fibrosis (CF). Hence, we spent a lot of time evaluating how much of an NPV contributor VX-809 could really be, especially in the context of a decline in Incivek. What our new NPV analysis tells us is that on a SOTP basis, Incivek (we estimate zero WW sales in 2016e) + Kalydeco + very conservative VX-809 assumptions could be worth a minimum of ~$54/sh (13% downside). However, when adjusting for VX-809 market share and price, we see an aggregate NPV of up to $115/sh (+85% upside), which is after the gap up in VRTX shares last week. Combine this with favorable feedback from CF experts and what looks to be manageable risks for the upcoming combo data in F508del heterozygous CF patients and we find the risk / reward in VRTX shares more compelling."
All of Benzinga's Analyst Ratings news can be viewed here.
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