Benzinga's Top Upgrades with Color for May 15, 2012
Listed below are today's Top Upgrades at Benzinga:
Credit Suisse comments, "Our work suggests recent upward pressure on fulfillment center costs is driven by accelerated FC build outs in 2010/11 and growth in Fulfillment by Amazon (FBA), not a structural change in economics. In turn, we believe CSOI margin will stabilize in 2H12 and trend higher in FY13 driven by 1) gross margin upside from a growing mix of 3P, digital, and AWS revenue and 2) fulfillment productivity gains as new FC's opened over the past 2 years mature. As a result, we are raising our FY12 CSOI estimate by 12% to $1.7b and our longer term forecasts as well, and believe that our projections are above consensus."
Citigroup commented, "Revenue of $559MM beat our/Street ests of $537MM/$531MM. CSOI (Consolidated Segment Operating Income) of $68MM beat our $65MM est. due to significant Marketing leverage, while Non-GAAP EPS of $0.02 was above our $0.01 estimate. Q2 Midpoint Revenue Guide of $570MM was above our $560MM estimate, but Midpoint CSOI of $70MM was in-line with our estimate."
Sterne Agee said in the report, "Strong 1Q alleviated several concerns including GRPN's ability to generate meaningful operating leverage. Strong sequential growth in North America (+33%) suggests it is gaining significant market share. While the float issue (lockup expiration is June 1) is still an overhang, we believe the stock is attractive given it is trading well below its IPO price of $20."
Bank of America explained, “While Juniper has lost market share in some areas, we attribute most of its recent EPS pressure to weak carrier spending and timing of product launches. We expect some of investors' concerns to be lifted in 2H, once carriers' spending recovers, especially in North America, where Juniper generates 48% of its routing revenue. Juniper should also benefit from three recent product launches: T4000 core router, MX 3D Edge router with a new 100G line card, and the super-core PTX switch, where we expect to see good traction with carriers and internet companies.”
Bank of America stated, “After management's presentation at our tech conference in San Francisco, we came away more convinced that FLEX is well positioned to drive higher normalized margins with the optionality of incremental benefit from vertically integrated components. Drivers of the higher margins include: 1) structural mix shift away from High Velocity (divested PC ODM business and lower RIMM revs), 2) completion of restructuring that is masking margin improvement and, 3) higher rev in 2H12 that should drive leverage in components.”
Citigroup said, "On the positive side, the big story is progress at Columbus, which is slightly ahead of schedule and marginally below budget. The company expects to complete its FEED study on Natchez by year-end, breaking ground in early 2013 and starting production in mid-to-late 2014 (inline with our expectations). Finally, Q1 cash burn was just under guide of $14-16M. On the negative side, capital requirements and fuel registrations remain overhangs."
Jefferies comments, "We are upgrading Dominion Energy to Buy from Hold based on valuation. The spread between Dominion's earned return on equity, the minimum threshold needed to breakeven, is among the most favorable of any of the regulated companies in our coverage universe. The combination of a favorable spread with a high level of rate base growth merits a 10% P/E premium to our regulated gas and electric peer group."
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