Benzinga's Top Upgrades with Color for May 16, 2012
Listed below are today's Top Upgrades at Benzinga:
Deutsche Bank said in its report “Chesapeake Energy closed a $4BN term loan yesterday, which increased its liquidity to $4.7BN. Our previous rating was driven by a combination of (i) concerns over additional debt issuance for liquidity and (ii) fundamental natural gas risk as CHK is 0% hedged for 2012. With this financing, the company has alleviated one of our major risks giving them the runway to sell assets and finance FCF burn. While natural gas pricing risk is still an issue, we have seen pricing firm in the last couple of weeks, which is also beneficial to CHK.”
Credit Suisse went on to say “Slow economic growth has led to soft advertising spending. Sina grew faster than peers due to its high end user base and Weibo platform to attract advertisers. In 1Q12, auto ad spend performed the best, whereas IT, Telecom and financial service ad spending were down. Weibo had a 324 mn registered user base at end-March, and daily active user (% of registered users) is 9%. Given daily page views up 27% QoQ, user daily time spent at 1 hour, Weibo showcases healthy growth. Also, users accessing mobile terminals through Weibo account for 60%+ of total users, even higher than PC users. Sina will monetize mobile internet through Weibo and Sina portal.”
Global Hunter Securities said, "Encore Wire announced on Monday that it repurchased 2.77MM shares, or 11.8% of its total shares outstanding, for $66.6MM or $24.02 per share, funded by cash on hand. The repurchase was completed under the previously approved 4MM share buyback program, leaving an additional 1.22MM shares available for future repurchase. This transaction is not only accretive to estimates but shows that management views reinvestment as an attractive capital allocation option for shareholder value creation. As a result of the transaction we are increasing our full-year 2012 and 2013 EPS estimates from $1.80 and $2.15 to $1.94 and $2.43, respectively."
Stifel Nicolaus notes, "We are upgrading our rating on the shares of Windstream, following a more than 16% correction in the shares over the course of the past four trading days (versus a 1.8% decline in the S&P 500), following the company's 1Q12 earnings report. The bulk of investors' consternation appears to come from an issue related to the company's PAETEC asset in the quarter, by which the company, which had been experiencing some carrier billing disputes related to certain wholesale products, made the decision to modify and suspend the sale of these products."
Canaccord Genuity said, "We are maintaining our target price at $6/share and upgrading SD from Sell to HOLD. Since late February, SD has declined almost 30%, underperforming the E&P sector by ~10%. With minimal downside to our target, a HOLD rating is now appropriate."
Citigroup explained, "We upgrade to Buy (from Neutral) & our $88 price target on 15x implies +22% return. We believe newly lowered EPS is achievable due to improved merchandise execution with new colors & prices, & on growth from new brands Skagen & Lagerfeld. We see beaten-up valuation (22x to 11x, & down 38% 5/9/12) as an opportunity to own a global growth story at a nice price while investors wait to see what we believe will happen."
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