Benzinga's Morning Upgrade Summary for May 29, 2012
Listed below are today's Top Upgrades at Benzinga:
Wedbush said, "We are raising JACK to NEUTRAL from UNDERPERFORM. We believe JACK is positioned to benefit from a recent easing in industry-wide price-centric competition, as well as easing commodity costs in the near term. We believe JACK's current valuation properly reflects improved JIB profitability, as well as continued Qdoba underperformance."
Stifel Nicolaus comments, "Our $53 price target is derived off our FY14 sum of the parts (SOP) analysis in which we assume Vail's mountain and lodging segments can command 8.5x/11.0x multiples, respectively. With Vail shares declining 12% (S&P -5%) in the last two months, we believe this has created an attractive entry point as we push towards the 2012/2013 ski season. While Vail shares have historically traded lower during the summer months we believe continued encouraging demand signals toward the 2012/2013 ski season, continued strong international visitation, revised summer program offerings, and solid FCF support could all be catalysts for the shares."
JP Morgan stated, “Looking northward for value: upgrading OMA to OW, with a new Dec-12 PT of Ps31.5. In our view, the Monterrey-based company has consistently improved its operations over the last year, being able to both improve its commercial revenues and expand margins. As a result, since 2Q11, the reported EBITDA margin beat our expectations by an average of 4.9pp.”
DA Davidson commented in the report, "Sims Metal Management indicated in an update that full year earnings for fiscal 2012 “will be materially less than 85% of the prior corresponding period.” This guidance excludes a goodwill impairment charge taken in 1H and includes an expected gain on the sale of a business in 2H (a $36 million gain). Fiscal 2011 earnings were A$0.93 per share, implying earnings materially less than A$0.79 per share for fiscal 2012. Softness in deep sea ferrous markets, weakness in ferrous scrap prices among other items were highlighted in the release."
Sterne Agee notes, "We believe the sharp pullback in Approach shares, in conjunction with an industrywide valuation contraction, is overdone, barring another leg down in oil prices. Approach's share price now reflects a more balanced risk/reward outlook. Recent M&A activity, where a large Permian Basin acreage package sold for ~$17/boe, should support Approach as a potential acquisition candidate."
Oppenheimer comments, "We had been Underperform on LLL for three reasons: its exposure to the Pentagon's Operations and Maintenance budget; its high percentage of services revenue (under severe growth and margin pressure); and the short-cycle nature of its products, which make it immediately sensitive to downward DoD budgetary pressures. While these headwinds are still materializing, LLL's current valuation (and 17% FCF yield) suggests that downside risk is now largely priced in. Moreover, with the pending spin-off of LLL's most vulnerable services segment, LLL's overall business mix no longer appears materially worse than that of most defense primes."
Deutsche Bank says, "All cylinders are firing for FL with a much better-than-expected start to FY12 on the top-line (+9.7% SSS) and margins (up 247 bps). Strength in the athletic footwear cycle combined with management's track record gives us confidence that these impressive gains can continue, especially given unique product launches expected to coincide with the Euro Championships and Olympics. Our previous concerns regarding trends in Europe, LFL, and CCS banners were mitigated by each now running positive SSS. At 11.8x FY13E EPS along with a 2.2% dividend yield, shares of FL look attractive. We are raising our PT to $38, however, we see even greater opportunities LT."
Goldman Sachs notes, "We raise BTU to Buy for three reasons: (1) Improving China macro data and Newcastle thermal prices should drive greater Street credit for BTU's Australia business (better growth profile than covered US peers). (2) BTU is exposed to our view that PRB-levered stocks should see improved relative performance as PRB prices continue to rise from below cash costs today to mid-cycle by the end of 1H2013. (3) Its valuation given a 9% 3-year EBITDA CAGR screens favorably vs. the coverage group. Also, discussion of China thermal and Mongolia met coal JVs remain potential long-term catalysts.
JP Morgan notes, "Spreadtrum won two out of three TD smartphone designs picked by China Mobile in its 2Q12 tender, a positive surprise to the market. We think a rerating is justified given that 1) its monthly smartphone chipset shipments should exceed 1MM units in 3Q12, and 2) new leadership at China Mobile is supportive of TD development."
Citigroup says, "We are upgrading COP to Buy from Neutral/High Risk. We are raising our target to $67 per share based on our revised analysis of COP without downstream. Our view had been to remain Neutral until the company was split up given the lack of clarity on oil prices and spreads. Furthermore, we believe the split up is causing significant turnover in the shareholder base providing an opportunistic entry point into both names (based on research done by Citi on splitups)."
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