Benzinga's Morning Initiation Summary for June 4, 2012

Listed below are today's Top Initiations covered by Benzinga: Barrington Research Initiates The Active Network ACTV at Outperform: Barrington Research says, "The Active Network is a leading provider of SaaS event/organization management in four activity segments: sports (e.g., triathlons), communities (e.g., parks), outdoors (e.g., fishing licenses), and business (e.g., Oracle OpenWorld). Its solutions help more than 51,300 organizations optimize efficiency and process their 80 million annual event registrations. Active also drives event participation through its 1.5 million-plus social fans, 7 million unique monthly visitors to Active.com, and another 18 million monthly visitors to partners' sites." Stifel Nicolaus Initiates WageWorks WAGE at Buy: Stifel Nicolaus says, "The cost of healthcare and commuting to work is far outpacing inflation. Employers are pushing an increasing amount of the healthcare burden down to the employee and are looking for opportunities to mitigate the impact. …With the initiation of a Flexible Spending Account (FSA) cap in 2013, there is a compelling argument to remove the “use it or lose it” provision, which prevents unused funds to be rolled over for use in subsequent years. This provision is considered one of the biggest obstacles to driving incremental market penetration (currently in the low-mid 20s). While difficult to gauge timing and magnitude, we estimate the repeal could potentially add meaningfully to annuity EBITDA and FCF." Stifel Nicolaus Initiates Western Asset Mortgage WMC at Buy: Stifel Nicolaus notes, "We like the pure agency MBS focus, the valuation discount (6%) to book value, and the projected dividend yield (14% in 2H12+) of WMC. We also view the active portfolio management strategy and expected emphasis on the 30-year fixed market providing some differentiation from peers. …While most of its peers tend toward buy and hold portfolio strategies, WMC has indicated it anticipates a more active approach to adjusting portfolio composition as opportunities change." Pivotal Research Group Initiates CBS Corporation CBS at Buy: Pivotal Research Group stated, “CBS is the media stock best positioned to capitalize on what we believe are perpetually-favorable trends benefitting the network TV business and its ancillary activities. The company's direct competitors are harder to invest in, buried as they are inside of much larger conglomerates (namely Comcast CMCSA, Walt Disney Co. DIS and News Corp NWSA).” Jefferies & Company Initiates Western Asset Mortgage WMC at Buy: Jefferies says, "WMC will espouse an active management approach as opposed to a "buy and hold" strategy. Since investors are paying for the management of securities via a management fee and/or G&A expenses, we'd prefer investors own the REIT that is actively managed as opposed to the “buy and hold” strategy." Morgan Stanley Initiates PG&E Corporation PCG at Equal-weight: Morgan Stanley notes, "PCG trades at a discount to peers and a near-term settlement on San Bruno looks likely, which should be positive. However, there continues to be risk surrounding the company's equity ratio and pipeline safety recovery. We see some upside to our $47 PT, based on 14.0x 2014e EPS of $3.35. Our estimate is modestly below consensus, driven by our view that equity needs will continue due to a robust capex plan." JP Morgan Initiates Audience ADNC at Overweight: J.P. Morgan stated, “With exposure to the fast growing smartphone/tablet markets, the company has a significant market opportunity of 2.6B units per year by 2015. We estimate ADNC has an 18-24 month lead over competitors and its proprietary/scalable technology based on the science of human hearing should allow it to maintain high barriers to entry, in our view.” Deutsche Bank Initiates Western Asset Mortgage WMC at Buy: Deutsche Bank comments, "We expect WMC to generate net ROEs of 14-15% given current spreads available in agency MBS, as the portfolio benefits from the investments in less prepayment-sensitive securities and the low financing cost environment. We believe WMC deployed the new capital quickly and has benefited from rate changes since the offering. We are initiating coverage with a Buy rating and a target of $21.75 per share, which is based on a 10% premium to book value." Deutsche Bank Initiates Audience ADNC at Buy: Deutsche Bank comments, "Audience is expanding its presence among smartphone makers. We believe they are now integrated into Apple's A5 applications processor and are a standard technology in all iPhones. The company is also picking up designs at most of the other major handset vendors. We think this will lead to strong growth as smartphones take off around the world." JP Morgan Initiates Western Asset Mortgage WMC at Neutral: JP Morgan notes, "WMC is a newly established mortgage REIT (May 2012) that invests in agency mortgage-backed securities. The company was funded in a “blind-pool” IPO and is externally managed by Western Asset Mgmt Co. (WAMCO), an established fixed income asset manager. WMC is currently constructing a portfolio of agency MBS funded by a combination of debt and equity. The level of leverage employed will vary based on the volatility and underlying credit of the MBS being financed. We expect the agency RMBS portfolio to be levered 6-8x. We believe the current price fairly reflects execution risks associated with a “blind-pool” IPO." All of Benzinga's Initiation coverage can be viewed here.