PLXS- A Good Short- Mortgage Your House and BUY !
WR Hambrecht & Co.
(DLTR) Reit Buy We are revising our Q3 and Q4 EPS estimates to a loss of ($0.21) and $0.06 from ($0.10) and $0.20 to reflect television advertising expenditure not in our original estimates. As we are not increasing revenue despite increased Overstock.com brand awareness likely to result from additional television presence, we consider our new estimates, particularly for the December quarter, to be conservative. We think OSTK shares will do well into Xmas anticipation and thus view any weakness on this EPS revision to be a buying opportunity.
(OSTK) Reit Buy We believe Dollar Tree is introducing coolers in several stores in Northern California. Customer response was very favorable during our visit to one of those stores. Although we cannot confirm plans for other regions, we believe this initiative will be an important driver of comp sales if rolled out to the rest of the chain.
Friedman, Billings, Ramsey & Co., Inc.
(ADIC) Coverage Initiated with a Underperform We are initiating coverage of ADIC with an Underperform rating and are establishing a FYE 2005 price target of $6.50. Our FY 2004 and FY 2005 EPS estimates are $0.05 and $0.17, respectively. We believe that ADIC will tend to underperform the consensus earnings expectations due to heightened competition in the midrange tape market, less payoff from the EMC partnership than seems expected, and limited margin expansion potential. We also believe that the working-capital intensity of ADIC's business model acts as an additional drag on valuation and that, when all factors are combined, ADIC shares are about 30% overvalued at current levels. The key assumptions embedded in our discounted cash flow-based valuation are an 11.6% compounded annual sales growth rate from 2004-2007, a targeted operating margin of 5.5%, a discount rate of 12.5%, and a 2.4% drag on free cash flow from working capital.
(BLS) Reit Market Perform We are lowering our 2H04 estimates for BellSouth by a total of $0.03 and have lowered our EBITDA margin by 30 basis points as a result of anticipated expenses from the three hurricanes to impact BellSouth in 3Q04. We do not expect these expenses to be normalized from earnings and thus are lowering our estimates.
(EMC) Reinitiating Coverage with a Outperform We are reinitiating coverage of EMC Corporation with an Outperform rating and are establishing a FYE 2005 price target of $15.00. Our FY 2004 and FY 2005 EPS estimates are $0.34 and $0.53, respectively. We believe EMC will support the consensus valuation estimate by continuing to take share with its core and newly acquired products, while adding to the consensus estimate via stronger-than-expected growth of new database-oriented ILM software products. The key assumptions embedded in our discounted cash flow based valuation methodology are that sales will grow at a 12.9% compound annual rate from 2004 to 2007, that a target operating margin of 22% can be achieved by 2006, and that a discount rate of 15% is appropriate.
(LLL) Reit Outperform Last evening, we initiated coverage of L-3 Communications Corporation with an Outperform rating and a $74.00 price target. LLL is broadly diversified from programs, budgets, and capabilities perspectives. This provides the company with a high degree of operating balance, regardless of the budget environment.
(SYMC) Reit Outperform On September 15, SYMC held its annual shareholder meeting. The meeting was in line with expectations, with sparse attendance. The company maintained September and FY 2005 guidance. The proposals on the proxy passed. We are encouraged by the approval of an increase in the number of authorized shares, which could point to a more positive future. We maintain our Outperform rating, as we believe SYMC will raise guidance on its next earnings call to include the recent price increase.
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