Benzinga's Top Upgrades with Color for May 2, 2012
Listed below are today's Top Upgrades at Benzinga:
Deutsche Bank said, "SkyWest reported a surprisingly much better March quarterly result than either we or the Street were projecting. Mar Q loss per share was $0.01 which compared favorably to our $0.15 loss and the consensus loss of $0.16. Furthermore, the result was a vast improvement over last year's loss per share of $0.19 (ex-specials)."
Bank of America explained in the report, "We may be early on TRI shares, but there were clear signs of improvement in 1Q12 results. The declines in net sales in Financial & Risk (57% of revenue) improved versus 4Q. Legal (24% of revenue) saw organic revenue accelerate versus 4Q. Even in the tough current environment, we still expect slight YoY adjusted EPS growth in 2012. We also argue that TRI's 4% dividend yield helps support the stock. We expect TRI to use proceeds from the pending $1.25bn sale of its Healthcare unit to make tactical acquisitions and modest share repurchases."
Bank of America commented in the report, "High exposure to US and increasing Asian exposure vs Europe, EMs (LatAm, Asia) finally poised to deliver as LUX reaches critical mass and looks for more targets, increasing market dominance (monopoly and monopsony, a' la Essilor) coupled with best-in-class operational performance, ongoing strong cash flow generation and an increasingly healthy balance sheet, and finally, strong performance in the last 5 years in terms not only of operational resilience but also of management performance as LUX evolved its skills set much to the better."
Goldman Sachs commented, "Despite a weak structural cash returns and industrial positioning profile, we see a mean-reversion value opportunity for STM following the recent sell-off. We expect its 2013E c.7% dividend yield alongside a 12% free cash flow yield to provide downside support, and now see upside even when ascribing a negative carrying value of $2.5 bn for the ST-Ericsson Joint Venture, incorporating future cash burn. As a result, we upgrade STM to Buy from Neutral with a 12-month price target of €6.3 (was €7.5), as we see positive risk/reward following the recent sell-off despite continued structural challenges, especially at ST-E."
D.A. Davidson commented, "Wolverine, Blum Capital Partners, and Golden Gate Capital agreed to buy Collective Brands Inc. (PSS – $21.16) for $2.0 billion. Upon closing this transaction in 3Q/early 4Q, Wolverine will acquire Collective Brand's wholesale and retail operations for the Sperry, Stride Rite, Saucony, and Keds brands (collectively known as PLG) for $1.23 billion, which values the portfolio at 10x 2012 EV/EBITDA based on Collective Brand's 2012 EBITDA forecast. The deal is expected to close in late 3Q, early 4Q. The deal is expected to be accretive by $0.25-$0.40 in 2013 and $0.50-$0.70 in 2014 (excluding integration costs)."
Barrington Research commented, "At the risk of being early, we are upgrading VAR from MARKET PERFORM to OUTPERFORM as we believe radiation therapy and radiation surgery are proven, effective and efficient and already a standard of care therapy for the treatment of many types of otherwise hard to treat or hard to access tumors. We believe VAR is the proven technology and market leader in each of its respective markets. It is an early leader in proton therapy, international penetration for radiation therapy systems is low and VAR's balance sheet and cash flow yield are amongst the more attractive names in the medical device space."
Jefferies said, "We see WWW's acquisition as a game-changer that instantly increases revenues by 70%. 2013 EPS accretion guidance of +12% appears modest but, in our opinion, adequately conservative. We expect the story to ultimately resemble VFC/Timberland, GCO/Schuh and PVH/Tommy, recent deals whose acquiring stocks are up 45%+ since their respective announcements."
Bank of America commented in the report, " We are upgrading our rating on GNW from Underperform to Neutral largely unrelated to the 1Q earnings release last night (operating EPS of $0.06 and we think $0.08 adjusting for one time items, both below our $0.09 estimate and the $0.13 consensus). Since Genworth reported 2011 results (February 3rd), the share price is down over 30%, largely on the preannouncement of a 1Q loss in Australia Mortgage Insurance (MI) and a delay of the partial IPO of this unit. With the recent loss in Australia and continued losses in U.S. MI, the share price reflects extreme negative sentiment, in our view."
Bank of America commented in the report, "Several reasons for our prior Underperform rating are now reversing including (1) consistency of improving margins at lower revenue levels (now targeting 3.5% OPM below $7bn prior rev target), (2) revenue headwinds from RIM getting incorporated into estimates post this round of estimate cuts, (3) reversal on the drag on margins from restructuring the RIM exposed assets over the next two quarters and (4) improving component margins through the course of the year for the power supplies business."
Bank of America commented, "TripAdvisor's research based platform lies at the heart of the online travel ecosystem and we continue to see the company as a strong secular grower with high sustainable barriers to entry. We have been a believer in TRIP's long-term prospects and a strong Q1 assuaged our fears that management may further take down 2012 estimates as they work through the Expedia separation."
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