MOST NOTEWORTHY: Coca-Cola, Novo Nordisk and Equinix were today's noteworthy upgrades:
Bear Stearns upgraded The Coca-Cola Company (NYSE: KO) to Outperform from Peer Perform, as they expect it to post solid earnings short-term with potential upside, and over the long-term due to its upgraded business model.
Bernstein raised its rating on Novo Nordisk AS (NYSE: NVO) to Outperform from Market Perform, as they believe consensus estimates do not reflect the company's growth potential.
Merriman upgraded shares of Equinix Inc (NASDAQ: EQIX) to Buy from Neutral on valuation following the recent sell-off. The firm expects strong Q4 results.
MOST NOTEWORTHY: Linc Energy, Equinix and Smith & Wesson were today's noteworthy initiations:
Merriman initiated Linc Energy (OTC: LNCGY) with a Buy rating and believes the company is well-positioned to become a large producer of ultra-clean, high quality diesel fuel, at extremely high margins.
Equinix (NASDAQ: EQIX) was assumed with a Buy rating and $120 target at Deutsche Bank. The firm thinks the company continues to benefit from favorable industry dynamics as customer demand continues to outstrip supply of new co-location space industry-wide.
Susquehanna is positive on Smith & Wesson's (NASDAQ: SWHC) leading market position in the handgun market and top line growth. The firm started shares with a Positive rating.
OTHER INITIATIONS:
ComScore Inc. (NASDAQ: SCOR) was reinstated with an Outperform rating at Credit Suisse.
UBS initiated Willbros Group (NYSE: WG) with a Buy rating and $4 target.
Lazard started BladeLogic (NASDAQ: BLOG) with a Hold rating.
MOST NOTEWORTHY: GlaxoSmithKline, Equinix and Convergys were today's noteworthy initiations:
Societe Generale believes consensus estimates are underestimating the quality of GlaxoSmithKline's (NYSE: GSK) base business. The firm started shares with a Buy rating.
Merriman believes Equinix's (NASDAQ: EQIX) data center footprint leaves it highly exposed to changing market dynamics, including virtualization, and initiated shares with a Neutral rating. They see limited upside over the next 12 months.
Convergys (NYSE: CVG) was reinstated with a Hold rating and $19 target at Kaufman Bros, as they are not confident in the company's 2008 new signings outlook and is concerned that the current restructuring and headcount cuts will prove disruptive over the medium term.
OTHER INITIATIONS:
First Solar (NASDAQ: FSLR) was initiated with a Buy rating and $360 target at UBS.
Wachovia resumed coverage of News Corp (NYSE: NWS) with a Market Perform rating.
Baird initiated Sealed Air (NYSE: SEE) with a Neutral rating.
MOST NOTEWORTHY: AeroVironment, American Oriental and Intel were today's noteworthy initiations:
Suntrust initiated AeroVironment (NASDAQ: AVAV) with a Buy rating and $32 target and expects AVAV's market leadership in unmanned aerial systems and increased effort in the high altitude to drive strong organic growth.
Jefferies believes American Oriental (NYSE: AOB) is capable of making sizable acquisitions given its strong cash position and finds the valuation attractive at current levels. The firm started shares with a Buy rating and $20 target.
Intel (NASDAQ: INTC) was initiated with a Neutral rating and $30 target at Baird on valuation.
OTHER INITIATIONS:
Equinix (NASDAQ: EQIX) was initiated with a Market Perform rating at Wachovia.
While gold and commodities around the world enjoy one heck of a bull market, the performance of technology stocks is steadily improving.
Last night, Oracle Corporation (NASDAQ: ORCL) once again reported solid results, although margin improvement was a little light and the software giant got a big boost from positive currency movement. Oracle's solid results follow a boost in outlook from Intel Corporation (NASDAQ: INTC). Also, with EMC Corporation's (NYSE: EMC) offering of VMware Inc (NYSE: VMW) being a huge success, equity offerings for the tech sector are also picking up, with Equinix Inc (NASDAQ: EQIX), the data-center company, completing a secondary this week. Improved IPO and secondary markets for tech stocks have usually meant good things for tech in general.
Also, just the general tone in technology is pickup up as both Google Inc (NASDAQ: GOOG) and Yahoo Inc (NASDAQ: YHOO) are remaining very active in the acquisition market as the two search-engine giants scoop more web-centric applications and Web 2.0 products.
While CNBC and Bloomberg focus on the booming commodities market, do not forget technology is beginning a very nice bull market.
MOST NOTEWORTHY: Ford Motor Co, Advanced Micro Devices, Brocade, Netflix and Equinix were today's noteworthy upgrades:
Bear Stearns believes Ford Motor Company (NYSE: F) could also benefit from similar deal to General Motors Corporation's (NYSE: GM) potential VEBA healthcare restructuring with the UAW. The firm upgraded Ford shares to Outperform from Peer Perform.
Advanced Micro Devices (NYSE: AMD) was upgraded to Neutral from Underweight at JP Morgan. The firm expects AMD's Barcelona server chip will help close the gap vs. Intel Corporation (NASDAQ: INTC).
Citigroup upgraded shares of Brocade Communications Systems (NASDAQ: BRCD) to Buy from Hold and added the stock to their Global Tech Conviction List on expectations for market share gains and margin upside in 2008.
Thomas Weisel upgraded shares of Netflix Inc (NASDAQ: NFLX) to Overweight from Market Weight, citing reduced pressure from competitor Blockbuster Inc (NYSE: BBI), which could lead to upside in subscribers.
Needham upgraded shares of Equinix (NASDAQ: EQIX) to Buy from Hold to reflect improving fundamentals and potential upside from the IXEurope acquisition.
MOST NOTEWORTHY: Polo Ralph Lauren (RL), Alcan (AL), Alcoa (AA) and Conn's, Inc (CONN) were today's noteworthy initiations:
Polo Ralph Lauren (NYSE: RL) was initiated with a Market Perform rating at Piper Jaffray. The firm feels the risk/reward is balanced at current levels given the near-term risks from increased investment and exposure to inconsistent U.S. wholesale markets.
Goldman Sachs resumed coverage of Alcan (NYSE: AL) and Alcoa (NYSE: AA) with Neutral ratings and a $101 target and $48 target, respectively.
Morgan Joseph is positive on Conn's Inc's (NASDAQ: CONN) strong track record of growth, new store growth and easy comps, and initiated shares with a Buy rating and $34 target.
Savvis Inc (NASDAQ: SVVS) announced transaction with Microsoft Corporation (NASDAQ: MSFT) yesterday is another clear sign that the datacenter business is here to stay.
Savvis announced that Microsoft would assume leases for 300,000 square feet of datacenter space in Santa Clara that Savvis controls, the heartland of Silicon Valley. In return, Savvis receives $200 million. Microsoft gets greater control of more datacenter space and Savvis gets rid of below-market-rate leases that were signed when the industry was in the dump.
We began blogging that investors should jump into Savvis in April 2006 when the stock was selling for $26. Today, the stock is at $50, just shy of 100% profit. The datacenter industry was a boom-bust posterchild sector for Internet 1.0. Many of these companies went into or flirted with bankruptcy.
However, while the two largest stand-alone datacenter companies, Savvis along with Equinix Inc (NASDAQ: EQIX), have done considerably well since we started blogging about their merits as investments over one year ago, these stocks are still underfollowed and underknown. The fundamentals of this industry continue to improve and the barriers to entry continue to expand.
Stay with both Savvis and Equinix, and if you do not own them, I'd suggest buying them and putting them away. These are difficult assets to build and maintain and companies such as Microsoft, Google Inc (NASDAQ: GOOG) and Level 3 Communications Inc (NASDAQ: LVLT) want to own more of them.
As this earnings period begins to wind down, with most of the juggernauts already having reported, we begin to see reports from some smaller, lesser known companies, along with reports from former high-fliers like Gateway Inc (NYSE: GTW) and Overstock.com Inc (NASDAQ: OSTK).
Monday February 5
Overstock.com to report Q4 earnings, conference call at 11am.
PDUFA date for Watson Pharmaceutical Inc's (NYSE: WPI) Actoplus XR for non-insulin dependent diabetes mellitus.
Tuesday February 6
Nike Inc (NYSE: NKE) to hold Analyst Day at 12pm. Credit Suisse First Boston believes Nike will announce the rollout of a specialty retail store concept at the meeting.
Wednesday February 7
Equinix (NASDAQ: EQIX) to report Q4 earnings; conference call at 5:30pm. Kaufman Brothers notes that the company's last overhang was removed in the middle of January and it sees a $93 price target on the stock.
PDUFA Date for Roche Holding's (OTC: RHHBY) Cera for chronic renal disease.
Thursday February 8
Monthly sales reports reports due from Abercrombie & Fitch Co (NYSE: ANF), Limited Brands (NYSE: LTD), Nordstrom, Inc (NYSE: JWN) and Wal-Mart Stores Inc (NYSE: WMT).
Gateway to report Q4 earnings; conference call at 5:30pm.
Friday February 9
Corning Incorporated (NYSE: GLW) to hold Investor Meeting at 9am with presentations from its CEO and CFO.
Savvis Inc's (NASDAQ: SVVS) business continues to improve, supporting the view that the data center business is a real business. As we have blogged about Savvis and Equinix Inc (NASDAQ: EQIX) in the past, these are two pure-play data center companies that were able to restructure their balance sheets in the post-tech & telecom bubble of the late 1990s. Here are some of the numbers for Savvis:
Savvis revenue jumped 15%, with adjusted EBITDA jumping 55% to $123 million
Revenue continued to shift to higher-end product lines, moving up the value chain to managed VPN and hosting services
EBITDA for the fourth quarter jumped 67%
Savvis was able to sell a subsidiary for $125 million which can be used to expand its core hosting businesses
The power of Savvis' model is that it can move its customers up the value chain which allows the company to grow revenue and EBITDA for a number of years.
For example, managed hosting generates $4 versus every $1 dollar earned for a commodity hosting business. In addition, for new services that Savvis will be able to sell to customers in 2008 on its upgraded infrastructure, that number goes up to $8 for every dollar of commodity services.
Savvis said by increasing co-location space and moving up the value chain, it can easily drive hosting revenue above $ 1 billion. High-end hosting and managed services is a real growth business. Stay focused on both Savvis and Equinix.
Savvis Corp (NASDAQ: SVVS), a left-for-dead tech-telecom bubble stock, continues to come back to life. While most investors are on vacation, Savvis, a large independent data center company, released some interesting news this morning.
Savvis will add 180,000 square feet of raised floor space through new construction. This will increase its total data center footprint more than 10% to over 1.5 million square feet.
Savvis will also sell its content delivery network services business to Level 3 Communications (NASDAQ: LVLT) for $135 million in cash. Management said it will focus on its core hosting and managed network services businesses.
Savvis and Equinix (NASDAQ: EQIX), another independent publicly traded data center company, continue to benefit from the strong demand for data center space. Customers require high standards for security and reliability, power availability, cooling, network connectivity, and environmental controls. Savvis has pre-booked most of the new space.
The expansion is expected to cost $200 million. With $135 million coming from the asset sale to Level 3 and 2007 EBITDA expected to come at $150 million, Savvis can fund this expansion without using outside financing---a very good sign of the financial health of the company and for increasing shareholder value.
Since TheFly blogged in April to begin looking at this sector again, Savvis and Equinix are up 38% and 31%, respectively.
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