ADC Telecommunications (NASDAQ: ADCT) provides infrastructure equipment used by wireline, wireless, cable, broadcast and enterprise networks. Its systems connect high-speed Internet, data, video and voice services to residential, business and mobile subscribers. The firm also provides network management software and integration services. Ciena (NASDAQ: CIEN), Morgan Stanley (NYSE: MS) and Verizon Communications (NYSE: VZ) are on the company's customer list.
The firm surprised the Street last week, when it reported Q2 EPS of 39 cents and revenues of $403.4 million. Analysts had been looking for 30 cents and $384.8 million. Management also guided Q3 revenues to about $403.4 million ($395.70 million consensus), FY08 EPS to $1.25-$1.33 ($1.21 consensus) and FY08 revenues to $1.52-$1.54 billion ($1.5B consensus). Friedman Billings, Robert W. Baird, UBS and Deutsche Securities subsequently reiterated "buy" ratings on the shares. Lehman Brothers reiterated its "equal weight". All five firms boosted their price targets to the $18.50-$20.00 range.
Shares were higher today after the weekly jobless claims were reported as 357,000, down 18,000 from last week. While new claims are down, the four week average of those filing for benefits was up to 3.086 million, the highest level since March 2004. The good news is that the markets largely ignored that S&P downgrade of bond insurers today. The stock market even ignored a $5.00 rise per barrel in oil today. Here are the unofficial closing levels today:
Broadcom Corp. (NASDAQ: BRCM) was an example of just how strong today was by being up almost 3% at $28.90 late in the day. If you read trough the co-founder and former CEO's indictment charges you might think shareholders would have gone the other way.
RBC Capital Markets has a price target of $18 on NSM.
NSM June option implied volatility is at 46; July is at 40 above its 26-week average of 38 according to Track Data, suggesting larger price movement.
Ciena (NASDAQ: CIEN) closed at $29.97 Monday. CIEN is scheduled to report Q2 EPS on June 5.
Bank of America has Neutral rating with a $32 price target on CIEN.
CIEN June option implied volatility of 65 and July option implied volatility of 57 is above its 26-week average of 55 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Here's a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report quarterly results in the first week of June, 2008.
The following companies are expected to post earnings growth, compared to the same period in the previous year:
Take-Two Interactive (NASDAQ: TTWO) up 136.6% (from a loss) to $1.12 per share, on $499.1 million in revenue
MOST NOTEWORTHY: New York Community Bancorp, Gushan Environmental and Central European Distribution were today's noteworthy initiations:
Citigroup believes New York Community Bancorp (NYSE: NYB) is uniquely-positioned to benefit from the current operating environment and expects loan growth, NIM expansion, and good credit to boost EPS growth over the next year. The firm initiated shares with a Buy rating and $19 target.
Oppenheimer said Gushan Environmental (NYSE: GU) benefits from the Chinese government's policies encouraging growth of renewable fuels; shares were initiated with an Outperform rating and $14 target.
Jefferies initiated Central European Distribution (NASDAQ: CEDC) with a Buy rating and $66 target and views the company as a pure play on rising disposable incomes, particularly in Poland where it is headquartered.
OTHER INITIATIONS:
Lehman assumed Ciena (NASDAQ: CIEN) with an Overweight rating and $35 target.
BMO Capital started Millenium Pharma (NASDAQ: MLNM) with an Outperform rating and $18 target.
Shares of communications equipment maker Ciena Corp. (NASDAQ: CIEN) have been surging today following announcing that its first-quarter profit more than doubled, helped by higher networking equipment sales. Its surprising earnings numbers and also a positive sales outlook gave a lift to the entire sector, whose shares have been rallying in early trading.
For the quarter, the company said that its profit rose to $28.8 million, or 28 cents per share as new products helped Ciena to "take share and gain additional customer traction." These numbers are up from $11.1 million, or 12 cents per share reported in the same period a year ago.
Included in the company's earnings figures was $7.7 million related to a patent litigation settlement. Excluding that, Sears earnings numbers would have come at $49.6 million, or 47 cents a share. Analyst, on average, expected the company show quarterly earnings of 40 cents per share.
The efficiency of high-speed Internet service depends on the excellence of its infrastructure components. An Eden Prairie, Minnesota firm is a leading manufacturer of reliable hardware for the industry, serving big name clients in over 130 countries.
ADC Telecommunications (NASDAQ: ADCT) provides infrastructure equipment used by wireline, wireless, cable, broadcast and enterprise networks. Its systems connect high-speed Internet, data, video and voice services to residential, business and mobile subscribers. The firm also provides network management software and integration services. Ciena (NASDAQ: CIEN), Morgan Stanley (NYSE: MS) and Verizon Communications (NYSE: VZ) are on the company's customer list.
The firm surprised the Street last week, when it reported fiscal Q4 EPS of 30 cents and revenues of $330 million. Analysts had been looking for 22 cents and $318.4 million. Management also guided FY08 EPS to $1.12-1.22, versus Street consensus of $1.17. Merriman Curhan Ford subsequently upgraded the shares to "buy", Friedman Billings reiterated its "outperform", and Robert W. Baird noted that the firm's conservative outlook sets the stage for further outperformance.
CIENA Corp. (NASDAQ: CIEN) stock is falling this morning after the company has issued a sales forecast for 2008 that was below Wall Street's estimate. CIEN forecast that sales would rise 20% to $935.8 million, while Wall Street was expecting a rise of 21% to $945.4 million. CIEN also reported a fourth-quarter $13 million loss on a short-term investment known as an SIV. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CIEN.
After hitting a one-year low of $24.50 last November, the stock hit a one-year high of $49.55 in October. This morning, CIEN opened at $40.36. So far today the stock has hit a low of $37.23 and a high of $40.44. As of 11:10, CIEN is trading at $37.97, down $4.15 (-9.8%). The chart for CIEN looks bullish but deteriorating, while S&P gives the stock a 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $55 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 5.3% return in 4 months as long as CIEN is below $55 at April expiration. Ciena would have to rise by more than 44% before we would start to lose money.
CIEN has not been above $50 at all in the past year, and shown resistance around $42.50 recently. This trade could be risky if the tech sector is strong in the coming months, but even if that happens, this position could be protected by resistance the stock formed between$45 and $50 over the past 3 months.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CIEN.
FNM announced plans to issue $7 billion of non-convertible preferred stock and intends to reduce the quarterly common dividend to $0.35 from $0.50 cents. Goldman Sachs Co. says: "Capital raise foreshadows more losses." FNM overall option implied volatility of 65 is above its 26-week average of 40 according to Track Data, suggesting larger price fluctuations.
CIEN is expected to report Q4 EPS within the next two weeks. CIEN December option implied volatility of 65 is above its 26-week average of 47 according to Track Data, suggesting larger risk.
Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Just call Ciena the company that's covering the communication services spectrum.
Ciena (NYSE: CIEN) supplies application-focused communications equipment, software and services to communications service providers, cable operators, and governments.
Analysts really like two dimensions of Ciena's operations: Its optical networking products business, which helps service providers increase the efficiency and bandwidth of their communications networks; and its broadband networking products business.
Other positives: Most analysts see CIEN's 2008 revenue increasing about 15%-20%, with a 35%-40% revenue gain seen for this year. Analysts also expect the company to increase its market share of larger-customer accounts. The Reuters F2007/F2008 EPS consensus estimates for CIEN are $1.28/$1.72.
MOST NOTEWORTHY: Sanofi-Aventis, Lifecell, Mylan Labs, Panera Bread and Norsk Hydro were today's noteworthy upgrades:
Societe Generale upgraded shares of Sanofi-Aventis (NYSE: SNY) to Buy from Hold as they believe pipeline maturation over the next 12 months can drive the stock higher.
Piper upgraded shares of Lifecell (NASDAQ: LIFC) to Outperform from Market Perform after their recent survey indicated that AlloDerm remains the leading biologic hernia mesh on the market and competition is making little headway.
JP Morgan upgraded Mylan Labs (NYSE: MYL), Panera Bread (NASDAQ: PNRA) and Norsk Hydro (NYSE: NHY) to Overweight from Neutral. The firm upgraded Mylan based on its position in the global generics market and above-average growth; Panera was upgraded on valuation, as they believe the recent operating risk is now behind the company; Norsk Hydro was upgraded, as they believe the value of the company's aluminum assets are higher than the current share price suggests.
OTHER UPGRADES:
HSBC upgraded Ride Aid (NYSE: RAD) to Neutral from Underweight.
MOST NOTEWORTHY: General Motors, Green Mountain Coffee, Orexigen and Norsk Hydro were today's noteworthy upgrades:
Banc of America upgraded shares of General Motors Corporation (NYSE: GM) to Neutral from Sell as they believe the agreement with the United Auto Workers union offsets a worsening outlook for sales.
Piper Jaffray upgraded shares of Green Mountain Coffee Roasters (NASDAQ: GMCR) to Outperform from Market Perform after a meeting with management as they believe shares offer a compelling buying opportunity at current levels based on their 2009 estimates.
JMP Securities upgraded shares of Orexigen Therapeutics (NASDAQ: OREX) to Strong Buy from Market Outperform as they believe the company's lead product candidates, Empatic and Contrave, could become front-line therapies for obesity due to improved durability of efficacy, increased safety and tolerability, and lack of addiction.
Norsk Hydro (NYSE: NHY) was upgraded to Buy from Hold at Citigroup. The firm sees upside in the stock from the volume growth and further improvements in downstream operations.
OTHER UPGRADES:
Lehman upgraded Temple Inland (NYSE TIN) to Overweight from Equal Weight.
The efficiency of high-speed Internet service depends on the excellence of its infrastructure components. An Eden Prairie, Minnesota firm is a leading manufacturer of reliable hardware for the industry, serving big name clients in more than 130 countries.
ADC Telecommunications (NASDAQ: ADCT) provides infrastructure equipment used by wireline, wireless, cable, broadcast and enterprise networks. Its systems connect high-speed Internet, data, video and voice services to residential, business and mobile subscribers. The firm also provides network management software and integration services. Ciena (NASDAQ: CIEN), Morgan Stanley (NYSE: MS) and Verizon Communications (NYSE: VZ) are on the company's customer list.
The firm surprised the Street last week when it reported fiscal Q3 EPS of 37 cents and revenues of $346.1 million. Analysts had been looking for 23 cents and $329.1 million. The CEO cited better than expected strength in the connectivity, wireless and services businesses. Management also guided FY07 EPS to $1.11-$1.15 (92 cent consensus) and FY07 revenues to $1.308-$1.313 billion ($1.29B consensus). The stock popped on the news and has since been forming a bullish "pennant" consolidation pattern. Equities frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Brokers recommend the issue with six "strong buys" and sixteen "holds." Analysts see a 19% growth rate, through the next year. The stock's P/E ratio (14.20), Price to Sales ratio (1.81), Price to Book ratio (2.40), Price to Cash Flow ratio (9.25), Price to Free Cash Flow ratio (26.89), EPS Growth rate (42.31%), Net Profit Margin (13.33%) and Return on Assets (10.53%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 79% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $13.40 and $21.06. A stop-loss of $17.25 looks good here.
infrastructure equipment used by wireline, wireless, cable, broadcast and enterprise networks. Its systems connect high-speed Internet, data, video and voice services to residential, business and mobile subscribers. The firm also provides network management software and integration services. Ciena (NASDAQ: CIEN), Morgan Stanley (NYSE: MS) and Verizon Communications (NYSE: VZ) are on the company's customer list.
National Semiconductor
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had been looking for 23 cents and $329.1 million. The CEO cited better than expected strength in the connectivity, wireless and services businesses. Management also guided FY07 EPS to $1.11-$1.15 (92 cent consensus) and FY07 revenues to $1.308-$1.313 billion ($1.29B consensus). The stock popped on the news and has since been forming a bullish "pennant" consolidation pattern. Equities frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
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