/FIRST AND FINAL ADD -- DCW023 -- Robertson Stephens
Daily Growth Stock Update/ Comments: American Eagle Outfitters, Inc. (Nasdaq: AEOS) $48.75 Buy Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"After speaking with the company yesterday, we believe January comps at American Eagle are tracking in-line with the 5% estimate we established at the beginning of the month," said Kloppenburg. "While January typically represents a significantly promotional period for retailers to clear carry-over Holiday inventory, AEOS entered January with significantly less markdown inventory vs. a year ago. As such, we believe that current strong sales momentum is attributable to the company's strong new Spring assortments, which flowed into stores on December 26 and, as such, that strong sales trends could continue through the Spring season. As we move further into F2001, we believe the stock should begin trading at a 20x multiple to our preliminary F2002 EPS estimate of $2.85, implying a short-term price target of $57 or approximately 17% potential appreciation from current levels. As such, going forward we believe the stock should continue to appreciate, particularly as estimates continue to be upwardly revised. We recommend purchase and rate the stock a Buy."
AMB Property Corporation (NYSE: AMB) $24.31 Long-Term Attractive Jay Leupp, REITs/REOCs/Real Estate Services
"AMB reported Q4:00 FFO of $0.60/share, in-line with our estimate, and the consensus estimate, representing annual FFO/share growth of 11.1%," said Leupp. "Same-store NOI growth was an eyebrow-raising 11.2% (vs. our 6.0% estimate), driven by a 31.1% average rental rate increase on Q4:00 lease expirations. We maintain our 2000 and 2001 FFO/share estimates of $2.32 and $2.54, respectively, and maintain our LTA rating."
APW Ltd. (NYSE: APW) $41.00 Buy J. Keith Dunne, Electronic Manufacturing Products and Services
"APW announced the expected purchase of Mayville Metal Products in Feb. 2001 for an enterprise value of $287M, excluding potential acquisition charges," said Dunne. "We view this as a strategically important deal that a) establishes a North American presence in outdoor enclosures, b) strengthens relations with Lucent, Alcatel, Applied Materials and Nortel, c) enhances the company's geographic footprint especially in the Midwest, Carolinas, and near an important LU systems facility, and d) should be accretive. We are maintaining our Buy rating. Currently, APW is trading for 11.7x our pre- adjusted CY02E cash EPS, or a 35-40% discount to the EMS industry. As APW continues to meet our earnings expectations and successfully integrates recent acquisitions, we expect the stock market to re-assess the long-term growth opportunity, which should lead to multiple expansion towards 20x."
Artesyn Technologies, Inc. (Nasdaq: ATSN) $21.56 Long-Term Attractive J. Keith Dunne, Electronic Manufacturing Products and Services
"Artesyn reported 4Q00 Cash EPS of $0.27, $0.04 higher than our $0.23 estimate and previous guidance of $0.22-$0.25 given after the company's December 15 pre-announcement, on higher than expected revenues of $184MM, or 6% and 31% below our estimates prior to the pre-announcement of $196.3MM and $0.39, respectively," said Dunne. "We are maintaining our previously lowered FY01 and FY02 Cash EPS $1.30 and $1.60-$1.65, respectively, which are below consensus expectations, although we expect to review our estimates once we have more visibility in 2H:FY01. ATSN is trading for 16.6x our Cal-01E cash EPS and 13.5x our Cal-02E cash EPS, a 37% and 29% discount to its peer group, respectively. While relatively inexpensive, we believe that the stock will remain at these levels until inventors receive further evidence of improved supply chain management performance and revenue growth in 2H:FY01."
Delano Technology Corporation (Nasdaq: DTEC) $4.50 Long-Term Attractive Richard Juarez, eCommerce Infrastructure Services
"Delano reported 3Q:FY01 results in-line with the pre-announced results on January 4, 2001," said Juarez. "The Company reported revenues of $9.3 million, representing 15% sequential growth. We are maintaining estimates, and reiterating our Long-Term Attractive rating to reflect the slowdown in IT spending, and the growing and intense competition in the sector. We believe the Company is sufficiently funded to reach profitability, which we expect will be in FY3Q03 (December 2002), as opposed to the Company's estimate of FY4Q02 (March 2002)."
Gap, Inc. (The) (NYSE: GPS) $29.44 Buy Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"Yesterday the company announced the appointment of longtime Gap board member John M. Lillie to the newly-created post of Vice Chairman," said Kloppenburg. "Given his extensive management background, Mr. Lillie brings with him significant operational experience, which we believe should prove particularly helpful to the Gap as it focuses on its overall infrastructure needs, including sizable information technology investments. The Gap plans to report January sales on February 7th after the close of business. While we believe it is difficult to gain visibility on sales this month given the highly promotional period, we believe the company should generate a negative high-single digit comp vs. an 11% comp gain in the year-ago period. While we maintain our current Q4:00 EPS estimate of $0.34 vs. $0.47 in Q4:99, slightly ahead of the street consensus $0.33 estimate, we believe there could be some risk to our Q1:01 EPS estimate of $0.26 vs. $0.27 in Q1:00 as we believe that while management has made strong inroads in correcting the operational issues that plagued F2000, that the fashion merchandising issues which constrained F2000 comp store sales growth have not yet entirely been corrected. However, given the company's relatively low valuation of 21x our F2001 EPS estimate of $1.40, current levels represent close to a historic low for the company, and we believe shares should appreciate somewhat from current levels, we believe up to a 23x multiple (still well below the company's customary 30x-35x trading multiple) of our F2001 EPS estimate in the short term, or $32 per share, and over the next six to nine months to 23x our preliminary F2002 EPS estimate of $1.90, or approximately $45 per share. As such, we rate the stock a Buy and continue to recommend purchase."
HearMe (Nasdaq: HEAR) $1.31 Market Performer Richard Juarez, eCommerce Infrastructure Services
"Yesterday HearMe reported 4Q00 results essentially in line with the company's pre-announcement of December 20th and with our estimates," said Juarez. We believe that HearMe's divestiture of its Live Communities consumer- focused business and the re-structuring of its business to focus on VoIP technology may make it an attractive acquisition target for a larger messaging, conferencing, or VoIP player seeking to augment its technology capabilities. We are maintaining our FY01 estimates and Market Performer Rating."
Intuit Inc. (Nasdaq: INTU) $35.50 Buy Scott Appleby, eFinance
"According to PC Data, Intuit's TurboTax product sales at retail are improving," said Appleby. "TurboTax sales were down 30% versus the year ago week for the first week of release in December, but the most recent week's results indicate that sales at retail were up 8% versus the year ago week. Despite the improvement in TurboTax sales, QuickBook sales are still lagging. We remain cautiously optimistic regarding Intuit's outlook for both the quarter and longer-term. The improvement of TurboTax sales at retail during the quarter provides validation for our optimism. Further, we believe Intuit's mortgage business should benefit from an improved interest rate environment as refinance activity increases. However, we need to see more of an improvement in retail sales for Intuit's QuickBooks product before we would recommend more aggressive purchases."
Jones Apparel Group Inc. (NYSE: JNY) $38.7 Buy Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"Yesterday after the close JNY announced that it expects total sales for 4Q:00 should increase to $950-$970 mm, relatively in line with our $970 mm estimate and vs. $914.5 mm in 4Q:99," said Kloppenburg. "This estimate represents a 6% increase including $6.2 mm in licensing royalty income. In addition, management indicated they are comfortable with First Call Consensus EPS estimate for 4Q:00 of $0.52 vs. $0.40 and anticipate 4Q:00 EPS to fall in the range of $0.50-$0.53. Thus, we are maintaining our 4Q:00 estimate of $0.52 vs. $0.40. This brings our F2000 estimate to $2.50 which represents a 23.8% increase in earnings vs. F1999 $2.02 EPS results. Finally, JNY shares are currently trading at only 13.0x our F2001 EPS estimate of $2.98, a significant discount to the company's 3-year secular growth rate of 22%. Given the aforementioned merchandising initiatives in tandem with what we believe to be JNY's expanding market share in both department stores and retail locations, we believe the stock deserves to sell at least at an 18x forward year multiple. As such, we have raised our price target to $55 and believe current levels represent a compelling buying opportunity. We re-iterate our Buy rating and recommend purchase of shares."
marchFIRST, Inc. (Nasdaq: MRCH) $3.00 Buy Steven Birer, eServices
"Yesterday, marchFIRST announced the completion of its 2001 business planning process, implemented a number of cost-cutting programs, and finalized a stock option re-issuance program," said Birer. "The cost cutting initiatives announced by the company include reducing corporate expenses to 10% of revenues, cutting discretionary spending, consolidating smaller branches, closing its Montreal and Pittsburgh offices and reducing the company's workforce by an additional 550 people. Following the announced reductions, the company's employee base should total 7,600. The company also continues to evaluate opportunities for selling some of its non-core assets. In addition to the cost cutting initiatives, the company outlined an employee stock option re-issuance program under which eligible employees will be able to return 25.4 million existing options for newly issued options. Under the program, on July 23, 2001, the company plans to issue participating employees options to purchase a total of 8.4 million shares, or a new option for every three cancelled."
Merck & Co., Inc. (NYSE: MRK) $82.44 Market Performer Robert Hazlett, Large Capitalization/Specialty Pharmaceuticals
"Yesterday Merck reported 4Q00 EPS of $0.75 vs. $0.66, a 12% increase, in line with consensus and a penny above our expectations," said Hazlett. "Revenue growth of 28% benefited from robust Medco growth and some wholesaler stocking of certain key drugs ahead of price increases. Generic competition for hypertension drug Vasotec (elanapril) weighed heavily on both sales and margins. We believe a host of patent expirations over the next few years, coupled with revenue growth increasingly driven from low-margin Medco operations will likely make even mid-teens EPS growth increasingly difficult. We therefore continue to rate MRK shares Market Performer."
Netopia, Inc. (Nasdaq: NTPA) $8.19 No Rating*** Richard Juarez, eCommerce Infrastructure Services
"Proxim announced today that it has entered into a definitive agreement to acquire Netopia, Inc. in an stock-for-stock deal," said Juarez. "We believe that the acquisition is prudent for both companies, as it combines Proxim's expertise in wirefree networking solutions with Netopia's expertise in broadband Internet equipment and eCommerce Web platforms. In terms of management changes, Alan Lefkof, Netopia's current CEO, will become Proxim's Chief Operating Officer and Co-Chairman of the Board, while David King will remain Proxim's CEO and become Co-Chairman of the Board."
Park Place Entertainment Corporation (NYSE: PPE) $10.00 Market Performer Harry Curtis, Gaming & Lodging
"Park Place Entertainment's 4Q:00 EPS of $0.00 was in line with pre- announced guidance," said Curtis. "EPS for the year declined 5% to $0.57 from $0.60. We are maintaining our 2001 EPS estimate of $0.60, which is below consensus of $0.65. We expect consensus to decline toward our estimate. Bottom line: while we anticipate a significant buying opportunity in this stock, we do not believe we are there yet. We maintain our Market Performer rating on shares of Park Place Entertainment."
Retek Inc. (Nasdaq: RETK) $34.13 Buy Eric Upin, Business-to-Business eCommerce
"Retek reported solid Q4:00 results on Tuesday - exceeding our topline estimate by $3.3 million and operating EPS by 5 cents," said Upin. "Building upon Q3's momentum, the December quarter was characterized by significant customer wins and expanding product footprint. As a result of Retek's increasing visibility, we are raising our estimates slightly. As the company has evolved from a merchandise management solution provider to a supply chain suite vendor, we are increasingly positive on Retek's near- and longer-term outlook."
Industry Update: Semiconductor Capital Equipment Update Sue Billat, Semiconductor Equipment/Foundries
"The December preliminary book-to-bill ratio was 1.03, down from November's (revised) 1.12. Overall bookings declined 10% to $2.03 billion from $2.26 billion reported in November," said Billat. "In our view, the decline is consistent with our outlook for flat to slight decline of growth in 2001, and the bookings drop in December as reported by capital equipment companies. Orders for front end equipment declined 10% sequentially to end up at $2,03 billion in December. Book-to-bill for the front end still showed relative strength at 1.12 but below the 1.23 level achieved in November primarily due to shipments declining by only 1%. Given the flat to slightly down outlook we are projecting, and the 30% to 35% decline in bookings for Q1 guided by front end equipment companies, we anticipate January bookings to continue to decline. However, we believe the frontend industry growth will be increasingly driven by adoption of advanced technologies, such as the copper module and low-k dielectrics, as well as the transition to 300mm wafers."
*NR--Robertson Stephens is acting as an adviser in Fairchild's acquisition of Intersil's Discrete Power Business; therefore, in keeping with Firm policy, our rating on Fairchild goes to "No Rating".
**NR--Robertson Stephens is acting as an adviser in this transaction; therefore, in keeping with Firm policy, Intersil goes to "No Rating".
***NR--Robertson Stephens is acting as an adviser to Netopia in the acquisition of the company by Proxim, Inc.; therefore, in accordance with Firm policy, our rating on Netopia goes to "No Rating".
Unless otherwise noted, prices are as of Tuesday, January 23, 2001.
Robertson Stephens maintains a market in the shares of CheckFree Corp., PRI Automation, Q-Logic, American Superconductor Corp., AudioCodes, Broadcom, C-Bridge, Centillium, CoorsTek, Digital River, DuPont Photomasks, Intersil, Interwoven, Power Integrations, Siebel Systems, Tellabs, Virage, American Eagle, Artesyn Technologies, Delano, HearMe, Intuit, marchFIRST, Netopia and Retek and has been managing or comanaging underwriter for or has privately placed securities of American Superconductor Corp., AudioCodes, C-Bridge, Centillium, Coorstek, Cypress Semiconductor, Digital River, Fairchild Semiconductor Corp., LSI Logic, Intersil, Interwoven, LSI Logic, Power Integrations, Virage, Delano, HearMe, Intuit, marchFIRST, Netopia and Retek within the past three years.
Robertson Stephens, Inc. and its international affiliates ("Robertson Stephens") is the leading full-service investment bank focused exclusively on growth companies. The firm provides a comprehensive set of investment banking products and services, including equity underwriting, sales & trading, research, M&A advisory, convertible securities, private capital, equity derivatives, and corporate and executive services. Robertson Stephens, Inc. is a member of the NASD and all major exchanges. Robertson Stephens has more than 1,500 employees worldwide with offices in San Francisco, Boston, New York, Palo Alto, Chicago, Atlanta, London, Munich and Tel Aviv.
Robertson Stephens, Inc. ("Robertson Stephens") is an NASD member and a member of all major exchanges and SIPC.
The information contained herein is not a complete analysis of every material fact respecting any company, industry or security. Although opinions and estimates expressed herein reflect the current judgment of Robertson Stephens, the information upon which such opinions and estimates are based is not necessarily updated on a regular basis; when it is, the date of the change in estimate will be noted. In addition, opinions and estimates are subject to change without notice. This Report contains forward-looking statements, which involve risks and uncertainties. Actual results may differ significantly from the results described in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in "Investment Risks." Robertson Stephens from time to time performs corporate finance or other services for some companies described herein and may occasionally possess material, nonpublic information regarding such companies. This information is not used in the preparation of the opinions and estimates herein. While the information contained in this Report and the opinions contained herein are based on sources believed to be reliable, Robertson Stephens has not independently verified the facts, assumptions and estimates contained in this Report. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions contained in this Report. Robertson Stephens, its managing directors, its affiliates, its employee investment funds, and/or its employees, including the research analysts authoring this report, may have an interest in the securities of the issuer(s) described and may make purchases or sales while this Report is accessible. Robertson Stephens International, Ltd. is regulated by the Securities and Futures Authority in the United Kingdom. This publication is not meant for private customers.
Fleet Meehan Specialist, Inc. (Member NYSE), an affiliate of Robertson Stephens, Inc., is the specialist that makes a market in Alcatel, AutoNation, Inc., Cabletron Systems, Inc., Cash America International, Inc., Catellus Development Corp., CKE Restaurants, Inc., Computer Associates International, Electronic Data Systems Corporation, Ethan Allen Interiors Inc., FelCor Lodging Trust Inc., Foundation Health Systems, Inc., Harrah's Entertainment, Inc., Hilton Hotels Corporation, The Home Depot, Inc., International Game Technology, Jones Apparel Group, Inc., McDonald's Corporation, The Men's Wearhouse, MGM Mirage, Inc., National Semiconductor Corporation, Park Place Entertainment Corporation, Public Storage Inc., Scientific-Atlanta Inc., Seagate Technology, Inc., Shurgard Storage Centers, Inc., Station Casinos Inc., The Talbots, Inc., Tommy Hilfiger Corporation and Wal-Mart Stores, Inc. and at any given time, Fleet Meehan Specialist may have an inventory position, either "long" or "short," in this security. As a result of Fleet Meehan Specialist's function as a market maker, such specialist may be on the opposite side of orders executed on the floor of the Exchange in this security.
Copyright (C) 2001 Robertson Stephens -0- 01/24/2001 AA DCW023 /PRNewswire -- Jan. 24/ /END FIRST AND FINAL ADD/
CO: Robertson Stephens; CheckFree Corp.; PRI Automation, Inc.; QLogic
Corporation; American Superconductor Corporation; AudiCodes Ltd.; Broadcom Corporation; C-bridge Internet Solutions, Inc.; Centillium Communications, Inc.; Compaq Computer Corporation; CoorsTek, Inc.; Cypress Semiconductor Corporation; Digital River, Inc.; Dupont Photomasks, Inc.; Fairchild Semiconductor Corporation; Gateway 2000, Inc.; Intersil Holding Corporation; Interwoven, Inc.; LSI Logic Corporation; Power Integrations, Inc.; SCI Systems, Inc.; Siebel Systems, Inc.; Station Casinos, Inc.; Tellabs, Inc.; Virage, Inc.; American Eagle Outfitters, Inc.; AMB Property Corporation; APW Ltd.; Artesyn Technologies, Inc.; Delano Technology Corporation; Gap, Inc.; HearMe; Intuit Inc.; Jones Apparel Group Inc.; marchFIRST, Inc.; Merck & Co., Inc.; Netopia, Inc.; Park Place Entertainment Corporation; Retek Inc.;
Fleet Meehan Specialist, Inc. ST: California IN: FIN SU: RTG
-0- Jan/24/2001 16:50 GMT