Robertson Stephens Daily Growth Stock Update on OSIP PPRO AFCI
BSYS CRNT CHH ELNT GENZ JNY MRCH OPLK
SAN FRANCISCO, Feb. 13 /PRNewswire/ -- The following has been issued by Robertson Stephens:
Estimate Changes: OSI Pharmaceuticals, Inc. (Nasdaq: OSIP) $54.63 Strong Buy F2002E EPS: ($0.89), New Michael King, Biopharmaceuticals "OSI's stock has reacted negatively over the past several days to concerns about upcoming data for OSI-774, an EGF receptor inhibitor, in the treatment of ovarian cancer," said King. "We view the slide as an over- reaction and believe the company will present positive data for the compound at the upcoming ASCO meeting in May. We believe this small molecule represents a potential blockbuster compound aimed at a target that may change the treatment paradigm for a number of cancers. We would be buyers on the recent weakness of stock and believe OSI should be a core holding for the biotech investor. We continue to expect the drug to reach the market in 2004 and reiterate our Strong Buy rating." PurchasePro.Com, Inc. (Nasdaq: PPRO) $15.94 Buy 2001E EPS: $0.57, up from $0.47 2002E EPS: $1.00, New Eric Upin, Business-to-Business eCommerce PurchasePro delivered solid Q4 results on Monday, February 12 -- reporting $33.6 million in revenue (representing 94% sequential growth) and operating EPS of $0.11," said Upin. "To reflect the company's strong top- line growth and earnings leverage, we are raising our estimates. Overall, PurchasePro reported very solid Q4 results -- where the numbers speak for themselves in terms of the magnitude of the upside and strong operating leverage. However, we continue to believe the stock will be burdened over the next 2-3 quarters by: the need to deepen the existing management team, continued questions about the discipline of the company's financial and operating controls, and the company's ability to drive growth and profitability in an increasingly challenging economic environment. Even though we expect the stock to receive a near-term boost based on the company's strong quarterly performance, positive outlook and relative valuation discount, we believe the issues highlighted above will need to be addressed in order for the stock to make its next meaningful move." Comments: Advanced Fibre Communications, Inc. (Nasdaq: AFCI) $21.44 Buy Paul Silverstein, Communications/Networking "In the wake of Advanced Fibre Communications' presentation Monday, February 12, 2001 at the Robertson Stephens Technology Conference, our confidence in the near- and intermediate- to long-term outlook has been bolstered," said Silverstein. "We believe the underlying drivers of AFC's business are intact: the current driver of additional narrowband voice deployment via digital loop carriers and the future driver of DSL deployment via digital loop carriers located outside the central office. While we continue to lack strong near-term visibility of DSL deployment by SBC in its plans to deploy AFC's Dmax plus system as one of the two key so-called "neighborhood gateway" DSL provisioning vehicles under its $6 billion three-year "Project Pronto" DSL initiative, we believe there will be meaningful DSL revenues off of AFC's digital loop carrier platforms from both SBC and other AFC customers in fiscal 2001. We continue to believe that AFC offers a very attractive risk-reward profile, and are thus reiterating our Buy recommendation." Bisys Group, Inc. (The) (Nasdaq: BSYS) $50.19 Buy Andrew Jeffrey, eProcessing/ePayment "The Bisys Group announced yesterday its intention to acquire Boston Institutional Group for approximately $35 million in stock," said Jeffrey. "Boston Institutional Group is a provider of outsourcing services for mutual funds, focusing on third-party distribution and asset gathering. We believe this deal provides Bisys with a strategic opportunity to cross- sell its suite of products and services to a new group of clients and solidifies its position as a leader in the Investment Services market. We believe Boston Institutional Group will add $25 - $30 million in annual revenues and it should be neutral to FY01 earnings, turning accretive in FY02. We argue that BSYS shares will continue benefiting from the company's high internal growth rate, improving competitive position, widening operating margin and higher projected pretax ROIC. Our 12-month target price is in the low-$60s." Ceragon Networks (Nasdaq: CRNT) $15.13 Buy Paul Silverstein, Communications/Networking "In the wake of Ceragon Networks' presentation Monday, February 12, 2001 at the Robertson Stephens Technology Conference, our confidence in the near- and intermediate- to long-term outlook has been bolstered," said Silverstein. "We believe the March quarter is shaping up very similarly to Ceragon's first and second quarters as a public company, i.e. we believe there is strong upside to our financial forecasts. There does not appear to be any slowdown in deployment of Ceragon's point-to-point broadband wireless solution. We note that Ceragon recently signed an OEM agreement with Lucent and we believe that they are already shipping product under that agreement. Given the strength in current visibility and current business trends we are reiterating our Buy recommendation on the shares of Ceragon Networks." Choice Hotels International, Inc. (NYSE: CHH) $15.00 Buy Harry Curtis, Gaming & Lodging "Choice Hotels reported 4Q:00 operating EPS of $0.28, in line with consensus and our estimate," said Curtis. "For the full year 2000, operating EPS increased 6.6% to $1.10 from $1.03 in 1999. Reported 4Q:00 EPS was $0.05, which included $19.4 million of previously announced one- time charges. These expenses included restructuring at the corporate office ($5.6 million), equity loss in Friendly Hotels ($10.3 million), and loss on payment of the Sunburst note ($3.5 million). Total restructuring charges exceeded our original estimate of $17 million, attributed to the write off in Friendly. 4Q:00 revenues of $44.5 million was in-line with our estimate. Revenue was driven by a 6.1% increase in royalty fee income to $35.1 million. System wide RevPAR growth was 4.7%, which exceeded our RevPAR expectation of 3-4% for the quarter. Across brands, Quality (6% RevPAR growth), Mainstay (11.2% RevPAR growth), and Rodeway (6.0%) experienced the strongest gains. As previously announced, the company received $102 million in cash from the repayment of the Sunburst note. We expect the company to utilize proceeds to repurchase additional shares, make strategic acquisitions, and for mezzanine funding." Elantec Semiconductor, Inc. (Nasdaq: ELNT) $36.06 Buy Tore Svanberg, Analog & Mixed-Signal Semiconductor Devices Arun Veerappan, Communications Components/Semiconductor Devices "Elantec CEO Rich Beyer, CFO Brian McDonald and VP of Corporate Strategy and Business Development Mohan Maheswaran presented at the Robertson Stephens Technology Conference yesterday," said Svanberg and Veerappan. "The company reported that its PC related sales, including the video and optical storage businesses, continue to be soft due to an overall slowdown in the PC industry. Despite this slowdown however, we believe Elantec products are somewhat less susceptible to overall growth trends due to the increasing industry adoption rate of optical storage devices as standalone devices and within PCs. Given the seasonality of the PC market and that some of the company's end-market customers continue to readjust component inventories, we believe the company's video and optical storage businesses could be somewhat flat during the March quarter from December quarter levels. We believe that the primary driver of the company's growth during the March quarter will come from its communications business, which continues to see great diversification, both in terms of customers as well as geographic regions. Overall, we believe that the company continues to execute well in its four main business lines, including video, optical storage, communications and power management and that its impressive rate of new product introductions over the last several quarters positions the company as a premier pure-play analog vendor in today's semiconductor markets." Genzyme Corporation (Nasdaq: GENZ) $82.88 Buy Michael King, Biopharmaceuticals "Oxford GlycoSciences (OGSIF $17-1/4) published a press release yesterday with preliminary analysis of a six-month study for Vevesca (OGT-918) for the treatment of Gaucher disease," said King. "The study was designed to evaluate oral Vevesca as a replacement to Genzyme General's Cerezyme enzyme replacement therapy (ERT). In this pivotal study, thirty-six ERT experienced patients (minimum of 2 years on therapy) were randomly divided into three cohorts with 12 patients converting to 100mg of Vevesca three- times daily, 12 patients receiving both Vevesca and ERT, and 12 patients remaining on ERT. Importantly, no clinical data was provided, which Oxford GlycoSciences intends to release at scientific meetings later this year. While it is impossible to draw any meaningful conclusions from the press release due to the lack of clinical data, we remain vigilant in analyzing cheaper, competitive threats to Genzyme's Cerezyme franchise especially as the drug comes off patent this year. We have been anticipating a slowing of Cerezyme growth and are now forecasting sales of $570 million this year. Genzyme plans to report full results on March 8th. We believe revenues of $203.7 million and $753.2 million for 4Q:00 and FY2000 respectively should not surprise anyone, and we are looking for EPS of $0.59 in 4Q:00 and $2.26 for FY2000.We are maintaining our BUY rating on Genzyme." Jones Apparel Group Inc. (NYSE: JNY) $38.51 Buy Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers "We reiterate our Buy rating on shares of Jones Apparel Group, as we believe the company maintains significant opportunities to achieve +12% revenue growth and +15% earnings growth annually through (1) expanding its the stable of well-known apparel, footwear, and accessory brands, (2) further diversifying its distribution channels, and (3) maintaining solid revenue growth in its core wholesale apparel business," said Kloppenburg. "JNY shares currently trade at 13.1x our likely conservative $2.94 F2001 EPS estimate and 11.0x our preliminary $3.50 F2002 EPS estimate-a significant discount to our projected 22% long-term earnings growth rate. We believe JNY shares should appreciate to our $53 price target throughout F2001, with JNY's P/E multiple expanding to 15.0x our preliminary F2002 EPS estimate of $3.50, as we believe the company's industry-leading growth opportunities, strategic foresight, and history of consistent revenue and earnings growth make JNY a compelling investment opportunity for those investors seeking to rotate into industry-leading companies within the consumer sector. As such, we reiterate our Buy rating and $53 price target." marchFIRST, Inc. (Nasdaq: MRCH) $2.50 Buy F2001E EPS: ($0.66), down from $0.20 Steven Birer, eServices "Yesterday, marchFIRST reported Q4:00 revenues of $213.5 million, below our lowered revenue estimate of $235.0 million," said Birer. "This result represents a 33.7% decline over Q4:99, and a 42.3% decline compared to Q3:00. We are lowering our 2001 revenue and EPS estimates from $1,200.0 million and $0.20, respectively, to $816.0 million and a loss per share of $0.66. We are nevertheless maintaining our Buy rating, based on an attractive risk/reward outlook over the long term if, as we believe, the company rights itself during 2001." Oplink Communications, Inc. (Nasdaq: OPLK) $12.13 Buy Arun Veerappan, Communications Components/Semiconductor Devices "Recently, Oplink announced the second phase of the expansion of its state-of-the-art, China-based manufacturing capability," said Veerappan. "Facilities are to be expanded in Zhuhai's Free Trade Zone, Shanghai's High-Tech Zone, and a new facility will be added in Chengdu. Today Oplink operates 200,000 square feet across these three facilities. Phase two targets the expansion of these facilities to 800,000 total square feet by the end of 2001. Oplink also operates specialty materials facilities in Beijing and Fuzhou. In addition, the company's headquarters and manufacturing facilities in San Jose, CA currently occupy 160,000. Currently, about 38% of products come from China and 62% come from the U.S. By the end of C01, Oplink expects the ratio to be 70% from China and 30% from the U.S. Regarding bookings, Oplink mentioned that it had about 80% of the March quarter booked going into the quarter. As a result, we believe Oplink will need to do about 20% turns business to meet analysts revenue forecasts of $47 to $48 million (up 10% q/q). While visibility at Oplink is lower than it was going into the September and December quarters, we believe that our estimates are very reachable given Oplink's high backlog coverage entering the March quarter, given the company's historical execution capability and given its current strong market position in the passive optical components market. As such, we reiterate our Buy rating on Oplink shares." Unless otherwise noted, prices are as of Monday, February 12, 2001.
Robertson Stephens maintains a market in the shares of OSI Pharmaceutifcals, PurchasePro.com, Advanced Fibre, The Bisys Group, Ceragon Networks, Elantec Semiconductor, Genzyme Corp., Oplink, and marchFIRST and has been managing or comanaging underwriter for or has privately placed securities of OSI Pharmaceutifcals, PurchasePro.com, Ceragon Networks, Elantec Semiconductor, Oplink, and marchFIRST within the past three years.
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SOURCE Robertson Stephens, Inc.
-0- 02/13/2001 /CONTACT: Elizabeth Denton of Robertson Stephens, 212-407-0470/ /Web site: http://www.rsco.com/
(FBF OSIP PPRO AFCI BSYS CRNT CHH ELNT GENZ JNY MRCH OPLK)
CO: Robertson Stephens, Inc.; OSI Pharmaceuticals, Inc.; PurchasePro.Com,
Inc.; Advanced Fibre Communications, Inc.; Bisys Group, Inc.; Ceragon Networks; Choice Hotels International, Inc.; Elantec Semiconductor, Inc.; Genzyme Corporation; Jones Apparel Group Inc.; marchFIRST, Inc.; Oplink
Communications, Inc. ST: California IN: FIN SU: RTG -0- Feb/13/2001 15:40 GMT