Thursday, February 24, 2011

Hewlett Packard downgraded

Since Quarter 1 earnings have come out for Hewlett Packard and I have re-evaluated the stock and downgraded from out-perform to just perform. The new target price based off my new valuations will be $54.32 per share from the previous valuation of $57.26 per share. This is based off poor guidance set forth by Hewlett Packard during the conference call about discussing earnings for the quarter. As well as delay in new products offered and sluggish performance in sales to commercial clients being down 12%.

Chris Whitmore, analyst at Deutsche Bank.
"We believe it could be a rocky road going forward as the transition to a revenue-driven story will likely take considerable time,"

A Huge Disappointment is the delay in the debut of the Webos Touchpad the "Timing of all our WebOS products (and) Wi-Fi version of TouchPad available in summer in the US, and rest of the world in the fall." This has already been delayed tremendously. It will be very difficult HP to gain strong makret share while Apple will most likely have their second generation Ipad out by then.

Jonathan Wiener

Wednesday, February 23, 2011

Hewlett Packard Earnings HPQ, Q1

Hewlett Packard opened today down 11% based off of poor revenue from this past quarter and a poor outlook for Q2 presented by HP. HP missed ours and other analysts experts by a considerable amount. HP's guidance for the current quarter, when compared to the first fiscal quarter, is the lowest in nine years, other than in 2009, which was the height of the economic recession. It is expecting revenue to be 31.4 - 31.6 billion making it over 1 billion off our estimates. Net income for the quarter ended 1/31 and went up 16% obtaining $2.6 billion or $1.17 a share which was up from $2.3 billion or 93 cents a share based off last year. Revenue increased 4% to $32.3 billion from $31.2 billion, and gross margin rose 1.5 percentage points to 24.4%.

On the positive side HP has many new products that are going to be released in the coming year. They have the touchpad which I believe will be able to take a small share in the tablet market. With the acquisition of palm HP has decided to come out with their own line of cell phones. The most innovative release is the revitalization of their laptops since Personal computer sales have dropped this quarter this is vital for their comeback in that segment. The new laptop elite line allegedly will be able to get up 32 hrs a charge this will equate to tremendous sales if it is true.

At the moment I believe we will ride out this wave till the end of the week and I will post tomorrow with updated valuations based on the information that has been put out.

Jonathan Wiener

Friday, February 18, 2011

ECL F4Q10 Earnings 02/17/11-(Jim Carroll)

Ecolab Inc., released their 4Q earnings on February 17, 2010. They reported EPS at $.56(+17%) and adjusted EPS at $.60(+9%). Also, adjusted 2010 results were +12% to $2.23 and estimates for 2011 have been forecasted to rise + 11-13 %. Earnings barely trailed estimates of $2.24 and it was above last year’s EPS of $ 1.99.

Net sales were up $ 1575.5 Million in the 4th quarter. Total revenues for the fiscal year of 2010 rose 3 %( year over year) to $6089.7 Million. ECL results were primarily from their Latin America and Asia Pacific sales. As well as, the global lodging and food and beverage businesses.The US Cleaning and Sanitizing business grew 1% to $681 million for the 4Q. ‘Other US Services’ rose $ 111 million. International operations jumped 3 % to $681 million. Overall, Operation Margins grew from 12.9% from 12.5%. Gross Margin increased marginally from 50.1 % to 50.3%.For 2011, ECL predicts their EPS to be between $2.47- $2.53.

ECL was just shy of earnings prompting shares to drop 5.3 % to $ 47.10, on February 17th. In the 4 Q ECL made acquisitions that analysts feel may put the company at risk. There has also been increased competition from Clorox (CLX) and Church and Dwight (CHD). J.P. Morgan even stated that so far in 2011, they are at the ‘bottom’ of the chemical universe. Ecolab, for the first quarter of 2011, estimates EPS to be 42 cents to 45 cents per share, which is below the average estimates of 48 cents a share. Ecolab created a restructuring plan in Europe, which will cut 900 jobs.

ECL plans to improve sales and to offset the cost of raw materials with new product releases and better pricing. In November, ECL acquired O.R solutions and they closed the deal for the Cleantec business from Campbell’s Brothers Ltd. O.R solutions is U.S. developer of surgical fluid warming and cooling systems. The Cleantec business, based out of Australia, is a developer of cleaning and hygiene products. On February 14th Ecolab released a disposable helmet system for use in surgical procedures. They feel that this will give surgeons the protection barrier they need and maintain a level of comfort.

-Jim Carroll

Thursday, February 17, 2011

ASNA Target Price

The Ascena Retail Group (ASNA), known as Dress Barn prior to a corporate reorganization, closed today above my initial target price of $31.20. The stock has been up recently on above-expectation 2Q results and positive macroeconomic trends. ASNA is up 23.5% since inception into the portfolio.

After updating the model, I have re-evaluated the price target to $36.15 based on calendarized EPS of $2.41 and a P/E multiple of 15x. This represents 15% upside potential from current trading levels.

ASNA's second quarter conference call will be held on March 2. Dress Barn continues to hit on all cylinders as they continue to recognize synergy from the Justice acquisition. Consolidated comp performance for 2Q was 9%; resulting from 1% in dressbarn division, 17% from maurices, and 11% from Justice.


Thursday, February 10, 2011

Rapid Micro Biosystems Partners with Life Technologies Corporation

Rapid Micro Biosystems, a leading provider of automated, non-destructive, rapid microbial detection, today announced a sales and marketing agreement with Life Technologies Corporation. For quality control microbiology customers, the agreement combines best in class automated microbial detection and enumeration with gold-standard microbial identification.

The agreement leverages the strengths of both companies, benefiting customers who struggle daily with time consuming, manual processes, and product safety testing where accuracy and time to results are critical. The goal of the agreement is to maximize industry adoption of the complementary technologies. The Growth DirectTM System from Rapid Micro Biosystems enables rapid microbial detection, and the MicroSEQ® Rapid Microbial Identification System from Life Technologies facilitates accurate bacterial and fungal identification.

Ralph Lauren Beats Estimates and Doubles Dividend in 3Q

Ralph Lauren (RL), which is currently trading at a price of $126.86, released 3rd quarter earnings yesterday February 9th 2011. Net income rose to $168.4 million or $1.72 a share which beat expectations of $1.29. Revenue climbed to $1.5 billion beating the expectations of $1.46. Same store sales increased by 15%. As of close of February 8th 2011 the stock is up 47% in this past year. Also announced was the approval for a $250 million dollar buy back which is in addition to about $469 remaining under another plan. In addition, the company has declared an increase in the regular quarterly cash dividend to $0.20 per share from $0.10 per share. While performance has improved there will be challenges facing RL including increasing cotton prices. UASBIG will monitor this closely however does believe that Ralph Lauren has the pricing power to offset the increase in commodity costs.

~Susan Jacobson

Thursday, February 3, 2011

IP F4Q10 Earnings 2/3/2011 - Jeremy Pellizzari

International Paper Co. released their 4th quarter earnings on February 3 and showed an adjusted EPS of $0.68, which is more than triple that from the year prior. They also turned in revenues of $6.5 billion, a 9% year over year increase. International Paper was able to have what they called their best 4th quarter in ten years due to solid volume, pricing, and cost performance. A highlight from the earnings call pointed out the strong margin expansion both in the 4th quarter and throughout the year. In the 4th quarter, margins expanded 240 basis points, which is actually more than the annual expansion of 110 basis points. On an annual basis, IP earnings were just of $2 per share and they had a strong free cash flow of $1.7 billion. Sales finished the year up 8% and ended the year with a lower debt level and a solid cash balance of $2 billion.

Broken down into segments, the Industrial Packaging segment had revenue growth of 16% year over year and adjusted operating profits of $274 million, a 226% year over year increase. The printing papers segment showed a 1% increase in revenue with a 70% increase in adjusted operating profit to $236 million. Consumer packing posted revenues of $880 million, up 12% year over year, and also increased their adjusted operating profits to $64 million. Xpedx, the company’s distribution business, reported revenues of $1.77 billion and actually showed a decrease in year over year operating profits of 71%, down to $9 million.

As for the future, International Paper Co. has highlighted the ability of their company to produce high amounts of free cash flow and expansion in foreign markets as factors of continuing success. As well as producing a solid year of earnings, IP was able to raise their dividends back to the pre-recession level of $.75 cents per share.

Jeremy Pellizzari - Junior Analyst

LIFE Releases 4th Quarter Earnings

Life Technologies reported after the close of today's market that its fourth-quarter revenues rose 7 percent to $932.3 million (exceeding Wall Street estimates of $929.4 million) year over year with 11% sales increases for its Genetic Systems and Cell Systems divisions.
The company posted a net profit of $70.7 million, or 37 cents per share, compared with a profit of $48.9 million, or 26 cents per share, a year ago.
It projected 2011 revenue growth in the mid-single digits and forecast earnings excluding items of $3.80 to $3.95 per share. Analysts' on average are looking for 2011 earnings of $3.86 per share for the company.


Illinois Tool Works earnings report

Illinois Tool Works reported their Q4 earnings and the earnings per share were $0.79 versus the $0.80 predicted by the analysts. The company's fourth-quarter profits fell by 23% as prior year. The decrease was primarily due to a big tax cut recorded in 2009. The last year tax benefit gave an extra 37 cents boost to EPS. For the whole year the company earned a total of $3.03 per share or a total of $1.53 billion compared to $1.49 per share and $947 million in 2009.

Even though the profits decreased the revenue for the fourth quarter was up by 11%. The best preforming segments were the Power Systems and Electronics which contribute almost 23% growth in revenue, and Welding Equipment increased their revenue by 18%. The total revenue for the year was $15.87 billion from $13.88 billion in 2009.

The volume of trades for the day was double the daily average, and despite not beating the analyst estimates the stock the stock closed the day with only a loss of 1.3% or $0.70.

The company is very optimistic on their first quarter earnings prediction which are higher then the estimates on the street. The company predicted 12% to 15% earnings growth for the first quarter, which will result in 81 cents to 87 cents EPS. Analysts predict earnings to be 76 cents per share a 10.6% growth.

Roman Beleuta

Tuesday, February 1, 2011

Novartis 4Q10 1/27/2011

Novartis released earnings Thursday, and reported $14.2 billion in sales for the fourth quarter and $50.6 billion in sales for year 2010. Novartis increased their fourth quarter sales by $1.3 billion, or 10%, from fourth quarter 2009, and increased their annual sales by $6.3 billion, representing an increase of 14%. In addition to sales, profit also exceeded last year’s numbers, but did not exceed analyst expectations. Profits for the year jumped to $10 billion, representing an increase of 18% over the previous year’s $8.4 billion in profits. Quarterly profits fell by 2% from $2.32 billion to $2.27 billion.

Despite fairly positive numbers, Novartis shares dropped 2.7%, as the reported earnings did not meet analyst recommendations. Wall Street analysts had expected Novartis to report earnings of $1.25 per share, but the company only returned $1.14. The earnings underperformed analyst expectations mainly due to restructuring charges and currency impacts. However, the company praised its acquisition of Alcon, and expects the new eye-care division to be a driver of earnings growth in the future. In addition, the company saw 13 major products approved, and filed 16 new products during the 2010 year. Novartis saw strong growth in its generic division, which saw sales increase 14% from $7.5 billion to $8.5 billion. The generic arm of Novartis capitalized on patent expirations of other large pharmaceutical companies such as Sanofi-Aventis and Merck. Novartis created generic version of Sanofi-Aventis’ Lovenox, a blood thinning drug, and Cozaar, a major cardiovascular drug created by Merck. Novartis also has some potential blockbuster drugs in the pipeline. The company is currently working on an experimental respiratory drug called QVA149, which is expected to be a major drug if it is approved. A new blockbuster drug is necessary, as Novartis is about to face patent expirations of some of its biggest drugs. Diovan, the company’s best-selling heart drug, drove $6 billion in sales in 2009, and is now facing patent expiration in 2011. In addition, Gilvec drove nearly $4 billion in sales, and is facing patent expiration in 2015.

To summarize, Novartis saw increase in annual and quarterly sales, and an increase in annual earnings. Despite these increases, the company missed analyst expectations, and the stock dropped by 2.7%. Going forward, the company needs to find a new blockbuster drug to help alleviate the earnings loss that will come when two major drugs, Diovan and Gilvec, face patent expiration. Considering the patent expirations the company is facing, and the uncertainty surrounding healthcare reform, I am cautious about Novartis’ return potential and its place in our portfolio.

-Ryan M. Kennedy