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November 25, 2015
07:44 EDTPMCSMicrosemi accretion from PMC-Sierra deal underappreciated, says Stephens
Stephens analyst Harsh Kumar said Microsemi's (MSCC) accretion from its deal to buy PMC-Sierra (PMCS) is being underappreciated by the market, making him a buyer of the stock. Kumar reiterates his Overweight rating and $45 price target on Microsemi shares.
November 24, 2015
12:08 EDTPMCSOn The Fly: Top stock stories at midday
Stocks began the session in negative territory and remained there for most of the morning. The weakness was attributed to the worldwide travel alert issued by the U.S. State Department on the eve of the Thanksgiving holiday as well as the shooting down of a Russian plane by Turkey, both of which heightened the tension of investors. The averages have shown improvement since the European markets closed and have moved to their session highs to turn mixed near noon. ECONOMIC EVENTS: In the U.S., the estimate of third quarter GDP growth was boosted to 2.1% from 1.5%, matching estimates. Personal consumption growth was estimated at 3.0% in the second look, versus expectations for an increase of 3.2%. The S&P/Case-Shiller 20-city composite home price index was up a seasonally adjusted 0.6% month over month in September, versus expectations for an increase of 0.3%. The Conference Board's consumer confidence reading for November came in at 90.4, missing the consensus forecast of 99.5. COMPANY NEWS: Bill Ackman has put more funds behind his big bet in Valeant Pharmaceuticals (VRX), as filings show that Pershing Square raised its stake in the embattled drugmaker to 9.9%. In other news from a high-profile activist investor, Carl Icahn revealed that he has taken a 7.13% stake in Xerox (XRXZ) and may seek positions on the board of the company. Research firm Piper Jaffray believes that Icahn's involvement in the company can amplify the company's review and boost the stock, but was not the case at midday, as Xerox shares slipped about 2% following last night's disclosure. MAJOR MOVERS: Among the notable gainers was Dollar Tree (DLTR), which rallied 6% after it reported upbeat quarterly earnings and backed its fiscal 2015 guidance. Also higher was Burlington Stores (BURL), which gained 8% after reporting quarterly results and approving a new $200M share repurchase program. In addition, Boulder Brands (BDBD) was up 8.5% after it agreed to be acquired by Pinnacle Foods (PF) for $11 per share. Pinnacle slipped 4% following the deal announcement. Another noteworthy losers was Brocade (BRCD), which fell 8% and was downgraded to Neutral from Overweight at JPMorgan following its Q4 earnings. Also lower was Microsemi (MSCC), which dropped 6% after it agreed to acquire PMC-Sierra (PMCS), which was also 6% lower, in a $2.5B transaction. INDEXES: Near midday, the Dow was up 15.57, or 0.09%, to 17,808.25, the Nasdaq was down 8.75, or 0.17%, to 5,093.73, and the S&P 500 was down 0.7, or 0.03%, to 2,085.89.
11:39 EDTDTLKDatalink management to meet with Craig Hallum
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10:56 EDTPMCSSkyworks may look for new targets after losing out on PMC-Sierra
Shares of Skyworks Solutions (SWKS) rose, and those of PMC-Sierra (PMCS) fell, after the former gave up on its pursuit of the latter, which has agreed to be acquired by Microsemi (MSCC). An analyst from CLSA suggested that the failure to reach a deal is good news for Skyworks, which may now seek out other merger and acquisition opportunities that are a better strategic fit. WHAT'S NEW: Skyworks announced that it terminated its merger proposal with PMC-Sierra, which subsequently agreed to be acquired by Microsemi in a deal valued at approximately $2.5B. Skyworks said that it takes a "highly disciplined" approach to identifying takeover candidates and that PMC no longer meets its financial criteria at an increased valuation. Skyworks initially made its offer of $11.60 per share on October 29, and Microsemi followed suit a day later with an increased bid of $11.88 per share. Things escalated from there, with Microsemi finally agreeing to acquire PMC for $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC in a transaction valued at approximately $2.5B and representing about a 77% percent premium to the closing price of PMC shares as of Sept. 30. STREET RESEARCH: Following the news, CLSA analyst Srini Pajjuri said that it "didn't make much strategic sense" for Skyworks to acquire PMC in the first place due to the PMC's lagging growth over the past three years. Pajjuri argued that abandoning a proposal for PMC was a positive development for Skyworks, which can sustain double-digit organic growth for the next two to three years without a major merger or acquisition. The analyst added that analog/MCU firm acquisitions offer a better strategic fit for Skyworks and named Silicon Labs (SLAB), Monolithic Power (MPWR), Semtech (SMTC), MaxLinear (MXL), and Inphi (IPHI) as possible targets. Pajjuri kept an Outperform rating and $92 price target on Skyworks' stock. PRICE ACTION: In morning trading, Skyworks rose 1% to $78.52, PMC-Sierra slid 2% to $11.61 and Microsemi fell 7.9% to $33.36. Meanwhile, Silicon Labs gained 2.2%, MaxLinear rose 2.4%, Monolithic Power was flat, and Semtech and Inphi were marginally lower.
10:29 EDTPFPTPalo Alto seen adding confidence on IT security demand
The shares of IT security company Palo Alto (PANW) are rising after the company reported stronger than expected results last night. In a note to investors today, JPMorgan wrote that the results "should help restore investor confidence" in demand for IT security systems. WHAT'S NEW: Palo Alto reported first quarter earnings per share of 35c, versus analysts' consensus estimate of 32c. The company's revenue came in at $297M, versus the consensus outlook of $284M. The IT security company provided roughly in-line Q2 EPS guidance, while its Q2 revenue guidance came in slightly above expectations. "Security remains a strategic consideration embedded in virtually every IT decision, (and) as a result, the demand environment remains very healthy, said Palo Alto CEO Mark McLaughlin. ANALYST REACTION: Palo Alto's results should boost investors' confidence in the IT security demand environment, wrote JPMorgan analyst Sterling Auty. Palo Alto's results were "healthy" and the company's customer growth trends continue to be strong, the analyst stated. Moreover, the company is selling more of its products to each customer, Auty reported. As investors shift to valuing the company on cash flow, moving away from their current revenue based valuation method, the stock should rise, according to Auty, who kept a $216 price target and Overweight rating on the name. Palo Alto reported strong results, showing that the company is continuing to gain share in the new, fast growing next generation firewall and advanced threat detection market, according to Stephens analyst Jonathan Ruykhaver. Strong demand, good new products, and a wider distribution network will enable the company to deliver significant share gains and strong growth, believes the analyst, who increased his price target on the stock to $200 from $190. Also very upbeat on Palo Alto was Pacific Crest analyst Rob Owens. The company's growth continued to be "torrid" last quarter and it will clearly be among the winners in the IT security sector, wrote Owens, who raised his price target on the shares to $210 from $190 and kept an Overweight rating on the name. WHAT'S NOTABLE: Other publicly traded companies in the IT security space include Barracuda (CUDA), Check Point (CHKP), F5 Networks (FFIV), FireEye (FEYE), Fortinet (FTNT), Imperva (IMPV), Proofpoint (PFPT), Qualys (QLYS) and Symantec (SYMC). PRICE ACTION: In early trading, Palo Alto climbed 7% to $184.22.
08:41 EDTPMCS, PMCSSkyworks may seek alternate M&A after missing out on PMC-Sierra, says CLSA
CLSA analyst Srini Pajjuri argues that PMC-Sierra (PMCS) was not a good strategic fit for Skyworks (SWKS) and that giving up its acquisition pursuit was a positive development. The analyst thinks Skyworks can sustain double-digit organic growth for the next two to three years without an acquisition, but wouldn't be surprised to see the company look for another target, naming Silicon Labs (SLAB), Monolithic Power (MPWR), Semtech (SMTC), MaxLinear (MXL) and Inphi (IPHI) as potential fits. Pajjuri has an Outperform rating and $92 price target on Skyworks shares.
07:04 EDTPMCSMicrosemi enters definitive agreement to acquire PMC-Sierra in $2.5B deal
Microsemi Corporation (MSCC and PMC-Sierra (PMCS) announced that they have entered into a definitive agreement under which Microsemi will acquire PMC for $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock through an exchange offer. The transaction is valued at approximately $2.5B and represents a 77.4% percent premium to the closing price of PMC's stock as of Sept. 30. The transaction is expected to be immediately accretive to Microsemi's non-GAAP EPS and free cash flow. Microsemi anticipates achieving more than $100M in annual cost synergies with greater than $75M of those expected to be realized in the first full quarter of combined operations. Microsemi currently estimates approximately 60c of non-GAAP EPS accretion in the first full year after closing the transaction. Microsemi intends to fund the transaction and repay its existing credit facility with existing cash, $2.7B in new transaction debt and $0.6B in Microsemi common stock. Shareholders of Microsemi and PMC will own approximately 85% and 15%, respectively, of the combined entity post completion of the transaction. Under the terms of the definitive acquisition agreement, a wholly-owned subsidiary of Microsemi will commence an exchange offer to acquire all of the outstanding shares of PMC common stock for $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock tendered. The exchange offer is subject to customary conditions, including the tender of at least a majority of the outstanding shares of PMC's common stock and certain regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the first quarter of calendar 2016. No approval of the stockholders of Microsemi is required in connection with the proposed transaction. Terms of the agreement were approved by the boards of directors of both Microsemi and PMC.
07:01 EDTPMCSMicrosemi enters definitive agreement to acquire PMC-Sierra in $2.5B deal
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05:15 EDTPMCSSkyworks announces termination of merger agreement with PMC-Sierra
Skyworks Solutions (SWKS) announced that it decided not to modify its amended and restated merger agreement with PMC-Sierra (PMCS), entered into on October 29. Today PMC terminated the amended and restated merger agreement and, as a result, Skyworks is entitled to an $88.5M termination fee from PMC. Skyworks maintains a highly disciplined approach to the assessment of potential acquisition candidates, and at an increased valuation, PMC no longer meets Skyworks' financial criteria. Skyworks' upwardly revised mid-term target operating model remains unchanged from the annualized non-GAAP earnings per share of $8.00 it provided on its Q4 earnings conference call on November 5.
November 19, 2015
07:34 EDTSALEGoldman Sachs to hold a conference
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07:27 EDTCKECMKM Partners to hold a conference
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07:05 EDTPMCSMicrosemi announces revised proposal to acquire PMC-Sierra deemed 'superior'
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November 18, 2015
13:36 EDTCKECCarmike remains undervalued relative to peers, says B. Riley
B. Riley analyst Eric Wold says Oasis Management's letter to Carmike Cinemas, as reported last night by Reuters, highlights a number of the arguments he's been making. Wold continues to view Carmike as a "meaningfully undervalued" theater chain with the potential for a dividend. He reiterates a Buy rating on the stock with a $32 price target.
13:31 EDTCKECActivist Oasis pressing Carmike for dividend, Reuters reports
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07:59 EDTPFPTUBS to hold a conference
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07:46 EDTSALEJefferies hosts a summit
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07:02 EDTPMCSMicrosemi announces revised proposal to acquire PMC-Sierra for $12.05 per share
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November 16, 2015
19:50 EDTSPDCSpeed Commerce reports Q2 EPS (32c), consensus (4c)
Reports Q2 revenue $31.3M, consensus $34.2M.
08:02 EDTPMCSPMC-Sierra reiterates commitment to Skyworks transaction
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November 13, 2015
17:22 EDTPMCSRelational Investors gives quarterly update on stakes
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