Trefis Week In Review
The Week in Review
Below is a summary of the activity on Trefis during the past week that we thought you would find interesting.
- Abercrombie Reports Strong Q2 Beat, Yet Its Stock Tanks 17%: What’s Going On?
- What Helped Insulet Stock Gain 10% This Week?
- Drop Johnson & Johnson, Pick These Steady Eddie Stocks?
- Alibaba Stock Is Down 70% From Highs, But Its AI Push Is Yielding Results
- What’s Behind The 70% Rise In Philip Morris Stock?
- Up 50% And Then Down 25% This Year: What Explains These Wild Swings In Micron Stock?
Insights from the Week
Technology Media & Telecom
- Nokia-Microsoft’s OS Impact on Android Limited for Now on February 18, 2011
This deal provides Microsoft with an opportunity to gain market share in both the smartphone operating system market and the search advertising market as it leverages Nokia’s large global presence across the globe …
- Are Cheaper iPhones a Good Move for Apple? on February 18, 2011
The move to offer cheaper iPhones should help Apple gain smartphone market share, but this could come alongside lower average pricing and reduced profit margins …
- Nokia Partnership Provides Upside for Microsoft Stock on February 17, 2011
Through the Nokia partnership, Microsoft not only stands to gain licensing revenues for its operating system, but also search advertising market share …
- Outlook for Motorola Solutions in the Enterprise Security Market on February 17, 2011
A hypothetical scenario in which Motorola Solutions’ revenue from enterprise sales increases at rate of 10% to reach $4 billion by the end of our forecast period (vs. our $3 billion estimate) would imply 5% upside to our $35.49 price estimate for Motorola Solutions …
- AT&T Pushes to Grow Cloud Based Mobile and IT Services on February 17, 2011
We estimate that enterprise segment constitutes around 8% of AT&T’s price estimate and is thus not a great value contributor …
- Nokia’s Pact with Microsoft – The Long and Short of It on February 17, 2011
There is still hope for Nokia in the long-term, as the initiative will allow Nokia to concentrate on its hardware products post-transition and cut costs currently spent on software development …
- Juniper’s Shares Soar, Taking a Closer Look at its Switch Market Business on February 17, 2011
Juniper has a smaller presence in this market vs. other markets it competes in like edge and core routers, and we think this might be its biggest opportunity to grow …
- Amazon, Apple & Google Benefit from Borders Bankruptcy on February 16, 2011
The reduction in brick-and-mortar distribution points for magazines is likely to drive publishers further into the arms of Apple and Google which are offering up their growing smartphone and tablet platform bases as potential salvation for the publishing industry …
- Patch.com Can Lift AOL’s Fortunes on February 16, 2011
Patch.com attracted around 3 million unique visitors during December 2010, which is about 80 times the number recorded a year earlier …
- ESPN Leads the Charge for Disney’s Media Network Profit Growth on February 16, 2011
ESPN is Disney’s most valuable product segment, by our estimates, accounting for an estimated 28% of the company’s stock value …
- Upside and Downside Scenarios for NYT’s Online Paywall on February 16, 2011
In a hypothetical scenario in which 1 million users register at the $10 per month web-only fee, it would imply $120 million in incremental annual revenues …
- Time Warner’s Digital Magazine Moves Provide Little Stock Upside on February 15, 2011
While no immediate plans exist in this regard, Time Warner has expressed interest in ultimately bringing its offering to Apple’s gadgets …
- OpenTable’s International Growth Driven by toptable on February 15, 2011
Toptable.com generated about $3.1 million in revenues for OpenTable in Q4 2010 – more than 10% of the company’s total revenue of $30.7 million for the quarter …
- Sticking with Cisco at $24 Though Earnings Raise Concerns on Core Business on February 15, 2011
There is pricing pressure on the portfolio and that raises the question of whether Cisco will be able to sustain a successful product transition without sacrificing on pricing or profit margins too much …
- What an NFL Lockout Would Mean for DirecTV on February 15, 2011
We believe the risk of customers switching to another service provider is limited, but the risk of losing revenue from NFL Sunday Ticket subscriptions looms …
- Rising Smartphone Penetration Presents Upside to Verizon’s Stock Value on February 14, 2011
It is clear that new customers are leaning towards smartphones, but older customers are upgrading as well, as evidenced by Verizon’s aggressive smartphone penetration targets for the coming year …
- Tablets to Help Push Dell Stock Above $20 on February 14, 2011
We estimate that Dell will be able to capture a modest 5% market share of Android based tablets in 2011 behind competitors like Samsung and Motorola selling close to 700,000 units during the year …
- Sprint Points to Higher Investment in Network Improvement on February 14, 2011
However, if Sprint can achieve its network improvements prior to 2015, and its spending levels subsequently drop, the company’s value could get a significant lift …
- Mobile Device Security Creates Attractive Growth Opportunity for Symantec on February 14, 2011
Symantec stock stands to gain if the mobile security market does indeed become a meaningful portion of the overall security software market …
(Trefis Pro Exclusive) Consumer, Retail & Automotive
- Skin Care Drives Estee Lauder in 2010; Margin Improvement Further Lifts Stock Value on February 18, 2011
Estee Lauder draws over 40% of its sales from skin care and recorded 15% growth in revenues from this segment during 2010 due in part to improved market share …
- McDonald’s Sales Momentum into January Could Prompt Stock Upside on February 18, 2011
McDonald’s encouraging comparable store sales performance has been driven by both increased average spend per customer visit as well as a rise in customer traffic at its restaurants …
- American Eagle Still Lagging Competitors After Holiday Season on February 18, 2011
American Eagle’s growth trends have been lagging behind competitors like Gap, A&F and Aeropostale in December and January, as well as for the full fiscal 2010 …
- Why Unilever Could Bid for Colgate and Why Now on February 16, 2011
Colgate’s strong balance sheet could allow Unilever or another suitor to raise debt against Colgate’s assets in the event of a takeover …
- Sizing Up Coach’s Downside on February 16, 2011
While shifting production to new regions might help Coach cut down on production costs going forward, the initial expenditure required to set-up production capabilities or establish ties with manufactures could pose a near-term headwind to profit margins …
- New Coverage: $45 Trefis Price Estimate for General Motors on February 16, 2011
After GM sold its majority stake in Ally financial, GM’s vehicle lease business contributed only 5% to GM’s total valuation, but we expect GM’s vehicle leasing business to grow and become increasingly more valuable following the acquisition of AmeriCredit …
- Ford Cruising in Right Direction Despite Earnings Speed Bump on February 15, 2011
Lower sales volumes in Europe were driven by Ford’s focus on maintaining profit margins and its decision to reduce its participation in certain low margin businesses …
- Higher Input Prices Will Restrain Kraft’s Margin Outlook on February 15, 2011
Kraft has lowered its earnings forecasts for 2011 and expects revenue growth to be driven more by higher prices than higher volumes …
- New Mobile Payment System Could Increase Starbucks’ Customer Traffic on February 14, 2011
Apart from this, the spending needs to cover cost of initial implementation of the technology as well as ongoing security fixes could weigh on Starbucks …
- What is the Potential Upside if Wal-Mart Gains Ground on iTunes? on February 14, 2011
Wal-Mart is already a source of significant income for studios by selling their DVDs and has massive scale to be competitive in electronic sell-through as well …
(Trefis Pro Exclusive) Energy & Financial Services
- ALICO Accelerates MetLife’s International Growth on February 18, 2011
We estimate that MetLife’s share of international insurance market will grow to about 0.3% by 2013 after the successful integration of operations …
- Coverage Launch: $19 Trefis Price Estimate for E-Trade on February 18, 2011
With more and more online brokerage firms trying to provide end-to-end financial services to their customers with facilities like online bill payment and debit card services, E-Trade has managed to remain a front-runner in this sector and consistently attract new customers …
- Two Legs of Growth for American Express: Women and Technology on February 18, 2011
What differentiates American Express from MasterCard and Visa is its relatively more affluent customer base, which it maintains by offering generous benefits and reward programs …
- Coverage Launch: $153 Trefis Price Estimate for First Solar on February 18, 2011
First Solar was the first company to reduce manufacturing cost per watt below $1, making it comparable to power generated by other conventional means …
- The Indirect Upside from Goldman’s Facebook Investment on February 17, 2011
The deal provides clues about Goldman’s private equity strategy in the wake of the Volker regulations, a part of the Dodd-Frank financial reform bill that puts a cap on the amount of proprietary capital that banks can use to make investments …
- Chevron Pushing Further into Natural Gas – Is There Much Stock Upside? on February 17, 2011
Although the expansion is a positive for Chevron, natural gas production constitutes only 9% of the company’s stock value by our estimates, so upside from this segment is limited …
- Coverage Launch: $20 Trefis Price Estimate for Charles Schwab on February 17, 2011
As net interest return is dependent on the investments undertaken by the firm, the value of this return is highly dependent on the efforts of the research arm …
- Encouraging Outlook if Wells Fargo Can Reduce Non-Interest Expense on February 16, 2011
Despite optimism following strong top line growth and a decline in net charge-offs during Q4 2010, we believe that non-interest expenses still pose a concern for Wells Fargo’s outlook …
- NYSE Euronext and Deutsche Boerse Merger Spells Promising Margin Outlook on February 16, 2011
NYSE Euronext and Deutsche Boerse AG anticipate that the business merger could generate 300 million euros ($450 million) in cost savings principally from economies of scale in information technology, clearing operations, market operations and corporate center functions …
- Coverage Launch: $22 Trefis Price Estimate for Ameritrade on February 15, 2011
The increasing popularity of an MMDA over normal savings account among clients due to the higher interest offered is also a significant advantage for Ameritrade …
- Improvement in Loan Portfolio Could Spell Upside for Wells Fargo on February 15, 2011
In its Q4 2010 results, Wells Fargo reported a significant improvement in the performance of its loan portfolio including both loans and mortgages as lending increased, driven by strong loan demand and decreased net charge-offs …
- MetLife Pushes New Products to Add Life to Shares on February 14, 2011
With the number of US uninsured households at a 50-year record high, more companies are coming up with similar products, which may improve sales …
- Difficult Trading Environment Weighs on Goldman Shares on February 14, 2011
Lower volumes and liquidity due to volatile macro economic conditions in the short term and increased regulations on proprietary trading in the long run will contribute to this lower yield …
- Upside and Downside Scenarios for JP Morgan on February 14, 2011
A weak economic recovery has resulted in a decline in average interest earning deposits and presents a potential concern for the multinational bank …
- Will Slimming Barclays’ Headcount Help it Shed Weight? on February 14, 2011
We believe that the decision to discontinue financial planning services could increase the Consumer Banking division’s profitability from our current forecast of just under 24% by the end of our forecast period …
Summaries of Trefis Members’ Recent Forecasts
- Connectivity Fee Could Add to Upside on MasterCard on February 18, 2011
MasterCard is trying to offer domestic solutions in various countries and these centers will bring the costs down and help MasterCard to lower its connectivity fee …
- Strong Viewership Can Give MTV Leverage to Grow Ad Pricing on February 18, 2011
With growing fragmentation of younger audience between cable, the Internet and other media, MTV’s market penetration translates into stronger pricing power for ad slots …
- Growth in Suntech’s PV Module Sales Could Beam Shares 20% Higher on February 16, 2011
We expect Suntech’s PV module sales to keep growing driven by environmental concerns that will spur adoption of solar energy systems and continued government subsidies that will keep prices affordable for consumers …
- Higher Gas Prices and Refining Margins Can Add Fuel to Conoco Shares on February 16, 2011
If there is a shift toward gasoline-oriented vehicles, European refiners will have a tough time producing enough to meet European demand as well as maintaining the level of exports required by the US market …
- International Markets Can Drive Gains in Priceline’s Hotel Bookings Market Share on February 15, 2011
Internet penetration in international markets has been growing at a substantially greater pace than in the United States and offers Priceline a larger addressable market to increase its hotel bookings …
- Apple’s Mac Notebook Prices More Resilient Than Our Estimates on February 14, 2011
These are signs that the notebook market is being increasingly commoditized, which has resulted in intense competition among notebook makers, in turn causing price erosion …
- Outlook for Coach’s New Store Openings on February 14, 2011
Coach’s retail and factory square footage has grown at an average annualized rate of over 15% in both North America and Japan …
ALICO Accelerates MetLife’s International Growth