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Analyst downgrades: AFL, HWAY, NVDA and SUNW
Filed under: Analyst reports, Analyst upgrades and downgrades, Bad news, AFLAC Inc (AFL), Sun Microsystems (SUNW), Stocks to Sell
 MOST NOTEWORTHY: Nvidia (NVDA), Briggs & Stratton (BGG), Sun Microsystems (SUNW), Healthways (HWAY) and MGIC Investment (MTG) were today's noteworthy downgrades:
- Stifel cut shares of Nvidia (NASDAQ: NVDA) to Sell from Hold on valuation.
- Briggs & Stratton (NYSE: BGG) was cut to Underperform from Neutral at Baird following the disappointing Q4 report and guidance.
- Goldman downgraded Sun Microsystems (NASDAQ: SUNW) to Neutral from Buy.
- Goldman also cut Healthways (NASDAQ: HWAY) to Sell from Neutral on valuation, following the recent rally that lacked material news of fundamental changes at the company.
- JP Morgan cut MGIC Investment (NASDAQ: MGIC) to Underweight from Overweight following recent strength which they believe is not warranted by fundamentals. They believe the overhang of the proposed RDN merger along with weak near-term fundamentals will likely drive underperformance in shares until the merger issues are fixed...
OTHER DOWNGRADES:
- Robinson Humphrey downgraded Goodrich Petroleum (NYSE: GDP) to Reduce from Neutral.
- RBC Capital downgraded Symmetricom (NASDAQ: SYMM) to sector Perform from Outperform.
- Restoration Hardware (NASDAQ: RSTO) was downgraded to Hold from Buy at BB&T.
- Henry Schein (NASDAQ: HSIC) and Aflac (NYSE: AFL) were cut to Equal Weight from Overweight at Morgan Stanley.
Analyst summaries provided by TheFlyOnTheWall.com (subscription required).
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Money Advisory
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Through The Fly’s Eyes: VMware
from Theflyonthewall.com
Server Virtualization About To Come Public
VMware, the California-based server virtualization company, is due to come public the next few weeks as it wraps up its roadshow.
EMC Corporation (EMC), which owns VMware, sold a big stake to Intel Corporation (INTC) and will allow us to participate in this industry’s growth as well. However, as pointed out by Eric Savitz in Barron’s over the weekend, server virtualization might hurt the big server companies such as Sun Microsystems (SUNW) and Dell Inc (DELL), as it reduces the need for servers on a five-to-ratio. Virtualization allows numerous users to work off of one server.
Technology bull markets often take off on a disruptive product and maybe server virtualization will be it. The IPO market for hardware and software has been dead for quite a while. Rather than going public, technology companies have been going private. The VMware deal is important because it could set the stage for renewed investor interest in technology. Stay on top of this IPO, this could be a high flyer.
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Theflyonthewall.blog
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Fast Money Recap & Review
Google Phone?
The Wall Street Journal
reported today that Google is spending big money on developing a mobile phone. Jim Goldman told the crew that Google Inc. (NASDAQ:GOOG) is earmarking over $100 million for this project and hiring 200 engineers. Google also hired the guy who invented the Sidekick. Goldman isn't so sure that Google will actually make a phone comparing the idea to Microsoft Corporation (MSFT) building a PC. Goldman says if Google decides to bid on the wireless spectrum then consumers would get a free phone, free access to the web and free phone calls. Goldman says that mobile advertising is a $65 million market. Goldman thinks the trade here is Google will be a leader in wireless software. Eric Bolling think that will happen but he doesn't see a trade in this.
America's Aging Infrastructure
The bridge collapse tragedy in Minneapolis raises concerns over the aging infrastructure in the U.S. Is the rational reaction to buy infrastructure stocks off this news like Fluor Corporation (FLR) and Foster Wheeler Ltd. (FWLT)? Guy Adami thinks if you're an investor you should own these stocks regardless. Eric Bolling would own these stocks for global growth. Bolling also like Meadowbrook Insurance Group Inc. (MIG) which is a play on toll roads. Jeff Macke likes Exponent Inc. (EXPO) which specializes in consulting for architectural engineering and they specialize in analyzing catastrophes.
Tech Tidal Wave
Market players seem to be positioning in tech stocks for a spending tidal wave. The Hewlett-Packard Company (HPQ) was up 3% and Cisco Systems Inc. (CSCO) was up 4%. Pete Najarian made bullish comments on Juniper Networks Inc. (JNPR), Cisco Systems (CSCO) and Sun Microsystems Inc. (SUNW). Guy Adami also likes Dell Inc. (DELL) and Eric Bolling would buy International Business Machines Corporation (IBM). Jeff Macke likes CSCO. Collectively the guys like HPQ.
CEO Interview
Happy 52-week to Allergan Inc. (AGN)
Sea Change
A new growing trend in travel is upon us with the private jet. Private jet travel is up 40% since 2002 due to companies like Blue Star Jets which is making the experience cheaper. Blue Star Jets is growing at over 30% a year doing $200 million in sales. Guy Adami says if you want to play this trend and make the fast money buy General Dynamics Corporation (GD), Textron Inc. (TXT), Rockwell Collins Inc. (COL), Embraer-Empresa Brasileira de Aeronautica S.A. (ERJ). Pete Najarian thinks the play off this is Morton's Restaurant Group Inc. (MRT) Tiffany & Co. (TIF) and Allergan Inc. (AGN), which make products for the rich who fly on these jets.
Pops and Drops
POPS-The9 Limitd (NCTY) traded up 11% today on strong demand for role-playing games in China. Guy Adami thinks it goes higher. Beazer Homes USA Inc. (BZH) was up 14% as the hedge fund Citadel doubled its position in the builder. Eric Bolling would stay out the stock is garbage. Las Vegas Sands Corp. (LVS) was up 8% today on bullish growth at the Macao casino. Eric Bolling called Macao the real deal stay with it. Pharmion Corporation (PHRM) exploded higher by 58% today after positive results of a phase 3 leukemia drug. Pete Najarian says the end isn't over. Dolby Laboratories Inc. (DLB) was up 13% after beating street estimates. Guy Adami says you can't stop the digital revolution.
DROPS- The Clorox Company (CLX) traded down 7% on poor bleach sales. Pete Najarian said he mis-read it and blame Merrill Lynch. LeapFrog Enterprises Inc. (LF) fell 16% on the China toy scare. Jeff Macke sees no opportunity in this stock. Nortel Networks Corporation (NT) was down 6% after the company cut profit forecasts. Guy Adami says guidance was terrible, but own it down to $19 with a stop for a trade. Getty Images Inc. (GYI) plunged 19%. Jeff Macke thinks its a round trip to grimville. Callaway Golf Company (ELY) fell 6%. Pete Najarian says the stock is done without Tiger Woods. Guy Adami gave kudos to
Barrons
for a July 25th article that said take profits on ELY. Jeff Macke said buy it now they are sand-bagging next quarter.
Final Trade
Pete Najarian would buy Juniper Networks Inc. (JNPR) before Cisco's earnings. Jeff Macke would get long Callaway Golf Company (ELY) on pullbacks. Eric Bolling and Guy Adami had no stock picks.
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Madd Money
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Through The Fly's Eyes: Getty Images
from Larry Ramer of Theflyonthewall.com
For Getty, it’s not a Pretty Picture
The walls are closing in and around digital images provider Getty Images (GYI). On the one hand, the company, which provides visual content to print media and advertisers, is being squeezed by discount Web sites that are offering royalty-free pictures. At the same time, Getty is suffering from the decline of advertising in print media and the surge in text-only advertising on the Internet.
These factors led Getty to dramatically lower expectations for its performance in Q3 yesterday. The company now predicts that its earnings per share this quarter will come in at just 43 cents, versus analysts’ previous consensus of 61 cents per share. Getty’s shares got hammered today, plunging nearly 19% to about $36. Apparently, the Internet advertising revolution has claimed an Old Media victim.
If there is salvation for Getty, it may come from software-as-a-service digital access management, or DAM. According to bitpipe.com, DAM is “the process of storing, retrieving, and distributing....files such as logos, photos, documents and multimedia files in a centralized system.” Getty has entered the software-as-a-service DAM market, and has apparently had some significant success. On Tuesday, research company Frost & Sullivan presented Getty with its 2007 Global Award for Market Leadership, and declared that Getty has become the largest software as a service DAM vendor. Getty has leveraged its expertise in delivering 2.5B thumbnails through its website each month to create its digital access management solution. In developing its DAM services, the company has concentrated on the media and marketing markets. It has most likely capitalized on its connections in the media and advertising worlds to sell its DAM services.
However, judging by a comment by Getty’s CEO yesterday, the company itself may not be putting too much emphasis on its DAM business. “Stabilizing our traditional stills business is our number one priority,” said Getty CEO Jonathan Klein. There are a large number of companies, including giants IBM (IBM) and Sun Microsystems (SUNW), offering DAM products and/or services. Getty may justifiably feel that it will not be able to thrive in this business over the long term.
The only other hope for Getty shareholders at this point is for the company to be acquired. Getty’s market capitalization is now only about $2.1B. Perhaps another company will decide that it its worth paying $2.5B or so to obtain Getty’s expertise in digital imagery and its growing DAM business. If not, Getty’s future is, well, black and white.
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