Let’s take a look at some analyst morning notes.
- Still bullish on Qualcomm: “Post close wireless innovator QCOM delivered impressive December quarter results and raised both its March and FY11 outlook sharply (even ex-$250M boost from royalty resolution). We believe QCOM remains a core growth pick given leverage to Smartphones, Tablets, 3G momentum and accelerated 4G deployments. We believe the guidance for EPS and chip margins remains conservative with design and customer wins at Mobile World Congress (2/14/11) and incremental opportunities with AAPL’s new iPhone for mid CY11 are likely to further boost sentiment. We use a target of at least $62 or 17x new CY11 of $3.01 plus $11.59 per share of cash.”
- Likes Motorola Mobility Holdings: “MMI announced its initial earnings as a separate entity reporting Q4 earnings on Wed. night. Reported sales of $3.4 billion were inline with consensus. Smart phones units of 4.9mln units increased 145% Y/Y & 29% Q/Q but were shy of 5.1mln consensus. Total units (smart + feature) were 11.3mln. We would not be surprised to see the stock trade lower on the results as some investors viewed the separation break up as a value creation event coupled with potential conservatism in guidance for results post spin. Maintain Hold/Speculative, $34.50 TP.”
- The Netflix flywheels are hard to stop: “NFLX Q4 revenue growth accel’d to 34% Y/Y vs. Q3’s 31%, on a flat Y/Y comp. We continue to believe NFLX is benefiting from momentum related to: a) Appeal of Streaming service through more connected devices and set-top boxes; b) Fewer physical DVD rental stores; c) Rapid growth of kiosk outlets, which given their inherently limited selection, may be highlighting NFLX’s deep content value proposition; and d) New subscription venues through mobile devices, such as the iPad, iPod Touch and iPhone; and (ii) Impressive Operating Margin expansion – Operating Margin was 13.1%, up 110 bps Y/Y, and was 160bps above our expectation. The upside came from about $23MM in lower operating expenses vs. our estimates, with Marketing expenses as the primary source of leverage. An Oprah endorsement and publicity around the Streaming Only service launch certainly helped reduce marketing costs, but so too did ongoing device distribution an continuous Streaming service improvements. We’d note that 13.1% operating margin is the second highest reported margin in past 8 quarters.”
- Extremely pleased with Qualcomm: “QCOM reported an incredibly strong fiscal Q1 with EPS of $0.82 well above our $0.72 estimate and far above the $0.70-$0.74 guidance even normalizing for a $0.03 boost from a lower tax rate and R&D credits. Revenue of $3.348B topped our $3.235B estimate and hit the top end of guidance of $3.05-3.35B. Guidance for FYQ2 was equally strong with revs of $3.45-3.75B and EPS of $0.77-$0.81 vs our ests of $3.12B in revs and $0.70 in EPS. As smartphones continue to ramp, we believe QCOM benefits both on royalties as ASPs remain high and on chips, particularly as the pace of wireless complexity accelerates widening the technology gap between QCOM and competitors and driving a favourable pricing environment and higher operating leverage. Reiterate OW.”
- Kinda bullish on the paywall: “Still wait and see. While the first look at potential scenarios is encouraging, with so much uncertainty on the specifics, coupled with risk of disruption in this higher-growth online segment of the business, we maintain our current stance. The stock’s premium to the group is about its historical 5-year average, suggesting this potential may not be captured in the shares. We believe any definitive data may be positively received by investors, suggesting some near-term upside potential in the stock; however, it will take a longer period of time to assess consumer reaction and the financial impact of this decision, also suggesting above-average volatility.”