QUALCOMM Update Target Price $ 86

QCOM : NASDAQ : US$71.12
Target: US$86.00

Qualcomm manufactures chipsets, licenses technology,
and provides global wireless services. Qualcomm has a
strong wireless intellectual property position and is a
leading wireless chipset supplier.
All amounts in US$ unless otherwise noted.

Technology — Communications Technology — Semiconductors
Investment recommendation: Qualcomm posted strong Q1/F2014 results
with pro forma EPS of $1.26 (including a net $0.04 gain from the Omnitracs
business divestment offset by other charges) above our $1.15 estimate.
Qualcomm issued Q2/F’14 guidance slightly below our estimates, but we
believe better than investor concerns post soft December quarter results from
Samsung and Apple. Qualcomm raised its full year F2014 pro forma EPS
guidance and maintained expectations for stronger 2H/F2014 results versus
1H/F2014 with improving QCT EBT margins in 2H/F2014. We believe
continued growth of smartphones, connected devices such as tablets, the
upgrade to new air interface technologies such as LTE, LTE Advanced, and
TDD-LTE, and market share gains for integrated Snapdragon solutions
should drive solid F2014 and F2015 sales and earnings growth. We reiterate
our BUY rating and raise our price target to $86.
Investment highlights
 Qualcomm reported Q1/F2014 results above our and consensus
estimates driven by stronger QCT sales of $4.6B and EBT margins of
19.6% versus our $4.5B/17% estimates. Qualcomm issued Q2/F2014
guidance slightly below our estimates due to slightly weaker QCT chipset
sales expectations during the seasonally soft March quarter.
 Management raised its F2014 full year guidance to $26.8B and $5.10 at
the range midpoints and maintained its expectations for stronger
2H/F’14 results versus 1H/F’14 driven by an improving chipset mix in
all tiers, growing sales into China’s LTE customer base, and lower
operating expense levels. We remain impressed with Qualcomm’s 14.5%
device (QTL) unit growth estimate for C2014 with only modest ASP
declines anticipated, and we are encouraged by management’s
comments that TD-LTE units in China could drive unit growth upside.
 With Q1/F2014 results above our estimates, combined with Qualcomm’s
raised F2014 pro forma EPS outlook, we raise our F2014 pro forma EPS
estimate from $5.04 to $5.12 and our F2015 estimate from $5.66 to $5.76.
Valuation: Our $86 price target is base


Facebook Update Target Price $70

FB : NASDAQ : US$53.53
Target: US$70.00

Technology — Internet
Investment recommendation
Facebook reported another strong quarter that was dominated by the
continued transition to mobile, which brings fewer ads at higher prices.
This trend should continue in 2014, along with the probable ramp of
Instagram revenue and video ads. We expect several more quarters
ahead of expanding newsfeed ad pricing, and also suspect the ad model
on Facebook will continue to evolve rapidly, leaving room for future
positive surprises.
Key Points
 Bullish: Ad pricing was up 92% y/y, driven by mix shift to newsfeed
ads on mobile; ad unit pricing has not yet begun to expand; DAU
grew 22%, including respectable 9% growth in U.S. & Canada.
 Bearish: Ad impressions were down ~8% driven by mix-shift to
mobile; expect operating de-leverage in 2014, as expenses are
expected to grow 40-45%, faster than we had modeled.
 Estimate changes: we are slightly raising our FY14 and FY15
revenue and non-GAAP EPS estimates to $10,763M/$13,559M and
$1.15/$1.55 from $9,956M/$12,822M and $1.06/$1.38.
We raise our price target to $70 (from $62), based on 45x our revised
2015 EPS estimate of $1.55 (up from $1.38).

ServiceNow BUY Target Price $70

This is our 200o th post !

NOW : NYSE : US$57.60
Target: US$ 70

ServiceNow is a leading provider of cloud-based services that
automate enterprise IT operations — this includes a suite of
applications built on the firm’s proprietary platform that
automates workflow and provides integration between related
business processes. ServiceNow was founded in 2004, is
headquartered in San Diego, CA and has been public since June
All amounts in US$ unless otherwise noted.

Technology — Enterprise Software — Infrastructure
ServiceNow delivered outstanding results and the firm’s outlook was
similarly strong. This jibes with our broad fundamental take on next
generation software firms’ fundamentals – which we believe is strong, and
frankly, getting stronger. Nothing is cheap in this space, but ServiceNow, is
at least relatively inexpensive, and more importantly, we believe
ServiceNow is poised to become one of a handful of major platform firms in
this software cycle alongside others like Salesforce, Workday, Atlassian and
Splunk. Reiterate BUY.
 Another upside quarter. ServiceNow reported strong Q4/13 results with
revenue of $125.2M (+67% y-o-y) and FCF of $20.0M, which were
respectively $4.2M and $11.9M ahead of our estimates. Calculated
billings of $166.2M (+70% y-o-y) were $16.0M ahead of our forecast,
and the firm ended C2013 with a booked backlog of $875M, which is
up 59% y-o-y.
 Customer metrics. Average annual revenue per customer was $230k,
up 21% y-o-y driven by larger initial deals and user growth within the
customer base. NOW added 160 net new customers in Q4, up from 122
sequentially, bringing the firm’s total to 2,060, including 20% of the
Global 2,000. Subscription revenue retention was 96% and the firm
added seven new customers with ACV >$1M, up from 3 in Q3/13.
 Outlook: 51% revenue growth in C2014E as NOW continues to invest in
the face of big opportunity. On the heels of strong year-end bookings,
management set midpoint C2014 revenue guidance roughly $33M
ahead of our estimates. The firm plans to continue to hire aggressively
(targeting ~800 heads in total, and 300 in S&M in C2014), which will
have a negative impact on near-term operating margins. We trimmed
our FCF estimates

Quicksilver Resources Short Squeeze ?

KWK rises and falls with the price of natural gas as do most producers.

There are several additional factors that account for our interest .

We bought KWK for Jack A. Bass Managed Accounts because they are seeking to turn an overleveraged ship and the recent $485 M sale of assets is part of that.

Equally interesting is that the recent rise in nat gas pricing allows KWK to roll over successful hedges at prices that have rallied.

Finally a 25 % short position means volume and price support. At this point we have not seen any sign of short covering – that is unusual volume day after day .


Below Average
As of 30 Jan 2014 at 1:20 PM EST.
Open 3.18 P/E Ratio (TTM)
Last Bid/Size 3.26 / 59 EPS (TTM) -2.13
Last Ask/Size 3.27 / 427 Next Earnings 24 Feb 2014
Previous Close 3.16 Beta 1.73
Volume 1,307,835 Last Dividend
Average Volume 2,960,777 Dividend Yield 0.00%
Day High 3.27 Ex-Dividend Date
Day Low 3.08 Shares Outstanding 177.1M
52 Week High 3.54 # of Floating Shares 123.7796M
52 Week Low 1.44 Short Interest as % of Float 24.77%

Natural Gas Pares Decline as Supply Decline Matches Forecast

Natural gas futures pared declines in New York after a government report showed a U.S. stockpile decline that matched analyst estimates.

The Energy Information Administration said inventories fell 230 billion cubic feet in the week ended Jan. 24 to 2.193 trillion cubic feet. Analyst estimates compiled by Bloomberg showed a withdrawal of 231 billion. A survey of Bloomberg users predicted a decrease of 230 billion.

“It’s still a pretty healthy draw,” said Kyle Cooper, director of research with IAF Advisors in Houston. “The run up over the last few days has already priced in very large withdrawals and also you have a weather forecast at the very back end that looks to be moderating.”

Cirrus Logic HOLD

CRUS : NASDAQ : US$18.74
Target: US$18.00

Cirrus Logic, a fabless semiconductor company, develops
and sells high-precision analog and mixed-signal
integrated circuits (ICs) for audio and energy markets
worldwide. The company offers analog and mixed-signal
audio converter, digital amplifiers and audio digital signal
processor (DSP) products. The company also provides
high-precision analog and mixed-signal ICs and boardlevel
modules for energy-related applications.

Technology — Hardware — Semiconductor Devices and Related
Investment recommendation
We expect CRUS to continue to trade at a discount to peers following
disappointing guidance. Revenue concentration remains a negative for
the company, especially given a flattening out of dollar content and
uncertain unit growth going forward. Our estimates are reduced and our
price target is lowered to $18.
Investment highlights
CRUS reported CQ4/13A (Dec) after the close. Revenues and EPS
were $218.9 million and $0.89, compared to consensus estimates of
$213.3M/$0.77 and our estimates of $210M/$0.74. Gross margin
for the quarter was 47.6%, above guidance of 45% to 47% benefiting
from a favorable product mix. EPS benefited from higher revenues
and better than expected gross margins.
Revenue for the March quarter is expected to range from $130
million to $150 million compared to our estimate of $187 million
and the consensus estimate of $174 million. Implied EPS at the midpoint
is $0.30, compared to a consensus estimate of $0.48 and our
estimate of $0.52. Management highlighted the weak revenue
guidance is driven by a seasonal sequential decline in portable
audio and Y/Y decline in ASPs.
Cirrus Logic’s price target of $18.00 (was $24) is 7x our C2014 EPS
estimate of $1.76 plus net cash of $5.01/share.

RF Micro Devices BUY Target Price $ 7.25

Target: US$7.25

RF Micro Devices is a leading supplier of power
amplifiers, front end modules and other RF components
for mobile devices (handsets, smartphones, tablets) and
communications infrastructure.
All amounts in US$ unless otherwise noted.

Technology — Communications Technology — Semiconductors
Investment recommendation: RFMD reported Q3/F’14 sales well below but
pro forma EPS in line with our estimates as a solid 350 bps sequential
improvement in pro forma gross margin exceeded our estimates. While
Q4/F’14 sales guidance was well below our and consensus estimates, RFMD
guided to a strong 40% gross margin for the quarter. Given RFMD’s strong
relationship with Samsung, leading position with the Chinese smartphone
OEMs combined with our expectations for RFMD to further grow RF $-
content in Apple’s next-gen iPhone products, we believe RFMD has now
secured strong market share with all the three major constituents of the
smartphone ecosystem and is well positioned for continued solid growth
trends. Further, as evidenced by three consecutive quarters of strong gross
margin improvement, we believe the sale of the UK fab, improving capacity
utilization, additional assembly capacity in Beijing, ramping volume of new
ultra low-cost CMOS PAs, and an overall improving new product mix
ramping with leading smartphone platforms is driving sustainable margin
leverage. We reiterate our BUY rating and raise our PT to $7.25.
Investment highlights
Q3/F’14 sales of $288.5M was below our $319.5M estimate but pro
forma EPS of $0.13 was inline with our $0.13 estimate due to strong
39.7% pro forma gross margin that exceeded our 37.4% estimate.
RFMD guided to Q4/F’14 sales of $255M at the range mid-point, also
well below our $297M estimate. We believe a sharp sales decline into
Apple’s seasonally soft March Q was partially offset by improving sales
into Samsung’s next-gen smartphones and RFMD’s Chinese OEM base.
Despite the guidance for an 11% Q/Q sales decline, RFMD guided to a
strong 40% gross margin. Further, RFMD anticipates 10%+ Y/Y sales
growth and 40%+ gross margin during F2015 driven by strong design
wins in key smartphones and tablets expected to ramp in 2H/C2014.
With Q4/F’14 sales guidance well below our estimate, we lower our
F2014 pro forma EPS estimate from $0.44 to $0.42. However, with our
expectations GM are sustainable at 40%, we raise our F2015 estimate
from $0.55 to $0.59 and our F2016 estimate from $0.60 to $0.67.
Valuation: Our $7.25 price target is based on shares trading at roughly 10-
11x our F2016 pro forma EPS estimate.

Hudson’s Bay Company

HBC : TSX : C$16.89
Target: C$22.50

The Hudson’s Bay Company is a leading North American department store retailer, operating stores under the Hudson’s Bay and Home Outfitters banners in Canada, and under Lord & Taylor in the United States.
All amounts in C$ unless otherwise noted.

Consumer & Retail — Merchandising
Investment recommendation
Hudson’s Bay announced the sale of its downtown Toronto location, along with its ownership of the ~400,000 square foot Simpson’s Tower to Cadillac Fairview for $650 million. Hudson’s Bay will lease the location back for a base term of 25 years, with renewal options for just under 50 years. After incorporating the transaction into our valuation, we are maintaining our BUY rating and increasing our target price to C$22.50 from C$21.00.
Investment highlights
 Utilizing an average $25 rent per square foot implies a 4.75% cap rate for the transaction. Incorporating the $650 million sale price, as well as the aforementioned increase in rent against our annual EBITDA estimates, our sum-of-the-parts valuation increases from C$20.33 to C$22.79.
 Assuming all proceeds are initially directed toward debt repayment, our fiscal 2014 year-end net debt/ebitda estimate falls from 3.9x to 3.2x, leaving Hudson’s Bay much more latitude to pursue Saks-related expansion plans and pursue additional growth opportunities.
 Concurrently, the company announced the locations of the first two Saks stores in Toronto. A full-line, multi-level Saks will be co-located with the current Hudson’s Bay location at Queen/Yonge and is planned to open in the fall of 2015. Also, the company plans to open a location at Sherway Gardens.
Our target price reflects our updated sum-of-the-parts valuation and represents 8.5x our F2014 EBITDA estimate of $$643 million. Although Q4/F13 appears challenging given both a heavily promotional environment and very unfavorable weather, HBC remains committed to reducing excess SG&A costs and leveraging the recent acquisition of Saks. Meanwhile, we believe investors will be rewarded through further monetization of HBC’s significant real estate assets during F2014