A couple of old fav's...TWAV & PUMA
Therma-Wave (TWAV) 17 3/8 -3/8: This report is for those of you that are interested in doing some year-end bottom fishing... While many investors focus on price and/or percentage drop when looking for recovery plays, Briefing.com notes that one of the most important elements of a successful recovery candidate - and this is especially true in today's marketplace - is earnings visibility... For example, FreeMarkets (FMKT) is well off its early year highs... And while we like the company's long-term prospects, the fact that FMKT is not expected to turn a profit for another couple of years increases the risk associated with the stock... TWAV, on the other hand, is expected to post earnings of $1.41 in FY01 and $1.91 in FY02... Despite its deeply discounted valuations, the stock - like FMKT- is trading just off its 52-wk low... Why? Clearly it has nothing to do with excessive valuations (like in the storage/optical networking sectors)... No, in TWAV's case it's been guilt by association as virtually everything chip-related has suffered through a miserable few months... But so far TWAV's underlying business remains quite strong - and management has given no guidance to the contrary... In fact, the fundamentals look quite solid as company has ample cash, a ROE of 66% and no debt... The stock's limited float also makes it attractive to daytraders... Consequently, those investors looking to play a rebound in techs might want to spend some more time taking a closer look at TWAV... Initial resistance is at 20, with penetration setting up move to the 26-28 area. - Robert Walberg, Briefing.com
14:50 ET ******
Pumatech (PUMA) 8 17/32 -3 17/32: PUMA shares are off 30% and just established a new 52-week low after reporting Q1 results after the close yesterday. They didn't miss their bottom line, in fact, they beat the consensus estimate of a $0.09 loss by a penny. By most estimates, PUMA also beat their top line, but at least one analyst was disappointed by the $9.9 mln sales, which represented 54.8% y/y and 9.9% q/q growth. Two Strong Buy reiterations (CIBC and Frost) and two downgrades followed the report, USB Piper Jaffray and Wedbush Morgan both cut their ratings from Strong Buy to Buy. Wedbush Morgan cited a weaker-than-expected quarter in Pumatech's Mobile Application Platform (MAP) growth. Indeed, the 11 new customer signings, were down from last quarter and well below Wedbush's expected 21 new customers. However, overall MAP revenue did show 10% sequential growth in a weak wireless environment. MAP is seen as a key revenue driver for PUMA and the lower-than-expected customer count is cause for concern, but not panic. MAP revenues accounted for 33% of the total, and going forward, management expects sequential MAP growth in the low double digits. Enterprise sales were up 10.2% to $4.72 mln, and again management expects low double digit sequential growth in Q2. The quarter also included the acquisition of The Windward Group. While only two weeks of the quarter included combined Windward results, the Professional Services sequential growth of 18.9% is a precursor to future strong growth in that business segment. The Windward Group adds about 50 employees to the previous total of 20 for the Professional Services business. While the services business will crunch gross margins slightly, it will also see the strongest sequential growth in the next few quarters as a result of the acquisition. Gross margins may slip to the 78-80% range over the next few quarters, but PUMA maintains the highest GMs in their industry. While some analysts had predicted a $10 mln quarter, PUMA's Q1 results were not that bad considering the slowdown in the wireless environment. They did not issue negative forward guidance, in fact next quarter's $11.3-11.7 revenue estimate is in line with the models we've seen. Today's sell off appears to be overdone, however the wireless sector shows few signs of being resuscitated in the near future.- Matt Gould, Briefing.com |
