SAN FRANCISCO, Nov. 15 /PRNewswire/ --
The following is being issued by Robertson Stephens, a member of the National Association of Securities Dealers, CRD number 41271:
November 15, 2000
Initiation of Coverage
BarcoNet N.V. (BARN.BR 13.14 Euros)
Buy
Nicklas Gustafsson, Manufacturing and Communications Industries Hardware
"We believe that the European and Asian broadband communication markets are in the early stages of a long-term growth toward becoming true mass consumer markets," said Gustafsson. "Competition between operators, as well as between different broadband technologies on deregulated markets will, in our opinion, drive network operators to make substantial infrastructure investments in broadband technologies. We believe that BarcoNet is well positioned, with its extensive client relations, broad product and service offering and experienced management, to benefit from the large infrastructure investments European broadband operators are expected to make over the next couple of years."
Rating Changes
MP3.com, Inc. (Nasdaq: MPPP) ($4.00)
Long-Term Attractive
Aleksandar Sasa Zorovic, Online Media Infrastructure
Lowell Singer, Next-Generation Internet eNablers
"Mp3.com was ordered to pay statutory damages and attorneys fees to Universal Music Group (UMG) in the amount of $53.4 million," said Zorovic and Singer. "As Mp3.com does not intend to appeal the judgment, this now ends the lawsuit UMG brought against Mp3.com. Together with $53.2 Mp3.com paid for settling with the other four major labels, the total settlement in the amount of $106.6 million is significantly less than the $170 million figure the company set aside for that purpose originally. We are upgrading our rating on the company's stock to Long-Term Attractive from Market Performer. The end of this lawsuit at terms that are not excessively damaging to the company, in our view, decreases the investment risk in MPPP considerably."
Estimate Changes
BEA Systems, Inc. (Nasdaq: BEAS) ($70.94)
F2001 EPS: $0.24 from $0.22
F2002 EPS: $0.37 from $0.31
Buy
Alex Baluta, Internet & eCommerce Applications
Mark Perutz, eBusiness Infrastructure
"BEA Systems reported strong results yesterday for the third quarter fiscal 2001 with total revenues increasing 77% year-over-year," said Baluta and Perutz. "The company reported revenues of $224 million and an operating EPS of $0.07, surpassing our estimates of $207 million in revenue and EPS of $0.06. It is our view that BEA continues to build momentum as the leading software infrastructure platform for e-business, and has now posted four consecutive quarters of over 75% year-over-year revenue growth. Leading with its WebLogic application servers, we believe BEA is solidifying its claim as the top vendor of a comprehensive eBusiness infrastructure platform. The company is within reach of becoming the de facto standard platform for powering eBusiness, in our view. We reiterate our Buy rating."
Cato Corporation (The) (Nasdaq: CACOA) ($12.13)
F2000 EPS: $1.51 from $1.49
F2001 EPS: $1.60, New
Long-Term Attractive
Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"Cato reported third quarter EPS increased 38.5% to $0.18 from $0.13 in the third quarter of 1999, $0.02 ahead of our $0.16 estimate," said Kloppenburg. "Tight cost control resulted in a better-than-expected SG&A ratio and generated the $0.02 earnings upside vs. our estimate. Due to the $0.02 upside achieved in the quarter, we are raising our fiscal 2000 EPS estimate to $1.51 from $1.49. We are establishing a fiscal 2001 EPS estimate of $1.60. We believe our estimate is conservative, as it assumes 4.7% revenue growth and a flat operating margin of 9.1%. We expect the company to provide additional guidance on fiscal 2001 revenues and earnings within the next month. CACOA shares trade at 7.6 times our $1.60 fiscal 2001 EPS estimate, a significant discount to the company's long-term 15% projected secular growth rate. We believe CACOA shares should appreciate due to multiple expansion to an 11-12 times range and due to likely additional upside to current earnings estimates. As such, we reiterate our $18 price target, implying 50% possible price appreciation for investors with a 12-18 month time horizon."
Letsbuyit.com (LBC NM/1.48 Euros)
2000E EPS: (1.61) Euros from (1.57) Euros
2001E EPS: (0.96) Euros from (0.99) Euros
Buy
Derek Brown, European Internet & eCommerce
Michael Graham, Internet
"On November 14, LetsBuyIt.com announced results for its fiscal third quarter ended September 30," said Brown and Graham. "We believe the company reported solid third quarter results, especially considering the seasonally weak third quarter period. In addition, we believe the company's underlying fundamentals continue to improve, pointing to strong momentum as the company heads into the all important fourth quarter retail season. Overall business momentum remains strong, in our view. Member growth, buying members as a percent of total members and average value per unit sold all beat our estimates for the third quarter. We believe that these trends, combined with the company's launch of its Christmas shop today and emphasis on fulfillment in the current quarter point to a strong fourth quarter performance. Although the company does not have enough cash to reach profitabilty, we believe the company remains undervalued at these levels and we maintain our Buy rating."
Mills Corp. (NYSE: MLS) ($17.00)
2000 FFO: $2.66 from $2.68
2001 FFO: $2.95 from $2.96
Buy
Jay Leupp, REITs/REOCs/Real Estate Services
"Mills Corporation (MLS) reported Q3:00 FFO of $0.66 per share, $0.01/share below our estimate. We attribute the difference in reported earnings and our estimate to lower than expected earnings from unconsolidated joint ventures. We believe Mills' strength continues to be its healthy development pipeline. Currently, Mills has two properties under development. Arundel Mills, containing 1.3 million square feet and scheduled to open November 17, 2000, and Discover Mills, containing 1.2 million square feet and slated to open in 2001. 2002's development pipeline appears similarly extensive with three projects currently in the planning stage. We are revising our 2000 and 2001 FFO/share estimates of $2.68 and $2.96, to $2.66 and $2.95, respectively, to reflect third quarter results and our revised fourth quarter percentage rent estimate. We reiterate our Buy rating. Our 12-month price target is $19, or approximately 6.5 times our 2001 estimate of $2.95/share."
Network Appliance, Inc. (Nasdaq: NTAP) ($96.25)
F2001 EPS: $0.42 from $0.40
F2002 EPS: $0.58 from $0.57
Buy
Dane Lewis, Network Storage Systems & Software
"Network Appliance reported fiscal second quarter 2001 results in line with our estimates," said Lewis. "Revenues for the quarter increased 109% year-over-year and 13% sequentially to $260.8 million versus our estimate of $258.9 million. Pro-forma EPS for the quarter was $0.10, in line with our estimate. While revenue growth was impressive, the company reported less upside than it has historically shown. NTAP's caching business rebounded this quarter, bringing in $20 million in revenues vs. $10 million last quarter. The company has stated its intent to continue focusing on increasing caching as a percentage of revenues. We are raising our estimates for the fiscal third quarter of 2001, fiscal 2001, and fiscal 2002. In our view, the company can continue to grow at 100% year-over-year for the rest of the fiscal year, but believe the law of big numbers is catching up with it. We will revisit next year's estimates at a later date once we see how the NTAP performs once new competitors enter the market."
Sycamore Networks, Inc. (Nasdaq: SCMR) ($64.44)
F2001 EPS: $0.23 from $0.22
F2002 EPS: $0.37 from $0.35
Buy
Paul Johnson, Communications/Networking
"Sycamore reported what we believe to be impressive fiscal first quarter results above our forecasts for revenues and earnings," said Johnson. "Revenues of $120.4 million and pro forma EPS of $0.05 exceeded our and Street estimates of $104.0 million and $0.04, respectively. Sequential revenue growth during the quarter was driven by continued strong acceptance of the company's products at Williams Communications, as well as two unnamed '10% customers' in the quarter. As a direct consequence of the strong financial performance during the quarter, we are raising our estimates for fiscal 2001 and 2002. We believe our estimates continue to be conservative. We are reiterating our Buy rating on the stock."
Wal-Mart Stores, Inc. (NYSE: WMT) ($46.88)
F2000 EPS: $1.43 from $1.44
Long-Term Attractive
Bill Dreher, Broadline Retailing/Discount & Department Stores
Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"Wal-Mart reported third quarter 2000 EPS of $0.31 versus $0.29, which was in line with our $0.31 estimate and the Street expectations of $0.31," said Dreher and Kloppenburg. "This represents a 5.5% increase in EPS, well below the company's long-term earnings growth rate of 15% and the EPS increases of approximately 27% and 29% enjoyed in fiscal 1998 and fiscal 1999, respectively. It appears to us that Wal-Mart management is appropriately adjusting to the more moderate consumer spending environment and clamping down on inventory and expense controls. Given that Wal-Mart benefits from the broadline retailing industry's most comprehensive sales database and forecasting systems, we are very comfortable with our modestly revised estimates. Wal-Mart shares remain rated Long-Term Attractive due to what we view as limited upside potential from multiple expansion. Our conclusion on Wal-Mart is that while the company has very strong fundamentals, we believe that the shares could continue to experience a choppy trading pattern until the macroeconomic picture stabilizes. Thus, despite our tremendous respect for Wal-Mart's management and the company's strong prospects, we are maintaining our Long-Term Attractive rating, based on a decelerating earnings growth rate, our forecast for limited upside potential to earnings, as well as the shares' premium valuation in a stock market that is less receptive to investments in the retailing sector."
Comments
Antigenics Inc. (Nasdaq: AGEN) ($13.94)
Buy
Michael King, Jr., Biopharmaceuticals
"Yesterday, Antigenics won a patent infringement case in Europe against Stressgen Biotechnologies," said King. "The European Patent Office ruled that Stressgen's patent to use heat shock proteins (hsp) in therapies for cancer and infectious diseases was invalid. This ruling follows a similar preliminary ruling two years ago from the EPO. AGEN has similar patents in the United States. AGEN currently is the only company to hold patents in the field of heat shock proteins. We view this patent victory as a major validation of the company's patents in the U.S. and abroad. Stressgen has a heat shock protein product, HspE7, in Phase II and Phase III clinical development for the treatment of HPV and genital herpes. The company plans to continue these trials. Oncophage(R), AGEN's lead product, is now in nine separate trials for seven different cancers. The most advanced is a Phase III trial for the treatment of renal cell carcinoma. AGEN is conducting eight Phase I/II trials in six different cancers. With the recent acquisition of Aquila and the likely filing of an IND in the fourth quarter of 2000 of a heat shock protein treatment for herpes simplex virus, AGEN is beginning to expand its product portfolio beyond cancer. With over $4 per share in cash and a growing product pipeline, we feel AGEN represents a compelling value in today's market. We reiterate our Buy rating."
Crosswave Communications, Inc. (Nasdaq: CWCI) ($8.75)
Buy
Jim Friedland, Telecom Services
"Crosswave reported fiscal second quarter 2001 revenues of Y529.9 million, up 71% from fiscal first quarter 2001, exceeding estimates," said Friedland. "EBITDA losses for the quarter increased to (Y2,276.0) million (($21.1) million), from FY Q1:01 losses of (Y1,989) million (($18.8) million). The company's network rollout is on track. Crosswave already has 3,700 route miles of operational backbone using leased dark fiber from KDDI (Phase I) and has started to deploy 4,010 route miles using a conduit obtained from the Ministry of Construction. During the quarter, the company's customer base increased to 50, up from 38 in the previous quarter. The customer base consisted of 33 corporations and 17 telecom carriers. Crosswave is building 59,600 square meters (641,529 square feet) in data space in Japan - more than any other next-generation telecom operator. Crosswave had Y33,719 million ($312.5 million) in cash at September 30, 2000. We estimate that the company is funded through 2001. We are maintaining our Buy rating."
Intimate Brands, Inc. (NYSE: IBI) ($22.81)
Buy
Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"Intimate Brands reported third quarter 2000 EPS increased 14.5% to $0.09, in line with our $0.09 estimate," said Kloppenburg. "As previously announced, total sales in the third quarter rose 13.6% to $925.1 million versus $814 million in the third quarter of 1999, driven by a 6% comp-store gain and an 11% increase in selling square footage. The quarter's 6% comp-store sales gain exceeded our initial forecast for a 5% comp increase. IBI shares trade at only 18.2 times our fiscal 2001 EPS estimate of $1.25, a 28% discount to the company's 20% secular growth rate. We believe our fiscal 2001 EPS estimate of $1.25, which represents 15.4% EPS growth, could prove highly conservative and believe the company will continue to benefit from upwardly revised earnings estimates in fiscal 2001. As such, we remain confident in our Buy rating and recommend purchase of shares."
Redback Networks Inc. (Nasdaq: RBAK) ($70.06)
Buy
Paul Johnson, Communications/Networking
Ara Mizrakjian, Communications/Networking
"In light of the recent weakness in the shares of Redback, we thought it helpful to explore the company's historical valuation," said Johnson and Mizrakjian. "We believe that the following analysis renders the current situation as particularly appealing to investors and, as such, we believe the stock represents an attractive buying opportunity. We believe Redback is trading at a significant discount to their closest peers in the Next Generation IP and Optics arenas. The price to revenue multiples of their closest peers among the next-generation IP companies and the leading next generation optical vendors are more than double that of Redback's. In our opinion, this will change as Redback's optical business grows and as they increase their already "gorilla-esque" market share in the next generation IP arena. Redback filed its third quarter 10-Q statement this week. In the filing, the company stated that it had sold $5.4 million in receivables in the most recent quarter. We believe that this sale consisted of a single receivable from a single customer - a large name brand carrier. Although we are not one for passively accepting growth in receivables from quarter to quarter and we would have preferred management to disclose the issue on the conference call with analysts, this event seems relatively innocent to us. Time will tell if this is a foreshadowing of more difficult business conditions, although we doubt it. We are reiterating our Buy rating on Redback Networks."
Target Corporation (NYSE: TGT) ($28.38)
Long-Term Attractive
Bill Dreher, Broadline Retailing/Discount & Department Stores
Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"Target reported third quarter earnings per share fell -8.4% to $0.24, two cents below the $0.26 EPS result of last year," said Dreher and Kloppenburg. "This performance was in line with our $0.24 estimate and a penny above the Street consensus expectations of $0.23. We continue to be concerned with the company's strong deceleration in operating momentum. Dissimilar to other Wall Street analysts and management guidance, we do not believe Target's current issues are a one-quarter phenomenon. We do not expect sales trends to quickly rebound. We are concerned that the softening of consumer spending, which is particularly pronounced in the Midwestern portion of the country, and is compounded by an across-the-board fashion miss, which we believe affects Target's modern lifestyle merchandising more than any other discount store, will lead to continued deceleration of operating trends. We continue to believe fourth quarter Street consensus EPS estimates are overly optimistic and will need to continue to come down from the current consensus estimate of $0.62, towards our $0.56 estimate, which is flat with last year's $0.56 performance. We are maintaining our LTA rating on TGT shares."
TJX Companies, Inc. (NYSE: TJX) ($28.13)
Long-Term Attractive
Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
"During yesterday's call, management surprised the Street by lowering comp guidance for November to 1% from 3%," said Kloppenburg. "Comps month to date are flat, given a weakness in Kids and Dresses and TJX is now projecting fourth quarter 2000 EPS of $0.50, $0.03 below our previous $0.53 estimate and versus $0.44 last year. This represents 13.6% EPS growth which we note is below the company's long-term projected growth rate of 15%. This short-term slowdown in sales and projected EPS growth in tandem with what we believe are growing pains for TJX as well as the company being vulnerable to an increasingly promotional retailing environment caused us to decrease our rating to Long-Term Attractive from Buy. The fourth quarter revisions caused us to decrease our fiscal 2000 by $0.02 and our fiscal 2001 estimates by $0.03, and thus we are projecting EPS of $1.88 in fiscal 2000 and $2.12 in fiscal 2001. We note that our fiscal 2001 remains below consensus; however, we remain cautious given the promotional retailing environment. With the stock trading at a multiple closer to our projected EPS growth rate for the fourth quarter of 2000 and fiscal 2001, we would look for signs of an increase in sales and EPS growth, before becoming more aggressive on the stock."
Unless otherwise noted, prices are as of Tuesday, November 14, 2000
Robertson Stephens maintains a market in the shares of MP3.com, BEA Systems, Cato Corp., Network Appliance, Sycamore Networks, Antigenics, Crosswave Communications, and Redback Networks and has been a managing or comanaging underwriter for or has privately placed securities of MP3.com, BEA Systems, Barconet NV, Letsbuyit.com, Sycamore Networks, Antigenics, Crosswave Communications, and Redback Networks within the past three years.
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