Ladenburg Thalmann analyst Jon Hickman initiated coverage of the Jacksonville-based company last week with a “buy” rating.
It’s good to have a securities analyst’s perspective on ParkerVision because it’s a difficult stock to evaluate on your own. Although I do check in with analysts for their insights, I can usually analyze a company like CSX Corp. myself by looking at its quarterly financial data.
ParkerVision is a different animal because it has no financial data. The company, which is trying to market radio frequency technology it developed, hasn’t produced any revenue in recent quarters and has lost money every year since its inception in 1989.
The only way to analyze ParkerVision’s value is by gauging the market potential for its technology. CEO Jeff Parker has demonstrated its technology and explained it to me several times over the years, and I find it very intriguing.
The problem is, I don’t have the technical expertise to determine whether this technology is really one the world needs or wants.
So, I was very interested in Hickman’s report. Ladenburg Thalmann does have an investment banking relationship with ParkerVision, but Hickman’s analysis is independent of that side of the business. He is optimistic about ParkerVision.
“After more than a decade of a somewhat tortuous commercial development effort surrounding its RF process technology, the stars appear to be lining up for ParkerVision and its investors,” Hickman wrote in his report.
He said ParkerVision’s technology “is particularly well adapted for the size and performance specifications of 3G and new 4G smartphones.”
“We are confident that the company will be able to market its technology to baseband chip suppliers and handset OEMs and garner a modest share of this very large market,” Hickman said. (An OEM is an original equipment manufacturer.)
Even a 1 percent share of the market would bring $120 million in annual revenue, he estimates.
Hickman is expecting the company to begin deploying the technology next year. He projects ParkerVision will generate $10 million in revenue in 2013 and become profitable in 2014.
ParkerVision also has been talking a lot about a patent infringement lawsuit it filed last year against Qualcomm Inc., but hasn’t said how much money it could receive from it.
While it will be a long time before that suit is decided and it’s impossible to say if ParkerVision will be successful, Hickman said the lawsuit potentially could bring a judgment exceeding $1 billion.
Hickman set a price target of $5 on the stock. ParkerVision’s stock started the year below $1 but has been on the rise, reaching $2.81 before Hickman’s report. It reached a 52-week high of $3.25 Wednesday after his report.
Special factors helped CSX earnings
Here’s why I rely on analysts to help me with corporate earnings. They often find information that I miss.
While CSX last week reported second-quarter earnings that were 3 cents a share higher than last year, Stifel Nicolaus analyst John Larkin points out that four special items each added a penny to earnings. Without those items, the Jacksonville-based railroad company’s earnings would have been a penny lower than last year.
Those items were a one-time tax benefit, a fuel surcharge lag effect, a reduction in incentive compensation and proceeds from a rail line sale.
However, Larkin was not disappointed with CSX’s results and reiterated a “buy” rating on the stock.
“With utility coal volumes down dramatically, the fact that the company was still able to post a respectable second-quarter EPS number suggests that the company did a fine job of offsetting the drop in coal volume with operational efficiency, solid pricing on non-export coal related traffic, and strength in sectors such as automotive, intermodal, and chemicals,” Larkin said in his report.
Dahlman Rose & Co. analyst Jason Seidl also reiterated a “buy” rating.
“CSX shares underperformed the market slightly following the (company’s Wednesday morning) earnings call as investors worried about the tempered pricing in the quarter. However, pricing continued to be above rail inflation and should climb back up to historical levels in the coming quarters once coal traffic starts to improve materially, leading to a more favorable mix,” Seidl said in his report.
CNBC’s Kernen ‘loves’ JIA
CSX’s earnings report last week created another opportunity for a cable television anchor to plug Jacksonville International Airport.
You may recall after the Republican presidential debate in Jacksonville in January, Erin Burnett talked about “what I think might be America’s best airport” on her CNN show. She went on and on about how she enjoyed her time at JIA waiting for a delayed flight.
Wednesday morning on CNBC’s “Squawk Box,” Joe Kernen began an interview with CSX Chief Executive Michael Ward by gushing about Jacksonville and the airport.
“I love Jacksonville. I love the airport. So easy. Easy in, easy out,” Kernen said.
You just can’t buy that kind of publicity.
FIS stock drops despite higher earnings
Fidelity National Information Services Inc. last week reported adjusted second-quarter earnings from continuing operations of 66 cents a share, up from 54 cents a share last year and 7 cents higher than the average forecast of analysts surveyed by Thomson Financial. But the company’s stock fell $1.10 to $33.13 Wednesday after the report.
Analyst David Koning of Robert W. Baird said investors were concerned about revenue growth in the coming quarters and that a pullback in the stock was expected after a strong recent performance.
“Over the past several years, the stock has had a good run behind general acceleration in revenue growth, and more recently behind the strategic shift of returning cash to shareholders and the flight to safety in an uncertain market. Over time, FIS has executed very well and has a very stable business model with limited fluctuations even in big economic swings,” Koning said in his report.
He has a “neutral” rating on the company, which calls itself FIS. “We would likely become more aggressive with a pullback toward $30,” Koning said.
D.A. Davidson & Co. analyst John Kraft maintains a “buy” rating and a $40 price target on the stock. FIS provides technology services for banks, and Kraft said last week that he was looking for signs of more spending by banks on the company’s services.
“Discretionary spending is slowly improving as the industry recovers and increasingly looks to outsource key technologies,” Kraft said in his research note after the earnings report.
“Not deservingly, FIS’ shares carry the lowest valuation in the group. With European concerns misguided and an organic growth in the middle of the direct peer group, we expect multiple appreciation over the coming quarters and we reiterate our ‘buy’ rating,” he said.
Regency selling 15 centers for $321 million
Regency Centers Corp. last week announced an agreement to sell 15 of its shopping centers to an affiliate of Blackstone Real Estate Partners VII for $321 million.
The properties include six Florida shopping centers, all in the southern half of the state. The centers, with 2.1 million square feet of leasable space, are 90.3 percent occupied.
Jacksonville-based Regency, which specializes in grocery-anchored shopping centers, owned a total of 365 centers across the country as of March 31.
“The sale of these non-strategic assets is consistent with the stated objective for our capital recycling program this year, which is to be a net seller and to reinvest the proceeds into dominant, grocery-anchored shopping centers located in target markets with excellent prospects for growth and to reduce leverage,” Regency CEO Hap Stein said in a news release.
Currency values impact Vistakon
Johnson & Johnson last week reported that second-quarter sales at its Jacksonville-based contact lens subsidiary, Vistakon, fell slightly because of currency fluctuations that affected international sales.
Vistakon’s total sales fell by 0.3 percent to $730 million in the quarter. Domestic sales rose 3.3 percent to $253 million, but international sales fell 2.1 percent to $477 million.
On an operational basis excluding the foreign exchange impact, total sales in the contact lens business rose 1.9 percent, Johnson & Johnson said.
Overall, New Jersey-based Johnson & Johnson said its total sales in the quarter fell 0.7 percent to $16.5 billion, but excluding the currency impact, operational results rose 3.5 percent.
For the first time in years, ParkerVision Inc. has analyst coverage.