Keryx Biopharmaceuticals, Inc. Q1 2008 Earnings Call Transcript

Keryx Biopharmaceuticals, Inc. (KERX)

Contemplating Key Indicators

David Merkel submits:

I figure when things are relatively quiet, it is time to start thinking about the bigger picture.

Quiet? Are things quiet now? Well, sorta… we still have problems:

Sonic Innovations, Inc. Q1 2008 Earnings Call Transcript

Sonic Innovations, Inc. (SNCI)

Standard Pacific Corp. Q1 2008 Earnings Call Transcript

Standard Pacific Corp. (SPF)

Q1 2008 Earnings Call

Shoe Carnival: Not One of Retail's Clowns

R.J. Hottovy submits:

We were pleasantly surprised by the 1Q08 results that Shoe Carnival's (SCVL) released yesterday. The company delivered sales of $162M (comparable store sales fell 4.9%) and EPS of $0.38, better than what we had anticipated in our preview post. The stock also fared much better than expected, rising almost 7% to $13.93.

With so much noise in the marketplace regarding consumer constraints (especially Shoe Carnival's moderate-income family audience), it's easy to forget that there are smart, seasoned management teams that have weathered difficult economic climates before. Though it can be argued that retailers haven't seen an environment this challenging in over fifteen years, we believe Shoe Carnival's management has done an admirable job keeping margins at somewhat respectable levels. A few areas in particular stand out from the quarter, including expense controls [SG&A on a dollar basis came in flat to 1Q07 at $39M] and inventory management (flat on a per door basis).

While 1Q08 was encouraging, are there enough compelling reasons to initiate positions of Shoe Carnival at current levels? We don't expect the climate for value-conscious consumers to improve materially anytime soon and the company faces several headwinds in the coming months, including inflationary production cost pressures from Southern China factories (management estimates an average cost increase of between 5%-15%), operating expense deleverage stemming from negative comps, and additional marketing spending intended to improve the in-store environment and customer service. Additionally, women's non-athletic category trends remain sluggish industry-wide, and there are few reasons to expect a significant reversal in the back half.

That being said, Shoe Carnival also has a few things working in its favor. We expect the back-to-school season to be a positive catalyst, as it represents a time when footwear purchases are more of a necessity purchase for families rather than a discretionary buy. Furthermore, there is mounting evidence that athletic footwear may be returning to favor. With the merchant team's recent collaboration with key vendors like Nike, New Balance, Rockport to create a more compelling product for African-American and Hispanic customers and added exposure of the Olympic games, the athletic category could drive unexpectedly strong 3Q08 results. The balance sheet remains clean, allowing the company to open 20-25 new stores this year (including 10 or so in new markets) and potentially take market share form other struggling competitors in this channel.

Assuming comps remain in the negative low-to-mid single digits and there is only a modest drop-off in new store contribution due to the cautionary consumer environment, full-year sales should come in around $660M (roughly flat to a year ago). Gross margins will likely fall somewhere between 40-60 basis points due to increased promotional activity and occupancy/distribution expense deleverage. Despite aggressive cost cutting, there should also be SG&A expense deleverage due to the opening of additional stores and additional marketing investments. Based on these assumptions, we anticipate full-year EPS to come in somewhere between $0.82-$0.87 (We have not factored in additional share buy-backs into our assumptions).

Investment recommendation: Much like our investment recommendation for Brown Shoe (BWS), we encourage investors to at least evaluate Shoe Carnival's stock at its current valuation. We would be inclined to wait for near-term pull-back as the marketplace factors in what will likely be lackluster 2Q08 results, but build positions in the high $13 range (representing about 16x forward earnings). Given the headwinds outlined above, we do not recommend this stock for momentum investors, but investors with long-term horizons could be rewarded by taking advantage of Shoe Carnival's relatively inexpensive valuation.

Disclosure: No positions in subject company.

Dell Makes Headway, But Skeptics Remain

Eric Savitz (Barron's) submits:

Dell (DELL) shares were the market star today, after the company reported better than expected results for its fiscal first quarter ended April.

But the Street is still sharply split on the stock. The bulls think the turnaround at the company is just getting underway, with recent cost-cutting just beginning to pay off. But the the bears remain skeptical about how successful the turnaround plan will be, and advise steering to competitors Apple (AAPL) and Hewlett-Packard (HPQ) for exposure to the PC market.

Consumer Spending: The Reality of Zero

James Picerno submits:

You can slice it, you can dice it. You can even massage it and look on the bright side. But you still can't get blood out of a stone or, it seems, inflation-adjusted increases in consumer spending.

Real personal consumption expenditures were flat in April, down from a slight 0.1% increase in March, the government reported today. Meanwhile, as our chart below shows, the longer-term trend isn't inspiring.

Dollar Tree et al: Four Retailers

Saul Sterman submits:

As a courtesy to long time Seeking Alpha reader and commentator 'Lisa', who apparently is researching stocks for some recession insurance, the following is an analysis complimenting Wayne Mulligan's article.

Wayne Mulligan is reiterating this well known concept. However, it is always wise to check and see if the company is the right fit for the right downturn. To assume that a company that has done well in a previous recession will do well again in a subsequent recession is incorrect. Both companies and consumers change over time as the needs and psyche of the public migrate. For example, during the great depression, hair salons did well as people wanted to feel and look good. Does this mean that beauty parlors did well in the next recession or the one after that? Well, yes they did until the last mini recession where the public psyche changed and fitness clubs did better.

NetSuite Not Sweet? Piper Starts at 'Sell'

Eric Savitz (Barron's) submits:

Piper Jaffray’s Mark Murphy today launched coverage of NetSuite (N) with a Sell rating and a $14 price target, well below the current level.

Murphy’s thesis is that customers are not that happy with the on-demand business software provider’s offerings. “We believe the market has yet to include the potential financial consequences of what we believe to be lower customer satisfaction levels than the broader On Demand industry,” he writes. “While we think our estimates are achievable, there is potential downside risk to our long-term cash flow forecasts if customer concerns are not addressed.”

Visa: Trading Transparency

Robert Freedland submits:

Part of my portfolio management strategy involves dealing with sales at the extremes of my portfolio size.  For me, my minimum number of holdings is five and my maximum is twenty.  I try to 'float' my portfolio between these two extremes based on the activity of my own stocks.  In this case, sitting at five positions, my minimum, the sale of a portion of Copart (CPRT) gave me a signal, or 'permission slip' as I sometimes write, to be looking for a new stock to buy.  And thus, as I have written before, with that nickel burning a hole in my pocket, I set out to find a new stock to purchase.

Checking the list of top % gainers on the NYSE earlier today, I saw that Visa (V) had made the list.  However, the other stocks moved higher and V sold off a bit, so by the end of the day it was no longer on the top % gainers.  However, by that time I had already purchased 70 shares at $85.92 for my trading account.  Visa (V) closed at $85.25 up $3.33 or 4.06% on the day.

Status Report: Frontier Pacific Mining / Eldorado Gold

The M & A Researcher submits:

Eldorado Gold Corp. (EGO) offer for Frontier Pacific Mining Corp. (FRP) rejected.

As expected, Frontier Pacific has rejected the current Eldorado offer as inadequate. Frontier cited the following as key reasons for the rejection:

Status Report: Wrigley / Mars

The M & A Researcher submits:

William Wrigley, Jr. Co. (WWY) - Mars, Inc.

Preliminary proxy statement filed.

Status Report: XM Satellite Radio, Sirius

The M & A Researcher submits:

Regarding XM Satellite Radio (XMSR) and Sirius Satellite Radio (SIRI):

Once again, despite the various and seemingly countless perspectives on recent activity involving the FCC, there is quite literally no substantial developments to report. Commissioner Martin's comments suggesting a decision before the end of June are nearly identical to the rhetoric Mr. Martin has offered since late last year, and should in now way be taken at face value. While a June decision would be in no way surprising, it would be equally un-shocking if the FCC review continued into July, or even August. What seems to be widely overlooked here is that the FCC very likely would have concluded its review several weeks ago if the DOJ had imposed conditions as part of its approval. As this obviously did not occur, the FCC is essentially on its own in reaching what will be a monumental decision. In other words, there is simply no reason to expect Commissioner Martin's latest vague projection to come to fruition.

Status Report: Safeco / Liberty Mutual

The M & A Researcher submits:

Safeco (SAFC)/Liberty Mutual

Preliminary Proxy Statement Filed

Libor in Question, Again

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