Varian Medical: A Smart Buy
Posted by Eddy Elfenbein on April 16th, 2007 at 1:05 pm

Varian Medical Systems (VAR) took a big hit on Friday, dropping 7.3% on news of lower revenue guidance. But the stock’s defenders are coming out in full force. Joshua Lipton of Forbes noted the positive views of many analysts:

In a client note, Citigroup analyst Amit Bhalla wrote that while North America has not displayed signs of weakness in past quarters, the results do appear explainable.
The North America miss, Bhalla wrote, was due to timing of customer buying patterns and had the quarter been one week longer, orders would have been $20 million higher and total North America oncology net orders would have been flat, instead of down 10%.
Bhalla said, “As was the case in Europe last quarter, the company does not believe that it has lost orders to competitors in North America and we believe this to be the case as well.”
Bhalla maintained a “buy” rating on the shares. He lowered his price target by $2 to $60.
Standard & Poor’s Equity Research analyst Robert Gold also continued to believe that Varian is a wise buy.
In a client note, Gold wrote that he was disappointed by the 10% decline in U.S. oncology orders.
“However, we believe an increased size of average orders, and a slightly more competitive market are extending the selling cycle a bit and have pushed some booking into the third-quarter,” Gold wrote.
He said that he still sees full fiscal 2007 revenues of about $1.8 billion and earnings per share of $1.83. He maintained a “strong buy” opinion on the shares.

The S&P 500 Hits 6-1/2 Year High
Posted by Eddy Elfenbein on April 16th, 2007 at 10:33 am

So much for the Shanghai Surprise from seven weeks ago. The market has now made up everything it lost, and is at a fresh 6-1/2 year high. The index is still over 4% from the all-time reached in 2000. The good news is that the S&P is inches away from being in the black for the decade (and century and millennium).

Tom Wolfe Leads Off for Portfolio
Posted by Eddy Elfenbein on April 16th, 2007 at 9:45 am

Tom Wolfe looks at the New Masters of the Universe:

While fathers all over America tend to become overzealous, even violent, these days in trying to turn their children into little sports superstars, in Greenwich a father who is one of these people will try to take control of every element in a game: his child’s teammates, their coach, the opposing team’s coach, its players, and most definitely the referees. In a famous instance, one of these people came to watch his teenage daughter play in an ice hockey game against a team from neighboring Port Chester, New York, a town known in Greenwich as the place where one’s plumbers, electricians, computer swamis, roofers, glaziers, air-conditioning mechanics, wall-to-wall-carpet humpers, and household servants live. The man began bellowing so loudly, nobody at the rink could shut out the sound. He upbraided the referees for their poor eyesight and worse judgment. He told his daughter’s coach how to play her and all her teammates and kept him abreast of his mistakes in strategy. He scolded the Port Chester coach and the players for their incessant cheating and malicious roughness. Finally a Port Chester player, a big girl, an Amazon on ice, skated to the stands, charged up the stairs on her skates, and accosted the Mouth, putting her gloved fist six inches from his face and saying, “If you don’t shut the fuck up, I’m gonna come back and beat the shit outta you!” He shut up. The tales are endless: the hedge fund founder desperate to get his son into one of Greenwich’s socially swell private schools who clips a six-figure check to the first page of the application, witlessly forcing the school to reject both his son and his check or lose all credibility—

Geoffrey Raymond’s Latest
Posted by Eddy Elfenbein on April 16th, 2007 at 9:34 am

I’m not sure what to say about this, but here’s Geoffrey Raymond describing his latest painting of Maria Bartiromo.

Happy 300th Leonhard Euler
Posted by Eddy Elfenbein on April 15th, 2007 at 3:28 pm

The Washington Post has more on the “Mozart of Mathematics.”

Fama Factors Out French: “I Did All The Work”
Posted by Eddy Elfenbein on April 15th, 2007 at 3:25 pm

At long last, we now know the truth:

After 15 years of sharing the credit for groundbreaking research with Ken French, Eugene Fama is on a mission to expose his former colleague, and himself. The result is an alarming behind-the-scenes look at how academic careers are made and broken.
“I hired Ken French in 1990 when he was a driving instructor in Winnetka. Chicago was pressuring me to partner with another researcher; I couldn’t stand the idea so I hired a stooge. The man has never contributed a single idea to my research, and yet his name is constantly mentioned in the same breath as mine. On top of it all, the American Finance Association has nominated him as president-elect! That’s a travesty and I won’t have it.”

2007 Wharton Economic Summit
Posted by Eddy Elfenbein on April 13th, 2007 at 7:58 am

Not much blogging today. I’ll be in Philadelphia at the 2007 Wharton Economic Summit.
It’s sort of like Davos, except the odds of being car-jacked are a lot higher. Wish me luck.

Brady Quinn on Power Lunch
Posted by Eddy Elfenbein on April 12th, 2007 at 12:12 pm

Sue Herera adores him.

JOSB Down 8%
Posted by Eddy Elfenbein on April 12th, 2007 at 11:10 am

JoS. A. Bank Clothiers (JOSB) is down sharply today on a poor same-store sales report:

Men’s clothing retailer JoS. A. Bank Clothiers Inc. said Thursday that its same-store sales grew 1.4 percent in March, but missed analysts’ expectations.
Analysts polled by Thomson Financial were looking for a same-store sales increase of 2.7 percent for the month.
Same-store sales, or sales at stores open at least a year, are a key measure of retailer (or restaurant) performance, because they measure growth at existing stores rather than from newly opened ones.
Total sales for the period ended April 7 climbed 10.1 percent to $45.7 million from $41.5 million in the year-ago period.
Quarter-to-date, same-store sales were up 2 percent while total sales were ahead 11.8 percent to $84.1 million versus $75.2 million in the prior-year period.

Bed Bath & Beyond Earned 79 Cents a Share
Posted by Eddy Elfenbein on April 12th, 2007 at 8:28 am

The company just wrapped up its 15th straight record year. For the fourth quarter, Bed Bath & Beyond (BBBY) earned 79 cents a share, although that doesn’t include a charge of seven cents a share.
For the year, BBBY earned $2.15 a share, which is a nice improvement over the $1.92 a share it made last year. Annual sales rose from $5.8 billion to $6.6 billion.
Here are the quarterly results going back a few years:

Two things to note. This last quarter was based on 14 weeks while the other quarters were just 13 weeks. Also, the 2006 fiscal year had 53 weeks compared with 52 for last year.
Some analysts have noted the company’s lower gross margins. This is what BBBY had to say on their conference call:

The gross profit margin for the full fiscal year improved slightly from fiscal 2005. The approximate 110 basis point decline in the fiscal fourth quarter was primarily due to higher inventory acquisition costs. Inventory acquisition costs were higher, primarily due to a shift in purchase volume incentives earned during our fiscal third quarter, which as we discussed in December, benefited that quarter.

This is the first decline in gross margins in five years.