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Canaccord Genuity on Nokia, Smith & Wesson, and Quiksilver


Nokia launches its Windows 8 handsets, Smith & Wesson posts better than expected Q1 earnings, and Quiksilver sees solid growth across brands.

The following are excerpts from Canaccord Genuity analysts' commentaries.

Nok Nok

Nokia (NOK) launched its Windows 8 handsets last Wednesday, and while many were impressed by the product, most were left wondering when the product will be launched and how much it will cost. Sources are now saying that the Nokia phones will be available through AT&T (T) in early November, timing which would appear to make sense as Windows 8 is set to launch on October 26. Verizon (VZ) also confirmed that it plans to work with Nokia, although the company declined to give specifics of the relationship.

Early last week Verizon said that it was looking to add more Microsoft-powered phones to its offering in the fourth quarter. Canaccord Genuity Technology Analyst Michael Walkley anticipates sales to begin in Q4/12, after the launch of the LTE iPhone 5 (AAPL) and several LTE Android (GOOG) smartphones, leading him to reduce is 2012 sales estimates. Walkley now sees 3.8 million units being sold in Q4, down from 4.5 million and his 2013 estimate falls to 25.1 million units from 27.4 million.

Move Over, Brett Favre -- The Real Gunslinger Is Here

Smith & Wesson (SWHC) raised its full-year sales forecast and posted better than expected Q1 earnings, helping it finish the week with a bang. The gunmaker earned $0.28 per share on revenue of $136 million in the first quarter, topping Wall Street's expectation of $0.18 on $128.7 million. The results and stronger US demand led management to increase its full-year sales forecast to a range of $530-540 million, well ahead of the consensus estimate of $498.2 million. In the second quarter it expects sales of $130-135 million while analysts are looking for $119 million.

CEO James Debney commented, "As we come into Christmas…there is a lot of consumer purchase activity. We want to be in the forefront of the consumer's mind." The company is looking to remain focused on its core firearms business as it sees opportunities to increase revenue and reduce costs going forward. While investors cheered results, analysts have recently cautioned that gun demand could fall off following the US election. They believe some gun demand may be driven by concerns the Barack Obama may tighten gun regulations, leading buyers to hit the gun market earlier than usual.

Shakas All Around!

Shares of Quiksilver (ZQK) traded higher after it reported 2Q revenue and EPS of $512.4 million, and $0.09, with earnings nicely ahead of Credit Suisse's model for $511.4 million and $0.01 and consensus of $527 million and $0.05. 2% year-over-year revenue growth (8% constant currency) was driven by Asia-Pacific (up 13% constant currency) and the Americas (up 12% constant currency) offset by Europe (up modestly constant currency). Growth was solid across brands with Quiksilver up 3.5% year-over-year, Roxy up 4.6% year-over-year, and DC up 15.5% year-over-year.

In recent quarters, Credit Suisse has been encouraged by a return to top-line momentum for Quiksilver, but concerned about lack of flow-through to the bottom line as well as signs of excess inventory build. This quarter, the brokerage says that Quiksilver showed solid brand momentum across regions (with the exception of Europe which remained soft), brands, and channels. The brokerage, which maintains a neutral rating on the stock, is raising its target price on Quicksilver given improved visibility into its longer-term strategy and signs of improved spending discipline.

Editor's note: For more information on Canaccord Genuity, click here.
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Canaccord Financial and its affiliated companies may have a Corporate Finance or other relationship with the companies mentioned and may trade in any of the Designated  Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage herein.
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