IRM: Macquarie reiterates Outperform, sees 75% upside by 2010

I continue to like the IRM story. Recent weakness makes the stock more attractive to me in the longer term.

Macquarie:Kevin McVeigh sees 75% upside to Iron Mountain by 2012 and does not think this is a buggy whip story. And, you can buy it cheaper than Buffett did.

We are reiterating our Outperform rating based on what we consider to be an attractive opportunity to invest in the IRM stock, which is down 31% since Sep-09, underperforming S&P 500 by 3600bps. This level is only modestly above its credit crisis low of $17.07 reached in Mar-09. We believe the recent weakness creates an attractive entry point in front of its October 5th investor day. We also see meaningful upside to our $35 price target and expect the shares to appreciate driven by what we expect will be solid preliminary 2011 internal revenue growth guidance at investor day, likely in the low-to-mid-single digit range.

Transformation has driven shift in capital structure. We continue to be impressed with how well the management team, leveraging its highly recurring internal revenue growth, has transformed Iron Mountain into a US$3 billion global leader in information protection and storage services. In our view, this transformation coupled with an intense focus on margin expansion and capital efficiency has enabled the company to generate much better-than-expected free cash flow and positioned the company to return capital to shareholders earlier than expected. We feel even more confident based on the key takeaways below:

o Liquidity, ability to manage debt supports return of capital to shareholders;
o Share repurchase and dividend should drive multiple expansion;
o Capex as a % of revenue should decrease yielding stronger free cash flow;
o Digital (almost 10% of revenue) continues to be an area of focus.

Use recent weakness as a buying opportunity. Iron Mountain's recurring business model and healthy internal growth should drive strong EBITDA, which coupled with its focus on capital efficiency as evidenced by its lower capex guidance of US$280.0m should drive strong free cash flow of about US$327.5m (8% yield). We believe this free cash flow will enhance Iron Mountain's ability to return some of its cash through its US$150m share buyback + US$0.25 dividend.

GLW: 'Gorilla' glass may be new face of touch-screen tablets, high-end TVs

CORNING, N.Y. — An ultra-strong glass that has been looking for a purpose since its invention in 1962 is poised to become a multibillion-dollar bonanza for Corning Inc.

The 159-year-old glass pioneer is ramping up production of what it calls Gorilla glass, expecting it to be the hot new face of touch-screen tablets and high-end TVs.

Gorilla showed early promise in the '60s, but failed to find a commercial use, so it's been biding its time in a hilltop research lab for almost a half-century. It picked up its first customer in 2008 and has quickly become a $170 million-a-year business as a protective layer over the screens of 40 million-plus cell phones and other mobile devices.

Now, the latest trend in TVs could catapult it to a billion-dollar business: Frameless flat-screens that could be mistaken for chic glass artwork on a living-room wall.

Because Gorilla is very hard to break, dent or scratch, Corning is betting it will be the glass of choice as TV-set manufacturers dispense with protective rims or bezels for their sets, in search of an elegant look.

Gorilla is two to three times stronger than chemically strengthened versions of ordinary soda-lime glass, even when just half as thick, company scientists say. Its strength also means Gorilla can be thinner than a dime, saving on weight and shipping costs.

Corning is in talks with Asian manufacturers to bring Gorilla to the TV market in early 2011 and expects to land its first deal this fall. With production going full-tilt in Harrodsburg, Ky., it is converting part of a second factory in Shizuoka, Japan, to fill a potential burst of orders by year-end.

ITRI Jefferies Report

Jefferies: We continue to view ITRI as a core holding in the smart metering (AMI) space, with the largest number of integrated AMI meters under contract.  With leading share of the North AMerican metering market, ITRI remains a proven vendor and 800 lb gorilla in an increasingly competitive environment.  Recent competitor announcement does not affect ITRI's near term fundamentals or LT market positioning and we remain buyers, particularly on current share weakness.  We would reassess this opportunity should pronounced share loss become evident.  ITRI repotts Wednesday, July 28.  We are ahead of consensus for 2Q10.

VMI 2Q 2010 EPS

DS notes: USS projects being pushed out. Forecast that earnings will now be down 35% YOY v. 25% at last call excluding Delta acquisition. Implies $3.71. (where they were in 2007) that leaves them with $1.86 to do the rest of the year. (2009 was record year EPS for them) This is not surprising when Utility is down 50% YOY and was almost ½ of revs last year.. Not a good day to report too. - bk to bill about flat in utility in the Q. Good company and managing things relatively well. Need to continue to keep an eye on pricing and what was 6% increase in SGA costs (non-acqusition related). Increased competition it seems in foreign geographies. This is still a 2011 story, but seems now more risk than upside to macro environment currently where they play.

Fedex - uh oh

FedEx reported a stronger-than-forecast profit jump for the fiscal fourth quarter, but delivered weaker-than-anticipated current year guidance, citing pensions, health care and maintenance. Shares of the the package-shipping giant, considered a global economic bellwether because of the breadth of goods it ships, fell 2.6% in premarket trading.