First, we would like to wish everyone a Happy New Year. Our lawmakers certainly did that with the passing of the so-called resolution to the fiscal cliff late Tuesday night. The equity market applauded Congress for such hard work by jumping more than 2%. The President signed it into law earlier tonight.
Regarding some recent macro data, the Dec. manufacturing ISM surprised on the upside, and included an employment index at its highest level in three months. In addition, we have seen downtrending weekly initial jobless claims after the initial impact of the Sandy storm. Regional business surveys are also showing a slight improvement in their employment indexes.
However, based on our model, we believe this Friday's December employment numbers will come in a bit short of the consensus. Economists estimate an increase of 155K in Dec. NFP. We think that figure will be closer to 130K.
Regarding our latest published opinion on specific stocks, we note that AVID has moved up approx. 17% since we posted our $9/sh valuation on the Company. It closed on Wednesday at $7.99/sh. We must also note that FB has moved up to $28/sh after it dipped to below $18 in early Sept. As a reminder, we valued FB at $23/sh in May. FB is trading at 42x FY '13 EPS. Analysts expect EPS growth to bounce back up to 26%+ after estimating that they grew merely 20% in FY '12. In its Dec. quarter earnings report, FB is expected to show significant improvement in generating revenues from mobile ads. Any slight disappointment could drive the stock back down to $25/sh. FB and AVID are expected to report their latest quarterly results on 1/23 and 2/4, respectively.
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