UPGRADE :
S&P maintains buy recommendation on shares of Bare Escentuals (BARE)
Third quarter EPS of $0.25, vs. $0.22, is $0.01 below our estimate. The shortfall came from weak sales, primarily in the Premium Wholesale and Home Shopping TV segments, with the latter adversely affected by the timing of a show on QVC. With BARE experiencing softening sales in the last six weeks, we are reducing our full-year 2008 EPS estimate by $0.07 to $1.06 and 2009's by $0.12 to $1.16. Given reductions in the EPS base, peer p-e multiples and our 3-year growth rate for BARE (to 10% from 16%), we lower our p-e and p-e-to-growth-based 12-month target price by $3.50 to $7.50. -L. Braverman-CFA
S&P reiterates buy recommendation on shares of KLA-Tencor (KLAC)
KLAC posts September-quarter operating EPS of $0.32, vs. $0.75, matching our estimate. Revenues fell 10% from the June quarter, on weak memory spending. Logic spending remained strong, representing 77% of orders, compared to only 16% for memory. We are encouraged by KLAC's plan to reduce operating expenses to $160-$175 million by the coming June quarter, lowering its quarterly breakeven revenue level to $350-$400 million. The company plans to reduce buybacks but maintains its dividend. We reduce our fiscal year 2009 (June) operating EPS estimate by $1.11 to $0.49, and our target price by $17 to $25, based on a price/sale above peers. -A. Zino-CFA
S&P reiterates strong buy recommendation on shares of Chevron (CVX)
Our preliminary analysis indicates CVX posted third quarter EPS of $4.06, vs. $1.76, on higher oil and gas price realizations. Results excluded $0.20 of charges related to hurricane damage, and beat our estimate by $0.85. Oil & gas production declined by 5.7% to 2.443 MMboe/d on entitlement and hurricane impacts, but were above our expectations. Downstream refining & marketing earnings rose almost 5-fold on improved U.S. margins from the sale of refined products as oil prices declined, despite lower volumes on reduced demand. We will provide more detail after CVX's conference call. -T. Vital
Needham upgrades Bankrate (RATE) to buy from hold
Needham analyst Mark May says Bankrate's (RATE) third quarter results beat his estimates, driven by deposit-related hyperlink revenue and revenue synergies from recent acquisitions.
May notes that display ad sales remained soft, but held up better than he expected. Importantly, he says EBITDA margins rebounded 455 basis points sequentially to 36%, driven in part by 11% sequential online revenue growth.
Given positive results and outlook, he raises $1.48 2008 pro forma EPS estimate to $1.61 and $1.89 2009 to $2.05. He sets a $36 price target on the stock.
Citigroup upgrades Express Scripts (ESRX) to buy from hold
Citigroup analyst Charles Boorady says while Express Scripts (ESRX) third quarter claims were slightly below his estimate, he believes greater mail penetration and higher EBITDA/Rx reflects lower generic unit cost.
Boorady says the company's third quarter should ease concerns about slower Rx trends and how a weak economy would hurt PBM profit growth.
He raises EPS estimates to reflect better EBITDA/Rx in the third quarter 2008 despite a very weak economy and guidance for continued improvement. He raises $3.07 2008 EPS estimate to $3.10 and $3.60 2009 to $3.70.
He also increases his $67 price target to $77, in line with yearend 2007 price even though estimated EPS is rising 30% in 2008 and 20% in 2009.
Keybanc upgrades MGM Mirage (MGM) to buy from hold
Keybanc analyst Dennis Forst says he upgrades MGM Mirage (MGM) as he expects free cash flow (FCF) to be in the $700 million range for 2008 and 2009, and possibly $1 billion in 2010; he sees attractive enterprise value to estimated 2009 EBITDA ratio of 8.0.
Forst notes MGM has leading positions in Las Vegas, Biloxi, Detroit and Atlantic City. While he feels there is uncertainty regarding the length and breadth of pressure on Las Vegas operations and the magnitude of the potential success from City Center project, he is persuaded by valuation and the company's ability to compete, generate cash, and an increasing sentiment by investors that commodity and credit issues are easing.
He has an $18 price target on the stock.
Merriman upgrades First Solar (FSLR) to buy from neutral
Merriman analyst Brion Tanous says First Solar (FSLR) reported third quarter revenue and EPS of $349 million and $1.20, notably higher than his $297 million and $0.90 estimates, respectively.
Tanous says FSLR has established itself as a leading PV module producer, with approximately $6 billion in long-term contracts. He thinks the company's aggressive cost reduction program should position it for continued dominance into 2009, despite tight credit markets and falling modules prices. He's also impressed with FSLR's calculated entry into the U.S. residential solar market.
He sets target range of $185-$195 based on 30 times his $6.31 2009 EPS estimate.
HOLD/NEUTRAL :
S&P maintains hold recommendation on shares of McAfee Inc. (MFE)
Third quarter operating EPS of $0.39, vs. $0.34, is $0.03 higher than our estimate, as revenue rose 27% to $410 million, $35 million above our forecast. MFE cites strength in all geographical regions, corporate and consumer markets, and we think it is gaining marketshare with its comprehensive solutions. Although we believe the security segment is more resistant to a slowdown in IT spending than other software, we see MFE revenue growth rate moderating in 2009. We raise our 2008 EPS projection by $0.06 to $1.63, but trim 2009's by $0.06 to $1.64 and our target price by $5 to $36 on our lower growth outlook. -J. Yin
DOWNGRADE :
S&P reiterates sell recommendation on shares of Electronic Arts (ERTS)
September-quarter loss of $0.97, vs. loss of $0.61, is $0.57 wider than our loss estimate. Revenue rose 40% to $894 million, but were $34 million below our forecast; results were hurt by higher R&D and marketing expenses. Although the video game industry has been resilient in past recessions, ERTS is cautious about a weak Christmas shopping season, reflecting weak sales in October. We think the company also has execution issues, delaying the release of several titles. We are cutting our fiscal year 2009 (March) EPS estimate by $0.87 to loss of $0.75, fiscal year 2010's by $0.33 to $0.50 EPS, and our target price by $5 to $20. -J. Yin
Wedbush downgrades Bare Escentuals (BARE) to hold from buy
Wedbush analyst Rommel Dionisio says Bare Escentuals (BARE) $0.25 third quarter EPS missed his $0.26 estimate on disappointing results in the Infomercial and Home Shopping Television channels.
Dionisio downgrades BARE on his concerns about the company's plan to lower overall pricing, which he says could hurt brand exclusivity and aspirational appeal over the long run. He also notes he's concerned about BARE's plans to increase marketing spending and to expand its product offerings.
He cuts $1.10 2008 EPS estimate to $1.06 and $1.25 for 2009 to $1.12; his $10 price target goes to $6.
Credit Suisse cuts estimate for Symantec (SYMC)
Credit Suisse analyst Philip Winslow says Symantec (SYMC) missed his revenue and deferred revenue estimates, as recent exchange movements, combined with a slowdown in consumer spending, drove the majority of the shortfall.
Winslow says the impact from forex to deferred revenue meaningfully depressed operating cash flow during the quarter, and negative impact should follow through into the third quarter; the company expects forex to negatively impact revenue by more than $100 million and EPS by $0.04-$0.05.
He cuts his $1.55 fiscal year 2009 EPS estimate to $1.43 and $6.55 billion revenue forecast to $6.17 billion He keeps $20 price target and outperform rating on the stock.
Related Posts :
- 10/30/2008 - Upgrade & Downgrade (Update 2)
- Dennis Gartman Letter: Suggests investing in gold
- Credit Suisse Raises Google to "Buy" with a $400 Price Target
- Morgan Stanley Cuts Cisco's Earnings Estimates for the Next Two Years
- Business Week: Analyst Actions: MGM Mirage, First Solar, Symantec, October 30, 2008 3:17 PM EST
- Business Week: S&P Picks and Pans: Electronic Arts, Chevron, KLA-Tencor, Bare Escentuals, McAfeeOctober 31, 2008, 11:19AM EST
- Business Week: Analyst Actions: Express Scripts, Bankrate, Bare EscentualsOctober 31, 2008, 11:30AM EST
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