Merrill Lynch upgraded Ingram Micro (IM) to buy from sell.
Analyst Michael Hillmeyer says Ingram Micro should benefit from seasonal second-half pickup demand, and he sees less price competition. He notes Hewlett-Packard's move to sell fewer systems through the channel seems to have stabilized, and Ingram Micro stands to gain from H-P's new initiative to consolidate a number of distributors in Europe.
Hillmeyer thinks Ingram Micro is likely to outperform rival Tech Data over the next year, as it has slashed expenses and the cost structure has caught up to Tech Data's structure; he sees Ingram Micro's operating margin passing Tech Data's margins.
Hillmeyer raised the 10 cents second-quarter earnings per share estimate to 11 cents, and he sees 61 cents 2003 earnings per share. He raised his 80 cents 2004 earnings per share estimate to 85 cents, and set a $15 target.