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CIBC World Sees Opportunity in Zoran


Zoran (ZRAN) cut its EPS guidance for the third and fourth quarters. CIBC World views price weakness in the shares as a buying opportunity.

Analyst Rick Schafer says weakness in the stock brings a buying opportunity. He notes the company gave first-time detailed combined guidance after acquiring Oak Technology. Schafer says that while the company still expects the deal to be accretive to 2004 EPS, he thinks its guidance for EPS dilution of 18 cents to 19 cents in the second half is about two times the Street "whisper number".

Schafer cut his 83-cent 2003 EPS estimate to 63 cents; the analyst notes Zoran is still on track for a solid second half but needs time to "right-size" the combined business to realize an estimated $13 million to $18 million in annual cost synergies. Schafer raised his $1.10 2004 EPS estimate to $1.15 to include accretion. He is keeping a sector outperform rating on the shares.


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