RBC Capital upgraded Mentor Graphics (MENT) to outperform from sector perform.
Analyst Garo Toomajanian thinks Mentor Graphics will deliver another seasonally strong fourth quarter, and is building its backlog. He says his growth expectations and the company's guidance appear to be in-line with other large electronic design automation players. Toomajanian believes Mentor's Resolution Enhancement Technology products are doing particularly well, and will be the highlight in the fourth quarter and 2004.
Toomajanian notes valuation is attractive right now, with shares trading at 16 times his 82 cents 2004 earnings per share estimate. He raised the $18 target to $20, which is based on a 2005 estimated earnings per share of $1.00.