Needham upgraded Lexmark (LXK) to "buy," from "hold."
Analyst Charles Wolf says printer revenue growth is beginning to accelerate as the company's original equipment manufacturing pact with Dell gains momentum. He believes Lexmark's first-quarter revenue could grow 18%, far better than the company's guidance of high single digits, because Lexmark didn't ship any Dell-branded printers in the first quarter of 2003 but should ship around one million printers this quarter.
Wolf raised the $3.35 2004 earnings per share estimate to $3.70, and set a 2005 estimate of $4.35. He believes Lexmark will continue to manage its capital more efficiently, which, in turn, translates into higher free cash-flow estimates.