Raymond James keeps its estimates and strong buy rating on Brooktrout (BRKT).
Analyst Mike Latimore says as is typical of Brooktrout's business model, most of the upside dropped to the bottom line, generating fourth-quarter earnings per share well above his 4 cents estimate. He says fax applications are helping the business, supported by improving information-technology spending patterns.
Latimore raised the 25 cents 2004 earnings per share estimate to 37 cents, and upped the 51 cents 2005 estimate to 62 cents on higher revenues and gross margins. He doesn't expect the communications hardware maker to be able to maintain 68% gross margins over the long term, but he says Brooktrout has substantial operating leverage.
Also, Latimore notes Brooktrout mentioned halfway through this quarter that business is on track. He has a $50 target.