Resources Connection (RECN) reported fourth-quarter earnings per share of 31 cents. Baird upgraded the stock to outperform from neutral.
Analyst Mark Marcon says fourth-quarter EPS and revenue was much better than expected, driven primarily by increasing client penetration, which more than made up for the expected Sarbox run-off. He raised his 94 cents fiscal year 2006 (May) EPS estimate to $1.30. He initiated a $1.46 fiscal year 2007 EPS estimate.
Given increased estimates and diminished concerns regarding post-Sarbox run-off, he upgrades to outperform, Marcon says. He has a $34 price target, based on his conservative discounted cash flow analysis, which implies 25 times next 12 months EPS (cash adjusted).