JP Morgan cut its investment recommendation on Altera (ALTR) to neutral from overweight, citing the company's recently announced quarterly results.
Analyst Christopher Danely said the company's earnings per share came out a penny above his and consensus estimates. However, he noted that Altera's book-to-bill ratio fell below 1.0, and fourth quarter revenue was expected to be flat sequentially, below his 3% growth estimate. He's concerned that guidance is aggressive since turns equipment is in the low 70% range after being in the upper 60% range last quarter. He also said it appears that Altera is losing market share to rivals such as Xilinx (XLNX). He maintained his 76 cents 2005 earnings per share on $1.14 billion forecast, but cut his 93 cents 2006 earnings per share estimate on $1.35 billion revenue to 90 cents earnings per share on $1.30 billion revenue.