Standard & Poor's Equity Research
US Airways Group (LCC) : Ups to 4 STARS (buy) from 3 STARS (hold)
Analyst: Jim Corridore
First quarter operating earnings per share (EPS) of 5 cents vs. 15 cents loss beats our estimate of 35 cents loss. Revenues and yields were higher than we expected, and we see strong revenues, yields and passenger traffic continuing into the second and third quarter. We have been surprised by how well the merger integration has gone. With our view that the revenue outlook remains robust, and cost synergies are being achieved, we are raising our 2006 EPS estimate to $4.25 from $1.50 and starting 2007's at $5.50. We are raising our 12-month target price to $66 from $35, valuing the stock at 12 times our 2007 EPS estimate, below low-cost peers.
FMC Technologies (FTI) : Ups to 4 STARS (buy) from 3 STARS (hold)
Analyst: Stewart Glickman
First quarter EPS of 67 cents before one-time items vs. 24 cents is 15 cents above our estimate. Results were led by strong margins in energy systems. We think the company is positioned to benefit from growing subsea systems demand, and expected 2007 deployment of the North Sea subsea processing system could have significant growth potential. We are raising our 2006 EPS estimate to $2.83 from $2.37, and initiating 2007's at $3.51. We are raising our target price by $21 to $74.
Mcdonald's (MCD) : Ups to 4 STARS (buy) from 3 STARS (hold)
Analyst: Dennis Milton
April same-store sales grew 6.2%, year to year, reflecting growth of 4.1% in the U.S., 9.3% in Europe and 6.5% in the Asia-Pacific-Middle East-Africa segment. We are raising our 2006 EPS estimate by 6 cents to $2.24 and our 12-month target price by $3 to $42 to reflect improving sales trends in Europe and the positive translation impact of a weaker dollar. At 16 times our 2006 EPS estimate, shares trade at a discount to industry peers. We believe this valuation is attractive, given our view of McDonald's strong sales momentum and product innovation capabilities.
Home Entertainment Software Sub-Industry (ERTS) : Reiterates Neutral Outlook
Analyst: Gary McDaniel and Scott Kessler
Sony (SNE) says PlayStation3 will be available worldwide in mid-Nov. The base U.S. model will be released Nov. 17, and priced at $499. Timing is within our expectations, and should allow for holiday-season purchases. The price is $100 more than the Xbox 360's. We expect more sub-industry related announcements at the E3 conference. Given nascency of and uncertainty related to the new video-game console cycle, we expect revenue growth and profitability for sub-industry companies (ATVI), THQ (THQI), and Take-Two Interactive Software (TTWO) to remain somewhat restrained over the next couple of quarters.
Old National Bancorp (ONB) : Ups to 3 STARS (hold) from 2 STARS (sell)
Analyst: Mark Hebeka, CFA
Based on total return, Old National Bancorp reached our prior target price and we believe it is currently fairly valued. We continue to see loan and deposit growth as challenging, with Old National Bancorp trying to balance between appropriate pricing and growth in a highly competitive environment. We are keeping our 2006 operating earnings per share (EPS) estimate at $1.31, but raising our 2007 forecast to $1.40 from $1.36, based on slight decline in pricing competition and increased operational efficiency that we expect next year. We are raising our target price to $21 from $20, 15 times our 2007 EPS estimate, about in line with peers.
Altera (ALTR) : Cuts to 3 STARS (hold) from 5 STARS (strong buy)
Analyst: Thomas Smith, CFA
Altera announces that, as a result of a management review of historical stock option policies for 1996 to 2000, it plans to file its 10-Q report for the first quarter later than the May 10 deadline. The self-initiated stock option review follows media reports about other companies. Altera does not expect material changes to historical revenues or non-option-related expenses. We view late filings as a negative for investor sentiment. We are reducing our 12-month target price to $25 from $27.
Integrated Device Technology (IDTI) : Ups to 4 STARS (buy) from 3 STARS (hold)
Analyst: Thomas Smith, CFA
Integrated Device Technology posts fourth quarter fiscal year 2006 (ending March) GAAP loss of 13 cents (15 cents non-GAAP EPS), vs. EPS of 6 cents (7 cents non-GAAP.) We view this as in line with our 10 cents operating estimate before acquisition charges, but after 5 cents stock option expense. Margins widened. We think growth will spark from demand for communications chips and potential profit margin gains. We are raising our EPS estimates to 70 cents from 60 cents for fiscal year 2007 and to 90 cents from 80 cents for fiscal year 2008. We are also raising our 12-month target price $2 to $20, due to our view of an improved outlook for the stock.