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Analyst Actions: Micron, Wynn Resorts, Ciena, Kaiser Aluminum

Comments from analysts around the Street on Wednesday

From Standard & Poor's Equity ResearchThinkEquity downgraded Micron Technology (MU) to accumulate from buy after the memory chip maker reported a fourth quarter loss. The stock fell 8.9% to $10.74.

Analyst Robert Burleson says he had forecast a loss of $0.09 for the fourth quarter. He says Micron expects PC demand to be seasonally normal in the fourth quarter and his checks support this view so far. He's not entirely convinced that demand for components going into PCs will remain robust, however, as his checks point to potential double-ordering for key components. If double-ordering is in fact occurring, he thinks any weakness in PC consumption is likely to be met with major push-outs and/or cancellations of components.

Therefore, Burleson believes that investments in PC food chain are becoming increasingly risky. He cut his $0.57 fiscal year 2008 (August) EPS estimate to $0.07.


On Oct. 3, shares of Wynn Resorts (WYNN) lost 9.9% to $149.40, and Las Vegas Sands (LVS) fell 11.8% to $127.53. Morgan Stanley analyst Celeste Mellet Brown says preliminary September Macau gaming revenue reports indicate growth of 55% year-over-year and 8% sequentially, below her forecast of about 75+% growth and, she believes, below general expectations across the Street.

She says "the gaming revenue number implies that the new supply that came to the market shifted revenue rather than grew the market incrementally." She also says she believes that mass market revenue growth for the entire market was disappointing. She notes she expects to see improvements in October, a seasonally stronger month.

She has equal-weight ratings on Wynn and Las Vegas Sands, as well as on MGM Mirage (MGM).


Ciena (CIEN) shares moved up 6% to $45.23 after Goldman Sachs says the company raised its gross margin estiamtes at its analyst day.

Analyst Brantley Thompson says Ciena's management increased fourth quarter gross margin outlook to 47%-49% from 45%-47%, said it sees upside to gross margin over longer term. He believes fiscal year 2008 (October) revenue growth will beat Street expectation of 21%, given the company's strong fundamentals; thinks 25%+ more likely.

Thompson sees operating margin continuing to exceed estimates and cash flow continuing to improve. He says the optical networking market is transforming from legacy systems to new converged platforms, and believes many players will not survive the transition, leading to higher margins for those remaining.

He raises $1.11 fiscal year 2007 EPS estimate to $1.14, $1.60 fiscal year 2008 to $1.61. And he hiked his $47.50 target to $55. And he reiterated a buy opinion on the stock.


Kaiser Aluminum (KALU) shares rose 6.9% to $76.89 after analyst Anthony Rizzuto says KALU remains constructive onthe aerospace market, largely based on expected strong order growth from international carriers. He notes the company also highlighted balanced strength between commercial and defense markets. He says organic growth initiatives remain on schedule, including capacity increase at Trentwood, Wash. rolling mill.

He says he now has a greater sense of conviction regarding the company's latest program to enhance logistics and cost efficiencies, which could start contributing to results in late 2009. He thinks its impressive results are sustainable, and raises $3.45 2007 EPS estimate to $4.65, $4.10 for 2008 to $5.00. He has a $95 target, offering 30%+ upside.

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