Opinions from Wall Street analysts on Tuesday
From Standard & Poor's Equity ResearchSUSQUEHANNA NOTES MOMENTUM CONCERNS FOR COGNIZANT TECHNOLOGY
Susquehanna analyst James Friedman notes that although Cognizant Technology (CTSH) modestly beat aggressive third quarter revenue expectations and solidly beat EPS expectations, its forward guidance was in line to slightly below Street expectations. He says, furthermore, growth in the company's key Financial Services vertical slowed to 7% sequentially, and management is not seeing a typical fourth quarter budget flush.
Friedman says he's concerned about momentum going into a seasonally weak first quarter, as clients set fiscal year 2008 budgets. Despite these concerns, he believes offshore vendors are poised to continue to take market share, leading to acceleration in the second half of 2008. He ups $1.11 2007 EPS estimate to $1.15, keeps $1.45 for 2008. Reiterates positive rating.
DEUTSCHE BANK UPS TARGET FOR FIRST SOLAR
Deutsche Bank analyst Steve O'Rourke says with First Solar's (FSLR) latest capacity announcement and new customer supply agreements (555MWp contracts worth $1 billion), he believes First Solar's name plate capacity tracks to about 700MWp by the end of 2009, and will likely cross 1GWp by 2010, pointing to an aggressive capacity expansion backed by realizable assets.
With earnings tracking capacity expansion/customer contracts, he holds a favorable view on First Solar's long term business prospects. He sees $0.64 2007 EPS and $1.45 for 2008. He believes First Solar deserves a premium valuation; so he ups $140 price target to $170, which equates to 35 times his 2010 EPS estimate, and at 1 times the company's projected EPS growth rate of 100% over next few years. He rates the stock a buy.
JP MORGAN STILL SKEPTICAL ON NOVATEL WIRELESS, KEEPS UNDERWEIGHT
JP Morgan analyst Paul Coster says Novatel Wireless (NVTL) reported a strong third quarter, and fourth quarter guidance is above Street expectations. However, he believes the peak sell-in is occurring within North America, and sales could begin to slump in early 2008, although he concedes that Novatel Wireless' execution has been spot-on to date.
Coster says, given risks associated with what he views as a commodity product, he believes Novatel Wireless' multiple is not justified. He notes the stock trades at 22.0 times his $1.20 pro-forma 2008 EPS estimate, a 6% discount to the mean of his coverage. He believes there are too many companies pursuing the market with undifferentiated products, likely leading to commoditization and margin pressure, especially as growth moderates.
COWEN KEEPS NEUTRAL ON MOMENTA PHARMACEUTICALS
Cowen analyst Eric Schmidt says today's news that the FDA rejected Momenta Pharmaceuticals' (MNTA) blood clut drug is surprising, as it's extremely rare for an abbreviated new drug application to receive a non-approvable letter. He notes Momenta said its partner, Novartis (NVS) unit Sandoz, got a letter from the FDA detailing the companies' ANDA for M-Enoxaparin, (a generic form of SNY's Lovenox) is not approvable.
Schmidt says, while Momenta has other potential value drivers in its pipeline (including M-118, a generic version of Copaxone, in Phase II), following today's news he expects investors to be skeptical around Momenta's entire technology platform, pipeline and complex generic strategy. He expects the shares to trade down substantially.