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Analyst Actions: Cisco Systems, Foster Wheeler, Bankrate


Opinions from Wall Street analysts on Thursday

From Standard & Poor's Equity ResearchRAYMOND JAMES DOWNGRADES CISCO SYSTEMS

Analyst Todd Koffman says he's downgrading Cisco Systems (CSCO) shares to market perform from strong buy. He says, after enjoying three years of accelerating growth, it appears top-line trends at the company may be moderating. As such, believes multiple expansion has likely run its course, and he would expect some multiple contraction as growth rates moderate.

Meanwhile, Koffman says that $0.37 first quarter non-GAAP EPS topped his $0.36 estimate by $0.01. He notes operating performance was very strong, and gross margins were 65.5%, up from 65.2% in July and 64.8% a year ago. Overall, he believes the company's operational execution is outstanding.

He sees $1.42 fiscal year 2008 (July) EPS, and $1.69 for fiscal year 2009.

CITIGROUP UPGRADES FOSTER WHEELER TO BUY FROM HOLD

On Nov. 7, Foster Wheeler (FWLT) posted $1.66, vs. $0.77, adjusted third quarter EPS and set a 2-for-1 stock split. Citigroup analyst Brian Chin tells salesforce he's upgrading FWLT on strong third quarer results bolstered by potential Middle Eastern project wins.

He notes that the stock has been volatile over the last few days as investors worry about the Pluto LNG award in Western Australia. Given strong results/margins, he sees value to $183/share excluding Pluto. He also notes Saudi Aramco recently announced a $90 billion energy infrastructure program through 2012. With FWLT being a key vendor to Aramco, he sees it standing a good chance of benefiting from additional awards.

Chin ups his $5.24 2007 EPS estimate to $5.63, and $180.50 target price to $197.00.

CIBC WORLD DOWNGRADES BANKRATE TO SECTOR UNDERPERFORM

CIBC World Analyst Jason Helfstein says he learned after market closed yesterday that Bankrate (RATE) insiders were offering shares in a block trade, rendering a sale of RATE unlikely. Moreover, he says RATE is 13% above his $46 target price, and he sees risk of slowing graphical ad growth.

Helfstein notes, of the 1.2 million shares being offered, he believes the chairman of RATE is selling 13% of his shares (600,000 of 4.7 million), with management exercising 600,000 in options of a total position of 2.3 million shares (35%). He says this should effectively remove any speculation that RATE is sold in the near term.

He maintains $1.45 2007 and $1.74 2008 EPS estimates. He had rated the stock sector perform.


The Aging of Abercrombie & Fitch
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