Opinions from Wall Street on Thursday
From Standard & Poor's Equity ResearchCREDIT SUISSE UPS BIOGEN IDEC TO NEUTRAL FROM UNDERPERFORM
Credit Suisse analyst Michael Aberman says is not surprised by the news that Biogen Idec (BIIB) will stay independent. He reminds investors that the story for 2008 now becomes focused on Tysabri growth and the impact of potential PML cases on Tysabri's long-term prospects, Rituxan growth (e.g. Lupus), Rituxan challenges (e.g., competitors, ocrelizumab), and something positive emerging from its pipeline.
Aberman remains relatively positive towards Tysabri, although 2008 will be important inflection point as PML cases are likely to emerge. He also has positive bent towards Rituxan in Lupus, but this is balanced by emerging competitive CD20 landscape, including DNA's second generation anti-CD20, ocrelizumab. He sets a $60 price target on the stock.
BANC OF AMERICA DOWNGRADES WASHINGTON MUTUAL TO SELL FROM NEUTRAL
Bank of America analyst Steven Sherowski says in the wake of recent management disclosures, his pessimism on credit has grown, and his confidence in Washington Mutual (WM) is undermined. While the upsized $3 billion convertible preferred offering and announced dividend cut will improve regulatory capital, he is not convinced dilutive capital raising exercises are done yet.
Sherowski revises his earnings model, incorporating further $1.5 billion preferred offering, provisioning modestly above top end of management's guided $7.2-$8 billion range, but also management's suggested $500 million savings from restructuring.
He lowers his fourth quarter estimate to a loss of $2.54 loss, 2008 to a loss of $1.01, 2009 EPS to $1.45. He cuts December 2008 target to $13.
CIBC UPS TARGET ON RIGEL PHARMACEUTICALS
Analyst Brian Abrahams reiterates sector outperform and raises $16 target price to $17 following Rigel Pharmaceuticals' (RIGL) release of Phase II study results of R788 in rheumatoid arthritis (RA). Notes at the two higher tested doses, 100mg and 150mg 2x/day, patients taking R788 on top of methotrexate (MTX) had significantly higher response rates vs. patients on MTX alone, with dose-dependent activity.
Abrahams expects upside for RIGL on these results, as he believes they establish clear proof-of-concept for Syk kinase inhibition. He would be a buyer of RIGL given R788's potential to become a novel oral treatment for RA and other large-market autoimmune conditions. He sees $2.00 2007 loss, and $1.85 2008 loss.
JP MORGAN DOWNGRADES PLANTRONICS TO UNDERWEIGHT FROM NEUTRAL
JP Morgan analyst Paul Coster says channel checks suggest Plantronics (PLT) consumer BT headsets are being crowded out by Nokia (NOK) and Motorola (MOT), and that Audio Entertainment Group will be stranded in the channel at yearend. Assuming a macro slow down, he also expects enterprise IT spending will be reined in, impacting Audio Comm. Group (ACG) sales.
Coster cuts ACG year-over-year sales growth rate by 100 basis points through mid-calendar year 2009, reflecting his view that an economic slowdown is probable, and it will cause enterprise IT to slow discretionary upgrades of headsets; trims gross margins by 100 basis points through mid-calendar year 2009.
He cuts $1.49 fiscal year 2008 (March) EPS estimate to $1.43, $1.61 fiscal year 2009 to $1.53.