Opinions on stocks in the news on Friday
From Standard & Poor's Equity ResearchBEAR STEARNS UPS RESEARCH IN MOTION TO OUTPERFORM FROM PEER PERFORM
Bear Stearns analyst Andrew Neff says Research in Motion's (RIMM) third quarter results were in-line with estimates. However, he sees potential for continued high growth as RIMM expands its reach with new products (several expected around May), new marketing programs (lowering price of data), expanding carriers/geographies (330+ carriers in 130+ countries with China, India at early stage), and expanding segments (consumer growth exceeding corporate).
Neff thinks anxiety over economic concerns is overstated given secular phenomenon of smartphones. He ups EPS estimates from $0.67 for the fourth quarter to $0.70, $2.20 for fiscal year 2008 (February) post-option EPS view to $2.24, $3.05 for fiscal year 2009 to $3.75, and $3.75 fiscal year 2010 to $5.20, on higher consumer handsets.
He sets calendar year 2008 price target of $150-$170.
JEFFERIES RAISES TARGET ON RED HAT
Jefferies analyst Katherine Egbert says Red Hat's (RHT) $135 million third quarter revenue beat her $133 million view; EPS of $0.18 was in line. She says CEO Szulik's departure will unsettle status quo at RHT, potentially reinvigorating it.
Egbert says solid results, with strong cash flow and increasing margins, should deflect conspiracy theorists away from fundamental decline as the cause of leadership change. She notes as with all CEO conversions, there will likely be a series of derivative changes at RHT over the next 12 months.
She adjusts $141 million fourth quarter revenue view to $143 million; she keeps $0.19 EPS. With fiscal year 2009 (February) based on GAAP numbers, her estimates move to $0.87 EPS on $628 million from previous $0.86 EPS on $627.7 million. She ups target to $21 from $19, and keeps a hold opinion on the stock.
CREDIT SUISSE CUTS TARGET ON JABIL CIRCUIT
Credit Suisse analyst William Stein says he expects investors to look past solid first quarter results, and instead focus on the weaker-than-expected second quarter guidance. On the plus side, he says first quarter revenue was slightly above forecasts on upsides in consumer, telecom, and somewhat in automotive. Also, operating margin of 3.6% was at the high end of guidance.
On the negative side, he says second quarter guidance was below consensus and his estimates in the typically higher-margin computing/storage and industrial end markets. Also, guidance in the consumer area fell short of his view.
Stein cuts $24 price target to $20, but maintains outperform, as still sees restructuring boosting margins, program wins adding to sales. He sees $1.40 calendar year 2008 EPS.