Opinions on various stocks on Friday
From Standard & Poor's Equity ResearchCITIGROUP RAISES ESTIMATES, TARGET FOR PRICELINE.COM
Citigroup analyst Mark Mahaney says Priceline.com's (PCLN) fourth quarter bookings, revenues and EPS beat his expectations. He says 2008 midpoint guidance for bookings and EPS also above his forecasts. He believes fourth quarter fundamentals strengthened, and says the company is clearly taking share in its core markets.
Mahaney says Priceline is one of the most defensive Internet stocks because more than 60% of its bookings/profits are in Europe and counter-cyclical U.S. hedges. He thinks the company has travel segment's best management team.
He raises $5.08 2008 EPS estimate to $5.11, $6.02 for 2009 to $6.15. He says the shares offer relatively attractive valuation, with a 4% free cash flow yield for a 30%-plus free cash flow grower. He raises 124 target price to 137. He reiterates buy.
CITIGROUP ADDS BROCADE COMMUNICATIONS TO TOP PICKS LIVE LIST
Citigroup analyst Paul Mansky says he's adding Brocade Communications (BRCD) to his Top Picks Live list and reiterating his buy rating and 10 target price. He says, although a compelling valuation is part of his thought process, the fundamental profile is a larger portion of the story, as catalysts are relevant in a normalized or challenged information technology spending environment.
He believes Brocade carries a number of attributes that favor it in an up or down market. These include further leverage opportunity, an established sales channel, and an attractive product cycle.
Mansky notes Brocade posted $0.16 first quarter EPS, which topped his $0.15 estimate. He ups $0.62 fiscal year 2008 (October) EPS estimate to $0.63, and $0.65 for fiscal year 2009 to $0.69.
NEEDHAM CUTS TARGET, ESTIMATES FOR ARRIS GROUP
Needham analyst Greg Mesnaieff says Arris Group's (ARRS) fourth quarter was a major downside EPS surprise in the face of what had appeared to be solid industry fundamentals. He says the shortfall was result of recent and sudden market-share loss in E-MTA product segment, as a new vendor entered the market.
He also notes lower margins on new product introduction. He says first quarter revenue guidance is significantly below consensus due to slowdown in sales to Comcast Comcast (CMCSA).
Mesnaieff cuts $0.92 2008 EPS estimate to $0.66, and $1.08 for 2009 to $94. He cuts 17 price target to 12. He thinks market-share loss is troubling, but still sees ARRS as a leading cable infrastructure bellwether whose EPS trajectory will likely be restored in the second half of 2008. He keeps a strong buy opinion.