From Standard & Poor's Equity ResearchCARIS UPGRADES MASSEY ENERGY TO BUY FROM ABOVE AVERAGE
On Friday, Massey Energy (MEE) approved a $90 million expansion to capital spending in 2008. Caris analyst Ann Kohler says in conjunction with upped 2008 capital spending by $90 million, management also provided higher shipment guidance. Among her universe, she says Massey is the most leveraged to the metallurgical coal market, which continues to benefit from favorable steel market dynamics.
Kohler raises 2008 EBITDA and EPS estimates to $655 million and $2.87 from $533 million and $2.13, 2009 EBITDA and EPS estimates to $761 million and $3.45 from $647 million and $2.92, respectively. Also, as a result of management guidance, she's expanded her per ton operating margin in 2008 and 2009 to $14 and $15 from $11 and $13, respectively.
She raises her 48 price target to 58, based on EV/EBITDA multiple of 7 times her new 2009 EBITDA estimate.
CITIGROUP UPGRADES KLA-TENCOR TO BUY FROM HOLD
Citigroup analyst Timothy Arcuri says he's swapping out of Applied Materials (AMAT) and into KLA-Tencor (KLAC) in Citi's Top Picks Live list. He believes several near-term catalysts are likely to develop against a cyclical backdrop that he thinks is increasingly favorable.
Arcuri says while memory isn't without further downside risk, he thinks it represents only about 15% risk to orders, and KLAC stock is already discounting this scenario. He says while orders are slipping for some peers, checks suggest KLAC should surprise to the upside in the third and fourth quarters. He believes KLAC is seeing some increased adoption rates at Samsung and some resurgence in orders from TSMC.
He sees $2.83 fiscal year 2008 (June) EPS, and ups $3.28 fiscal year 2009 to $2.86. He also raises his 49 price target to 56.
CITIGROUP DOWNGRADES COLUMBIA SPORTSWEAR TO SELL FROM HOLD
Citigroup analyst Kate McShane says she's downgrading Columbia Sportswear ((COLM) for three reasons: She expects backlogs to be lower than expected when COLM announces first quarter results at the end of April, which could create downside risk for shares; Sourcing costs could weigh more heavily, especially in footwear -- she notes this is where she's seeing the most inflationary pressure and COLM lacks scale in this business; and COLM is increasing spending around marketing retail initiatives that could further drive down EPS.
McShane cuts 2008 and 2009 EPS estimates to $3.42 and $3.70 from $3.65 and $4.05, respectively. She also lowers her 48 target price to $41.