From Standard & Poor's Equity ResearchCREDIT SUISSE DOWNGRADES UAL CORP. TO NEUTRAL FROM OUTPERFORM
Credit Suisse analyst Daniel McKenzie says he is surprised by Continental Airlines' (CAL) decision, which follows media reports that Continental and UAL Corp. (UAUA) were nearing a merger. He says previous outperform rating on UAUA was predicated on a merger with CAL.
McKenzie doesn't believe a standalone UAUA plan is viable, and possible suboptimal merger with US Airways (LCC) (the most likely scenario in his view) appears challenging given labor turmoil that would potentially be inherited. He says LCC has a disproportionate exposure to Southwest Airlines (LUV), lack of a meaningful presence in Latin America, and poorly situated southern-tier hubs.
He believes that until oil prices stabilize or retreat, investors will be reluctant to commit new capital to airline stocks.
ROTH CAPITAL DOWNGRADES BEBE STORES TO HOLD FROM BUY
Roth Capital analyst Elizabeth Pierce says based on disappointing 7.6% decline in Bebe Stores (BEBE), merchandising issues that existed at start of quarter, i.e. soft sales in separates, as well as challenging sector issues, she expects the company to report third quarter (due Thursday May 1 after the market close) at the low end of guided range of $0.08-$0.12, which was based on a negative mid-single digit comp sales.
Pierce says given challenges the company has had in turning sales around and based on general economic climate, she expects the company to provide a very conservative outlook to the fourth quarter. Based on above factors, she believes there could be downside risk to her estimates and therefore, lowers fourth quarter fiscal year 2008 (June) EPS estimate to $0.17; and $0.78 fiscal year 2009 forecast to $0.75.
CANACCORD REITERATES BUY ON VISTAPRINT AHEAD OF EARNINGS REPORT DUE TUESDAY
Canaccord analyst Domenic LaCava says VistaPrint (VPRT) has the potential for upside third quarter results and is the best way to play eCommerce away from the consumer, with 90% of revenue coming from small businesses.
LaCava notes recessions tend to stimulate self-employment and force small businesses to cut costs; this creates nice tailwinds for VPRT, whose products are priced 20%-30% below competitors, on average. He also sees momentum building for the company on an international scale. He says visibility is solid, with 60% of the company's bookings tied to repeat customers.
He views VPRT as having the best potential for upside to his and consensus estimates in his universe. He notes third quarter results are due Tuesday; he sees $0.31 pro-forma EPS.