From Standard & Poor's Equity ResearchDEUTSCHE BANK MAINTAINS BUY ON LEHMAN BROTHERS
Deutsche Bank analyst Michael Mayo says he lowers his estimates and 52 target price to 49 on Lehman Brothers (LEH) to reflect higher-than-expected hedging losses and his assumption for a new $4 billion common equity issuance. He says this lower target reflects substantial upside from current levels, which he feels reflects more worst-case scenarios than merely bad.
Net-net, Mayo feels that Lehman is not Bear Stearns. He says liquidity is not a major issue, in his view, while equity risk remains but does not seem outsized.
Still, he says revenues should continue to grow in most areas and management is seasoned in tough times such as these.
GOLDMAN STAYS POSITIVE ON WAL-MART
Goldman Sachs analyst Andrianne Shapira says Wal-Mart's (WMT) May comps were robust, with strength seen across grocery, health, beauty and entertainment products. She notes executives said they have begun to see impact from stimulus checks. Additionally, the company's June same-store sales outlook was well above May and second quarter run rate of +0.2%, with an expected lift from further stimulus spending.
With above-plan May sales, Shapira sees some degree of upward EPS revision as inevitable. For now, her price target and EPS estimates remain under review.
She says Wal-Mart continues to fire on all cylinders as its strong price/value offering gathers further share of wallet in this tough spending environment. She recommends remaining a buyer of the shares.
UBS UPS ESTIMATES, TARGET FOR ADC TELECOMMUNICATIONS.
UBS analyst Nikos Theodosopoulos says ADC Telecommunications' (ADCT) second quarter revenues and EPS beat his estimates primarily on strength in fiber connectivity, with much of the upside driven by higher volumes, a gain in gross margin, and lower operating expenses. He notes ongoing cost reduction efforts.
He says the company raised $1.15-$1.25 fiscal year 2008 (October) EPS guidance, excluding one-time events and option expenses, to $1.25-$1.33. He sees much of the upside in guidance coming from ongoing fiber connectivity and wireless strength.
He raises his forecasts for gross and operating margins in fiscal years 2008 and 2009. He increases $1.13 fiscal year 2008 EPS estimate to $1.24, and $1.25 for fiscal year 2009 to $1.37. He raises 19.50 price target to 20. He reiterates buy opinion on the stock.