From Standard & Poor's Equity ResearchING REITERATES BUY ON FRANCE TELECOM
ING analyst Javier Borrachero says disagreement over financial terms has been stumbling block in France Telecom's (FTE) deal talks with TeliaSonera. He says FTE has underperformed peers by 10% since the first interest was communicated; therefore it's likely the share price could recover euro 1.5-2 per share given collapse of deal.
He notes that the market saw no merit in the deal and management now seems to be showing good financial discipline. He says the key question is what management has to say about its M&A policy going forward. He thinks they will resume very prudent previous M&A policy of selective acquisitions in some markets (Vietnam, Algeria).
Borrachero says solid fundamentals will again act as the main catalyst, with second quarter likely to deliver another set of solid numbers.
HIBBETT SPORTS DOWNGRADED BY NEEDHAM TO HOLD FROM BUY
Needham analyst Sean McGowan says he's downgrading Hibbett Sports (HIBB) based on his belief that recent price levels fairly capture HIBB's growth prospects, and that recent price strength leaves the stock a bit more vulnerable to the vagaries of jittery consumer sentiment. He notes HIBB closed Friday at $22.25, just below his $23 target.
McGowan believes HIBB's second quarter results could show positive surprises, as was the case in the first quarter, but that positive surprises may now be baked into the stock price.
He maintains his EPS estimates of $1.15 for fiscal year 2009 (January) and $1.30 for fiscal year 2010. He believes HIBB remains excellently positioned to post long-term sales growth rates in the mid-teens and EPS growth in the upper teens.
CANACCORD INITIATES COVERAGE OF LOJACK WITH SELL, $4 TARGET PRICE
Canaccord analyst Jeff Rath says his $4/share valuation for LoJack (LOJN) is based on a net tangible equity per share analysis. He says, while his DCF model yields a share price of $6.52, he feels LOJN's intrinsic value is much lower, and a further deterioration in EPS could cause shares to trade to net book value.
Rath notes that June new car sales data will be released July 1, and J.D. Power & Associates sees the seasonally adjusted annual rate of sales falling 23% year-over-year to 12.5 million vehicles vs. 16.3 million.
He also notes LOJN will post second quarter EPS on Aug. 4. He sees $0.19 EPS, vs. $0.17 consensus and $0.20 guidance. He feels the risk to future profitability and estimates is very high.