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Analyst Actions: Office Depot, VMware, Inter Parfums


From Standard & Poor's Equity ResearchCREDIT SUISSE CUTS ESTIMATES, TARGET ON OFFICE DEPOT

Credit Suisse analyst Gary Balter says Office Depot (ODP), in one of the least surprising misses of the year, said it will fall well short of its already reduced second quarter estimates, with only the surprise being the magnitude of the miss.

Balter notes ODP said second quarter retail comps nearly down 10% and total sales down slightly with trends falling off near quarter end. He says the company now expects operating margins to be down by 200 basis points more than the 200-250 basis-point decline previously indicated year-over-year. He says this implies 0.0%-0.5% operating margins vs. second quarter 2007's 4.5% operating margin rate, which in other words means the company expects to earn not much more than a penny per share for the second quarter.

After cutting estimates last week, he cuts $0.95 2008 EPS estimate to $0.43 and $0.95 for 2009 to $0.55. He also lowers 13 price target to 8. He kept a neutral opinion on the stock.

STIFEL NICOLAUS KEEPS HOLD ON VMWARE

Stifel Nicolaus analyst Todd Weller says it's not clear what drove VMware's (VMW) abrupt CEO change, but he believes there's likely a lot more at play than VMW's modestly reduced 2008 revenue outlook.

He says factors to consider include long-standing tensions between VMW and EMC (EMC), and the need for a more seasoned software executive as VMW matures and faces a more intense competitive environment. On a positive note, Weller thinks new CEO Paul Maritz, formerly at Microsoft (MSFT), has a solid background and should be an asset.

But while he finds the sharp drop in the stock today tempting, he finds it difficult to step up because he still doesn't view valuation as all that cheap.

CARIS UPGRADES INTER PARFUMS TO BUY FROM ABOVE AVERAGE

On July 7, Inter Parfums (IPAR) entered into into an exclusive six-year agreement with Bebe Stores (BEBE). Caris analyst Linda Bolton Weiser tells S&P MarketScope that she upgrades IPAR on valuation and yesterday's announced agreement with BEBE.

Weiser says IPAR's stock price has declined 26% from its April 30 high without any negative company-specific developments. She notes, under the deal with BEBE, IPAR will supply over 200 bebe stores with cosmetics and personal care lines.

She says the deal provides "cushion" to her $1.05 2009 EPS estimate, and will enable IPAR to further leverage its specialty retail infrastructure. She estimates IPAR could report bebe sales of $5-$10 million in 2009, with EPS contribution of $0.01-$0.03 per share. She has a 21 price target on IPAR.


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