From Standard & Poor's Equity ResearchCITIGROUP KEEPS BUY ON AIG
Citigroup analyst Joshua Shanker says American International Group (AIG) had pre-tax losses of $6 billion each in its CDS unit and credit impairments. He'd been expecting CDS loss of about $2.5 billion and potentially, credit impairments of a similar size.
Shanker thinks AIG's operating businesses produced earnings of about $1.00 a share -- 40% decline from year ago. He adds that its P&C business is showing soft market deterioration, with combined ratio deteriorating by 7.1%.
He thinks investors may have been hoping new CEO Bob Willumstad would have completed comprehensive review of businesses and might be content to weather a one-time charge pursuant to that review. But he thinks the "kitchen sink" will hang over the stock as a third quarter risk. He does not expect a need to raise capital.
OPPENHEIMER CUTS VERISIGN TO PERFORM FROM OUTPERFORM
Oppenheimer analyst Shaul Eyal says VeriSign's (VRSN) second quarter is ahead of his and Street estimates with core business revenue of $233 million slightly ahead of his $232 million estimate. He notes $0.25 non-GAAP EPS was $0.02 ahead of Street but mainly on reduced share count.
Eyal downgrades the stock and cuts $46 price target to $36 given: 1) the company's divestiture process is likely to continue well into 2009; 2) signs of slowdown in domain name growth especially on advertising front; 3) continued erosion in SSL ASPs with higher mix of lowest priced GeoTrust SSLs.
He notes with the timeline of divestitures uncertain, they're likely to continue well into 2009 and he does not expect operating margins to expand at expected rate; hence he cuts $1.05 2008 EPS estimate to $1.02 and $1.68 for 2009 to $1.54.
WEDBUSH CUTS TARGET PRICE FOR ZUMIEZ
Wedbush analyst Betty Chen says Zumiez's (ZUMZ) July same-store sales were down 1.4%, vs. a tough 9.7% growth comparison last year, in line with her 1.3% estimate. She still sees $0.08 second quarter EPS, vs. $0.11 last year, as she thinks ZUMZ remained prudent with expense control.
Chen feels ZUMZ is on track to open 57 stores in fiscal year 2009 for about 21% store unit growth. But given recent erratic trends, she cuts her fiscal year 2009 (January) EPS view to $0.92 from $0.93. Also, she remains concerned with potential risks tied to fiscal year 2009 guidance, limited longer-term margin opportunity due to company's private label strategy and potential revision to long-term growth plans.
She cuts her $18 price target to $17, and maintains a hold recommendation on the stock.