From Standard & Poor's Equity ResearchBARCLAYS CUTS IBM TO EQUAL-WEIGHT FROM OVERWEIGHT
Barclays analyst Benjamin Reitzes says his downgrade of IBM (IBM) is based on risks from a weakening economy and IBM's large exposure to financial services.
Reitzes sees the prospect of short-term services signings decelerating by the first quarter 2009 and believes server sales are already slowing down. He says management has done a good job improving the company's growth profile.
He notes the company's recurring profit stream, but thinks it is prudent to acknowledge risks presented by economy. He cuts $8.80 2008 EPS estimate to $8.49 and $9.68 for 2009 to $9.20. He also reduces his $130 price target to $108.
PIPER JAFFRAY CUTS ESTIMATES ON SOLAR COMPANIES, INCLUDING SUNPOWER
Piper Jaffray analyst Jesse Pichel says the solar industry depends on access to credit, and for now, the credit market remains closed.
While it may be reasonable to assume that the credit window will reopen in the months to follow on improved sentiment from government bailouts and lower Fed rates, Pichel thinks the cost of capital on renewable projects will increase by about 100 basis points due to higher bank financed interest rates, larger spreads and more upfront fees as loan syndicates "flex up" pricing.
For Sunpower (SPWRA), the analyst cuts $2.35 2008 EPS estimate to $2.30 and $3.60 for 2009 to $3.35. Pichel also cuts $98 price target to $75. But Pichel keeps a buy recommendation on Sunpower shares.
CITIGROUP CUTS G&K SERVICES TO HOLD FROM BUY
Citigroup analyst Ashwin Shirvaikar says G&K Services' (GKSR) cut in its first quarter EPS guidance is the latest in a string of disappointing results from GSKR.
Shirvaikar thinks not much seems to be going right at the moment and there is little reason to own GSKR outside of valuation, which isn't working as a catalyst in this market. He says it remains to be seen if the company's cost reduction efforts will be enough to turn the tide.
He cuts $2.43 fiscal year 2009 (June) EPS estimate to $1.69 and $2.80 fiscal year 2010 to $2.44. Given these cuts, reduced confidence in the company and lower multiples across the sector, he cuts $42 price target to $30.