From Standard & Poor's Equity ResearchOPPENHEIMER DOWNGRADES APPLE TO PERFORM
Oppenheimer analyst Yair Reiner says whatever reason Steve Jobs pulled out of Macworld annual address, this is unexpected and underscores greatest risk to Apple's (AAPL) long-term success - dependence on Jobs's health and apparent lack of long-term succession plan.
Reiner believes Apple's success has depended on handful of products shaped and filtered by Jobs's singular vision. He says until the company discloses the state of Jobs's health or elaborates a viable plan for eventual transfer of power, he can no longer recommend AAPL as a long-term investment.
He removes $145 price target. His prior rating was outperform.
UBS FINANCIAL UPGRADES KANSAS CITY SOUTHERN TO BUY FROM NEUTRAL
UBS Financial analyst Rick Paterson says since peaking at $55 in July, Kansas City Southern (KSU) stock has been in a freefall, likely on deteriorating economy, elimination of takeout premium given difficult credit markets and fears about refinancing of $200 million note.
Paterson says with the note refinancing now done, KSU has a 2-year window before it needs to tap credit markets again, by which time conditions should be better.
He cuts $1.96 2008 EPS estimate to $1.78 and $2.23 for 2009 to $1.77 to reflect weakened economic view and higher interest expense from the refinancing. He has a $35 price target.
OPPENHEIMER MAINTAINS PERFORM ON ADOBE SYSTEMS
Oppenheimer analyst Brad Reback says Adobe Systems' (ADBE) fourth quarter results were in line with recently reduced guidance.
Reback says, while macro-environment is clearly impacting the company's new product cycle (CS4), strong showings in its Mobile segment and its Enterprise business unit, cost controls and share buybacks were highlights in the fourth quarter.
Looking ahead, he thinks demand for CS4 will remain muted and he expects the company to reinvest some savings from recently unveiled restructuring steps into demand generation initiatives. He still views long-term fundamentals as solid, but would wait for a more attractive entry point.
BAIRD CUTS GIBRALTAR INDUSTRIES TO UNDERPERFORM
Baird analyst Peter Lisnic says Gibraltar Industries (ROCK) cut 2008 EPS guidance to $1.07-$1.16 (excluding the sold SCM business) from $1.47-$1.54.
Lisnic says the sharp cut highlights the dramatic decline in demand across end markets now overwhelming solid structural improvement. He thinks the sharp decline in materials prices is likely a significant contributor to lowered EPS guidance.
He cuts $1.53 2008 EPS estimate to $1.27 (including SCM); cuts $1.40 2009 to $0.65 to reflect markedly softer first half demand, exacerbated by FIFO inventory/pricing issues. He cuts $15 target to $10. His prior rating neutral.