JP Morgan cut its investment recommendation on Altera (ALTR ) to neutral from overweight, citing the company's recently announced quarterly results.
Analyst Christopher Danely said the company's earnings per share came out a penny above his and consensus estimates. However, he noted that Altera's book-to-bill ratio fell below 1.0, and fourth quarter revenue was expected to be flat sequentially, below his 3% growth estimate. He's concerned that guidance is aggressive since turns equipment is in the low 70% range after being in the upper 60% range last quarter. He also said it appears that Altera is losing market share to rivals such as Xilinx (XLNX ). He maintained his 76 cents 2005 earnings per share on $1.14 billion forecast, but cut his 93 cents 2006 earnings per share estimate on $1.35 billion revenue to 90 cents earnings per share on $1.30 billion revenue.