S&P Cuts Motorola Price Target

Plus: Analyst opinions on Capital One Financial, Callaway Golf, and more

Motorola (MOT)

Maintains 4 STARS (buy)

Analyst: Kenneth Leon, CPA

Following its January 4 pre-announcement, Motorola posts 17 cents vs. 25 cents fourth quarter EPS before special items, below our 39 cents estimate. Average selling price for handsets declined in the fourth quarter due to unfavorable product and geographic mix, but Motorola gained market share. We see 8% sales growth, but narrower margins, in 2007. We are lowering our 2007 EPS estimate to $1.10 from $1.45. However, Motorola's $15.6 billion of cash can be used for share repurchases and potential dividend hikes. Based on 20 times our 2007 EPS estimate, near peers, and 1.2 times 2007 estimated sales, we are lowering our 12-month target price to $22 from $25.

CNET Networks (CNET)

Ups to 3 STARS (hold) from 2 STARS (sell)

Analyst: Scott Kessler

Shares have fallen some 17% since the recent high established on December 8, and are now very close to our 12-month target price of $8.00. We continue to view CNET's fundamentals as challenged and the company's future as somewhat uncertain, but we now see valuation as appropriate. On Monday, January 29, we expect CNET to file restated financials due to past options backdating and to report full fourth quarter results. We believe financial developments could amount to positive catalysts for the stock. We think risk-reward considerations warrant a hold opinion on the shares.

Unionbancal (UB)

Ups to 2 STARS (sell) from 1 STAR (strong sell)

Analyst: Frank Braden

Fourth quarter operating earnings per share (EPS) of $1.06 vs. $1.10 is $0.02 below our forecast. Net interest income was also shy of our expectations, declining 6.9% on a shift to higher cost deposits. Net interest margin declined 19 basis points from the third quarter. Credit quality remained solid, with nonperformers 0.08% of total assets. Though we expect growth in non-interest-bearing deposits to remain under pressure, we do see a slight rise in 2007. We are raising our 2007 estimate $0.04 to $4.60, and our 12-month target price $4 to $58. At 12.6 times our 2007 estimate, this is below peers but in line with Unionbancal's historical average.

Randgold Resources (GOLD)

Reiterates 3 STARS (hold)

Analyst: Leo Larkin

Ahead of results scheduled for release on February 5, we continue to estimate fourth quarter earnings per ADS at $0.20 vs. $0.15 in the year-earlier period. The projected increase reflects a higher gold price and Randgold Resources's increased production. We still expect earnings per ADS of $0.74 in 2006 and $0.83 in 2007, assuming another increase in production and a rising gold price. While we view the balance sheet a strong, we see Randgold Resources as a speculative play on higher gold prices, given its erratic production and low reserves. We are maintaining our P/E-based 12-month target price of $22.

Capital One Financial (COF)

Reiterates 4 STARS (buy)

Analyst: Frank Braden

The company reported fourth quarter EPS of $1.14 vs. 97 cents, below our estimate of $1.27. Before effects of the North Fork Bank acquisition, EPS is $1.28. Annualized U.S. loan growth in cards was strong, up 19.5% over the third quarter. U.K. credit business remains under pressure from challenging credit environment and Capital One has begun to pull back on sub-prime marketing. Despite a difficult auto financing environment, the company benefited from growing scale and risk management. We are lowering our 2007 EPS estimate to $8.00 from $8.15, based on our expectation of lower realized synergies in 2007, but maintain our $92 target price.

Callaway Golf (ELY)

Maintains 2 STARS (sell)

Analyst: E. Kolb

Based on a preliminary report, Callaway expects 2006 net sales of about $1.018 billion and diluted EPS of 33 to 35 cents. The company's EPS forecast, which includes 9 cents in assorted integration and restructuring charges, is slightly below our estimate of 36 cents. Given that operating results were slightly better than we expected, however, we are increasing our 2007 EPS outlook by 9 cents to 87 cents. We are raising our 12-month target price by $2 to $13, based on a blend of our discounted cash flow and historical and peer analyses.

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