FRIEDMAN BILLINGS CUTS DYCOM INDUSTRIES TO MARKET PERFORM FROM OUTPERFORM
Friedman Billings analyst Alex Rygiel says Dycom Industries' (DY) lower second quarter outlook is due to noticeable "softening in the intensity" of spending by a broad range of customers in January.
Rygiel says his downgrade reflects lower outlook and his concerns that the softness in January could extend through 2008, as the pace of fiber deployment, maintenance on telecom and cable infrastructure could slow or pause for a few quarters as a result of macro economic uncertainty. Given its significant miss, believes DY is put back into the penalty box, which may continue for some time until investors regain confidence.
He cuts $1.32 fiscal year 2008 (July) EPS estimate to $0.95, $1.42 calendar year 2008 to $0.92, due to lower-than-expected revenue and profit margin.
NEEDHAM REITERATES BUY ON NUANCE COMMUNICATIONS
Needham analyst Richard Davis says Nuance Communications (NUAN) beat consensus revenue and EPS expectations, organic revenue growth was steady at 18.5%. He also notes management's 2008 financial outlook was slightly ahead of his forecast.
Davis adds that operating metrics were fine, with days sales outstanding of 101 days flat quarter-to-quarter, deferred revenues of $124.9 million, vs. $109.6 million a year ago, record cash from operations of about $41 million.
He believes Nuance has improved level of predictability each year since he began covering it in 2000; the company now has enough diversification within speech that inevitable ebbs and flows of a particular business segment is not especially material.
The analyst sees $0.81 2008 EPS, and $0.92 in 2009. He has a $23 12-month target price on the stock.
CITIGROUP CUTS ESTIMATE, TARGET FOR VERTEX PHARMACEUTICALS
Citigroup analyst Yaron Werber says Vertex Pharmaceuticals (VRTX) shares may continue to be pressured after the company guided higher-than-expected expenses in 2008 and sought dilutive financing.
Werber believes uncertainty still surrounds outcome of PROVE 3 trial due to mixed patient population. He says he's skeptical PROVE 3 will support teleprevir registration. He also sees a bumpy road ahead due to competitors' data, and worries about high cash-burn rate.
He says $490-$520 million 2008 R&D guidance is higher than his $448 million estimate, concerned about continued high costs, as launch still a few years away. He widens his 2008 $1.64 loss per share estimate to $2.52 loss.
He cuts $25 target price to $21. He has a hold opinion on the stock.