Analyst Actions: Blue Nile, First Solar, Applied Materials, Cephalon

Opinions on various stocks on Wednesday


Citigroup analyst Mark Mahaney says Blue Nile's (NILE) $0.45 EPS beat the Street's $0.44 estimate due to lower-than-expected tax rate. Blue Nile's 2008 view for "at least 10%" revenue growth and flattish GAAP EPS compare to his estimates of gains of 17% and 19%, respectively. Blue Nile's projection for no growth in the first quarter implies material deceleration from the fourth quarter's 24%.

Blue Nile blamed U.S. macro environment, soft Web traffic in December and January, and big drop-off in high ASP sales. Mahaney now sees material macro headwinds, no near-term catalysts, and tough first half comps.

Mahaney says what keeps NILE as a hold vs. sell are: market share gains; long-term international growth opportunity; 6% 2008 FCF yield; unique supplier relationships; strong execution track record. He cuts $1.24 2008 EPS view to $1.06.


ThinkEquity analyst Jonathan Hoopes says after visiting First Solar's (FSLR) Perrysburg, Ohio plant, he came away with a strong belief that the company could further improve effective throughput. He gives management credit for strong execution in the fourth quarter on the manufacturing efficiency front as effective annual throughput per line has increased to over 44MW (up from 39.6MW in the third quarter and 30MW in the second quarter).

Hoopes says this drove strong year-over-year revenue growth of 280%, vs. his 220% growth estimate. He believes that the strength in EPS suggests stronger future earnings power.

He raises $2.06 2008 GAAP EPS estimate to $3.08, 77% revenue growth estimate to 92%. He believes his $310 12-month target for the stock will prove conservative.


Caris analyst Ben Pang says Applied Materials' (AMAT) first quarter was very strong, with a big boost from flat panel display orders and enough progress on solar to keep the good vibes going. He says the company's first quarter beat consensus and his estimates for all metrics.

Pang notes orders rose 13%, compared with guidance of a 5%-15% decline. He adds that the company sees second quarter revenues flat-to-5% higher and EPS of $0.18-$0.22.

He says AMAT reiterated its expectation that thin film module shipments will occur in mid-year and also expects all contracts announced in fiscal year 2007 (October) to be converted to orders or backlog in fiscal year 2008.

He sees $1.19 fiscal year 2008 EPS and $1.62 for fiscal year 2009. He raises $20 target to $21. He rates the stock average.


Broadpoint analyst David Lickrish says Cephalon's (CEPH) fourth quarter results were in line with his estimates except for sales of Fentora, which were $33.9 million, vs. his $45 million forecast.

Lickrish notes he's upgrading CEPH to strong buy from buy, given the recent share price decline. He says CEPH, as of yesterday's close, was trading at p-e multiples of 11.7 and 10.3, respectively, on 2008 and 2009 adjusted EPS forecasts.

Given the potential to broaden Fentora's label, which would open up new markets and reaccelerate growth in the franchise, plus the ability to launch Nuvigil with a host of new indications, he believes there's substantial growth potential in both of these drug franchises. He has a $85 target price on the stock.

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